Higher meat costs seen to last in Canada

 

 

Higher raw meat costs look to be a long-term trend as Canadian hog farmers struggle to recover from money-losing operations, the head of leading Canadian hog processor Maple Leaf Foods said.

 

"We actually think it is a new normal," said president and CEO Michael McCain, noting that higher protein costs are here to stay. He added that costs are not going to go backwards for the foreseeable future.

 

Hog producers were losing CA$40 (US$38) per pig in 2009, a situation that is not sustainable, McCain said. Meanwhile, Maple Leaf's process of adjusting its prices to higher meat costs will take one to three quarters, he said.

 

Earlier, Maple Leaf announced its financial results for the first quarter ended March 31, 2010. Sales for the first quarter declined 7% to US$1.19 million from US$1.27 million last year, mostly due to the impact of the strengthening of the Canadian dollar on fresh pork sales.

 

Adjusted Operating Earnings increased 7% to US$33.9 million compared to US$31.6 million last year, due to better performance in the protein operations. Net earnings increased to US$8.8 million or US$0.06 per share in the first quarter of 2010 compared to net earnings of US$2.9 million or US$0.02 per share last year.