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Slaughter shortages and statistical summaries

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With COVID-19 and a months-long strike having created backlogs of hogs in Quebec alone, can the protein sector find solutions that don’t leave livestock producers on the hook? Canadian Pork Council vice-chair Rene Roy considers the stakes farmers face in his region; and, Phil Franz-Warkentin of MarketsFarm considers this week’s drought-dented crop production estimates from Statistics Canada. Hosted by Dave Bedard.

View the transcript of this episode below:

Dave Bedard: [00:00:05] Hi, and welcome to Between the Rows. I’m your host this week, Dave Bedard. For various reasons, hog farmers in Quebec have lately been facing some serious shortfalls in hook space for their animals, which in turn creates animal welfare concerns as well as financial problems. And it begs the question, is surge capacity even a thing in the meatpacking sector, if indeed it ever was?

René Roy: [00:00:26] It’s not. It’s not bolts or nuts. If we cannot stop the engine and start again in three months.

Dave Bedard: [00:00:35] And the grain markets have been waiting for statistics, Canada’s latest estimates for the country’s 2021 crop production. Well, now those estimates are out. So is there anything there producers can actually make bank on?

Phil Franz-Warkentin: [00:00:47] Ideas are actual production might be even smaller than the small numbers that stats can put out.

Dave Bedard: [00:00:54] Also, here’s some shameless self-promotion you could use, namely, you can now find us on YouTube. Just search up Between the Rows Podcast again. Make sure to punch in Between the Rows podcast. You’ll find the latest episodes, plus our evergreen archive. And we’re planning to use this YouTube space to post resources on our stories and even pictures and video. We’re also hoping it’s going to be another space where you can drop us a line. Let us know what you think about BTR or maybe tell us about a story we should be taking a look at. So, again, when you get a chance, head over to YouTube and search up between the Rows podcast.

The strike by unionized workers at the Olymel hog slaughter and pork processing plant at Valley Junction, south of Quebec City, is now entering its fifth month with tens of thousands of hogs backed up on farms in Quebec alone. Now it’s Monday afternoon as I speak, and employees at that plant are expected to vote tomorrow on a new agreement in principle that could end that dispute for now. However, as we discovered during the current COVID 19 pandemic and several times before that getting a plant back up and running after it’s gone offline doesn’t necessarily solve the problem for livestock producers or for the animals themselves. Today we’re talking with René Roy, president of the Beauce pork producers’ union and vice-chair for the Canadian Pork Council,

Now, I do plan to talk about the bigger picture, of course, just beyond just the Olymel strike. But we should first discuss the strike’s current impact on the hog sector. Last I heard, there were about 166,000 market weight hogs backed up on farms in Quebec. Is that number still accurate or has it increased?

René Roy: [00:02:42] Well, every day it increase slowly. We are estimating that we are a little bit higher than 170,000 to date. Wow. So, yes, there is a lot of backlog.

Dave Bedard: [00:02:55]. Now, I’d like to discuss, of course, the animal welfare aspects of this problem. What happens to these animals when they’re growing bigger in these barns that they weren’t meant to stay in for so long?

René Roy: [00:03:06] There are multiple issues. The first one is when it’s especially when it’s summer and when we are in summer like that, it’s hot and hotter also in the barns. So we have to manage the temperature of the barn. But also the proximity that the pigs are closer than usually together. We have to manage also their well-being. It’s a challenge all producers, every producers to have their own way to manage the challenge. Some have some extra space that they can use, barns that they are using less. We’ve sold a lot of piglets outside of Quebec so that we reduce a little bit the pressure on the barns. But it is certainly a challenge.

Dave Bedard: [00:04:01] And the hot weather we’ve seen this summer specifically can’t be helpful either. You know, as you said, with the proximity of animals in the barns and whatnot, it’s just, you know, I can I can’t imagine the conditions being very good for them.

René Roy: [00:04:13] It is challenging. And we had some similar problem during the COVID, but it was over the winter period or the spring period. And it is easier to manage because it’s colder and the ventilation can keep up more easily. It is clear that it’s far from a desired situation, having a larger number of pigs that are also hit if you’re in this cases during a period so hot.

Dave Bedard: [00:04:50] Mm hmm. Now, by the time this podcast goes live, the strike at Valley Junction may or may not be settled. But even if the plant restarts immediately at full capacity, will there be enough slaughter space and time to clear away that entire backlog of 170,000 hogs?

René Roy: [00:05:06] We know that it will take time. And it is also one of our concerns in this situation, because we know that pigs are growing at a slower pace over summer because it’s hotter and the gain in weight is not as quick as it is during fall or winter. And also the grain is better because there is this new harvest. So we are expecting that the challenge will continue for a period of time. But first, the priority here is that the slaughter capacity opens up again, and then it will be possible to manage the backlog. We have plenty of capacity starter capacity in Quebec to manage the production, but it is certainly not it will not disappear overnight. This is clear.

