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Deboning a pig carcass will never rank up there as anyone’s dream career. But for the residents of tiny St-Simon, Que. (population 1,093), the 650 jobs provided by the local pork processing plant have long been a preferred alternative to their town’s economic starvation.
For decades, they’ve put up with the smell—and the gibes from visitors who got a whiff of it—in exchange for the steady, well-paid, union jobs at the Olymel plant. It seemed like a reasonable deal.
As a division of Quebec’s huge agricultural co-operative, La Co-op fédérée, Olymel was supposed to practice a kinder, gentler capitalism. Or so the St-Simonais, as the town’s residents are known, thought until this month, when Olymel laid off 120 workers at the plant. By September, the rest will be gone, too.
Where to? Canada’s multibillion-dollar pork farming and processing industry, long centred in Quebec, is shifting westward as economic, political and environmental forces favour Manitoba and Alberta. And, co-op or not, Olymel is moving with it. After all, it’s still got to bring home the bacon for its members.
Olymel may be little known on Bay Street, where its main rival, publicly traded Maple Leaf Foods, gets most of the attention. But St-Hyacinthe, Que.-based Olymel remains Canada’s biggest pork and poultry processor, with annual sales of $2.5-billion. And it didn’t reach the pinnacle by putting the profit motive second.
In 2001, Olymel paid $90-million to buy the fresh-pork division of Vancouver-based Premium Brands. The deal included the company’s Red Deer, Alta., hog processing plant, the country’s biggest with a slaughter capacity of 55,000 pigs a week. Now, Olymel has joined with Saskatchewan-based Big Sky Farms and Manitoba’s Hytek on a proposal to build a $200-million pig processing facility in Winnipeg’s St. Boniface neighbourhood with a 45,000-a-week capacity.
It’s not hard to figure out why. Annual pig production in Manitoba has more than tripled in the past decade to more than eight million hogs, thanks to cheap feed, abundant land and accommodating provincial and municipal governments. But fewer than half of those pigs are slaughtered and transformed into value-added meat products in the province. Most are exported as piglets (known as weanlings in industry lingo) to fatten up on big industrial pig farms in Iowa or other “corn belt” states. From there, they head to a U.S. slaughterhouse and meat processor.
Little wonder the Manitoba government is offering a $27.5-million grant and loan package to OlyWest (as the St. Boniface joint venture is known) to proceed with the plant. The City of Winnipeg is offering free land and $2.4-million in tax relief in exchange for the 1,100 jobs at the plant and a promise of more value-added agribusiness.
In many ways, Quebec is the model for such a business. All but a few thousand of the 7.1 million pigs born in the province each year are processed here. The result is a $3-billion industry that provides almost 30,000 direct and indirect jobs and more than $1-billion in value-added pork exports, mostly to the United States, Japan and South Korea.
The winds of change, however, are carrying with them more than the stench of pig waste. In 2003, the former Parti Québécois government slapped a moratorium on new or expanding pig farms, citing dangerously high levels of phosphorous—stemming from liquefied hog manure sprayed on farm fields—in many water systems in the province’s pork belt south of the St. Lawrence River between Montreal and Quebec City. The moratorium was lifted last year, but pig farmers still feel like pariahs and municipalities have placed strict restrictions on expansion. As a result, the number of hogs produced annually has dropped more than 10 per cent since the moratorium was imposed.
The result is that Quebec has been left with too much pig processing capacity—spread out among too many small and mid-sized facilities—and little prospect of a return to the hog boom of the nineties. Higher production costs in Quebec, the Canadian dollar’s steady rise since 2004, and a wasting-disease-like virus that killed 200,000 Quebec hogs last year are all factors reinforcing Olymel’s decision to shift activities westward.
Still, Quebec has one advantage neither Manitoba nor Alberta can match: an abundant and willing labour pool. Most of Quebec’s pork processing plants are located in small towns—where there’s apparently less stigma attached to a slaughterhouse job—in a province with an unemployment rate, at 8.4 per cent, that is more than double Alberta’s 3.5 per cent and almost twice that of Manitoba’s 4.3 per cent. OlyWest’s toughest task, when the proposed St. Boniface plant opens in 2008, will be finding and keeping workers. Maple Leaf has faced an 80-per-cent annual turnover rate at its pork processing facility in Brandon, Man. Only the select few, it seems, can stomach the job.
Don’t tell that to the folk in St-Simon. Or to the people in nearby Ste-Perpétue, where Olymel’s restructuring will no doubt put a damper on the annual Pig Festival this year.