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'Everything's on the table': How COVID-19 could change Canada's meat processing industry – Financial Post

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“Big is bad.”

That’s the standard refrain Temple Grandin hears when she lectures students at Colorado State University on the complexities of meat processing plants.

Her standard retort: “Big isn’t bad. Badly managed is bad.”

For years, she has driven home this point: that even in a rapidly consolidating sector, where many small plants processing 500 head of cattle a day have been mothballed in favour of a few mega-facilities slaughtering 20,000 cows per day, high standards for animal safety and meat quality are still possible.

“Those plants can do a good job,” the animal science professor and livestock handling expert said in an interview. “The size doesn’t matter very much that way.”

But it matters an awful lot in other ways. That became clear to Grandin a number of years ago, after massive floods crippled transportation in her home state of Colorado and an ice storm devastated Eastern Canada.

The supply chain can handle one large plant being closed. But when it turns into multiple plants you have a problem.

Temple Grandin, animal science professor and livestock handling expert

“Even then, I wasn’t thinking about a pandemic,” she said. “I was thinking more of things like power failures, power grids going down, massive storms taking out a single plant. The supply chain can handle one large plant being closed. But when it turns into multiple plants you have a problem.”

Big isn’t bad, Grandin decided. “Big is fragile.”

It’s a deeply painful lesson Canada’s meat industry has been forced to learn as COVID-19 sweeps through North America and into the handful of plants responsible for the bulk of the country’s meat processing.

Huge swaths of the workforce were infected in outbreaks at Cargill Inc.’s plant in High River, Alta., and JBS USA Holdings Inc.’s plant in Brooks, Alta., requiring entire operations to shut down. As the supply chain shuddered, multinationals Cargill and JBS — controlling 70 per cent of Canadian beef processing at those two Alberta plants alone — raced to stagger shifts, outfit staff in protective gear and retrofit facilities with plexiglass shields.

The question now is whether those measures will be enough to contain the virus or if a more fundamental reimagining of meat supply chains is necessary — one that would see more automation in processing, fewer cuts of beef in grocery store coolers, an unraveling of a decades-long shift to large scale production — and ultimately higher prices.

Will the industry be changed by this? I think there’s no doubt about that

Mike von Massow, a food economist at the University of Guelph

“Will the industry be changed by this? I think there’s no doubt about that,” said Mike von Massow, a food economist at the University of Guelph. “It’ll have to change to mitigate the spread of infection between employees which is something we’ve never had to think about before. Can we do it within the plants we have? I don’t think we know that yet.”

At the core of the issue is a simple problem: COVID-19 thrives in crowds. And the quantity of workers inside each processing plant has only increased as production has become more concentrated. Indeed, just three plants — the JBS and Cargill High River facilities together with Cargill’s Guelph-based operation — now represent 85 per cent of all Canadian beef processing.

When large numbers of employees work closely together, the solution isn’t as simple as thinning shifts or telling staff working elbow to elbow to stand further apart.

A meat plant has two main parts. The “kill side” where the animal is slaughtered, bled and skinned and the “cut side” where its innards are removed and the meat is sliced, first into halves and then quarters. These “primal cuts” are then reduced into the smaller pieces seen in grocery stores — the steaks, roasts and ground beef bought in trays and boxes.

Over the years, the industry has gotten better at directing specific cuts to individual markets. Indeed, Canada exports 44 per cent of its beef, mostly to the United States but also to Asian countries where parts considered waste in North America  — kidneys, hearts, tongues and tripe — draw a good price.

But producing all those cuts requires the kind of human skill that meat processors have struggled to replace.

“The part that has the most people is the cut up,” said Grandin, who was the subject of a Hollywood movie, starring Claire Danes, highlighting her work as an animal scientist. “On the slaughter side, the people are much further apart and it’s easier to pull them apart, but on the cut-up side they’re shoulder to shoulder.”


Beef producers say delayed processing due to COVID-19 infections of workers at killing and meat-packing plants is leading to longer times for their animals on farms and costlier feeding bills.

Getty Images

Early infection control measures included reducing the number of people on each shift. But while that might slow the spread of the virus, it also slowed down “the line,” — the continuous, largely linear flow of a meatpacking plant that sees live animals arrive at one door and finished products emerge from another. With fewer people on “the cut,” the backlog of animals ready for processing swelled, leaving farmers to house and feed them for longer than intended.

