The largest co-operative in Canada is considering getting into the meat packing business.
Over the next few months, Federated Co-operatives Ltd. will explore the feasibility of adding a slaughter or processing facility, or both, to its $1.45 billion asset base.
The feasibility study stems from a resolution put forward by the Olds Co-operative Association Ltd. at FCL’s 75th annual convention in Saskatoon on March 1. The 400 delegates in attendance approved the proposal.
Asked during a break in the meeting if the idea had merit, FCL chief executive officer Wayne Thompson was noncommittal.
Read Also
Canola oil transloading facility opens
DP World just opened its new canola oil transload facility at the Port of Vancouver. It can ship one million tonnes of the commodity per year.
“Well it certainly merits the feasibility study,” he said.
Thompson also made numerous references to the fact that the proposal goes beyond FCL’s traditional scope of business operations and will have to be thoroughly investigated.
“We really haven’t explored being in the beef packing business,” said Thompson.
“We’re not very knowledgeable in that industry.”
The study will include an analysis of the capital cost required to build a plant, the volumes needed to generate a profit and how the end product would be distributed to retail co-ops.
Thompson expects to have something to report back to co-op members the next time they gather in November.
Olds Co-op director Gwen Jensen tabled the resolution. She said the proposal could entail one large slaughter facility and processing plant, or several smaller operations scattered throughout the Prairies.
“We have very limited processing facilities in Western Canada. We have to remedy that and who better than Federated Co-op?” said Jensen.
Canadian processors handle about 70 percent of the yearly beef slaughter. The remainder are killed and processed in the United States. She said that has to change, especially in the post-BSE environment.
“We should be keeping those processing jobs and those value-added dollars from that processing here in Western Canada,” said Jensen.
Her central Alberta community is feeling the ripple effect of the BSE crisis. Producers have greatly reduced incomes due to the closure of the American border to cattle exports and will be spending less money at the co-op and other local businesses.
A new plant would bring money to some rural community and would give prairie farmers another outlet for their cattle. Jensen said FCL could either go it alone or join with one or more of the growing number of producer groups contemplating setting up their own plants.
She said profit shouldn’t be the bottom line when it comes to this venture, urging the board to go back to its co-operative roots and the principle of people helping people.
FCL recorded sales of $3.5 billion in the 2003 fiscal year and posted a 12th consecutive year of record earnings with net savings of $282 million.
