* Loss C$0.10 per unit vs loss C$1.01
* Revenue C$61.6 mln vs C$78.1 mln
* To hike prices due to rising costs
* Units drop 18 percent
TORONTO, Nov 12 (Reuters) - Menu Foods Income Fund MEW_u.TO reported a narrower third-quarter loss on Wednesday as it recovered from last year's recall of tainted pet food, but warned that it would have to hike prices because of rising production costs, sending its units down 18 percent.
The petfood maker said it lost C$2 million, or 10 Canadian cents a trust unit, in the quarter, compared with a year-earlier loss of C$19.3 million, or C$1.01 a unit, when it struggled with the effects of the costly pet food recall.
The Mississauga, Ontario-based company said revenue fell to C$61.6 million from C$78.1 million in the quarter.
Menu Foods was hit hard by a massive recall that began in March 2007, following reports of animal deaths connected to some of its products. The recall, which also affected other pet food manufacturers and suppliers, was tied to wheat gluten and rice protein concentrate imported from China that was tainted with melamine.
The company also said on Wednesday that it planned to raise its prices for a second time this year because of rising costs for the raw materials used to make its products as well as an expected increase in the cost of steel cans.
Menu Foods units were down 18 Canadian cents at 82 Canadian cents. ($1=$1.23 Canadian) (Reporting by Scott Anderson)