Canada Hog Markets

CANADA - Last commentary I wrote about how 2014 was truly the “Year of the Pig Farmer“ and one for the record books with an unprecedented $60 margin average for farrow to finish on the year, writes Bob Fraser – Sales & Service, Genesus Ontario.
calendar icon 8 April 2015
clock icon 7 minute read

Well to slightly rework the old adage “that no good deed goes unpunished”, in the pig business no good time seemingly goes long without some “plague or pestilence” ensuing. Be it “swine flu”, PEDv, port strikes, PRRS, the list goes on. For Canada (Ontario), the latest on the list is the strike as of March 18 between Olymel management and the Vallée-Jonction union, the Confederation des syndicats nationaux (CSN). Olymel is one of Canada’s largest pork packers with four packing plants in the province of Quebec.

Now for many readers this may seem like just that one more thing on a long list of things to come along to disrupt the pig industry. In addition, many may throughout their pig career have contended with labour disruption at a packing plant. However for those who have been thinking or talking about the possibility of North America running short of shackle space in 2016 or late 2015, you now need to look no further than Ontario to get a sense of what this might look like. It is a mess and I am not kidding when I say welcome to our nightmare. Prior to March 18th approximately 23,000 hogs per week had been going (primarily on contract) from Ontario to Olymel in Quebec.

This would represent approximately 20 per cent plus of Ontario production. “To limit adverse consequences for Quebec producers” Ontario producers were the first to be thrown under the bus. As of March 24th Olymel cancelled deliveries of all 23,000 hogs from Ontario. This very quickly gets to be what 10 pounds looks like in a 5-pound bag. As I said a mess.

Last year I wrote in commentary about the loss of Quality Meat Packers in Ontario. This ultimately was the loss of some 35,000 shackles to the Ontario pork industry. If in January 2014 almost anyone had suggested the possibility of such an event and the consequences to the Ontario industry I believe almost everyone would have agreed it would be an unmitigated disaster. Then unbelievably at the end of March 2014, that exact event occurs with Quality Meat Packers declaring bankruptcy at their Toronto plant and very shortly declaring the same thing at their Mitchell, Ontario plant with the ultimate permanent loss of 35,000 hooks. From here, proving that in life, timing is everything these 35,000 hogs very quickly were taken up by:

One Conestoga Meat Packers (the producer owned packer in Ontario) that was in the process of expanding from a single shift of 15,000 hogs per week to a second shift of approximately 30,000 per week. They had been working their way into this since the New Year expecting perhaps as long as a year and half to fully ramp up. With the sudden turn of events with Quality that plan, got fast-forwarded.

Two Sofina/Fearmans (the largest packer in Ontario) moved to running at five days rather than four (that it had been doing for a number of years) and from 8,000 to 9,000 head per day.

Three the bulk of the balance of the Quality supply has been taken up by Olymel out of Quebec moving from their average of approximately 15,000 per week from Ontario to in excess of 20,000 per week.

All this happened amazingly with an every rising price due to amongst other factors the PEDv shortened supply. So not only did the Ontario pork industry appear to dodge a major bullet it appeared to be dodged with little to no consequences to being able to get your hog processed.

Now the worm has turned. We are without 23,000+ shackles and without any good alternatives. Now I appreciate when forecasters are looking a packer capacity “conventional wisdom” adds up reported capacities of various plants. Well one common denominator is packers have no room for extra hogs until they can buy them to advantage. Then magically they seem to be able to find room and we get to see capitalism in a commodity business at its most Darwinian. Producers I have talked to suggest anywhere from fifty to hundred dollar lower receipts per hog and this was from probably at best a breakeven situation. So tremendous losses and that’s if you’re “lucky” enough to move your hogs. If you’re able to find a buyer, the next challenge is to find a truck. With the greater distances to find a market and the extra time involved with a possible border crossing trucking capacity is becoming greatly strained. Once again, as Jim Long has pointed out you have to be extremely tough to be a pig farmer. Also, a cautionary tale as to what things can look like should the North American industry overwhelm packer chain capacity on a grander scale. Here is to a quick resolution to the Olymel strike and better days ahead.

On a completely different note, my Mother passed away on March 17th (St. Patrick’s Day) at age ninety. I have concluded we delude ourselves that at whatever age we are prepared for the loss of a parent. It leaves a big hole that I expect never gets completely filled. As I reflected on the many gifts and lessons from my Mother I present this bit from her eulogy for your consideration in our fast-paced world that sometimes seems all too caught up with commerce.

Manners were extremely important to my Mother. She certainly wasn't one to stand on form and wasn't strict in any real meaning of the word but had an inherent sense of how things were to be done and the great importance of instilling this in her children. This went beyond the prerequisite please and thank you. I have a very strong memory of riding the bus in London. Looking back now don't know that we were on public transit because we needed to. Mother had a car the old Blue Goose and later 59 Plymouth. Also, have no particular memory of anywhere we were going.

However, it was clear we were on a bus for lessons for me. I don't know if she organized to be on it when it would be very full but I was clearly instructed were a female of pretty much any age to get on the bus and there was no place to sit. Immediately to jump up and with little to no comment give them your seat. The same applied to an elderly man. Amazingly, she seemed to be able to explain the importance of this once and after that should you lapse she didn't elbow you.

She just looked at you and you were levitated out of your bus seat. Also although perhaps old fashioned or quaint now you must always walk on the outside to the curb with any female anywhere without fail. In addition, as times change my Mother took a dim view to the wearing of hats in a building other than perhaps a barn. Similarly the not wearing of a shirt indoors. Again, she wasn't strict about it that you could do what you wanted but if you were coming to her table, you wouldn't be fed. Moreover, it was my Mother's table. She was a marvelous cook and took pleasure in it for family and friends. I have inherited a great fondness for pie and never saw a butter tart I didn't like from my Father but probably really, because my Mother was a superb baker. I digress... Manners were important to Mother and I've come to appreciate that to be gentlemanly, mannerly can carry you a long way in this world. I will certainly now strive to do better.

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