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'Family farms will be lost': Hog farmers fear bankruptcies, pork shortage as meat-packing plants close – Financial Post

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Bottlenecks at pork slaughterhouses due to COVID-19 are creating a cash crisis for farmers, raising fears of bankruptcies at the farm level and threatening the flow of Canadian meat to grocery store coolers.

A cluster of coronavirus outbreaks has bedevilled meat-packing plants in recent weeks, forcing the temporary shutdown of some facilities and the imposition of strict social distancing and safety measures in others.

Olymel, the country’s largest pork processor, was forced to close a plant in Yamamiche, Que., for 14 days after nine employees tested positive for the virus. The company reopened that plant last week and has introduced new safety protocols at three of its six slaughterhouses.

While the measures are necessary to keep employees safe and prevent a total shutdown of facilities, they are also dramatically reducing the number of animals moving through the plants, creating a backlog on farms that is costing farmers between $30 and $50 per animal or roughly half their value, according to the Canadian Pork Council. Most of the country’s 13 pork processing plants are now operating at reduced capacity as infection control measures are carried out.

The organization is seeking aid from the federal government to keep farmers afloat.

“We are asking the government for an emergency payment of $20 per hog so that pork producers can continue to pay bills, feed pigs and keep producing food for Canadian families,” said Rick Bergmann, chair of the council. “Without it, family farms will be lost. In turn we will continue to see disruption in the food supply chain, and increased food insecurity as supplies tighten and food becomes even more expensive.”


Olymel is the country’s largest pork processor.

Ryan Remiorz/The Canadian Press files

The federal government is working with the provinces to support farmers and ensure availability of meat products, according to Marie-Claude Bibeau, the federal Minister of Agriculture and Agri-Food.

“We understand the repercussions the short-term capacity reduction in certain meat processing facilities is having on livestock producers,” the minister said in an emailed statement.

Canada exports about 70 per cent of its pork production annually and relies on imports for some domestic needs. The country could expand its imports to backfill domestic production, although other countries are at risk of running into the same problems in their slaughterhouses, said Gary Stordy, director of government and corporate affairs at the Canadian Pork Council.

“We have to remember also, that countries around the world are putting export restrictions on food,” he said.

The volume of hogs slaughtered in Canada fell by 16.2 per cent for the week ending April 14, as Canadian farmers struggled with a combination of depressed market prices, rising feed costs and lower returns on oversized hogs.

Indeed, as processing plants take fewer animals, farmers are being forced to pay more to continue to feed them. The hogs in turn are getting larger a problem for farmers who are paid less for animals that have grown beyond an agreed-upon size.


Most of Canada’s 13 pork processing plants are now operating at reduced capacity as infection control measures are carried out.

Hyungwon Kang/Reuters files

“There is a weight and size producers are expected to deliver and they get penalized if they aren’t within those specifications,” Stordy said.

At the same time, a swath of meat processing plants have also been forced to close south of the border due to COVID-19 outbreaks, exacerbating an already significant oversupply of American hogs. That’s driven down market prices to roughly US$45 per hog from a more typical US$55 a hog for this time of year, said Ken Ball, a senior commodity futures adviser at PI Financial. Canadian hog prices are tied by formula to U.S. prices.

“The system was taxed even before this and now even the plants that are open are slowing down,” Ball said. “Eventually market hogs will build up and swamp the market.”

Hog prices typically rally to US$80 or more between May and July, he added.

“The concern now is that seasonal rally just won’t happen this year,” he said. “And without that rally, farmers are going to be hurt even more.”

Olymel now has three of six plants operating at full capacity, said Richard Vigneault, spokesperson for the firm. The Yamamiche facility, which usually processes 28,000 hogs each week, moved 4,000 as it reopened last week and is expected to hit 17,000 this week, he said.

“We have implemented a lot of measures to reduce to zero if possible the risk of contamination,” he said. “We are all trying to adapt and adjust and cope with this situation as best we can.”

Financial Post

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GM to recall about 7 million pickups, SUVs for faulty air bag inflators – CBC.ca

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General Motors will recall about seven million big pickup trucks and SUVs worldwide to replace potentially dangerous Takata air bag inflators.

The announcement came Monday after the U.S. government told the automaker it had to recall six million of the vehicles in the U.S.

GM says it will not fight the decision, even though it believes the vehicles are safe. It will cost the company an estimated $1.2 billion US , about one third of its net income so far this year.

The automaker had petitioned the agency four times since 2016 to avoid recalls, contending the air bag inflator canisters have been safe on the road and in testing. But the National Highway Traffic Safety Administration (NHTSA) on Monday denied the petitions, saying the inflators still run the risk of exploding.

