Canada – A Strange Marriage
Bob Fraser – Sales & Service, Genesus Ontario
The ties that bind. The marriage I am referring to is the increasingly strong one between the Quebec and Ontario pork industries. 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.
This post was written by Genesus