A rural economics expert says business incentives in Saskatoon were too attractive to pass up for a new chicken processing company.
“Increasingly, economic activity concentrates either in urban centres or in rural fringes around urban centres,” said Rose Olfert, a professor at the University of Saskatchewan.
Prairie Pride Ltd.’s $15 million
facility is under construction in Saskatoon.
“We definitely looked at some of the rural communities,” said Bruce Arabsky, director of operations for Prairie Pride.
“A lot of the challenges was waste water, you know, treatment facilities. It wasn’t really adequate treatment facilities readily available so we had to look at lagooning and things like that.”
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The new construction prompted more than 100 layoff notices at a competitor’s processing plant in Wynyard, Sask. Lilydale needs fewer employees because it foresees less business.
“It would be really, really hard to paint as a good thing for Wynyard,” said Olfert. “Some areas, even if you remove 10 jobs, that’s a big deal in a rural setting.”
She said the job loss could deliver a painful blow to the economy of Wynyard and surrounding area.
“When we lose employment in rural areas like that, it’s not just the job loss, which is bad in itself,” Olfert said. “Sometimes, it’s also the fact that there’s not much else for that person to do in the near vicinity.”
Factors like instant access to water treatment facilities, major routes and proximity to freight were major perks to building in the city, Arabsky said.
Olfert added Saskatoon is not responsible for the economic prosperity of Wynyard. She said co-operation between rural and urban centres is important, but Wynyard is outside the city’s commuting area.
Instead, she sees new opportunities for growth in rural areas around Saskatoon.
“The surrounding rural population can benefit from that new economic activity by commuting in.”
When construction is finished, Prairie Pride will have 250 employees and the capacity to process 600,000 chickens per week. The national supply management system allocates Saskatchewan 500,000 head per week so Lilydale and Prairie Pride will compete for business.
“If processors believe they can build a business on a limited supply of input or chicken, then that’s a business decision that they’re going to make,” said Ed Rodenburg, chief executive officer of Lilydale.
Rodenburg said several producers have already notified Lilydale they will be taking their business to Prairie Pride. Arabsky said it could be because approximately 85 percent of the province’s chicken growers are from the Saskatoon area.
Rick Burton, director of policy with Saskatchewan Agriculture, said the new plant could mean expansion.
“Having the additional processing capacity in the province just makes it further the case for future expansion of chicken production in the province,” Burton said. “I mean, if we got the capacity, we can easily handle the increased growth.”
Every eight weeks, chicken governing boards in each province submit allocation requests to the Canadian Chicken Marketing Agency. It’s an opportunity to plead the case for an increase in allocation.
Van Stewart, general manager of the Chicken Farmers of Saskatchewan, said the province applied for an increase in September.
“We did put in a request, but at the end of it, we had to work with all the provinces.”
Stewart said many provinces are upgrading and advancing their processing capacity, and not everyone will get their way. Allocations in each province must add up to the total national allocation for chicken production.
“If we responded to everybody that had improved their processing facilities, we’d probably be a constant state of overproduction,” Stewart said.
Saskatchewan’s quota doubled in 2000 and Burton hopes it continues to rise.
“We continue to push for future growth and that’ll be a priority as we go forward.”