Dave Bedard: [00:06:09] If the if so, if the Valley Junction were to get back up and running again this week, for instance, would it be possible to clear this backlog without having to euthanize any market weight animals?

René Roy: [00:06:23] Well, we are crossing our fingers. It is certainly a challenging time for the pork industry. We are going through unprecedented situation, we haven’t seen this kind of situation before. Yes, we’ve seen some backlog during the COVID, but it’s we have it it’s more than we have seen during the COVID and also the period of the year. So we know it will be challenging. We are working all together to find solutions and dealing with the priorities. We are trying to keep the lighter pigs waiting a little bit longer. We sell piglets outside. We sell pigs, market hogs outside of the provinceRed Deer to to make sure that we can reduce the pressure. And we expect that will we’ll have to continue for a certain period of time to be able to cope with this situation.

Dave Bedard: [00:07:35] Mm hmm. Now, obviously, as you said, Olymel has been helping out. They’ve been sending hogs to the hogs west of there or sending piglets west to their red or sending hogs west, rather, to their plant at Red Deer. And some younger piglets and weanlings have been sold to make space in barns. But when it comes to when it comes to an incident such as this, what makes it so difficult then to  find slaughter spaces for these animals if a plant such as Valley Junction is forced to close temporarily?

René Roy: [00:08:02] The challenge is that we are working, that there is no business that is trying to to work. It’ll always try to optimize their use of their resources, which is the what a good business manager does. But the thing is, when we have some stressor critical time, as we have right now, when it closes, and we have also to admit that this is one of the largest plant in Quebec. There is no easy replacement there because of the capacity of such a processing plant. We are not able to find hook space as much as we are losing in this in this plant. So we have to find solutions outside of Quebec, although if it was a smaller a small plant, we would be able to manage it. But because of the size, it is certainly a challenging one.

Dave Bedard: [00:09:20] Mm hmm. From a historic perspective, was there was there ever a point where there was slaughter capacity in eastern Canada, in Quebec and in Ontario, for example, to better manage a backlog such as this?

René Roy: [00:09:33] It is clear that when we have a specialization and concentration of the processing market it reduces the number of processing plant, and it tends also these plants tends to be bigger. So in the history we have seen, if we look at if we look back in our history, we didn’t we never had such an intense industry with such a small number of plants, but small number in number, but large in terms of processing capacity. So when one is closing, it creates challenges that we have not seen in the past. When I say we haven’t seen in the past, we’ve seen some strike. We’ve seen the other situation, notably in Ontario with the processing plant that has closed. But we’ve been able in the medium term to cope with it. But in the short term, as we are, as we see for a strike, it is challenging. We are not able to find such not such a large number of workspace overnight.

Dave Bedard: [00:10:52] Now, it seems like a situation such as this places a lot of pressure on the producers, though, and on the hogs as well. What are the responsibilities of processors such as Olymel or others in a situation such as this?

René Roy: [00:11:04] We have raised this this issue with the processors. We have to work hand in hand with our processing industry. We are just part of a large chain of in the food chain. So we are just producing it. Somebody is processing it. And there is another one that is selling it retail to the consumers. So we have to work hand in hand. But this situation shed light on the modification to our industry, and we have to find some ways to address this kind of situation in the future. We have also discussed with the government regarding the legislation for the process of food processing industry in term of of labor law, because we have to say we are dealing with animals. It’s not it’s not bolts or nuts wood. If we cannot stop the the engine, then start again in three months and nobody notice it is it is live animals. We cannot stop the chain overnight. So this kind of situation puts a larger pressure on the old food and food industry industry, not only the producers, but also there are some responsibility at the societal level to see how we want to deal with this situation in the future. And it was a strike, but we have seen in the United States how they had to go through a fire in one of the processing plant, a major processing plant in the beef industry. These kind of situations, we have to  start to think about it, because the society has taken some decisions in what they wanted to see their food produced. But on the other hand, there are some responsibility in these choices that has to be taken. And it’s not only the producers who can bear the the weight, the weight off of these decisions.

Dave Bedard: [00:13:30] Mm hmm. Now, you mentioned the choices and modifications in the future. You know, surely the situation will come up again. It’ll rise again. Whether a plant has to close for public health reasons such as the pandemic or another strike or another lockout. You know what? What can be done in the future to prevent this kind of backlog?

