Canadian pork processing plants operating below capacity
From the Western Producer
Canadian pork packing plants have lost 150,000 head per week, which has resulted in plant closures and consolidation. Prairie packers were running at 95 percent capacity in 2010, but that fell to barely 80 percent last year. As well, five owners control 40 percent of sows, and 40 percent of slaughter on the Prairies is vertically integrated, which means the pigs are packer owned.
Last year’s closure of Quality Meat Packers Ltd. in Toronto after 100 years of operation had a major impact. It handled 20,000 hogs a week and employed more than 700 people. There is now one less bidder in the marketplace. Some of those hogs are killed in Quebec while others are shipped to Swift & Co. in Kentucky. Quebec’s packers are running at about 75 percent.
“We still have a capacity situation in Ontario where we need to find a home for at least 20,000 pigs a week,” said market analyst Kevin Grier. “If Quality didn’t go out of business, Ontario would have been a hotbed of competition at the packer level because Quebec still needed those hogs.”
Canada is not expanding its slaughter capacity because of the fewer available hogs, but the U.S. is likely to grow by five to six percent this year. Part of the expansion is to make up for last year’s losses, when porcine epidemic diarrhea killed seven million piglets.
Another problem for Canada’s pork packing sector is higher operating costs, which are typically $5 to $10 per head more than in the U.S. Nevertheless, Canada has maintained a strong presence in the world market and is the third largest exporter behind the U.S. and the European Union.
The industry is often criticized for heavy reliance on the U.S. market, but only 30 percent of Canadian pork goes there. At one time, it was 50 percent.