The Quebec-based co-operative announced Tuesday it will close its Winnipeg fluid milk plant effective Sept. 24 — affecting 48 jobs — and transfer that work to plants at Edmonton, Victoria and Burnaby.

“Unfortunately, the level of investment required to maintain the plant’s competitiveness in the coming years was becoming too high,” Agropur CEO Emile Cordeau said in a release.

“We are making this strategic decision to optimize our consumer milk network in Western Canada. This will help simplify our business model and ensure our competitiveness.”

The Winnipeg, Edmonton and Burnaby plants all came to Agropur in a 2014 deal to buy Sobeys’ former Canada Safeway milk processing facilities, following Sobeys’ takeover of Canada Safeway’s stores and operations in Western Canada in 2013.

The deal to buy the plants included a supply agreement to produce milk for the retailer’s Lucerne brand under license. An Agropur representative wasn’t immediately available Tuesday to say how the Winnipeg plant’s closure will affect the Lucerne fluid milk supply chain.

Dairy Farmers of Manitoba general manager Brent Achtemichuk said via email the organization considers the plant closure “a loss for our province” but understands Agropur “had to make a business decision to consolidate operations in Western Canada.”

All dairy farmers in Western Canada share revenue collected from processing plants in the region, he said, which in turn “helps to mitigate the impact of a plant closure.”

Manitoba’s dairy farmers have enough processing capacity for milk produced in the province at this time, but “we continue to encourage processors to invest in our province,” he said.

As of last December, Manitoba’s 259 dairy farms milk about 47,000 cows in all, producing 409 million litres in the 2019-20 dairy year, supplying the Agropur facility and 10 other Manitoba processing plants.

Agropur said Tuesday it’s “aware of the impact this decision will have” and affected employees “will be able to take advantage of available programs, including employment opportunities at other Agropur sites, severance packages, and the employee and family assistance program.” — Glacier FarmMedia Network

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Nova Scotia-based Empire — whose stores operate under brands including Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, and Lawton’s — on Thursday announced what it called “Project Sunrise,” described as a “significant cost reduction.”

The $500 million in annualized cost savings is expected to come from “collapsing multiple, independent regions into a largely national, functionally-led structure” led by a reorganized management.

The new structure, Empire said, “will simplify the way the company conducts business” but will also result in a “reduced workforce,” affecting “office staff only” rather than front-line store staff or distribution centres.

Also, at the supply end, the company said it will be “simplifying” how it “collaborates with vendors while leveraging its purchasing scale as a $24 billion national company.”

“We have an aggressive goal to transform our organization, better serve our customers, empower our employees and assuredly move from defense to offense in the market,” CEO Michael Medline said in the company’s release Thursday.

“The future Sobeys will operate with a simpler, leaner structure, more efficient core processes and tools and will better leverage its $24 billion national scale.”

The company described its three-year plan as “a clear response to Empire’s business performance over the past 18 months.”

Medline, releasing the company’s third-quarter results in March, said the results “are not where they need to be,” posting net earnings (net of non-controlling interest) of $30.5 million on $5.89 billion in sales, compared to a $1.37 billion loss on $6.03 billion in the year-earlier period.

In its year-end ledger last June, Empire booked a net loss of $2.13 billion on $24.62 billion in sales, compared to $419 million in net earnings on $23.93 billion in fiscal 2015.

The company last June cited “significant integration, operational and reorganizational challenges” coming out of its 2013 takeover of Canada Safeway, as well as a “difficult economic environment mainly in the Alberta and Saskatchewan markets.”

Medline said Thursday the company “will focus on making these bold changes while at the same time ensuring we stabilize performance, particularly in Western Canada.”

One-time costs for “severance, relocation, retraining, minor systems development, and third-party support” are expected to appear in the company’s ledgers starting in its fourth fiscal quarter this summer, with the “majority” expensed in the first half of fiscal 2018.

More specifics on those one-time costs are expected next month.

