Maple Leaf Foods will retain a 19.9 per cent ownership position in the newly formed pork company, the name of which will be announced in the coming months, the company said.

Maple Leaf will join a host of companies that have demerged their businesses to streamline operations and realize more value.

Globally, several companies including most recently chemical maker DuPont have moved to break up their businesses in an attempt to increase profitability and revenue growth.

The spinoff company will enter into a pork supply agreement with Maple Leaf Foods and will continue to supply pork at market prices to meet the needs of the prepared foods business.

Maple Leaf Foods will in turn provide the new company with brokerage services in North America, as well as certain other services.

The owner of Schneiders, a premium meat products brand, said its separation plan has the support of McCain Capital and the McCain family, which has the largest and controlling stake in Maple Leaf Foods.

Maple Leaf Foods will continue to be led by CEO Curtis Frank, while Dennis Organ, who headed the pork business, will become the CEO of the new company.

The separation plan, which has been approved by the board of directors, is expected to be completed in 2025.

Upon completion of the separation, existing Maple Leaf Foods shareholders are expected to receive an equal part of shares in the new pork company.

—Reporting for Reuters by Anuja Bharat Mistry in Bengaluru

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“Not only have we restored profitability, but the trend we see for the coming years is encouraging,” said Pascale Houle, Sollio’s CEO in a Feb. 29 news release.

Sollio’s food division, Olymel, saw the greatest turnaround in 2023, the company said. It ended the year with a surplus of $138.3 million after a loss of $446.1 million in 2022.

The company said it achieved this via improved performance in fresh pork, reduced slaughter volume, consolidating plants and distribution centres, disposing of “non-strategic assets,” recruiting foreign workers to offset local labour shortages and focusing on value-added products.

Resumption of exports in some markets also boosted profits, the company said in the news release.

In 2023, Olymel dialed back hog production in Alberta and Saskatchewan and shuttered several processing plants in Ontario and Quebec, including at Vallee-Jonction, Sainte-Hyacinthe and Princeville.

Sollio’s annual report indicated that the number of hogs slaughtered declined, as did market share in Quebec.

The company said it saw sales of about $4.71 billion in 2023, up from $4.60 billion in 2022, it said in its annual report.

Exports to China decreased, due to more value-added production, the report said. Volumes of chilled pork shipped to Japan declined slightly as well.

“The launch of these same products in Canada was a great success,” the report said.

In the west, the company said it benefited from full access to the Chinese market. This partially explained an increase in sales, it said.

Sollio reported record profits in its bacon sector, and a decline in its poultry sector.

Olymel’s market share for turkey declined in 2023, the report said. Bird quality has been an issue, the company said, including with cysts in male birds.

“It appears that the production volumes in 2024 will have a negative effect on our results, amid increased imports of turkey meat from Chile,” the annual report said.

Further processed poultry produced higher margins in 2023 compared to 2022, with higher selling prices offsetting lower volumes sold.

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Pork producers have been losing money as pig prices and consumer demand have struggled at a time of high costs for labor and other expenses.

Smithfield, owned by Hong Kong’s WH Group 0288.HK, said it will terminate employees who support its dealings with farms that raise hogs under production contracts. Layoffs may total about 70 employees, or up to one third of the 210 workers in Smithfield’s Utah hog production operations.

The contracts are with finishing farms that raise hogs to slaughter weight, Smithfield said in an email to Reuters on Wednesday, adding that it will continue to operate company-owned sow farms in Utah.

Analysts said pork producers need to cut the number of sows, or female pigs used to reproduce, to return to profitability more quickly.

“Our industry and company are experiencing historically challenging hog production market conditions,” Smithfield CEO Shane Smith said in a Tuesday statement.

Smithfield in October said it would shut a pork plant in Charlotte, North Carolina, after previously confirming it would permanently close 35 Missouri hog farm sites. Last year, the company said it would close a California plant and reduce its herd in the Western U.S.

Smithfield needs such cutbacks to remain competitive, Smith said. The company cited an “industry oversupply of pork, weaker consumer demand and high feed prices” as challenges, though futures prices for corn Cv1 used for livestock feed last month fell to their lowest level in nearly three years.

U.S. meat companies also grappled with excess chicken supplies this year, and face dwindling cattle inventories and a law requiring more space for livestock in California.

Tyson Foods TSN.N, the biggest U.S. meat company by sales, has shut chicken plants.

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La Broquerie, Man.-based HyLife announced last week it has bought a 75 per cent stake in Taylor Corp.’s Prime Pork, a packing and processing operation at Windom, Minnesota, about 200 km southwest of Minneapolis.

