Coldwater, Mich., processing plant could boost northeast Indiana pork production

August 5th, 2016

By Doug Leduc | Indiana Economic Digest 

A processing plant under construction in Coldwater, Mich., could increase northeast Indiana pork production and make the region’s hog farming more profitable.

Ongoing potential economic benefits from the future Clemens Food Group plant were described by Steve Meyer, vice president of pork analysis for Fort Wayne-based EMI Analytics, and by Chris Hurt, an agricultural economist with Purdue University.

With the plant expected to slaughter 10,000 heads a day or about 2.5 million a year, “that’s an opportunity,” said Meyer from EMI’s Iowa office.

“It’s certainly a positive thing for hog producers in northwest Ohio, northeast Indiana and southern Michigan to bring another buyer to the market,” he said. “I think it’s going to be positive for hog prices. It’s going to provide the market access (to processing) at a much lower cost for transportation than what producers, especially in Michigan, had available to them.”

Clemens announced plans for the 550,000-square-foot facility about 60 miles north of Fort Wayne in December 2014, saying it would represent up to $255.7 million in private investment.

The company estimates the project will create 800 jobs, and it was supported by $12.5 million in Michigan Strategic Fund - Community Development Block Grant funds for infrastructure improvements, land acquisition, workforce development and on-the-job training.

About half the hogs slaughtered at the plant will come from seven large operations producing them on contract and the rest will come from independent producers, Meyer said.

If all goes as expected, the plant could begin testing its operations next June and ramping up processing during the next few months.

Having a full shift processing by November 2017 could come in handy, Meyer said, because he projects the U.S. hog supply will be up during the fourth quarter 2.7 percent from a year earlier, and will increase an additional 2 percent by the fourth quarter of 2017, “so that means we’re going to have plenty of hogs available.”

Indiana supply

Within the tri-state region, the plant is likely to get more hogs from Indiana than from Michigan and Ohio, Hurt said in a June report providing an update on progress toward an Indiana goal of doubling its pork production between 2005 and 2025.

In an email, he said Ontario also would be an important source of hogs for the plant’s operations.

Construction of the processing facility “provides an opportunity for Indiana production to expand by about 500,000 head or more depending on how the new plant affects capacity utilization of competitors in the region,” Hurt said in the Purdue Agricultural Economics Report.

Including the number of pigs born in the state and the number shipped to Indiana farms where they could be finished to market weights, the state’s pork production industry had grown 40 percent between 2005 and 2015 to nearly 9 million head, he said.

Clemens describes itself as “a sixth-generation, family-owned integrated pork production operation including farming, processing, transportation and logistics.”

It is based in Hatfield, Pa., where it was founded in 1895. When the project was announced, the company expected to be able to open the facility in late 2017. But, a milder-than-expected winter allowed its construction to proceed more quickly.

The plant’s proximity to northeast Indiana hog farmers will benefit them because most of them are doing business with Indiana Packers in Delphi or Tyson in Logansport, locations in the north-central and northwestern parts of the state, said Jeanette Merritt, director of Checkoff Programs for Indiana Pork in Indianapolis.

Because local farmers will have a processing facility closer to them that needs their hogs for its operations, “I believe we are seeing an interest in building more hog barns in northeast Indiana,” she said. “There is a lot of interest in selling to the facility.”

News of progress on the facility is welcome among hog farmers because higher feed costs have contributed to some lean times for them in recent months.

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