Faced with a decreased supply of hogs from central Canada, Larsen Packers is sweetening the pot for local pork producers.
The Maple Leaf-owned plant, located in Berwick, Nova Scotia, needs a minimum of 1,500 hogs a week to operate effectively, according to plant manager Mike Lee.
Larsen has been relying on imports from Ontario and Quebec, but that supply is in jeopardy due to declining production. On January 15, Lee sent a letter to Maritime pork producers offering an $8 freight subsidy for hogs delivered to the plant, and proposed a one-year fixed-term contract to try to maintain processing levels.
The trouble is, Maritime hog production is also in steep decline. Pork Nova Scotia, the marketing agent for hogs in the province, reports that in 2009 pork production dropped 62 per cent in Nova Scotia and eight per cent in New Brunswick. P.E.I., the region's largest supplier of hogs, saw production drop 37 per cent.
“My primary concern right now is looking for hogs to stabilize the kill part of the operation. Given the number of hogs in the Maritimes, we're hoping to be able to do that,” says Lee.
But with the federal government encouraging pork producers to get out of the industry, maintaining supply may be a challenge.
Tim Seeber, executive director of the P.E.I. Hog Commodity Marketing Board, welcomes the Larsen offer but he isn't convinced it will be enough.
“It's a better offer than what we've seen in a long time from anybody, but it's too little too late,” remarks Seeber.
“In the past, our producers have asked Larsen for a larger operating window, and their window was six months. Our producers wanted contracts, and they wouldn't offer contracts. Now we have producers committed to long-term contracts in Quebec, and we have producers in a financial hole. They've been losing $30 a hog for almost two years now, and we don't know how much longer they can stay in the business.”
Lee won't reveal how many hogs Larsen is currently bringing in from Ontario and Quebec or what the response has been to his appeal for Maritime-sourced hogs.
“We're still gathering data, but it's been positive from the folks that have contacted us. Once we get all the data, we'll meet with the producers, and if contracts are appropriate that's something we'll discuss with them at that time. We hope it's not too little too late,” he says.
Larsen Packers currently employs 350 to 400 people. It has been owned by Maple Leaf Foods since 2000.