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Poultry Marketplace
Profile of The Canadian Turkey Industry
Chapter 5: Processing and Further Processing
- INDEX
- CHAPTER 1: Introduction
- CHAPTER 2: World Turkey Production and Trade
- CHAPTER 3: Canadian Turkey Production and Supply Structure
- CHAPTER 4: Turkey Production in Canada
- CHAPTER 5: Processing and Further Processing
- CHAPTER 6: Canadian Turkey Market
- ANNEX A: The Import Control List
- Tables and Figures
- Bibliography
5.1 Industry Structure and Establishments
Canada has 135 primary poultry processing plants (24 federally registered and 111 provincially registered). The five largest firms in terms of processing quantities are, in order: Unidindon (in Québec), Lilydale Poultry (in British Columbia and Alberta), Thames Valley Processors (in Ontario), Sofina Foods (in Ontario) and P&H Foods (in Ontario).
| Federally registered | Provincially registered | |
|---|---|---|
| British Columbia | 2 | 2 |
| Alberta | 2 | 721 |
| Saskatchewan | 1 | 1 |
| Manitoba | 2 | 1 |
| Ontario | 8 | 27 |
| Québec | 6 | 1 |
| New Brunswick | 1 | 1 |
| Nova Scotia | 2 | 3 |
| Prince Edward Island | 0 | 1 |
| Newfoundland and Labrador | 0 | 2 |
| TOTAL | 24 | 111 |
1- Including Alberta’s 68 Hutterite plants.
Source: CFIA / Data compiled by the AAFC AID Poultry Section.
Canadian processors are represented at the national by the Canadian Poultry and Egg Processors Council (CPEPC). CPEPC represents some of the largest agri-food corporations and its 170 members process over 90% of Canada’s chicken, turkey, eggs, and hatching eggs. The CPEPC’s mandate is to identify and represent the collective goals and interests of the processing industry, develop appropriate action plans, and conduct activities that will best achieve those goals.
5.2 Slaughters
From 1996 to 2006 the total turkey slaughters increased from 146.2 million kilograms to 162.5 million kilograms (eviscerated). This total can be broken down into four different categories: broilers, hens, toms and mature. Hens are female turkeys and usually reach a weight of between 5 to 9 kilograms, while toms are male and usually weigh in at over 9 kilograms. Broilers are younger birds of either sex weighing less than 5 kilograms and are usually a bit tenderer than their older turkey equivalents. Mature turkeys are older and not as tender and are most suitable for moist-heat cooking, such as stewing and baking, and may be preferred for use in soups and stews. Mature turkey is not subject to the supply management system. Figure 8 provides a breakdown in the types of turkeys slaughtered over a five year period. Consistently, toms provide the largest category of slaughtered turkeys representing 47% of the total production in 2006 while mature turkeys provide the least with only 5.6% of total production in 2006.
In 2006, Canadian slaughters were at their highest during the months of September and December with slaughters close to 31.8 million kilograms but were at their lowest in the months of January and February with slaughters near 22.3 million kilograms. Quarterly slaughter distribution shows some stability over the course of the year with third quarter (July, August, and September) representing the largest share with 27.1% while the first quarter (January, February, March) provided the smallest share with 21.3%.
In 2006, Ontario had the biggest share of turkey slaughters with 46% followed by Québec (22%), and British Columbia (12%). These include slaughters that come from domestic turkey supplies as well as imports.
Figure 9 - Provincial Shares of Turkey Slaughters in Registered Stations, 2006
Source: AAFC AID Poultry Section.
5.3 Further processing
5.3.1 Further Poultry Processors Association of Canada (FPPAC)
The FPPAC is a trade association that provides manufacturers of value-added poultry products with an opportunity to share visions and concerns. The association was founded by three independent further processors in August 1985. The common cause that brought members together then was the concern about adequate supplies of raw material, and this today remains a key issue. Members are engaged in adding value to chicken, turkey, and fowl meat by way of sizing, marinating, breading, cooking, forming and adding other ingredients to make ready-to-eat or cooked products and meals.
Currently, the association is made up of 42 further processors (and 10 associate/supplier members), most of them based Ontario, where over half of Canada's further processing capacity is located. FPPAC members account for about $1.3 billion in sales and employ over 4,200 full-time positions. 1
5.3.2 Further Processing Plants
As of September 2007, there were 402 federally registered further processing plants for poultry meat in Canada. These plants are engaged in canning, boning and cutting, and other similar activities. It should be noted that some further processing plants also engage in primary processing; as well, a number engage in more than one type of further processing operation.
Source: Canadian Food Inspection Agency (CFIA) database on licensed plants.
5.4 Economic importance of the industry
The Canadian Poultry and Egg Processors Council (CPEPC) has a further poultry processing sub-sector that represents poultry (chicken and turkey) further processing plants across Canada. This group has reported over $300 million in plant and equipment investment, and employs more than 3,500 people. It is supplied by primary processors, and transforms raw poultry meat into a variety of innovative foods for the retail and food services markets.