Medline said Empire plans on “balancing potential risk to our unique Quebec and discount businesses by keeping them distinct, while harmonizing the way they operate nationally.”

Further, he said, the company will be “ensuring focus on the core grocery business by separating out related businesses, like pharmacy and fuel, into a distinct functional structure.” — AGCanada.com Network

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SunGold Specialty Meats’ Lamb Tonight line of meats began selling at Sobeys, Safeway, and Thrifty Foods stores across Canada earlier this summer. It features 10 ready-to-cook lamb products, including lamb burgers, sausages, meatballs, kabobs, and seasoned ground lamb.

But along with making the lamb easy to use and attractive for consumers, it also wanted to share the story of its producers, so the labels contain pictures and background on some of their lamb-producing families.

Polson’s Farm is one of the featured operations, and Nathanael Polson has already lots of feedback.

“I have an aunt in Toronto, and she goes to Sobeys and sees the lamb with our picture on it,” said Polson, who’s breeding 1,600 ewes at his family operation near Tees. “So she tells her friends. It’s a connection, and it can snowball. We’ve had extended family even in Red Deer see it, and all of a sudden, it gives more ownership to what we do.

“People today seem to need a story to buy.”

SunGold sees Lamb Tonight as a good news story all around.

“We’re taking underutilized cuts and creating more value out of the carcass, which is good, not just for SunGold, but also for producers,” said general manager Miles Kliner. “The reality is we need lambs to be successful, and producers need to make a living to make more lambs.”

The Lamb Tonight line also features innovative packaging, made possible by a $1.7-million investment in both mixing and packaging equipment for the Innisfail processing plant. Those improvements were completed in May, adding 30 new jobs over the last few months.

“This project represents another significant investment by the shareholders into the lamb industry,” said Dwayne Beaton, SunGold CEO. “It also provides new retail packing options for our current fresh lamb meat and offal business.”

“The equipment allows us several new options for pre-cut, ready-to-sell product for the retail environment that we believe will help grow the lamb category, to better satisfy growing demand,” said Kliner, adding work is underway to find new ways to utilize culls.

Because of the lingering wartime stigma attached to the term mutton, processing older sheep has often been an expense item for producers rather than a return. So with a marketing plan and a more palatable term, the introduction of some innovative sheep meat products could be down the road as well.

Interacting with consumers is a priority for Kliner, and not a week has gone by since Lamb Tonight launched in June that he hasn’t personally dealt with at least one call or inquiry.

“A lot of them are technical in nature. The No. 1 question is whether the product is pork free, since it seems many people have severe pork allergies, and a lot of products use hog casings. But we use all collagen-derived bovine casings, so we can maintain our halal certification.”

There are also no fillers or preservatives in the Lamb Tonight products.

Sales have increased since the product launch, but has been modest so far. However, Kliner said he’s confident the product quality and marketing effort, including producer stories, will drive demand higher.

“I’m excited. We see Lamb Tonight products as a gateway for people who haven’t tried lamb before,” he said. “We wanted to provide consumers with a more convenient lamb product. These value-added items offer a lower price point compared to lamb cuts.

“They’re simple to cook. We’ve had tremendous feedback. People are looking for different choices.”

On the farm front, Nathanael Polson doesn’t mind the trappings of his retail ‘fame.’

“Value added is a good thing. It helps the bottom line,” he said. “Margins are so small for both producing and packing lamb. We trust if they’re making money, we make more money.”

Stories about 12 Alberta lamb producers can be found at lambtonight.com.

Lamb consumption: small but growing

Canadians only eat, on average, about a kilogram of lamb per year — a small fraction compared to their consumption of pork, beef, or chicken.

But despite that, the country’s sheep producers can’t supply the market, with 50 to 60 per cent of lamb being imported every year, mostly from New Zealand, Australia and the U.S.

But SunGold says lamb is the only red meat protein category growing in per capita consumption in Canada over the past decade. Also, Canadians eat more lamb per capita than Americans.

