The province’s food and beverage processing industry stands to grow its annual sales by $700 million by the end of the decade — but not if it maintains “business as usual,” according to a recent Brandon University study.
The Rural Development Institute released the study last week which suggests swift action from industry and government is needed or else the industry will shrink $100 million by 2020, with Manitoba’s pork and potato industries taking the biggest hit.
According to the report, the food and processing industry, a $4.7-billion-per-year industry in 2011, as a whole represents 28 per cent of Manitoba’s manufacturing revenue, 15 per cent of its exports and employs more than 12,000 people.
On the pork side, production is well below capacity, investors are getting nervous and the hog moratorium on barn expansions are all working against the industry. The report suggests industry and government are both wallflowers and have to start dancing together before sales take a significant dip before the end of the decade.
“There has to be some sort of collective action to move forward,” said RDI director Bill Ashton.
The report suggests tapping into a growing appetite for pork in Asia and Europe and growth will result from expanding barn capacity, increasing hog supply and driving processing plants to 100 per cent capacity.
How that will happen remains the burning question, however. Premier Greg Selinger addressed the sputtering pork sector during a State of the Province address in Brandon late last month and stated the pork moratorium will continue in an effort to protect Manitoba’s water, but added there’s lots of room for opportunities to continue to grow the industry within those confines.
Maple Leaf Foods in Brandon is scalingback the number of hours available at the local hog processing plant, currently running at 80 per cent capacity, a far cry from the 97 per cent capacity it needs to run at in order to be efficient and competitive, according to the report.
Faced with under-producing inefficient plants, a high Canadian dollar, shrinking North American processing capacity and low crop yields, the potato industry stands to dip in the coming years as well, the report suggests.
Through more research and more water and irrigation availability, the cost of potatoes needs to be reduced by increasing potato yields from the current 320 to 365 hundredweight per acre in order for potatoes to regain competitiveness in the world market.
Ashton said the McCain Foods plant in Carberry is still issuing contracts, but they are getting smaller, a detail Ashton said foreshadows the industry’s future.
“Effective action just means getting businesses and government talking together with a solution,” he said.
“It’s going to affect not only investors, but employment as well as the community and supply operations both for potatoes and pork ... it already is, but what we’re suggesting in this report ... if you go out seven years, this isn’t getting much better.”
Canola, a growing and dominant Manitoba export, is faced with crushing capacity and decreased acreages as farmers are beginning to favour soy and corn.
The report suggests reducing travel distance for exporting canola meal and importing canola seed to and from the U.S. while urging national rail companies to improve service.
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Republished from the Brandon Sun print edition May 5, 2014