Pork packer Olymel is preparing to dial back its hog production in Western Canada by shuttering six of its sow units in Alberta and Saskatchewan.
Olymel, the agrifood arm of Quebec’s Sollio Cooperative Group, announced Friday it has served 80 employees with layoff notices at five sow units in Alberta and one in Saskatchewan.
The unit closures — Pinnacle 1 and 2, Dynacrest 1 and 2 and Smoky Sow/Dev in Alberta, and Olysky’s Kelsey unit in Saskatchewan — will reduce Olymel’s company-owned sow herd in Western Canada to 40,000 sows, down from 57,000, the company said.
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That reduction is expected to translate to a net production cut of about 200,000 company-owned market hogs per year.
Olymel said the impact of that supply cut on operations at its hog slaughter plant at Red Deer, Alta. “will not be felt until 2024 at the earliest” and would depend partly on hog supply availability from independent producers.
The company didn’t give a hard date for the closures in its release Friday, but said the affected sow barns’ operations will be wound down “over the next several months” and the barns will stay closed “until market conditions improve.”
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“Over the past two years it is well documented that Olymel has experienced significant losses in the processing of fresh pork as a result of limited market access globally,” Olymel CEO Yanick Gervais said in Friday’s release.
“Now, coupled with stubbornly high feed costs, resulting in unprecedent losses in the hog sector, we have little choice but to retract and position ourselves for success in the future when conditions improve.”
Olymel’s fresh pork business in Western Canada took a hard hit in the company’s 2022 fiscal year, largely from “higher grain, labour and transportation costs, as well as the closure of the Chinese market in the first three quarters of the fiscal year for a second consecutive year.”
In Sollio’s fiscal 2022, its Olymel division alone booked a loss, before income taxes, of $445.7 million for 2022, following a $71.8 million loss for 2021.
Olymel had already been in deep cost-cutting mode for months. Last fall it cut dozens of administrative and management positions through attrition and layoffs, and since then has permanently closed three pork further-processing plants in Quebec.
After announcing it intended to reduce its total hog slaughter, Olymel last month reported it will permanently close its hog slaughter plant at Vallee-Jonction, Que. by Dec. 22.
Olymel and other packers operating in Quebec last month also announced a new supply deal with that province’s hog producer organization, les Eleveurs de porcs du Quebec.
To reduce the effects of the Vallee-Jonction plant’s closure on Quebec hog producers, EPQ said at the time, the new deal calls for Olymel specifically to cease buying market hogs from neighbouring Ontario.
Olymel’s remaining hog slaughter plants in Canada include the facility at Red Deer and its plants at Princeville, St-Esprit and Yamachiche, Que. — Glacier FarmMedia Network