René Roy: [00:13:47] We know that the processing industry is one that is highly competitive. We know also that in Canada, it’s not a large industry compared to the United States or some countries in Europe. So we have to see the various options we have. One is certainly diversification of the of the plants in order to be able to process in in alternative places. Some of the meat we know that the size of some of these plants is huge. Additional collaboration between plants can also help in terms of contingency plan if there is one that has to close for whatever reason. So these kind of options or alternatives has to be considered in the future.

Dave Bedard: [00:14:43] Mm hmm. Now, I remember during the pandemic, of course, there was some set aside funding in place to help cover feed costs as well during the pandemic. Obviously, that’s not going to happen in every situation and certainly hasn’t happened here. Is that also a possibility, I mean, to get help with some of these costs?

René Roy: [00:15:00] It’s the it’s a it’s a possibility we have some discussion with the government, but at the end of the day, even if there is some compensation, there is a lot of food waste, if not for food waste, but food that is lost in these kinds of circumstances. So we have to find solutions that really target the problem. Compensation to the producers. Of course, we have we have been hit hard. We have lost a lot of money to be in a strike that was not where we were not involved. So we’ve been a collateral victim in this situation. This is certainly damaging. And this is a reason why we are requesting help from the government. But we have also to look at additional solutions that will address the situation of the processing industry and the production.

Dave Bedard: [00:16:08] Mm hmm. Now, is it reasonable to expect that these things may happen? I mean, you know, as you mentioned, collaboration between plants, between companies, even if it is that is that how realistic is that that something like that might happen?

René Roy: [00:16:23] I have to admit that I I’ve seen things during COVID that I did not believe I would see. So. I, I think the best thing is to open the discussion. It’s and making sure that everybody are a beneficiary in some ways. Yes. Some competitors can see this disadvantages one there until they have to use it. The government can say it is expensive to look at alternative plant processing capacity until they have to use it. So it is not only the solution that we have to look, but also in the long-term benefit of all the stakeholders. So, yes, I understand I understand the point when we when we could be doubtful about collaboration between competitors. On the other hand, we’ve seen that it is important to have that competition is not the end of the day. We have to to see collaboration also.

Dave Bedard: [00:17:34] Mm hmm. And we’ll certainly keep watching the situation to see how it develops. thank you very much for your time today, merci.

René Roy: [00:17:43] Thank you very much for taking the time to discuss the matter.

Dave Bedard: [00:17:47] You’re very welcome, René Roy  is the president of the Beauce pork producers’ union and vice-chair for the Canadian Pork Council,

You’re listening to Between the Rows. I’m your host this week, Dave Bedard. Well, it didn’t take much guesswork this year for grain traders to estimate that Canada’s total grain and oilseed crops would be down substantially from previous estimates. But Statistics Canada this week pretty much confirmed all those suspicions. The question is whether any of StatsCan’s  latest estimates have caught grain and oilseed markets by surprise. And for that, we have Phil Franz-Warkentin back with us from Glacier Markets Farm. Phil, hi. And welcome back to Between the Rows.

Phil Franz-Warkentin: [00:18:41] Hi, Dave. Thanks for having me.

Dave Bedard: [00:18:43] So let’s get the big question out of the way. Were the numbers we saw on Monday from stats can already pretty much baked into the markets?

Phil Franz-Warkentin: [00:18:50] Yeah, I’d say so. The most of the major crops all came in right in line with expectations of where traders expected things to be ahead of the report. And yeah, like you said, production on just about everything is down sharply on the year due to the drought. And now the second guessing begins and ideas are that actual production might be even smaller than the small numbers that StatsCan put out. So that meant even though production is down sharply on the year prices, canola prices have been under under pressure following their report. And as as has wheat futures to some extent.

Dave Bedard: [00:19:34] Mm hmm. Was there anything in the report that that surprised you or anyone else in there who follows these who follows these sorts of things?

Phil Franz-Warkentin: [00:19:41] Yeah. No, I don’t think there was any like real big surprises. The one thing that jumped out at me was that they actually revised last year’s canola production number higher. So that might be a matter of, you know, that crop year has come and gone. And they realized, oh, we exported and processed more than we grew, allegedly. So maybe we had more on hand than we thought. So they have another report out next week on the ending stocks. So that will provide a bit more detail on that little number. But the yeah, they raised it from 18 point something to 19.5 million tonnes last year’s crop. But this year’s canola crop, they pegged it at 14.7 million So, you know, down sharply on the year, the smallest of the past decade or so, I would think.

But yeah, hearing anecdotally farmers who are harvesting a lot  think that that even 14.7 million is optimistic on canola. So we’ll see how that turns out.

Dave Bedard: [00:20:48] And just one technical detail. What’s the final report from Stat’s? Can’t on the year comes out like that. That comes out when December, right?