Owners complained to the NHTSA that the company was placing profits over safety.

Exploding Takata inflators caused the largest series of auto recalls in U.S. history, with at least 63 million inflators recalled. The U.S. government says that, as of September, more than 11.1 million had not been fixed. About 100 million inflators have been recalled worldwide.

27 deaths worldwide

Takata used volatile ammonium nitrate to create a small explosion to fill air bags in a crash. But the chemical can deteriorate when exposed to heat and humidity, and they can explode with too much pressure, blowing apart a metal canister and spewing shrapnel.

Twenty-seven people have been killed worldwide by the exploding inflators, including 18 in the U.S.

Monday’s decision by NHTSA is a major step in drawing the Takata saga to a close. It means that all Takata ammonium nitrate inflators in the U.S. will be recalled, NHTSA said. Earlier this year the agency decided against a recall of inflators with a moisture-absorbing chemical called a dessicant. NHTSA said it would monitor those inflators and take action if problems arise.

GM will recall full-size pickup trucks and SUVs from the 2007 through 2014 model years, including the Chevrolet Silverado 1500, 2500 and 3500 pickups. The Silverado is GM’s top-selling vehicle and the second-best selling vehicle in the U.S. Also covered are the Chevrolet Suburban, Tahoe and Avalanche, the Cadillac Escalade, GMC Sierra 1500, 2500 and 3500, and the GMC Yukon.

It took the agency more than four years to arrive at its decision, which comes toward the end of U.S. President Donald Trump’s four-year term.

NHTSA said in a prepared statement that it analyzed all available data on the air bags, including engineering and statistical analyses, aging tests and field data.

“Based on this information and information provided to the petition’s public docket, NHTSA concluded that the GM inflators in question are at risk of the same type of explosion after long-term exposure to high heat and humidity as other recalled Takata inflators,” the agency said.

Declared defective

The company has 30 days to give NHTSA a proposed schedule for notifying vehicle owners and starting the recall, the statement said.

GM said that although it believes a recall isn’t warranted based on the factual and scientific records, it will abide by NHTSA’s decision.

Spokesman Dan Flores said Monday that none of the inflators have blown apart in the field or in laboratory testing. But he said GM wants to avoid a drawn-out fight with the government.

“Although we are confident that the inflators in the GMT900 vehicles do not pose an unreasonable risk to safety, continue to perform as designed in the field and will continue to perform as designed in line with the results of our accelerated aging studies, we will abide by NHTSA’s decision to maintain the trust and confidence of customers and regulators,” he said in an email.

In a 2019 petition to NHTSA, GM said the inflators were designed to its specifications and are safe, with no explosions even though nearly 67,000 air bags have deployed in the field. The inflators, it said, have larger vents and steel end caps to make them stronger.

But Takata declared the GM front passenger inflators defective under a 2015 agreement with the government.

In its petition, GM said that Northrop Grumman tested 4,270 inflators by artificially exposing them to added humidity and temperature cycling, and there were no explosions or abnormal deployments.

However, NHTSA hired air bag chemical expert Harold Blomquist, who holds 25 air bag patents, to review the data, and he concluded that the GM air bags were similar to other Takata inflators that had exploded.

Test results for the GM inflators included abnormally high-pressure events “indicative of potential future rupture risk,” NHTSA said in documents. “These findings illustrate that GM’s inflators have a similar, if not identical, degradation continuum” to other Takata inflators that have exploded, the agency wrote.

Flores said GM already has purchased 1.6 million replacement inflators made by ZF-TRW that do not use ammonium nitrate.

‘Unexploded hand grenade’

Jason Levine, executive director of the nonprofit Center for Auto Safety, which opposed GM’s petitions to avoid recalls, said it’s a good day for millions of GM owners who had to wait four years for a decision on “whether they are driving with an unexploded hand grenade in their steering wheel.”

Shares of GM rose nearly 3 per cent in Monday morning trading to $44.21. The company said the recalls will be phased in based on replacement inflator availability, and will cost $400 million this year.

Drivers can check to see if their vehicles have been recalled by going to nhtsa.gov/recalls and keying in their 17-digit vehicle identification number.

The previous Takata recalls drove the Japanese company into bankruptcy and brought criminal charges against the company. Eventually it was purchased by a Chinese-owned auto parts supplier.

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Market Crash Alert: What Goes up Must Come Down – The Motley Fool Canada

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Investing in stocks has risks, because the market is never predictable. If you can transfer people’s day-to-day behaviour or routine to the stock market, then everyone would be rich. Unfortunately, it won’t happen. The only sure thing is that prices will rise and fall.

