A beef co-operative in Manitoba plans to broaden its role in the meat packing industry.
Members of the Rancher’s Choice Beef Co-operative last week approved changes to the bylaws that will enable the co-op to also slaughter fat cattle. The previous goal had been to slaughter only cull cows and bulls.
“We’re designing the plant so that it will be able to handle on a single shift 60,000 culls and 20,000 fats (per year),” said Bruce MacDonald, general manager of Rancher’s Choice.
The slaughter and processing plant will be located at Dauphin, Man. The venture will cost about $28 million, including a 5,220 sq. metre building, the equipment needed for slaughter and processing and initial operating costs.
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Some money was raised for the venture through a previous sale of shares. MacDonald said the co-op has $1.5 million in a trust fund.
Another share offering is being launched this month, with the goal of raising at least another $4.5 million and possibly as much as $6.5 million.
The additional equity from the latest share offering will enable Rancher’s Choice to approach lenders for financing.
“Debt financing requires that we have more equity from producers in terms of cattle commitments and cash equity,” MacDonald said. “So that’s why we’re going out with 65,000 new Class A shares of $100 each. We have to raise more equity.”
The Manitoba government already has promised an interest-free repayable grant of $4.5 million. The province also is willing to guarantee loans for up to $7 million.
The effort to establish a cull slaughter plant in Manitoba began two years ago. When the United States border was closed to exports of Canadian cattle, Manitoba producers faced poor demand and low prices for their cull cattle.
Construction of the plant at Dauphin could begin late this fall or in early winter, said Rancher’s Choice president Ken Yakielashek, with slaughter to start in September 2006.