Taylor Corp. set up Prime Pork in 2016 at Windom’s former PM Beef packing plant, which had closed the previous year. The renovated plant now employs about 660 people and has capacity to process about 1.2 million hogs per year on a single shift, HyLife said.

The deal “will allow us to expand our operations into the United States” and will increase HyLife’s total processing capacity to 3.2 million hogs per year, HyLife CEO Grant Lazaruk said in a release May 22. The deal’s dollar figures weren’t released.

“Plants in both Canada and the U.S. will strengthen our supply chain, giving us further diversity in our operations to better serve our customers around the world,” Lazaruk said.

Specifically, combining the two operations for product flow from both the U.S. and Canada will allow for “additional marketing opportunity to customers who only carry pork products from either the U.S. or Canada,” Prime Pork said in a separate release.

Taylor’s Prime Pork and Comfrey Farm businesses also include hog farming operations, in which the company owns the pig inventory and contracts with third parties for barn facilities, feed and management.

Those contract operators today raise about 300,000 feeder hogs per year to market weight and Prime Pork sources other hogs from third party suppliers.

Privately held Taylor Corp. owns various agribusinesses as well as Minneapolis’ StarTribune newspaper and Minnesota’s NBA and WNBA basketball teams. “With this new partner and leadership, I am confident this agreement will be great for the community, employees and area producers,” Glen Taylor said in Prime Pork’s release.

“Prime Pork’s location in southern Minnesota provides an abundance of resources, securing hog supply and the other raw materials required to operate a processing facility efficiently.”

Manitoba hogs

HyLife also announced May 5 it had bought the hog farming operations of ProVista from its Manitoba owners, Harold and Arthur Rempel, for an undisclosed sum.

Steinbach, Man.-based ProVista is today billed as “one of Canada’s largest independent hog farming operations,” with hog production sites in Manitoba’s southeast and Red River Valley regions and in the RM of WestLake northwest of Portage la Prairie, as well as in southeastern Saskatchewan.

The assets going to HyLife in that deal include a boar stud operation and 37,000 sows in 12 sow barns, along with six nursery and six finishing barns producing up to a million hogs per year, employing 252 people.

The ProVista farms are “in close proximity to HyLife’s current operations,” HyLife said, allowing for “strategic synergies, as the newly acquired farms will be added to HyLife’s existing infrastructure.”

“We have a long working relationship with ProVista and look forward to building on all the hard work that they have done,” HyLife’s Lazaruk said May 5. “This acquisition enables HyLife to expand our production team and secure hog supply to facilitate future growth.”

“We are confident this sale represents an opportunity for our employees to grow with a global leader in the pork industry, and it fulfills our farming business aspirations,” the Rempels said in the same release.

The Rempels’ other businesses include Proline Pork Marketing, Horizon Livestock and Poultry Supply, ProVista Feeds, PVS Transport and Quarry Oaks Golf Course.

HyLife has been in aggressive expansion mode in recent years, expanding its hog processing plants at Neepawa, Man. and at Salvatierra in central Mexico, building and buying additional finishing barns and putting up a new feed mill at Killarney, Man. — Glacier FarmMedia Network

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It’s all part of an ongoing effort to ensure pork processing plants aren’t disrupted by COVID-19.

“I’m very impressed by our packers, and for the workers for coming to work every day and being there and realizing that they are an essential service,” said Darcy Fitzgerald, executive director of Alberta Pork.

“Our processors have come up with some pretty innovative ways to do things differently and offer greater comfort and safety for their workers. The precautions are there and everyone is mindful of their safety.”

But while “things are moving along smoothly right now,” no one is taking anything for granted.

“We’re sitting on pins and needles right now, not wanting anything to go awry,” said Fitzgerald.

There’s an ongoing need for more masks and gloves, and officials in the sector are closely monitoring both the availability and cost of inputs and supplies needed by producers, said Gary Stordy, director of government and corporate affairs with the Canadian Pork Council.

“At this point, there is no indication that it is severely impacting production, but people are paying attention to some of the levels,” he said.

While there is good demand for pork products, the futures market is the worst Fitzgerald has seen in 11 years.

“It’s only because we have this speculation and people who every day trade and make the market go up and down to make money — and we’re playing with food,” he said.

“We’re seeing a lot of demand around the world for the product. It’s not like there is going to be a lack of demand or shortage anytime soon.”

Stay in touch

Both financial and mental health concerns are always lurking under the surface in the hog industry, Stordy said.

“COVID-19 has the potential to do harm to both,” he said. “Producers are incredibly resilient, but as we continue in this pandemic, these factors are becoming more and more of a concern.”

