Foreign ownership not always bad | JBS has a good track record overseas and will open new markets, says Ted Haney
The potential purchase of XL Foods assets by international meat giant JBS USA raises no concerns about foreign ownership for the former head of the Canadian Beef Export Federation.
Ted Haney said there were no other suitors for the federal Lakeside plant in Brooks, Alta., and other XL assets after Canada’s largest beef recall and temporary closure of the country’s second largest cattle slaughtering plant.
Haney, who is now president of the consulting firm Ranch 4 International, told a Nov. 1 meeting of the Southern Alberta Council of Public Affairs that foreign ownership shouldn’t be a concern.
He said Canadians work to attract foreign investment to develop various industries but then worry about it.
“Canadians, once we get those foreign assets, then we resent those foreign assets,” said the man who spent 20 years developing beef export markets.
“That’s an inconsistency that we have to deal with. We either shut the doors to foreign investment and we are happy with our slower pace of development, or we keep the doors open for investment and we celebrate and welcome them once they’re already here. I happen to believe in the second one.”
Haney said many in the industry were surprised when Nilsson Bros. bought the Brooks plant from U.S.-based Tyson three years ago.
JBS was thought to be a suitor at the time, he added, but didn’t see it as offering market access beyond what it already had through its earlier acquisition of Swifts.
However, many markets have reopened to Canadian beef in recent years, and access to China in particular favours Canada.
“I think what we’ve seen today is that, at the right price and with a recovery in market access, JBS has decided that this company is worth a very close look indeed.”
He said JBS paid less for the Brooks plant and accompanying assets than what Nilsson Bros. paid Tyson, so price was obviously another factor.
However, he said JBS is also a keen competitor to Cargill, which operates the largest federal beef processing plant in Canada at High River, Alta.
“They’re not going to give Cargill a day’s rest in competing for cattle. They are going to compete hard with all the best suppliers, and that’s just good news for us.”
Haney said JBS’s record of meat plants on several continents has proven its social contract to operate, while XL Foods’ lack of communication during the recall harmed its reputation.
“There appeared to me to be a distinct lack of transparency, of account-ability, of humility, of apology and in fact it called into question, I believe, quite quickly that ownership’s social contract to continue operations.”
Export markets closed to beef from XL after the recall, and Haney said the slow pace of reopening those markets, now that the plant is operating under new management, is troubling.
He said the delay might be due to other countries’ relationships with the Canadian Food Inspection Agency, which haven’t always been amicable.
“The speed at which foreign regulators resume trade in beef from the Lakeside plant is in part a measurement of the confidence they have in the CFIA properly overseeing safe food production in the plant, and it is a measure of the quality of relationship between them so that they want to co-operate and act quickly,” said Haney.
“I have no doubt that there’s a regulator or two around the world that sees this a little bit as their opportunity to balance the tables.”