When demand outstrips supply in most cases it is a good problem to have, if there is a way to increase that supply. In the case of a pork processor in Manitoba selling chilled pork to willing consumers in Japan and China, the company is taking things in its own hands, but will need the entire industry, rural Manitoba, government and the construction trades to pull together.
Claude Vielfaure, the president of HyLife says a planned expansion of the company’s Integrated Pork Production and Processing System will help meet a growing international demand for pork, especially in Japan and China.
HyLife markets pork products to over 23 countries with its more prominent markets being China, Japan, Canada, the U.S. and Mexico.
Recently, HyLife announced plans to expand and modernize its Neepawa, MB pork processing plant and add supporting production infrastructure including a new feed mill and new finishing barns to increase output to meet a growing demand for product.
Expanding the processing plant may be the easiest part, but adding the supporting production infrastructure, a new feed mill and new finishing barns maybe be a little more difficult when considering the hog expansion ban the previous NDP government put in place in 2011.
Vielfaure says the company has grown its markets all over the world, especially in Japan and China and is confident the demand for pork and protein around the world will continue to grow as the population grows creating opportunity for protein producers.
Dennis Hodgkinson, the president of DGH Engineering, a Manitoba firm says the construction of swine production facilities requires considerably more up front planning than 10 years ago.
DGH Engineering, on behalf of Manitoba Pork, has developed cost estimates for the construction of new hog production facilities.
The estimates indicate new facilities, built from scratch on vacant land, will cost $500 to $520 per pig place, compared to about $300 in 2001.
Hodgkinson says in addition to the increased costs, producers considering new construction must navigate a complex approval process.
“Back when I started in this industry you could literally plan a barn one week and be under construction the next and people did that. That’s not the reality today. Right now people need to be thinking a year in advance. They need to be planning now what they hope to do next year.
“A realistic time line is, from the start of the planning process to being able to put a shovel in the ground, people need to think in terms of eight months,” said Hodgkinson. “For next spring construction, we’re already crowding the limits here in terms of being in time. That’s a new reality for sure.”
He says people in Manitoba must realize that the building permit requires pre-engineer work and to get engineer plans and file for permits in that regard.
“You need to make your decisions on exactly what you’re going to do, get your material list together, determine your costs, and ship a plan out for tender if you’re entertaining bids from contractors which all relate to preplanning and going forward.”
Hodgkinson says in terms of costs, it is possible to be economical but producers are in a position where they pretty much have to accept what’s available in the market place. With costs of finisher pig barn $500 – $520 dollars per pig place, considerably higher than the approximately $300 per place in 2001, where are those extra costs coming from?
Some increases in material costs, a natural sort of inflation and some of the costs are a little cyclical. Commodity prices, steel’s up and down, wood’s up and down but there’s been a general trend.
“Labour costs have gone up I think a fair bit over that time period,” said Hodgkinson. “Once upon a time we had an extremely favourable conditions for hiring cheap construction labour in the barn building industry but those people have migrated out of that industry back into commercial construction and so the specialization for some of these rural crews that built a lot of barns has been diluted a bit and so we’ve seen a significant increase in labour costs.”
There’s been significant creep in the basic requirements, changes in building codes boosting costs by about 15 per cent related just to mandated code changes with the adoption of the Manitoba Farm Building Code.
“We’ve also seen a steady migration in the demands placed on the industry to satisfy our environmental legislation and there’s been a significant increase in costs associated with that,” he said. “While our meat processors would like to see a cost somewhere in the order of $400 per pig place, that’s hard to achieve. Some producers, with a do-it-yourself approach, might be able to time those costs but $500 is probably where we are.” •
— By Harry Siemens