Innate behaviour of the stock market

Stocks behave depending on emerging or prevailing market or business environments. Since the market comes in cycles, traders rely on trends or patterns to make profitable investments. The key to successful stock investing is the execution of the strategy, although it’s not easy.

You must also understand that during a cycle, some asset classes will perform better than others. For example, the energy sector is in a rut at present because of low oil prices and weak demand. Investors stay away from energy or oil stocks because of elevated volatility. The same goes for airline stocks.

When oil prices begin to surge, along with demand, it will start a new cycle. In such a case, you follow the golden rule: buy low and sell high. Investors will follow the trend and ride on the momentum. As energy stock prices rise, investors will profit take at some high point.

TSX rally

The pandemic triggered a stock market crash in March 2020, causing a market-wide carnage. The S&P/TSX Composite Index saw its biggest one-day drop since 1940. On March 12, 2020, the TSX fell 12.34% from 14,270.10 to 12, 508.50. Canada’s main stock market sunk further a week later to 11,228.50.

However, the bloodletting did not last long, as a bull rally ensued. On November 18, 2020, the TSX finished at 16,889.80, or a +50.42% climb from its COVID-low. It has recovered from the losses and is down by only 1.02% year to date. Of the 11 primary sectors, five are in positive territory and six remain in the red.

Thus far, the top three performing sectors are information technology (+38.05%), materials (+16.83%), and industrials (+13.05%). The energy sector is the worst performer with its -44.02% loss.

Bucking the pandemic

If you’re wary of the present market uncertainty, North West Company (TSX:NWC) is proving to be irrepressible and pandemic-resistant in 2020. Investors in this consumer-defensive stock are winning by 25.31% year to date. Likewise, its 4.35% dividend yield should be safe and maintainable, given the 57.39% payout ratio.

This $1.6 billion Canada-based multinational grocery and retail company serves communities in extreme geographies. It has a monopoly of the markets. Even an e-commerce juggernaut is hardly a threat.

You can find North West stores in underserved rural communities and urban neighborhoods in northern Canada, western Canada, rural Alaska, the South Pacific islands, and the Caribbean. Customers in these markets can buy a broad range of products and avail of various services. The highest preference, however, is food.

If you were to invest today, the share price of $32.84 is a good entry. Analysts forecast the stock to climb further by 15.71% to $38 in the next 12 months.

Reversible trend

Expect the TSX to get hotter once the availability of the COVID-19 vaccine becomes a certainty. However, don’t get too excited, as rising infections and a return to lockdowns could reverse the trend.

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Bank of Canada deputy downplays risks of consumer default wave – BNN

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The massive policy response from the Bank of Canada and the federal government successfully prevented the country’s financial system from buckling, though vigilance is still needed, according to a top central banker.

Signs of overwhelming financial strain are few, and the risk of a wave of consumer defaults seems low, Deputy Governor Toni Gravelle said in remarks via video conference to the Autorite des marches financiers. Almost all of the households with expired debt deferrals have resumed repayments, and government measures are helping businesses in many sectors manage cash flows, he said.

“We have long warned that a recession could create broad stress across the financial system,” Gravelle said in a semi-annual update on vulnerabilities in the financial system. “Yet, despite the devastating economic impact of the pandemic, this risk has not — as of yet — materialized.”

The speech paints a reassuring picture of Canadian consumers and companies emerging from the unprecedented shock in decent shape, in spite of elevated debt levels. It also casts the central bank’s own response as largely successful in averting the worst effects of the crisis, though Gravelle said the pandemic remains a source of “considerable financial system risk.”

The deputy governor downplayed signs of overheating in the nation’s housing market, hinting the recent surge in prices reflects fundamental factors such as pent-up demand and a shift in preferences to larger homes. Values have risen fastest, meanwhile, in cities with moderate mortgage levels.

“To this point, we do not see signs that home prices are rising due to speculation, like we saw in the greater Toronto and Vancouver areas a few years ago,” he said. At the same time, he cautioned about the need to be vigilant in certain segments of the market such as condos.

Gravelle added, however, that it’s too soon to declare victory, in particular because many mortgage deferrals only ended in October, meaning the full effects may not be known until the end of the year or early 2021.

He was less sanguine on the prospects for business, which he said may need more financing in the near term to get through a bumpy recovery. That’s why the central bank is ready to support the financial system if needed, even though it has recently pulled out of some programs.

“We expect that an increasing number of businesses will need financing in the coming quarters to get by,” he said. “Staff will be conducting simulations using firm-level data to quantify this, and we plan to publish those results in the next couple of months.”

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