A combination of hog prices remaining high despite good supplies and a new processing plant in nearby Michigan have Ontario hog farmers optimistic about the near future.
“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.
Read Also
U.S. livestock: Cattle strength continues
Cattle futures on the Chicago Mercantile Exchange were stronger on Friday, hitting fresh highs to end the week.
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.
