YORKTON, Sask. – The LDM Foods construction site resembles a bustling small town.
More than 400 workers and equipment are in motion, putting the final touches on the new canola processing plant near Yorkton, Sask., on the Yellowhead Highway.
It’s a slightly more difficult task in the mud after recent rain and snow, but the end is in sight. By late November, the plant should be in full operation and processing 850,000 tonnes of seed into oil for human consumption and meal pellets for livestock.
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On Oct. 13, the first trucks rolled through the scale to the unload pit. They have been lined up ever since to fill the plant’s three 550,000-bushel tanks by Oct. 25.
Kevin Hruska, of Gerald, Sask., owns six new identical trucks that made the first deliveries.
“We’re hauling 500 tonnes a day,” he said. “It’s a great day for farmers in this area.”
Louis Dreyfus announced construction in September 2006, at the same time that Richardson International announced it also would build in Yorkton. That plant is expected to open next spring.
In 2007, Louis Dreyfus and Tokyo-based Mitsui & Co. joined forces to form LDM Foods. Louis Dreyfus owns 60 percent and Mitsui owns the remainder.
Construction began last summer. Originally expected to cost $90 million, the final price tag will be closer to $130 million.
About 75 people will work at the plant when it’s fully operational.
Procurement manager Dean Klippenstine said the first stages of opening went well.
“With any luck the plant will fire up as smoothly as seed receiving did,” he said Oct. 15.
“We haven’t had any breakdowns yet. We’re crossing our fingers.”
Klippenstine and his staff have contracted all the canola seed that farmers are delivering.
Inbound product arrives by truck, but 95 percent of it will leave by rail, he said. Construction included a rail yard that can hold 280 cars and connects to Canadian Pacific Railway to the west and Canadian National Railway to the east.
Klippenstine said LDM has leased 500 new rail cars and bought two locomotives to move the cars within the yard and into position to head south or west.
“The oil and canola meal pellets will be going to the U.S.,” he said.
American dairies will use the meal, and canola oil is in high demand in the United States.
The plant will produce 500,000 tonnes of meal and 350,000 tonnes of oil per year.
Klippenstine said 20 to 25 percent of the crush will be Nexera varieties that are in strong demand for their health benefits.
LDM Foods faces stiff competition for canola, given the number of buyers in the area. The two Yorkton plants, at full capacity, will need 1.69 million tonnes annually.
A map on Klippenstine’s wall shows that canola production within a 50 kilometre radius of Yorkton is 270,000 tonnes.
At 150 kilometres out, the production is two million tonnes but other plants, including Cargill at Clavet, Sask. and Bunge at Nipawin, Sask. and Harrowby, Man., are also vying for the crop.
Klippenstine said that is good news for farmers.
“The more competition you get, the basis should get closer,” he said.
Hruska agreed. He said farmers are often at the mercy of basis levels and he expects the basis to drop as more facilities come on stream.
“Competitiveness can do nothing but help us,” he said. “The basis can be as much as $1 a bushel.”
Considering that he grows 700,000 bushels of canola each year, basis plays a significant role.
Hruska said shipping directly to LDM also helps him manage his on-farm storage.
“We can get out 20 to 25 percent of our crop,” he said, rather than storing it and waiting for a call.
Klippenstine said LDM Foods will never be completely full.
“Product is always going out; we’ll ship all the time,” he said.
The facility features a 20,000 tonne capacity pellet storage building, which is enough to hold 14 days worth of production.
It also includes a refinery.
