Quebec pork farmers reeling as a Perfect Storm creates economic crisis

Over the last two years, François Nadeau has chosen to do something rare among his fellow Quebec pork farmers: invest in the future

Despite economic conditions that industry leaders have called a crisis, Nadeau and his wife and co-owner of their business, Julie Bogemans, went ahead with a new building to house some of their 1,200 sows. It features high-tech feeding and cooling systems and bigger, open pens to replace many of the crates and cages that used to keep the animals confined.

In an interview at his farm in St-Sebastien, a rural community about 50 kilometres southeast of Montreal, Nadeau explained that the changes were made in part to ensure the farm complies with new federal animal welfare rules that come into force in 2029.

 “Despite everything that’s happening, we’re among those who still believe in pig farming, despite the difficulties”

 

“Despite everything that’s happening, we’re among those who still believe in (pig farming), despite the difficulties,” he said.

In the current economic climate, leaving pork production altogether seems to be the more popular option.

Recently, more than 20 per cent of producers in the province applied for a program to compensate farmers who severely reduce their herds or quit — a number that has shocked even industry leaders who are well aware of how tough things have become.

“It worries us enormously,” said Louis-Philippe Roy, president of a group representing pork producers in Quebec, who account for about 31 per cent of Canadian production.

Roy says the crisis currently shaking the industry is created by a “perfect storm” of factors, including COVID-19-induced slowdowns, labour shortages at pork plants, the closure of one of the province’s largest slaughterhouses, a glut of pork globally, high interest rates and skyrocketing grain prices that have driven the cost of feed up by 60 per cent.

As a result, he said the Quebec farmers, who bargain collectively with the companies that slaughter and process hogs, have had to accept prices that see them lose between $15 to $20 per animal they produce.

Ken McEwan, a retired University of Guelph professor and agricultural economist, says Canada’s pork industry has always been sensitive to price fluctuations, in part because it is heavily dependent on exports — especially to the fickle Chinese market, which temporarily banned Canadian pork imports in 2019.

While Canadian producers are known for their high-quality product, he said in a recent interview, “it’s not just about what’s going on in Quebec or Eastern Canada. It’s about global factors.” The fallout has been especially painful in Quebec, where leading processor Olymel has shuttered several facilities and is reducing its slaughter capacity by some 1.6 million hogs a year.

Sébastien Pagé, who owns a maternity farm east of Montreal that produces 125,000 to 130,000 piglets per year, says the low price of pork is forcing producers to dip into a stabilization program funded by both farmers and the government.

While pork production, like all agriculture, is cyclic, he said it’s rare for a down period to last so long. He is committed to continuing his operation in the Estrie region, but he is delaying renovation or expansion programs.

“In terms of projects we wanted to do, everything is on ice right now,” he said. “And it’s like that for all of us: either it’s on ice or producers want to reduce.”

Paul Beauchamp, a vice president at Olymel, says Quebec was hit hard and early during the COVID-19 pandemic. The combination of temporary closures, absenteeism and distancing rules meant the packing plants could no longer keep up with volume. As a result, the company had to stop producing high-value products and focus on simple cuts that didn’t require deboning — contributing to a loss of $400 million over two years, he says.

He says that Olymel, like everyone else in the industry, is trying to emerge from the crisis. For Olymel, that meant reducing slaughter capacity and focusing on high-value products that fetch a premium price in markets such as Japan, Korea, and Australia. He said there are also efforts to grow the market within Canada to make it less reliant on imports.

While Nadeau says many of the factors in the crisis are beyond farmers’ control, he’s trying his best to reduce the cost of production despite the rising price of insurance, labour and feed.

In his new building, the sows wander from the open pens into narrower feeding bays, where a machine reads a chip in their ears and determines down to the gram exactly how much feed each animal should eat.

Elsewhere, in a maternity room, a caged sow nurses a row of newborn piglets, after delivering 20 that same morning. Computers monitor each of the sows individually, alerting Nadeau if they haven’t eaten or walked their normal amount.

He’s also integrated a new ventilation system designed to mitigate the province’s hotter summers by blowing air from fans through a wall of cold water, in order to keep the sows comfortable so they eat well and deliver healthy piglets.

He says the changes are about welfare but also efficiency. “It’s becoming more and more important to be able to stand out, to be all the time trying to look for small margins,” he said.

Nadeau, Pagé and Roy all hope the industry is close to turning a corner. But they say the near future, at least, will involve producing fewer animals more efficiently and with high standards, which will require the remaining producers to invest like Nadeau has.

The industry decided earlier this year to reduce the number of producers by nine per cent. Two per cent had already left of their own accord before the announcement this year of the voluntary withdrawal program, while the other seven per cent will be chosen from those who applied and will receive some compensation.

Roy of the pork producers federation wonders what will happen to the rest of the 22 per cent of producers who applied for the program but won’t be chosen.

“Will they continue their production? Will they reinvest? Those are questions I unfortunately can’t answer right now,” he said.