First western foray | Irving’s Cavendish Farms expects business as usual
East meets West in a $60 million deal that will see New Brunswick-based Cavendish Farms Ltd. buy the Maple Leaf Foods potato processing plant in Lethbridge by month’s end.
Cavendish Farms, a subsidiary of J.D. Irving Ltd., announced the deal Dec. 10.
The Maple Leaf plant, which employs 135 people, makes french fries and other frozen potato products for domestic and foreign markets. It has yearly sales of $75 million.
Cavendish Farms president and Irving chief executive officer Robert Irving confirmed the deal is the company’s first foray into Western Canada.
“It gives us, number one, more capacity to be able to sell more frozen potato products in the market,” he said.
“Number two, it gives us a more competitive position to be able to serve Western Canada and the western U.S. in terms of freight cost and service. And three, to expand our customer base, with the Maple Leaf potato customers.”
Cavendish enters a competitive market in southern Alberta, where McCain’s and Lamb-Weston operate sizable processing plants near Coaldale and Taber, respectively, and contract with farmers on thousands of potato-growing acres.
About 45,000 acres of potatoes are grown in the region annually. Contracting for the 2013 crop will begin in January.
Potato Growers of Alberta executive director Helmut Leili said growers are pleased with the news.
“I think its very, very good for the potato growers and Lethbridge,” he said.
“We feel very comfortable with them and we look forward to enhancing the relationship.”
The Lethbridge plant has been in play for several years. Leili said Maple Leaf has long felt the plant in the city’s industrial area wasn’t part of its core business.
However, Cavendish was a surprise suitor, given long-standing competition between the McCain and Irving families.
Irving met with plant personnel and some PGA members days after the announcement and described the meetings as “very positive.”
Leili said growers were pleased the company president personally made a presentation to them about Cavendish. Staff will be retained, and Irving said no major changes are planned to operations.
“I personally want to assure existing customers of our commitment to uninterrupted supply, quality products and service, and to ensuring a seamless and efficient transition to Cavendish Farms,” Irving said in a news release.
The facility is the former York Farms plant once owned by Canada Packers, which merged with Maple Leaf Foods in 1991.
Cavendish has three other potato processing plants: two in Prince Edward Island and a third in Jamestown, North Dakota.
It also operates a plant in Wheatley, Ont., which makes appetizers.
In a separate news release, Maple Leaf president Michael McCain said the $60 million will be used to pay down debt.