A few weeks ago, the results of an in-house survey conducted with agricultural producers were posted on the Bulletin des agriculteurs web site. It wasn’t a very scientific survey, nor was it particularly representative, but it nonetheless indicated an interesting trend.

To the question: Which avenue do you favour to increase revenues for agricultural producers, guess what the answer was? Collective marketing? No, that’s no longer fashionable. Government subsidies? Even less. Increasing farm productivity? Not even close! Ready to give up? Well, 80% of respondents believe that having a processing plant is the answer!

Although this is not a new idea, I personally find it interesting. Agricultural producers controlling an economic leverage other than their farms, now that’s pretty good. Talk to Agropur’s shareholders who are impatiently waiting for their patronage refunds for the year ending. However, if you speak with beef producers subjected to the whims of a single processing plant would certainly have no problems with venting their frustrations.

But as I chatted with some of you, I thought overall arguments were a little, how can I say, light-hearted. “We don’t have a choice, processing plants are exploiting us! We just got tired of begin screwed over! Anyone can do better than that bunch of incompetents!” Okay, okay, I hear you. But instead of telling me about your recriminations, tell me about a business plan.

Because finding a location for a slaughterhouse these days is no easy feat. First, you need money, lots of money, to create an impact. Most financiers agree: we wouldn’t have the means to buy Agropur or Coopérative fédérée today with their combined market value estimated at 1.5 billion $. But, you may think, that is not an insurmountable obstacle. Perhaps.

Expertise is also an issue. Slaughtering animals is a relatively easy operation. But there isn’t that much money in it. To make some kind of a profit, butchering, processing, packing and shipping would have to be part of the deal. Already, things are getting complicated. But that’s not all: you also need to market the product and fight tooth and nail for your share of a market that is already very competitive and over-burdened. For example, some retailers, with their head office located in Toronto, will only sell two national brands of pork in addition to their own, Maple Leaf and Schneider’s. In fact, Olymel, in spite of its size and market strength, has had trouble leaving its mark on the rest of Canada. Imagine that.

In recent months, Americans have become much more aggressive. They have the means, the decreased value of their dollar, the better product presentation and especially, their large capacity plants. In fact, there is a huge cost difference between a plant that processes 80,000 pigs/week and plants like ours that process 35,000. Québec is in dire need of a slaughterhouse superstructure. Will the multiplication of smaller establishments be, on the whole, more profitable for all producers? Will collective marketing be stronger for it? I doubt it.

Investing in and making money in the processing industry is risky business. In 2003, a gosh-awful year for agriculture, Canadian pork processors lost tens and tens of millions of dollars. Some just couldn’t survive, just like that new and recently folded Ontario pork slaughterhouse. A resounding failure.

This said, I won’t judge your intentions or your projects. I don’t know them. But if I had $30,000 to invest in a slaughterhouse project, I would steer clear of empty formulas and excessive zeal, I would look at the business plan, very carefully, and study the small print.