Maple Leaf Foods Sees Higher Meat Costs Lasting

Higher raw meat costs for pack-e rs appears to be a long-term trend as Canadian hog farmers struggle to recover from money-losing operations, the head of a leading Canadian hog processor, Maple Leaf Foods, said May 19.

“We actually think it is a new normal,” said president and CEO Michael McCain at the BMO Capital Markets Agriculture, Protein and Fertilizer Conference in New York. “Higher protein costs are here to stay, they’re not going to go backwards for the foreseeable future.”

Hog producers were losing $40 per pig in 2009, a situation that’s not sustainable, McCain said.

Canada’s farmers are sharply reducing the size of their herds as a higher Canadian dollar, volatile feed costs and a reduction in U. S. demand for live hogs due to the U. S. meat-labelling law have caused them to lose money.

Rising raw meat costs, along with a weak performance from Maple Leaf’s bakery business, caused its first-quarter profit to miss expectations last month.

Nearby Chicago live hog futures have jumped 84 per cent since August 2009 amid shr inking supplies.

Maple Leaf’s process of adjusting its prices to higher meat costs will take one to three quarters, McCain said.

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