UPDATE 1-Canada packer Maple Leaf to buy Puratone hog farm

Thu Nov 1, 2012 6:14pm EDT
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* Deal will ensure there will be hogs for packing plant

* Pays C$42 million for 500,000-pig producer

* Struggling hog farms losing C$50 per hog

By Rod Nickel

WINNIPEG, Manitoba, Nov 1 (Reuters) - Maple Leaf Foods , one of Canada's biggest hog processors and bakers, is buying distressed hog producer Puratone Corporation to secure hog supplies as farmers struggle to manage heavy losses.

Maple Leaf will pay C$42 million ($42 million) for Puratone, based in the western Canadian province of Manitoba, in a deal expected to close within a month, Maple Leaf said on Thursday.

Soaring grain costs, due to the severe U.S. drought, have caused North American hog farmers to incur losses of as much as C$50 for every pig they raise, forcing some to exit the industry.

Maple Leaf runs a hog processing plant in Brandon, Manitoba. Farmers' heavy losses have packers concerned about finding enough pigs to slaughter.

"This acquisition will ensure a consistent supply of hogs to our processing facility in Brandon, which is an integral supplier to our value-added prepared meats and pork business," said Maple Leaf CEO Michael McCain, in a statement.   Continued...