TORONTO - Canadian shoppers will face another hike in meat prices this month as Maple Leaf Foods Inc. (TSX:MFI) responds to the widespread impact of a virus in the U.S. hog industry.
The Toronto-based meat processor, which makes bacon, hot dogs and deli meats, said Thursday that rising costs have forced it to act quickly to improve its margins.
“We are reasonably confident that the entire market will react in similar ways, in the first instance, because the cost increases are an industry-wide issue,” president and CEO Michael McCain said in a conference call with analysts, noting that hog costs spiked 60 per cent in the quarter.
It will be the second price increase Maple Leaf has put through in response to the Porcine Epidemic Diarrhea Virus, which has killed millions of piglets since it was discovered last year.
The virus does not affect humans or the food they consume, but is estimated to have wiped out about 10 per cent of the U.S. pig population and has been blamed for recent increases in bacon and pork prices. Farmers have struggled to control the virus, because little is known about how it spreads and there is not yet a federally approved vaccine in the U.S.
McCain, 55, said the widespread effect is unlike anything he has seen before.
He cautioned about the impact on shoppers’ habits and the possibility that people could buy bacon and other pork products less frequently over the longer term.
“What we don’t know, and becomes highly unpredictable, is what the demand response will be from that new higher pricing,” he said, after the company reported its latest financial results.
The company announced the price increases as it reported a loss of $124.6 million in the first quarter, or 89 cents per share, as it dealt with costs from a massive seven-year revamp of its operations. That compared with a loss of $30.6 million, or 22 cents per share.
Sales rose more than three per cent to $711.3 million from $689.4 million.....