His organization has been telling producers to maintain social distancing, but not socially isolate themselves. Instead, they should stay in touch with their fellow producers.

“We’re in this together — use your colleagues, and talk to your fellow farmers in similar situations, and maintain that level of contact,” said Stordy.

Communication is vital throughout the entire pork value chain, added Fitzgerald.

“We’re a very small community on this planet, and every piece has to work together,” he said. “It if doesn’t, we start to see the real hiccups. This hopefully reminds everyone of that and how we can work better together.”

— Alexis Kienlen reports for Alberta Farmer from Edmonton.

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Paul Vielfaure died suddenly Nov. 23 at age 59, his family reported in a brief obituary in Winnipeg and Steinbach newspapers this week.

Radio-Canada reported Tuesday that Vielfaure had died in Phoenix, Arizona. While Vielfaure was known to have lived with multiple sclerosis for over 20 years, the French-language public broadcaster said his death was “not attributable” to MS.

Vielfaure, his brothers Denis and Claude and partner Don Janzen launched the hog production company then known as VL4/Janzen, based at La Broquerie, Man., east of Steinbach, in 1994.

Paul Vielfaure retired nine years later from the company, and from his position as a delegate to the Manitoba Pork Council.

By 2008 VL4 had changed its name to Hytek, taken on new partners Grant Lazaruk and Henry Van de Velde and purchased the Springhill Farms pork processing plant at Neepawa, Man., about 75 km northeast of Brandon.

The hog company, which rebranded as HyLife in 2011 and remains headquartered at La Broquerie, today produces over 1.4 million hogs per year and has expanded its hog production business into the U.S. and China.

HyLife’s Neepawa packing plant doubled its processing capacity and now handles about 6,500 hogs per day, supplying pork to domestic and export markets. — AGCanada.com Network

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“It’s unambiguously good news to have more processing capacity close to Ontario,” said Patrick O’Neil, Ontario Pork’s marketing division manager, at the Ontario Pork Congress.

The Clemens Food Group, a vertically integrated pork production company, is building a 550,000-square-foot fresh pork processing plant at Coldwater, Michigan, in the south of the state, about a four-hour drive from the Ontario border.

The plant, expected to be completed by the end of 2017, will be the only pork processing plant in Michigan and one of the closest U.S. plants to the Canadian border.

There’s additional value in having a plant in Michigan, because the restrictions on trailers are based on tons per axle, which means more pigs can be put on a truck, compared to running to Ohio and Indiana. The lower Canadian dollar also means that Canadian hogs are competitive in the U.S.

The Clemens plant in Coldwater isn’t the only new plant building built in the U.S.; Seaboard Triumph Foods is building a new plant at Sioux City, Iowa and Prestage Farms is trying to build a new plant in Iowa, but is having trouble finding a location.

New processing capacity won’t necessarily mean higher pork prices, O’Neil said.

“I still think most packing plants, they’re not wanting to outbid their competitors and pay more than the U.S. average price for hogs,” he said.

The Clemens family also produces hogs and will be filling up a good proportion of its new plant with its own pigs, along with other large farms who have committed to the plant.

There are also extra costs moving pigs over the border. Quebec packers, O’Neil said, have been buying more Ontario hogs and they pay for freight costs — something that U.S. packers do not.

“It’s going to be a really good option close by and it’s a big company. To actually gauge the impact, we’re going to have to see what happens,” said O’Neil. “The distance, especially if you have pigs in London or west, it’s significantly closer to ship the pigs into Coldwater than into Quebec.”

The hog market in general is strong, with market prices ahead of forward contracts.

It’s all about demand, despite strong volumes of pigs being produced in North America.

“The great news is, we see markets for our pork,” said Eric Schwindt, chair of the board of Ontario Pork, in an interview at the Pork Congress.

“Japan, China, the Far East — they want to eat more pork as the standard of living in the Far East improves. So there’s more demand. We’re also seeing it in the U.S. with more packing plants being built this year and next year. Again, more demand is always a great thing for pork producers.”

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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Olymel said Friday it will halt ham deboning at its St-Hyacinthe plant in September 2017, eliminating 340 positions.

Ham deboning work, until now the St-Hyacinthe plant’s designated specialty, will instead be done at plants with both slaughtering and butchering operations, Olymel said.

That move, the company said, will “improv(e) operational efficiency and reducing costs considerably, in terms of both fixed costs and shipping.”

Olymel’s hog slaughter and butchering plants — at St-Esprit, Yamachiche and Vallee-Jonction — are “now geographically closer to the further-processing plants they supply with raw materials,” the company said.

