Company president says AGT Food and Ingredients will add capacity to its pulse facility in Minot
Regina will not be the location for AGT Food and Ingredient’s next pulse food ingredients plant.
The Regina-based company announced it is instead expanding its facility in Minot, North Dakota, which makes pulse-based flours, proteins, starches and fibres for pet and human food.
Company president Murad Al-Katib had previously said the firm would consider adding more capacity in Western Canada once the third production line at its Minot food ingredients plant was running.
“It’s time to start looking at where the next plant is, and Regina has been a big candidate for a food ingredients plant,” he said last year.
The plan was to use surplus capacity at the red lentil splitting plant in Regina to add flour milling, semolina production and fractionation facilities.
Those plans have changed. The company has announced it is instead spending $10 million to modify its existing three production lines at Minot by adding equipment that will de-flavour, sterilize and blend pulse flour into pre-mixes.
Another $10 to $20 million will be spent next year to expand the building in Minot to allow for the addition of two more production lines.
“The incremental fixed costs of adding a line four and five in Minot was judged to be significantly lower than that of a green field build here,” Al-Katib said during a conference call announcing the firm’s first quarter results for 2015.
He said Saskatchewan producers can rest assured that the company has plans to expand its operations in Regina and for a different type of value-added project.
“It is not getting left out,” said Al-Katib.
“(The project) is likely going to be focusing a bit more on our packaged food business, so canning, retail packaging and expansion of our chickpea and bean business.”
The company began production on its third line in Minot in March and expects it to be at full capacity by the end of the year.
The decision about when to create a fourth and fifth production line will be made once the building that houses them has been built.
Al-Katib said it is important that customers know the project is underway.
“These are new ingredients for them in some cases,” he said.
“They need assurance that they’re not going to have supply chain issues should they embrace the ingredient. They need to count on the supply.”
John Chu, an investment analyst with AltaCorp Capital, asked Al-Katib to clarify comments he recently made about his long-term plan to build a pasta plant in Saskatchewan in 2016-18.
“To be very, absolutely clear, that is not imminently coming,” said Al-Katib.
The new production line at the company’s pasta plant in Turkey recently added 80,000 tonnes of production capacity.
“That’s a lot of retail packages,” he said. “I’ve got about 175 million packages to sell before I worry about Canada.”
Al-Katib also told analysts about his plans for the recently purchased West Central Road & Rail.
He said the five producer car loading sites will allow the company to meet the growing demand for bulk shipments of pulses and other crops while freeing up the firm’s pulse processing plants to do what they were meant to do, which is ship value-added pulses in containers.
Al-Katib said West Central was a desirable asset because it had capable staff and new infrastructure and was already shipping 300,000 tonnes of durum, wheat, canola, pulses and flax a year.
“Certainly there is a lot of room to grow this West Central platform into something much bigger than it is today,” he said.
The purchase also included Prairie Processing (1989) Ltd.
Al-Katib said the canaryseed processing facility in Eston, Sask., can clean to 99.9 percent purity, which means it can meet stringent phytosanitary requirements in Mexico and South America.