The Rural Voice, 1999-02, Page 49PERTH 1!i*
County Pork Producers NEWSLETTER
Maple Leaf - partner or not?
Any opinions expressed herein may
not necessarily reflect the views of
the Perth County Pork Producers'
Association.
Maple Leaf Foods has not exactly
been painted in the best light lately
and Michael McCain would hardly be
considered for man of the year in
pork producer circles.
Much of the frustration and
despair rising out of the price crisis
has found a focal point – fear of the
integrator, specifically, Maple Leaf
Foods. Even before the price crunch
really hit there was talk of a
deliberate attempt by processors to
sabotage prices in order to drive out
smaller producers. I do not believe in
a conspiracy, but the effect of the low
prices might still be the same and
leave the door wide open for a
bottom -to -top ownership of the pork
sector. Certainly, Maple Leaf has a
history in other commodities, namely
potatoes, of wanting to drive the cost
of the raw product to the lowest
possible level. It doesn't sit well with
independent pork producers to
envision themselves as serfs on their
own farms receiving barely enough
on a contract to cover the mortgage
payment on the barn.
A contract with an integrator
might sound appealing at first,
especially to people trying to get a
foothold in the industry. A
guaranteed price for five years
maybe, the chance to build that new
barn, give up that off -farm job, an
arrangement the bank is comfortable
with — it sounds good, but what
about when it comes time for
renewal? All of a sudden, the
finishing contract offer drops from
$16 to $9 per head and you still have
10 years left on the mortgage. What
is a person to do then? This scenario
is a very real possibility! There are
reports that contracts drawn up in
1994 are being offered renewal rates
in the $9 range.
A processor's motivation for
becoming integrated is primarily to
secure a consistent supply that meets
his demands for quality, etc. at the
lowest possible price. If left to their
own agenda, Maple Leaf Foods may
well move in this direction. And can
anyone find fault with that corporate
decision? Not the shareholders:
integrating should make them more
money. Not the taxpayers or the
government: after all, they would be
here contributing to the Ontario
economy, providing jobs in both
production and processing.
I think there would be two main
losers in the above scenario — the
individual farmer and rural
communities. Agriculture seems to be
one of the last frontiers where,
generally, independent farm
businesses can make a living. If you
look at most other primary sectors
like mining, oil and gas, and forestry,
integrators play a major role. In
agriculture, there is still the freedom
for individual entrepreneurs to work
and manage. That opportunity is
something most of us cherish.
Communities would be the other
casualty. Whereas farmers will
almost always spend their profits
locally, contributing to the well-being
of the neighbouring businesses,
corporations usually extract their
earnings and take them somewhere
else. The integrated model that might
first appear to society as being
equally good, ends up being a stand
alone giant. There would be little
interaction with neighbours, little
community spirit, nor much money
left for employees to do the same.
How then do we treat Maple Leaf
Foods? Firstly, we respect them for
what they are now. In Ontario, they
process 40,000 hogs per week. They
plan to double that number by the
summer of 2000. They have made a
serious commitment to be here and
for that we should be thankful. We
need a solid processing industry. We
should not slam them unfairly
without accurate facts. So many
people have blamed Maple Leaf for
Ontario Pork Producers
ANNUAL MEETING
March 17 & 18
International Plaza, Toronto
John Nyenhuis, President
519-393-6539
' The Rural Voice is provided to Perth
County Pork Producers by the PCPPA.
the pool price running at 80 per cent
to 85 per cent of the former price
formula during the strike at Quality
Meats. In reality, almost all of their
commitments were paid at 100 per
cent or more.
One final thought on Maple Leaf
Foods: it seems apparent that they
have their own agenda. They have
made it clear that they are moving in
a certain direction and if producers
happen to be alongside, fine. If not,
they will pursue their own model of
growth anyway. The challenge for
Ontario producers and the OPPMB is
to find ways of hooking up without
being swallowed up. This will require
all of the collective strength we can
muster and using that strength to our
advantage.
OPPMB directors tell us that the
two processing strikes we have lived
through have brought to light one
interesting benefit. Buyers who never
purchased Ontario hogs before and
did so because of the strikes are
calling. They are realizing that our
marketing system offers probably the
only opportunity in North America to
purchase large blocks of hogs on
short notice. What a great tool! I
believe the OPPMB has, and is
developing, a sound vision for the
future. It is encouraging existing
processors to become more willing
partners. It is inviting other
processors to take a look at our
advantages in Ontario. The vision
will include opportunities for
everyone.0
Submitted by Larry Skinner
PERTH COUNTY
PORK PRODUCERS'
PORK PRODUCTS
• Smoked Pork Chops • Fresh Pork Chops
• Stuffed Loin Chops • Smoked Sausage
• Smoked Cheddar Sausage
• Bacon Burgers • Teriyaki Pork Steaks
• Vittorio's BBQ Sauce
AVAILABLE FROM:
Fred de Marlines (Sebr.) 393-6812
Martin van Bakel (Dublin) 345-2666
Walter Bosch (Monkton) 356-9000
Ted Keller (Mitchell) 348-9836
FEBRUARY 1999 45