Despite the crisis in the hog industry, the Olymel pork processing plant in Red Deer appears to be weathering the storm. The plant, which opened in 2001, currently has 1,328 people on the payroll and is operating at close to capacity, processing close to 45,000 pigs a week.
Problems in the production side of the industry are not currently affecting the plant, but may become a factor in the future.
“Right now our numbers are holding fairly well, but we’re certainly concerned,” said Don Brookbank, vice-president of procurement for Western Canada. He believes the federal hog transition program will have an effect on the number of hogs processed, even though the plant has been able to keep the numbers up due to the influx of hogs from Saskatchewan.
Brookbank said most of the pigs processed at Olymel plant are raised in Alberta, but a number of Saskatchewan hogs have always been processed at the plant. More pigs are arriving from that province due to the challenges in the Saskatchewan pork industry. Brookbank said that reports have indicated that Saskatchewan’s hog inventory has been reduced by 42 per cent since 2007. By contrast, Alberta’s hog inventory has been reduced by 26 per cent since 2007, according to Canadian hog inventory figures from January 2010.
“It’s been a challenge to keep our number where it is, for sure,” said Brookbank. “We’re certainly concerned about the state of the production sector.”
The Olymel plant processes a wide variety of cuts of meat, including boneless loins and various trims. The plant is able to cut meats to accommodate specifications for markets around the world. Almost every part of the carcass that can be consumed is used, and there is no waste of any significance. “We value-add fresh meat to the maximum level that we can and we have done so since we came here,” said Brookbank. “We’ve invested $75 million since we came here to insure that we are able to add value to fresh pork.”
The plant does not do any cooking in Red Deer, but has
processing for bacon in other locations.
The Olymel plant and the Maple Leaf plant in Brandon, Manitoba are the two largest pork-processing plants in Canada. Olymel, which is based in Quebec, has a number of poultry and pork processing operations in Eastern Canada. The Red Deer plant is its sole operation in the West.
In its restructuring model, Alberta Pork has proposed the idea of a producer-owned plant or co-operative. Brookbank says Olymel is interested.
“It’s an integrated model. We are supportive of this and would be prepared to enter that sort of arrangement. The Western Pork Investment Corporation is spearheading this for producers and we’ve met with them.”
A similar model has been used by a number of competitors worldwide and Brookbank says it’s a model that could help with the long-term sustainability of the industry.
Labour supply improves
The Red Deer Olymel plant is capable of running two full shifts and did so in 2005-2006, processing up to 60,000 hogs a week. “Back then we could get pigs, but we had a hard time getting people, as everyone in Alberta did back then. We eventually had to discontinue the second shift,” said Brookbank. The plant had about 1,900 employees before they discontinued the second shift in 2006.
The recession has improved availability of labour.
“We’re in pretty good shape right now. With the economic downturn in Alberta, our turnover has been zip,” Brookbank said.
About 20 per cent of the plant’s employees are on the foreign worker program, and many past foreign workers have gone on to become landed immigrants. Most of the foreign workers have come from the Philippines, El Salvador and Ukraine.
The plant is entirely owned by Olymel, except for the resting areas and barns, which are owned by the Western Hog Exchange. The exchange has three-way contracts with Olymel and producers, and work with the producers to get the hogs to the plant. “They work very closely with us in the field,” said Brookbank. “They organize all of the deliveries to the plant with a sophisticated online booking system.”
About half of the hogs processed at the Olymel Red Deer plant are exported to international markets, which include the United States, Japan, China, Korea, Russia, Hong Kong, Mexico, the Philippines, Australia, Taiwan and New Zealand. The rest of the pork is consumed domestically.
Looking to the future
The H1N1 crisis was a very difficult time for all involved in the pork industry, especially since it arrived during the economic downturn, where there were numerous complications with countries and their credit, said Brookbank. “There was difficulty on that side, then H1N1 definitely affected our buyers and the consumption in the countries that we ship to,” he said.
Brookbank is aware of the Alberta Pork brand development strategy, and is interested in seeing what becomes of it, even though he says there are some challenges in this approach. He also says there are numerous challenges for Canadian producers due to some factors in the international marketplace.
Other problems are due to high feed costs. Brookbank said that he was happy to see the Alberta Livestock and Meat Agency’s strategy and funding announcement of $8 million to help study the feed market.
“We’re a world market. We can’t dig the producers out of the problem. We have this huge neighbour below us, and Canada has taken a reduction in their hog supply. In my opinion, we still need to see a reduction in the American numbers for the good of the North American market.”
Brookbank noted thatCanada took the reductions in numbers ahead of the United States, and the Americans will be the last to reduce. “They’ve made some adjustments and we’ll see how that goes this summer.”