September 17, 2012

Canada's Puratone files for creditor protection

Following Big Sky Farms in Saskatchewan, Puratone has filed for creditor protection, making it the second major hog company in western Canada to run into problems this week.

The Court of Queen's Bench has granted Puratone protection from creditors for 30 days, according to reports. During that time, the company must come up with a plan for dealing with its creditors and restructuring.

"We have streamlined operations significantly over the course of the past 24 months to minimise the cash-flow burdens associated with operating in this negative market environment," said President and CEO Ray Hildebrand in a statement. "In spite of being highly competitive in both the domestic and global landscape, the market challenges have now been exacerbated by the US drought to the point where there are no further operational-restructuring pursuits or austerity measures available to us that could protect us from the liquidity crisis the industry is facing. Our primary focus must continue to be employee safety, the care of our animals and the safeguarding of the environment."

The company said a number of stresses facing the hog industry as a whole were behind the need to restructure. The strong Canadian dollar, high feed costs, mandatory country-of-origin labelling in the US and a drought in the US Midwest were all causing hog producers to lose money.

"Every producer right across Canada and into the US is losing money on hogs, and our projections are that they will likely continue to lose from now through April," said Neil Ketilson, general manager of the Saskatchewan Pork Development Board. "It just depends on who has deep enough pockets to be able to withstand that."

Puratone produces about 500,000 hogs a year, making the company about half the size of Big Sky Farms, which went into receivership September 10.