Pig shortage plunges Sweet River Abattoir's profit

BY KARENA BENNETT Business reporter bennettk@jamaicaobserver.com

Thursday, February 19, 2015

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A pig shortage has left the Westmoreland-based slaughterhouse Sweet River Abattoir with profits of less than $1 million for its third quarter ending December.

"This comes as a direct result of a pig shortage — hence reduced revenue versus fixed operational expenses," managing director Valdence Gifford stated in the company's financials released earlier this month.

"High prices paid to farmers to secure the few pigs available were not passed on to our customers as these prices were agreed on before the supply nosedive," he added.

The slaughterhouse showed net profit of $898 thousand compared to $5.4 million it made for the corresponding period in 2013; a decrease of $4.5m or 83 per cent.

Pig sales declined significantly moving from $93.5 million to $34.6 million year-on-year. Gifford in his report to shareholders stated that despite the shortage of pigs in the market, the company is gaining momentum in turning around sales, as 2013 was a glut period for slaughterhouses.

'We continue to work hard to secure pigs to boost our income stream for the next quarter, and our suppliers of pigs are increasing their sows in order to produce more pigs for the market," he said.

Sweet River Abattoir, which is the third largest supplier of pork within the market, according to its data, stated that the severe shortage of pigs last year has resulted in all slaughterhouses reporting lower pig kill for December, a traditional peak season for pork.

The shortfall was offset by most slaughterhouses selling their inventory which led to the shortage of pork to meet high seasonal demand.

Gross profit for the quarter was $8.9m compared to $15.4m for the corresponding period in 2013; a decrease of 73 per cent due to fall in revenue and high prices paid for pigs during the shortage. However, efforts to cut cost in areas such as utilities and haulage expenses resulted in a 2.5 per cent decline in Sweet River's operating expenses.

Sweet River Abattoir has already selected five large farmers to begin implementation of the feed supply initiative with HiPro Feed and will increase the number of farmers to achieve equilibrium levels of production for the domestic market by July.

"We will also seek to increase the number of farmers in preparation to meet export demand in the near future. This process is been carefully managed working in collaboration with the Veterinary Division of the Ministry of Agriculture," he added.

Work on the new abattoir which recommenced from September 2014 has been progressing steadily and is slated for completion by March 2015. "Structural works have been practically completed and the equipment, all of which is already procured, is to be installed," Gifford said.




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