Hog plants are at risk of shutting as soaring inflation hampers demand for pork while feed costs climb.
Closely held Canadian HyLife Foods is looking for a buyer for its pork plant southwest of Minneapolis just three years after it purchased the facility, which processes about 1.2 million hogs annually. Olymel, another Canadian company, announced Friday it will permanently close its slaughter plant in Vallee-Jonction, Quebec, impacting about 1,000 workers.
“The decision was necessary to stop losses in the fresh pork sector, which have amounted to more than $400 million over the past two years and are jeopardizing the entire company’s profitability,” Olymel chief executive officer Yanick Gervais said in a statement.
Hog prices have been sliding amid concern pork supplies are outpacing demand for the meat. Additionally, the industry has faced labor shortages and rising costs of inputs like feed. That’s made it difficult for some operations to stay profitable.
A potential shutdown of HyLife’s plant would impact about 1,000 employees. Across the industry, many facilities are aging and require considerable investment to maintain and operate, making “under performing assets” heavily scrutinized, said Christine McCracken, senior analyst for animal protein at Rabobank.
“Our industry has been facing unprecedented external challenges such as inflation, high grain costs, and exchange rates that are affecting businesses and consumers alike,” HyLife Chief Executive Officer Grant Lazaruk said in an emailed statement.