April 15, 2014
Canada''s Quality Meat Packers seek creditor protection
Driven by soaring hog prices, Quality Meat Packers and Toronto Abattoirs Ltd., which employ 750 people at a downtown Toronto abattoir, say they will continue their operations and seek restructuring alternatives under the Bankruptcy and Insolvency Act.
Hog prices have soared by about 35% in the past year as a piglet-killing virus has reduced the size of the US herd by more than 3%. Porcine epidemic diarrhoea (PED) has crossed the border and been found in dozens of Canadian farms and handling facilities. The virus does not affect human health or food safety, but limits the number of pigs going to market. This means processors are forced to pay more for the animals ahead of the summer barbeque season.
"It''s the big volatility in pork prices, hog prices that the market''s experiencing right now. That''s been the management challenge," said Jim Gracie, marketing vice-president of Quality Meat, in an interview.
Quality Meat Packers has been in business since 1931 and produces fresh pork for domestic and international markets. It is one of the province''s largest pork processors and one of Ontario''s four federally inspected plants, which are licensed to export. The Tecumseth Street plant is one of the province''s oldest and most inefficient hog processors, a source said. Like other pork makers, it is unable to pass on high costs to consumers, who can easily choose chicken or other protein to keep their grocery bills down.
Mark Cripps, a spokesman for Ontario''s Ministry of Food and Agriculture, said Quality Meat''s move was a difficult one that will have an impact on the employees and their families.
In the past few years, the pork industry has faced several hurdles, including: (a) a strong Canadian dollar that made exports expensive and hurt international sales; (b) country of origin labelling rules in the United States that hit exports; (c) a 2009 ban on pork sales to China, Russia and several other countries amid an outbreak of H1N1 flu; (d) a drought in the US in 2011 and 2012 that drove up feed prices and caused farmers to cull their herds; (e) inflation-causing competition from the biofuel sector for corn and other grains that animals eat; (f) the PED virus, which has no cure and is spread by contact with faeces. Its spread has been linked to dirty transport trucks, boots and feed.
Between 2006 and 2013, the number of Canadian pig farms fell by 400 to 610. And the number of pigs sent to market fell by more than 10%, between 2006 and 2012.
Ron Davidson of the Canadian Meat Council said prices meat processors pay for animals are set in the US, because much of the Canadian herd is exported. At the same time, the meat processors face stiff competition from imported food from Europe and the US.