In 2006, the number of Canadian regulated turkey producers was 557, and generated farm cash receipts of $278 million in 2006.
5.4.1 Poultry Processing Revenue, Wage, and Employment Figures
Statistics Canada figures show that in 2005 approximately $5.2 billion out of the $21.5 billion meat product manufacturing industry in Canada was generated by poultry processing (24% of the total). The largest poultry processing region in Canada was in Ontario which accounted for near half of Canada’s entire poultry processing revenues.
Source: Statistics Canada, Table 301-0006**
† Data not available in order to meet the confidentiality requirements of the Statistics Act
In 2005, the total salaries and wages generated by both direct and indirect labour in the poultry processing industry was $716.5 million. During the same year, the total number of employees in the poultry processing sector was 21,614. Based on these figures, the average annual wage is approximately $33,100.
Source: Statistics Canada, Table 301-0006**
**Table 301-0006 publishes principal statistics for businesses above certain revenue thresholds that vary by province and by industry.
Below these thresholds are the smallest manufacturing businesses which are excluded from the ASML survey in order to reduce
response burden.
5.5 Concentration in the Industry
Like many sectors of the agri-food economy, the poultry industry has become concentrated over the years. The table below exhibits the various concentration ratios within the poultry industry across selected years ranging back to 1965. Concentration Ratio (CR) measures have traditionally been measured on the basis of sales but employment, capacity, value added, or physical outputs have also been used to determine market shares.
The concentration ratio is effective in showing the dominance of the top firms, but it does not address the rest of the market nor does it account for the influence of a single firm2. For this example, the difference between an establishment and a firm is that a firm may own a number of establishments under various names in differing provinces across Canada. In other words, the firm can be considered the ‘parent’ company of the establishment.
The most common measure is the CR4. For turkey, the CR4 measurement shows a steady idle trend since 2000, but when compared to the overall poultry sector since 1965 the overall trend has been one of consolidation. In 2006 the top four firms (Unidindon, Lilydale, Thames Valley Processors, and Sofina Foods) accounted for 70.85% of the turkey processed in Canada.
The evolution in the total number of firms and establishments over the forty year timeframe provides an overall indication of the level of concentration in the industry. While the CR4 ratio has increased in the poultry sector since 1965, the overall number of firms in the industry has decreased.
Although there are fewer firms and establishments in the overall poultry industry today, the overall quantity of poultry processed has increased dramatically over the forty year period. This trend implies that the average establishment and firm are processing a much larger amount of poultry than was the case at any point in the past forty years. The CR20 lends further support to this point by showing that the top 20 firms account for nearly 99.84% of the turkey processed in 2006 compared to much lower figures in the general poultry sector in 1965 and even in 1980. Over the years, turkey operations have become more specialized as the whole-bird consumption pattern has shifted toward more convenient products and specialized cuts. While the concentration ratio has stabilized in the recent years, concentration in the industry might continue to occur in the future.
* Data collected was calculated in the dollar value of poultry shipments and not in overall quantity (kg).
Source: Data for the years 1965 to 1980 are from Statistics Canada, Catalogue no. 31-402. 1985 data is from M.E. Fulton and Y. Tang, 1999. Testing the Competitiveness of a Multistage Food Marketing System: The Canadian Chicken Industry. Canadian Journal of Agricultural Economics 47: 25-250.
† 2000, 2005, & 2006 data is derived from the AAFC Poultry Section turkey slaughter data (kg).
5.6 Investments in the Industry
Figure 10 provides a breakdown of capital expenditures as well as expenditures as a percentage of total poultry shipments within the poultry processing industry since 1992.
The general trend to note is that capital expenditure in machinery equipment has consistently been higher than capital expenditures in construction. This trend, along with the concentration ratio data, further suggests that individual establishments are expanding in size and efficiency (through newer, more modern machinery) rather than increasing the overall total amount of establishments.
Throughout the fourteen year period, the average total annual capital expenditures as a percentage of total poultry shipments stand at approximately 7.5%; while 1996 and 1999 are years of above average capital expenditures with 12.2% and 14.6% of total poultry shipments respectively.
Figure 10 - Breakdown of Capital Expenditures in the Poultry Industry (1992 – 2005)
Source: Statistics Canada, table no. Table 029-0009 & Table 304-0014
1 Information taken from the FPPAC Web site.
* Since many of the plants in the “Other” category undertake more than one processing operation, the overall total is calculated in order to denote unique sites and eliminate double counting.
2 Harrison, Darryl and James Rude. (2004) Measuring industry concentration in Canada’s food processing sectors. Agriculture and Rural Working Paper Series Working Paper No. 70.
http://dsp-psd.pwgsc.gc.ca/Collection/Statcan/21-601-MIE/21-601-MIE2004070.pdf
