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Winnipeg Free Press - PRINT EDITION
Agriculture industry will rise to face changes
Agriculture dominated the news cycle this week and although the stories were not specifically connected, there will he shared impacts felt across the province's agri-business and manufacturing landscape.
Federal legislation ending the Canadian Wheat Board's monopoly and Maple Leaf Foods' significant investment in pork processing signal a new dynamic.
The measure of the strength of the provincial economy will be how well it responds to these changes.
Maple Leaf Foods' decision to make its largest western Canadian investment in Winnipeg is a good sign of underlying strength in the provincial economy.
As a $5 billion-a-year food giant, MLF has a stake in every part of the Canadian ag industry.
The company's decision to invest $85 million in a Winnipeg plant was made with careful consideration. With 22 processing and prepared-meats plants across Canada and just as many bakeries, Maple Leaf has more options than most companies in determining where to invest.
As commodity prices rise, so do Maple Leaf's costs, and with razor-thin margins -- $26 million in profit on $5 billion in sales last year -- it had no choice but to raise prices and become more productive. And to remain competitive, Canadian manufacturers have to invest in technology and innovation.
That Maple Leaf chose Manitoba has to do with the distribution of its own assets as well as the regional infrastructure where those assets exist.
Because the company's only primary pork plant is in Brandon, it makes sense for Maple Leaf to do as much processing as close by as possible.
For such a large company to rely that much on a regional market, it needs to have confidence in that market.
Scott McCain, the company's chief operating officer, said it's comfortable in Manitoba.
That kind of multimillion-dollar investment doesn't come out of the blue. MLF initially built its primary processing plant in Brandon because of the abilities of the regional hog producers. That sector grew dramatically for close to a decade, becoming the province's most valuable agricultural commodity. More recently, hog prices have fallen, exports have been stymied and a moratorium was imposed on development of new barns. But through it all, the industry got better at what it did. Manitoba hog producers are now making a profit once again and have become the most efficient in the country.
The rising Canadian dollar compelled some of that drive for productivity improvement.
Prairie grain production and distribution has also lurched through cataclysmic change for years -- from the end of rail subsidies to the abandonment of short lines to the dramatic increase in canola production.
Increasingly, the global market has imposed itself on the farm gate and western Canadian grain producers -- and handlers -- have remained competitive.
The debate will rage for some time about whether farmers will win or lose after the end of the wheat board's monopoly, but the change will almost certainly prompt innovation.
Next week, the Bio-Fibre 2011 conference will be held in Winnipeg, investigating the opportunities for bio-fibre in the composites industry.
It's another stream of innovation the industry can explore.
Agriculture makes up about five per cent of the provincial GDP and is responsible for more than 25,000 jobs.
With wheat prices just about doubling over the last year and hog producers bolstered by MLF's commitment, there is an underpinning of optimism in the ag sector that has not been present for some time.
The grain-handling companies say rising standards of living in the developing world mean the demand for global food commodities is on the rise and will be for years.
Regardless of the ideological or emotional elements of the transition of the wheat board, the good news is the industry, from the farm gate to the port, has shown its ability to be innovative.
Republished from the Winnipeg Free Press print edition October 21, 2011 B6
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About Martin Cash
Martin Cash joined the Free Press in 1987 as the paper’s business columnist.
He has spent two decades chronicling the city’s business affairs.
Martin won a citation of merit from the National Newspaper Awards in 2001 for his coverage of the strike and subsequent multi-million-dollar union settlement at the Versatile tractor plant. He has also received honours and awards for his work on agriculture and technology development in Manitoba.
Martin has written a coffee-table book about the commercial and industrial make-up of the city, called Winnipeg: A Prairie Portrait.
Martin Cash on Twitter: @martycash
martin.cash@freepress.mb.ca
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