This week’s guest commentary comes from Nathan Stevens of the Christian Farmers Federation of Ontario
Ontario agriculture and agri-food was tossed yet another curveball last week with the announcement that Quality Meat Packers Limited has declared insolvency. This situation leaves the company with 30 days to make a plan to re-pay its debts and the company hopes continue to do business. Yet this latest setback to the processing sector is making the quest to meet the Premier’s challenge to generate 120,000 new jobs within the sector and double the rate of growth look more and more difficult to achieve.
As the CFFO and the rest of primary agriculture sector continue to find ways meet the productivity portion of the Challenge with new and innovative ideas, the jobs side of the challenge seems ever more difficult to achieve. But it would be a mistake to characterize the entire processing sector as being on the ropes. We need to be careful when we look at this on-going situation that we don’t leap to conclusions for the entire industry. We must recognize that older plants may be reaching the end of their life cycle. There may be individual logistical challenges that are not readily apparent to outsiders. Simply put, there is no single quick fix for the businesses that are struggling.
We need to remember that for every aging or struggling plant, there are examples of new or refurbished plants that took advantage of the strength of the Canadian dollar in recent years to invest in productivity and efficiency. With the recent decline in the value of dollar, these plants are well positioned to compete, despite the other serious challenges they are facing.
With that being said, there are some broad infrastructure considerations that are critical to the processing sector. The rising cost of energy over the last number of years along with the predicted rapid increase in energy costs in this province is threatening many manufacturing jobs, including jobs in the agri-food processing sector. Heavy traffic congestion within the Greater Toronto Area reduces the efficiency of food processing businesses. Finally, border crossing times for our export industries add incremental costs to our businesses. A focus on these costs could provide the edge our businesses need to compete.
The Quality Meat Packers insolvency announcement brings into focus the underlying weakness of some of our food processing companies. Most farmers need processors to take their product and transform it into food for consumers, tying the success or failure of farmers to the success or failure of processors. It is becoming increasingly clear that the resiliency of the processing sector needs to be a focal point of Ontario’s agriculture policy in the months and years ahead.