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The grocer members of the Retail Council of Canada (RCC), which include Loblaw, Sobeys/Safeway, Metro and Wal-Mart Canada, said Friday they are “voluntarily committing to the objective of purchasing cage-free eggs by the end of 2025.”

However, David Wilkes, senior vice-president for government relations and the grocery division at RCC, said in a release that the grocers’ commitment is “made recognizing the restrictions created by Canada’s supply management system.”

The cage-free timeline, he said, thus “will have to be managed in the context of availability of supply within the domestic market.”

The RCC also noted the National Farm Animal Care Council (NFACC) expects to release a new Canadian code of practice for layer hens later this year.

When released, NFACC’s layer hen code is expected to guide Canada’s egg sector on various aspects of farm management and welfare practices, by way of “recommendations and requirements for housing, care, transportation, processing and other animal husbandry practices,” the RCC said.

The RCC, Wilkes said, “remains firmly committed to the NFACC process and will work with other participants to not only advance our voluntary commitment to move to cage-free environments by the end of 2025, but also by ensuring suppliers adhere to the code’s recommendations.”

Egg Farmers of Canada (EFC) last month announced a transition plan to move all Canadian layer hens away from conventional battery cage-style housing into “enriched housing, free-run, aviary or free-range” by 2036 — “assuming the current market conditions prevail.”

Without mentioning the RCC announcement, the national egg producer group said in a statement Friday it “look(s) forward to working with retailers to ensure high-quality Canadian eggs remain on grocery shelves everywhere, and we will continue to work with our supply chain to do so and to align our approaches as much as possible.”

EFC on Friday also noted its members have long supported and taken part in the NFACC process and brought last month’s industry plan forward for the NFACC review of the egg industry code or practice.

“We believe a code that takes into account what the egg industry analyzed, developed and proposed to be realistic will be stronger, and a tremendous framework on which to make many other enhancements to our industry for years to come,” EFC said.

EFC also said it’s committed to research on hen housing systems as well as consumer preferences, and to make sure decisions on industry practices are “evidence-based.”

Doing so, the egg producer group said, “ensures choice and price stability to shoppers while protecting the entire supply chain from shortages or the production of eggs for which there are no market.”

EFC also reiterated Friday that the various layer hen housing systems in use today “all have trade-offs across a host of sustainability factors including animal health and well-being, environment, food safety, worker health and safety and food affordability.”

Various non-government animal welfare groups on Friday hailed the RCC’s move, noting RCC grocer members account for 90 per cent of grocery store sales in Canada.

World Animal Protection Canada executive director Josey Kitson said in a separate release that the council’s decision “will have a transformative effect on the way that laying hens are housed in Canada.”

Nathan Runkle, president of the Canadian arm of Mercy for Animals, in another release, called RCC’s pledge “a watershed moment for farmed animals and caring consumers in Canada” and said it marks a “tipping point” for the egg sector.

“Any food company that has not yet adopted a cage-free egg policy is simply out of step with consumer expectations and business trends.”

Major quick-service restaurant chains operating in Canada have made announcements similar to the RCC’s in recent months, varying in the level of housing they expect for layer hens.

A+W said earlier this month it plans to get all its eggs from open-barn suppliers within two years. The owner of Tim Hortons and Burger King said last month it would take the chains’ North American egg supplies cage-free by 2025, and McDonald’s last fall pledged to shift to free-run eggs in the same time period. –– AGCanada.com Network

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The Quebec-based co-op on Wednesday booked net earnings of $47.5 million on sales of $5.875 billion in its fiscal year ending Oct. 31, 2015, up from $38.31 million on $4.662 billion in fiscal 2014.

The company also declared a deep cut in its patronage dividends, at $40.6 million for 2015, down from $92.3 million the previous year and $110.5 million in 2013.

The company, as part of the “Agropur 2015” strategic review it launched in 2012, set a goal that year of “generating $75 million in increased earnings before interest, income taxes, depreciation, amortization and joint ventures” (EBITDA) over 2013 to 2015.

