While the CAQ government seeks to increase Quebec’s food self-sufficiency, many farmers are experiencing serious difficulties while the pork processing and integration giant Olymel, whose business model, by its own admission, is goodbye, waver.
Conducted in March, a survey by the Union of Agricultural Producers (UPA) of 3,675 producers shows a worrying situation. Nearly 20% of farmers say they are in poor or very poor financial health, and almost half of them expect their situation to deteriorate over the next 12 months. One-third of farmers are unable to meet their financial obligations, and one in ten producers expect to close in the next year.
Although farmers’ incomes have increased due to higher food prices, the cost of inputs, including fertilizers, fuel and animal feed, have increased further, reducing profits. But it is the rise in interest rates that raises fears of the worst: almost half of agricultural loans must be renewed in the short term at much higher rates.
If they are well capitalized, dairy producers and field crops are doing quite well. It is start-up businesses, those of agricultural succession, heavily indebted, who are the most affected, as well as livestock farms in remote regions, whether in Abitibi-Témiscamingue, in the Bas-Saint-Laurent, in Charlevoix or Saguenay–Lac-Saint-Jean, which are struggling under the weight of animal feed and transportation costs. And there are those virtuous producers who have gone into debt to modernize their farm in order to improve the welfare of their animals or to practice sustainable agriculture.
As a large number of farmers in Quebec prepare to retire, ensuring that young people will take over or, if they have already done so, that they will keep their farms is a crucial issue. . There are food self-sufficiency goals of the Legault government. According to recently released Canadian data, 40% of farm operators will retire during the decade. The situation is not much different in Quebec, where the average age of farmers is 53 years old. At the same time, the next generation must deal with an explosion in the price of agricultural land.
Ensuring that livestock farms can swarm in Quebec on pastures that are well suited to this activity is also a matter of food self-sufficiency and, moreover, a land occupation issue.
The CAQ government is aware of the unsustainable pressure exerted by soaring interest rates on the next generation of farmers. The UPA calls for targeted financial assistance for companies in difficulty in the form of guaranteed loans for the consolidation of their debts coupled with the deferred payment of interest. As for livestock farms in remote regions, current programs, in particular farm income stabilization insurance (ASRA), could be adapted to take their specific situation into account.
Olymel’s setbacks are of another order. One wonders if this subsidiary of Sollio (formerly La Coop fédérée) is not the victim of its own carelessness. The acquisition of pork integrator F. Ménard in 2019, at a cost of one billion, it is said, was not a happy one. In 2021, the Government of Quebec and Investissement Québec launched a lifeline for Olymel by injecting 150 million into its capital. In 2022, the giant wrote off 248 million for “goodwill”, a euphemism for saying that it paid too much, while taking on heavy debt. Last week, it announced the closure later this year of its Vallée-Jonction facilities, which will result in the layoff of 1,000 people.
However, Olymel is about to benefit from further government assistance. Les Éleveurs de porcs du Québec have agreed to reduce their production by one million hogs out of an annual volume of 6.8 million animals through a buy-back program that should cost 80 million, two-thirds of which would be at the expense of the taxpayers. So the industry’s largest integrator is being paid to streamline. The least we can demand is that all the light be shed on this discomfiture. It must lead to an in-depth examination of this pork export sector which drinks greedily from the breasts of the State, an examination which will have to bear on both economic and environmental considerations.