That has both hiked costs for farmers and escalated the risk of the animal growing too big to be processed in the plant, where it spends much of its time hanging from an overhead chain that can only handle so much weight — a particularly vexing problem for pork farmers. Indeed, while beef farmers can slow the growth of cattle by manipulating feed, pigs grow until ultimately they’ve expanded beyond the plant’s ability to handle them.

“A normal weight for a pig to be processed is 280 pounds,” said Grandin. “Let’s say I have a 370-pound pig. I can’t put them on every hook in the plant, I’ll break the chain if I do that and shut the plant down half a day. But if I put a pig on every other hook, now I’ve cut the processing speed in half.”


While beef farmers can slow the growth of cattle by manipulating feed, pigs grow until ultimately they’ve expanded beyond the plant’s ability to handle them.

Scott Olson/Getty Images

Automation may provide opportunities to reduce the ranks of workers and slow the spread of infection. Indeed, robotic handling has done much to quicken operations in other areas of processing plants and the industry has been exploring its use for cutting operations. But here again, there are challenges.

Cattle are less genetically homogeneous than lamb or chickens, said Dave Moss, general manager of the Canadian Cattlemen’s Association. That means the pieces moving along a conveyor belt are rarely the same size or shape.

For robotic machines built for uniformity, that randomness has been difficult to overcome.

“It’s easy to automate something if the thing you are handling is always in the same position,” said Grandin. “But on the cut side, the meat’s not going to come down that conveyor always in the same position. You need people.”

There is an awareness that what plants looked like pre-COVID isn’t what they will look like when this is over

Chris White, president of the Canadian Meat Council

What about reducing the number of cuts and therefore the number of people required to produce them? Could we all learn to take a quarter of an animal and butcher it at home?

That would mean eliminating many cuts popular in other countries, eating into our export opportunities, noted Kim O’Neil, director of beef and veal at the Canadian Meat Council.

It also might not be terribly appealing to Canadians, who lack the fridge and freezer space necessary to handle large cuts of meat.

“We are seeing a lot of groups trying to educate the public on how to cook different cuts,” she said. “But a lot of what we export, Canadians simply don’t eat.”

That leads to the question of whether safeguarding the supply chain might require a more radical solution. A more distributed model, one with smaller plants, would see production spread out over more facilities rather than concentrated in just a few. That way if one plant is wiped out by infection, more would be available to backfill demand.

“It’s a valid question, I just don’t know if it’s the answer,” said von Massow.

The issue of infections, he notes, has less to do with the size of the plant and more to do with the structure of the process within it, one that relies on many workers pushed in together. Indeed, smaller plants are only valuable if they are built in a way that spaces people further apart.

“Most of the existing ones are built in the same way as the larger facilities,” he said.

Building a new meat processing plant from the ground up — one designed with infection control in mind — could cost between $300 and $400 million depending on design, said Moss. What’s more, it’s not clear that controlling the spread of infection depends entirely on what happens on the plant floor.

“The challenge is that social distancing has to happen before and after work and while you can control conditions at work, you can’t control it when people go home,” said Moss.

In addition to investing in temperature testing, cleaning and sanitizing procedures and personal protective equipment like gloves and masks, companies such as Cargill have produced educational materials for workers, translating them into up to 40 languages for temporary foreign workers. 

Though the plants are currently focused on bringing existing operations back online, “everything is on the table” when it comes to the future, including a reorganization of supply chains, said Chris White, president of the Canadian Meat Council.

“There is an awareness that what plants looked like pre-COVID isn’t what they will look like when this is over,” said White, whose organization represents all of the country’s major processors, including Cargill and JBS. “There will be a lot of discussions about automation, about whether other major changes are needed. There will be a whole-of-industry approach. But for the moment, people are just trying to get through right now.”

While any solution will cost money, a reimagined supply chain of smaller plants undoubtedly carries the highest price tag of all, Grandin notes.

“How do you process in smaller plants for the same price? You can’t,” she said. “The problem is big plants have economy of scale. Fixed costs such as buildings, water, electricity, they go down. Your cost per pig, per cow goes down. A more distributed supply chain will be more expensive. This is the trade off and there’s no way to change this. ”

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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