Genesus Global Market Report: Canada - a strange marriage

The ties that bind. The marriage I am referring to is the increasingly strong one between the Quebec and Ontario pork industries.
calendar icon 16 February 2018
clock icon 5 minute read

by Bob Fraser – Sales & Service, Genesus Ontario
[email protected]

Quebec and Ontario may be separated by language and culture but bound by history and geography, Lower Canada and Upper Canada. Now in the last number of years some specific circumstances (if there is such thing) have conspired to bring the two industries increasingly together. Lets take a look at some of it.

Kevin Grier, Market Analysis and Consulting Inc. in his latest Canadian Pork Market Report does a nice job of refreshing our memory on the big one for Ontario and giving it some context. We are approaching the fourth anniversary of when Quality Meat Packers filed for creditor protection on April 4, 2014. Sideswiping a lot of producers for a week’s worth of market hogs as they exited stage right. The Toronto Quality plant had a capacity of about 30,000 per week. The Quality owned Great Lakes plant in Mitchel could kill about 6,500. As can be imagined this blew a big and immediate hole in the side of the Ontario pork industry’s boat. There was much scrambling to Quebec, Manitoba and the U.S. with producers doing basically whatever it took to get their hogs slaughtered. A strike at the Olymel plant in Quebec in March of 2015 and production problems with the main Olymel plant taking Ontario hogs later the same year further exasperated a difficult situation. However as the smoke has begun to clear we see the Ontario plant Sofina with a steady base of slaughter running at 44,000 head and greatly aiding their profitability. The Ontario producer owned plant Conestoga has continued to expand to its present level of over 33,000 head (with further potential expansion ongoing). But perhaps most importantly Quebec is now on average taking 28 -30,000 head per week, the bulk going to Olymel but Du Breton a Quebec niche packer also being an important participant.

Ontario market hogs to Quebec is not a new phenomenon but prior to the Quality closing felt like almost an after thought, a irritant to Ontario packers as they couldn’t (at least easily) buy out of Quebec and accusations of “cherry picking” and not fully committed. Now with perhaps necessity being the mother of invention this marriage appears strong and likely to get stronger. Quebec packers need hogs and Ontario producers need shackle space. Grier estimates that Ontario hogs may now represent up to 25% of Olymel’s kill and a similar percentage of Breton’s kill. These are not inconsequential percentages that are easily replaced or walked away from, ties that bind.

The two slides above and below courtesy of Ontario Pork Marketing Division nicely show the Ontario market hog production against the Ontario packing capacity since 2007 and the requirement for another significant outlet after the Quality closing. The second slide is showing how Quebec is now accounting for 26% of the Ontario kill.

These are not the only increasing links between Quebec and Ontario.

F.Menard Inc. a large Quebec integrator with a significant sow base in Quebec and its own Quebec packing plant buys all the SEWs from ten thousand plus Ontario sows every week and has done so for ten plus years

Agri-Marche another large Quebec integrator and significant shareholder in Olymel has a feed mill in Ontario along with sow/hog operations.
Isoporc a further Quebec integrator has in the past contracted significant flows of SEWs from Ontario

Now a large Ontario producer sources significant flows of SEWs from Quebec into Ontario to go back to Quebec as market hogs
For a considerable period (since mid 1990’s) of time there has been a lively spot market in feeder pigs and SEWs as supply and demand dictated between the two provinces. Particularly from Ontario in Quebec in the summer as their pricing method based on cash rather futures presented better opportunities than the Midwest for sow producers.

Gestal a Quebec innovator and manufacturer of electronic sow feeding equipment and ESF systems is becoming an increasing presence in Ontario.

Groupe Cérès a Quebec company offering consulting services in swine production, sales of genetic products and sales of pig feeds has made strides into Ontario in the last number of years, now owning a feed mill in Ontario.

Similarly Demeter a Quebec veterinary organization have seized on competitive opportunities they saw to be a factor in Ontario in veterinary services and pharmaceuticals.

My experience in Quebec as they have looked to some of the same questions and problems as Ontario they seemingly in many instances have come up with different answers. Not sure who necessarily is right or wrong or why the differences but perhaps as culturally Quebec has looked more to Europe and Ontario to the US industry for guidance different solutions have been garnered??

Now rather than “vivre la difference” both provinces might do well to look to how they together tackle their problems and challenges to mutual gain and a “stronger marriage”???

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