The St-Hyacinthe plant will remain open, but with about 70 staff handling frozen product storage operations and a rendering line for lard production.

Olymel said Friday it’s also “studying various options to find a new vocation for the plant, which would enable it to fulfill other needs for the company.”

Olymel in June announced expansion work at its St-Esprit hog plant, which it said at the time would begin to handle greater output of “value-added” products and chilled pork.

The company in June also announced a Quebec City-area sausage plant at St-Henri-de-Levis would be repurposed for ham processing, after Olymel bought Trois-Rivieres sausage maker La Fernandiere and said it would move its sausage lines to that company’s plant.

The cut at St-Hyacinthe was “a difficult decision, but a necessary one if we are to achieve the conditions of efficiency and profitability that will enable us to maintain the bulk of other jobs across all our operations, and even create new ones,” Olymel CEO Rejean Nadeau said Friday in a release.

The job cuts, he said, were “deemed necessary after a thorough analysis of processing costs with a view to making all our operations more efficient.”

Olymel’s St-Hyacinthe plant saw a work stoppage in 2009, with unionized workers reportedly protesting a proposed wage freeze following a major pay cut in 2005, when the plant was said to be under threat of closure.

“I have requested that everything be done to facilitate the transition for employees assigned to another position, or their relocation to another Olymel facility,” Nadeau said Friday.

A plan has been set up and a relocation committee formed to move affected employees to other Olymel plants within a 70-km radius of St-Hyacinthe, the company said.

Apart from its pork slaughter and butchering plants, Olymel noted it operates other Quebec food processing plants at Drummondville, Ste-Rosalie, St-Damase and St-Jean-Baptiste, and “other types” of operations at St-Bruno, Boucherville and St-Valerien.

La Coop federee said earlier this year it plans to sell an ownership stake of up to 49 per cent in Olymel, to fund the co-operative’s plans for further expansions in pork processing and ag retail in Western Canada. — AGCanada.com Network

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Adjusted operating earnings in the meat products segment rose nearly eight-fold to $61.3 million in the Toronto company’s first quarter, helped by lower operating costs and price increases.

The company, whose brands include Schneiders and namesake Maple Leaf, recently completed a restructuring program started in 2010 to boost earnings by shutting some plants and modernizing others.

Maple Leaf’s net earnings were $42.3 million, or 31 cents per share, in the quarter ended March 31, compared with a loss of $2.9 million, or two cents per share, a year earlier.

On an adjusted basis, Maple Leaf earned 28 cents per share.

Total sales for the company, one of Canada’s biggest pork processors, rose 2.1 per cent to $796.9 million.

Analysts on average had expected Maple Leaf to earn 23 cents per share on sales of $816.9 million, according to Thomson Reuters I/B/E/S.

— Reporting for Reuters by Rod Nickel in Winnipeg and Arathy S. Nair in Bangalore.

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Maple Leaf, one of the country’s biggest pork processors, said the majority of the job cuts would be completed by the end of 2015 and the rest in 2016.

Nearly half of the positions are based in the Mississauga head office, said spokesman Dave Bauer. Sixty-four are based at the new Hamilton, Ont. meat plant, where analysts noted excess staff and supervisors during a recent tour. The rest of the job cuts are scattered across Canada.

Senior management, led by CEO Michael McCain, remains intact, Bauer said.

Maple Leaf rolled out a program in 2010 to boost earnings by shutting some plants and modernizing others, and the company has struggled to be profitable during that period.

Its third-quarter profit was only its second in the past 11 quarters, and was slightly smaller than expected as the company flagged inefficiencies in starting new plants.

“After years of change and transformation, we’re now in a position to streamline the organization so we can operate as efficiently as possible,” Bauer said. He declined to disclose the savings or one-time costs involved with the cuts.

Reuters reported the job cuts on Tuesday, citing people familiar with the matter.

Last month, Maple Leaf delayed into 2016 its target for increasing earnings before interest, taxes, depreciation and amortization as a percentage of revenue to 10 per cent.

Bauer said the job cuts would have only a small impact on reaching that target.

Maple Leaf’s free cash flow is set to grow next year, and the company has said it is interested in acquisitions in poultry processing or meat production.

The job cuts are not intended to make Maple Leaf more attractive for takeover, Bauer said.

Maple Leaf employs about 12,000 people in Canada.

— Reporting for Reuters by Anet Josline Pinto and Sneha Banerjee in Bangalore and Rod Nickel in Winnipeg; additional reporting for Reuters by Euan Rocha in Toronto.

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