Food prices also increased, but to a lesser extent. No one is immune from this phenomenon, and the added financial pressure is occurring in a sector where profit margins are already thin and it is difficult to raise retail prices.

The strength of the Canadian dollar offset rising costs somewhat and also enabled companies to invest in fixed assets to enhance their competitive edge.

Two important developments in Québec during the year were the , which produced the Pronovost report, and the Coulombe Report on Québec’s pork industry. These reports were tabled in the first quarter of 2008.

The 49 recommendations in the Pronovost report gave rise to considerable discussion, and the Québec government announced initiatives to tackle three priorities: to bring the industry into closer contact with consumers, to strengthen its ability to compete and to modernize the main pillars of agriculture.
 
How do you see SGF’s portfolio?
The portfolio is generally performing well, in a sector that had a tough year. Québec's pork industry experienced difficulties, but as a result of an efficient, orderly restructuring, our partner Olymel was up to the challenge.

SGF made a $5-million investment in Boucherie Jean-Guy Soucy Inc., which was therefore able to equip itself with a second modern plant to serve the industry more effectively by offering a range of slicing services and to maintain its capacity to produce high-value-added cooked meats. Boucherie Jean-Guy Soucy is also a fine family story. The founders’ children, Nathalie and Pierre, took over from their parents in 2004 and, year in and year out, have proved to be dynamic, visionary entrepreneurs.   After a partnership that lasted 20 years, we sold our interest in Aliments Carrière to Groupe Bonduelle, a global leader in the vegetable-processing sector. The expertise of Groupe Bonduelle, combined with that of Aliments Carrière, will create a player whose importance will only increase in North America. What does 2008 hold? The impacts of the events of the past year on Québec’s agri-food sector have extended into 2008. We are referring to the Pronovost and Coulombe reports.

On a broader scale, the results of the World Trade Organization negotiations, which are still in progress, could have a significant impact on the industry. We will be monitoring these developments closely and assessing their effects.

Québec’s agri-food industry will have to meet many challenges, including:

■ Higher operating costs – especially the cost of inputs and oil – and the
   difficulty of passing these increases on to consumers
■ Productivity enhancement
■ The strong Canadian dollar; and
■ The increasing manpower shortage.

To develop, businesses will have to make a greater effort to innovate, through products and technologies alike. They will also have to improve their productivity, secure capital to act on market opportunities and, in certain cases, merge to create companies large enough to tackle the North American market in a competitive fashion. Naturally, there will still be room for niche companies with strong potential, on a regional or North American scale.

SGF can provide financial assistance to companies able to consolidate their sector of activity and help companies solidly established here with their development outside Québec.