Phil Franz-Warkentin: [00:20:57] Yeah. Yeah, that’ll come out in December. So this this as far as like technical stuff goes. In past years, they would conduct a survey of farmers and have kind of a sense of, you know, more on the ground. Last year, they’ve been doing it for about five or six years now in September. But last year with the pandemic, they started doing it for this report as well. Basically, they came up with their data just using models and satellite imagery, and they have they have their own process to come up with it. So it’s not as on the ground as in the past. So there are some questions on, you know, from up in the in the atmosphere beyond the atmosphere with the satellite, the crops might have looked green or, you know, see one thing. But when you get closer to the ground in, the pods aren’t filling. And, you know, there’s fewer seeds in a pod than there might be in past years. That all adds up to the sense that crops will be revised lower in subsequent reports. And yeah, that December no, that’ll be a survey of farmers.

Dave Bedard: [00:22:18] So it’ll be classic stuff.

Phil Franz-Warkentin: [00:22:20] Classic stats. Yeah.

Dave Bedard: [00:22:23] So where do we go from here? I mean, are we pretty much done talking about, you know, being in a weather market or do we still have like a whole lot of harvesting to do before we can see that?

Phil Franz-Warkentin: [00:22:33] Yeah, I think the weather is baked in literally and figuratively for now. But that said, the you know, a lot of what the our prices happens here is dependent on the U.S, U.S. soy and corn markets. So soybeans and corn, they still have more time before their harvest. Same here with our beans and corn in Canada. So. So, yeah, weather is still at play. Just this week, the that hurricane in the U.S. Gulf, Hurricane Ida, that this caused a lot of disruption on the as far as. So did the U.S. go so that, you know, that’s a weather story that’s still finding its way up here to impact prices. But yeah, as far as the droughts and our own weather, you know, if it rains and more rain causes harvest delays, that that will be something. But at the end of the day, there, you know, there’s the there’s not a lot of being harvested. Right. So now the prices are already high and the sense is, can they go much higher, really? And that that remains to be seen.

Dave Bedard: [00:23:51] Which I guess would be the saving grace for producers who are going to be bringing in smaller crops that, you know, at least there’ll be a higher price to go with it.

Phil Franz-Warkentin: [00:23:58] Yeah, exactly.

Dave Bedard: [00:24:00] Now, we should talk about the U.S. futures as well. Just with the conditions in the U.S., Midwest improving, at least from a precipitation perspective, it sounds a bit like Ontario might not be able to capitalize on the bigger corn crop that it’s expected to be getting quite as much as expected that that there’s that there’s basically corn under pressure right now because of rain.

Phil Franz-Warkentin: [00:24:22] Yeah, the yeah. They, they stabilized in the past week. So they’re Yeah. Generally thought to be looking in in decent shape for the for the time being so. Yeah. Large U.S. corn and soybean crops. Large. Relatively speaking, they had their own issues earlier in the year. But I think there’ll be substantial supplies from there. And, you know, like you said, Ontario. Yeah, soybeans and corn, Canada. Soybeans and corn. They were the only ones that were fairly steady on the year as far as production goes. And that that’s due to the the better crops. So east where the bulk of those are grown as far as Canada’s production is concerned.

Dave Bedard: [00:25:18] Mm hmm. And sticking with Canadian crops for a second, I’m assuming you and of course, with the with the prairie crops as well, I’m assuming availability of crops for export is also going to have something to do with prices going forward.

Phil Franz-Warkentin: [00:25:30] Oh, yeah. There’s going to be a lot of demand rationing that will need to happen for Canada. Yeah. What, 14.7 million tonnes of canola grown this past year with exports and the domestic processing combined, we use 20 million tonnes. So that’s six million ish tonne shortage that, you know, just won’t be there this year as far as canola is concerned. So that will the general sense is will more likely to see the domestic processors have to cut back a bit, but not to the same extent as exports. And we’ll see a much a much smaller export program this year for canola and wheat and barley. Most crops that supplies just aren’t there.

Dave Bedard: [00:26:23] Mm hmm. So still lots to watch and lots to check out, of course, on the

Phil, thanks for your time. Thanks for having me. Phil Franz-Warkentin reports for Glacier MarketsFarm in Winnipeg. And that’s our time. Many thanks again to our guests. And we’ll be back in a week with more from the Glacier Farm Media family of publications. Just a reminder, too, if you’re needing another place to find that show, you can also now visit our YouTube channel. And again, the best search term to find us there is going to be Between the Rows podcast, and again, Between the Rows podcast. And you’ve been listening to Between the Rows. I’ve been your host this week, Dave Bedard. Thanks for listening.

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