In its 2015 annual report this week, the company instead described its 2012 goal as being “to reduce our costs by $75 million by 2015,” and added it has “exceeded that objective, with savings on an annualized basis of $84 million.”

In its year-end release Wednesday, the company said that for 2016, it has launched a new “three-year, $100 million cost-reduction program.”

Agropur, whose brands include Natrel, Quebon and Island Farms, didn’t specify Wednesday what it plans to do to meet the deeper cost-cutting target.

CEO Robert Coallier said in the annual report, however, that the company “will seek further synergies.”

Agropur in 2015 closed the deals it announced the previous year, buying the assets of New Brunswick’s Northumberland dairy co-operative, and Sobeys’ former Canada Safeway milk processing plants.

“The addition of the five acquired plants gives (Agropur) a national footprint,” the company said Wednesday.

During 2015, the co-op announced plans to shut an aging Montreal-area fluid milk processing plant at Saint-Bruno-de-Montarville by late May this year.

Agropur also said in November it will close the former Grace-Mar Dairy plant at Chilliwack, B.C. by late October this year, upgrade the former Safeway plant at Burnaby and shift its B.C. fluid milk processing there.

The company’s B.C.-based Island Farms arm also announced in October it would discontinue its yogurt line due to “declining” sales in recent years.

On the investment side in 2015, Coallier noted the company also improved its Oka cheese production capacity and completed major upgrades on plants at Lethbridge, Alta. and St-Hyacinthe, Que. plants, plus an aseptic product line at Bedford, N.S.

Agropur, he said, also completed the first phase of a project to standardize its computer platforms and processes under “a single solution.”

Agropur on Wednesday also noted its U.S. operations have contributed a “significantly increased proportion of total revenues” in 2015, at 44 per cent, up from 36 per cent the previous year.

In its U.S. plants, Coallier said, Agropur has increased its feta cheese capacity by 30 per cent and tripled its mozzarella capacity. — AGCanada.com Network

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Quebec-based Agropur took over the Burnaby plant, along with facilities in Edmonton and Winnipeg, when it bought the former Canada Safeway milk processing plants from Sobeys last year.

Closing the Chilliwack plant will affect 42 Agropur employees, while “additional investments” will need to be made at Burnaby to handle the added production, the company said.

The plant closure is expected to be wrapped up by late October next year. Affected staff will get opportunities to apply for “equivalent” positions at other Agropur sites, the company said.

The decision follows Agropur’s “ongoing” review of its processing operations, CEO Robert Coallier said in a release Wednesday. “Following the recent acquisition of the Burnaby facility, Agropur has decided to consolidate its operations and redirect production to its two other plants in British Columbia.”

Agropur’s deal with Sobeys for the dairy plants last year included a new “long-term” agreement to supply the Sobeys, IGA and Safeway retail chains with milk, yogurt and ice cream, and to use the Safeway chain’s Lucerne brand and trademarks under license.

“The decision to close Chilliwack and transfer its volume to our existing B.C. manufacturing facilities was a difficult one,” Agropur Canada president Serge Paquette said in the same release. “It is in no way reflective of the hard work and commitment of our employees at Chilliwack.”

Agropur, whose brands include Natrel, Quebon and Island Farms, has operated in Chilliwack since 1998, when it bought the former Grace-Mar Dairy plant. It also bought Chilliwack-based ice cream maker Coast Mountain Dairy in 2013.

In keeping with its ongoing review, Agropur has been in both cost-containment and capacity-boosting mode in recent years, spending over $100 million last year on upgrades at plants in Alberta and Quebec, plus new lab and head office space at Longueuil, Que.

The company also closed an older Montreal-area milk plant and announced last month its B.C.-based Island Farms arm would discontinue its yogurt line due to “declining” sales in recent years.

Along with the former Safeway plants in the West, the company’s acquisitions in the past couple of years have included Northumberland Dairy Co-operative, Dairytown Products, Farmers Co-operative Dairy, Central Dairies and Cook’s Dairy, all in Atlantic Canada. — AGCanada.com Network

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