Olymel’s decision to shut production at six sow barns in Western Canada has sent a shock through the entire industry, says the manager of Western Hog Exchange.
Early in the afternoon of Friday, May 26, Olymel announced it plans to wind down operations at six sow barns with a net impact of reducing by 200,000 the number of hogs its farms ship to its Red Deer packing plant.
Along with the loss of jobs to the people working in those barns, that puts further pressure on a plant that is already short on supply, said Brent Bushell, executive director for WHE.
It means the plant will receive fewer than 40,000 hogs per week when it should be processing 45,000 to remain efficient and competitive, Bushel said shortly after the announcement.
“This is the perfect storm for all of the wrong reasons,” he said.
Like many other commercial hog producers in Alberta and Saskatchewan, Olymel had cut costs and improved margins by shipping weaner pigs to the United States for finishing and processing.
Those markets have bottomed out, so farrow-to-wean producers who do not have good contracts with finishers, are at risk of being hit by the same torpedo, said Bushell.
High feed costs and a crash in the value of isoweans shipped to the United States have hit the industry at the start of the season when pork producers would normally expect higher prices for their pigs, said Bushell.
And while those factors are at the tip of the torpedo, it has gained momentum from industry partners’ failure to sit down and work out a system through which all three players – producers, processors and retailers – agree to share the risks and the rewards.
Producers should be getting 90 per cent of the cutout across the board, while retailers should be returning a larger share of their profits to the packers who supply them.
Bushell said the industry’s failure to work together in addressing its own shortcomings became clear to him eight years ago, shortly after he joined WHE. He said he could see the torpedo coming but was unable to find anyone willing or able to turn the ship.
“I don’t think this is going to kill the Canadian hog industry, but it is going to kill a lot of production,” said Bushell.
Alastair Bratton, an Alberta-based production manager for Olymel, said he was unable to comment about the impact on the day of the announcement. Production manager Kevin Brooks, based in Humboldt, Sask., said he was on days off at the time and would not likely know the impact on his farms until the following Monday. •
— By Brenda Kossowan