Tisdale Alfalfa Dehy Ltd. is closing after 35 years in the northeastern Saskatchewan community.
A rising Canadian dollar, record high natural gas prices, subsidized European alfalfa and climbing rail freight rates have worked against the company, said board chair Jim Boxall.
“Three years of losses and no end in sight. We are choosing to stop the bleeding rather than have the banks stop it for us. This way the staff get their severance and we can consider our options over a bit of time.”
Dehydrated alfalfa pellets, hay and cubes began shipping from Tisdale to mainly Asian markets in 1970. Tisdale Alfalfa has been a regular alfalfa buyer for 139 producers and an employment home for 18 full-time and 42 seasonal staff.
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“This is a hit to a small community. We are looking for alternatives, but from where we are right now there are some real hurdles to reopening,” he said.
Until this year, the European Union provided an export subsidy for dehy alfalfa of about $100 per tonne.
“We heard they were going to stop the practice. Instead they split the subsidy, $50 to the farmer and $50 to the processor. Then they continued dumping product onto the export market,” said Boxall.
He and other industry players lobbied the Canadian government for support against the new EU subsidy, but were told because of the way the European payments are structured, Canadian officials had little recourse.
Dehydrators said they expect EU subsidies will eventually fall under pressure from the World Trade Organization.
“Right now farmers could give it to us for free and we’d probably still lose money,” he said.
Dehy alfalfa prices f.o.b. Vancouver are about $205 per tonne. When transportation and handling costs of $56 are deducted, it leaves Tisdale alfalfa either enough to cover the cost of processing or the price of alfalfa, but not both, he said.
Tisdale Alfalfa Dehy’s board of directors is exploring options such as coal fired processing, new organic markets and long-term sales contracts with Japanese clients that might stabilize prices at profitable levels.
“We don’t mind competing, but right now there are factors beyond our control dictating that we need to shut down,” Boxall said.
The closure will be phased in starting in early January.
