Investment company partners with beef slaughter plant to tap the growing demand for beef
Howard Yong has racked up more than a few air miles over the last 30 months.
Yong, a Chinese entrepreneur who now lives in Manitoba, has made about 20 trips to China since immigrating to Canada to support his ambitious business plans in Western Canada.
Yong’s company, WYNN Agricultural Investment Management Ltd., is hoping to attract Chinese investment into Canada’s beef sector.
WYNN is setting up an investment fund so Chinese clients can own a piece of cattle ranches, feedlots and beef slaughter plants on the Prairies. In turn, it wants to sell meat from those slaughter plants to Chinese wholesalers and buyers, who are hungry for quality Canadian beef.
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Calvin Vaags, a Manitoba cattle producer and chief executive officer of True North Foods, a beef slaughter plant in Carman, Man., has been working with WYNN Agricultural Investment Management Ltd. for two years.
“Everybody knows there is lots of opportunity in the Chinese market,” Vaags said. “I’m a fairly cautious person. I don’t embrace everything that comes along. But with WYNN … I think they are very serious and very capable.”
Yong, who now lives in Winnipeg, used to own a 500 head dairy herd in China’s Hebei province, near Beijing, and operated a company that produced milk, yogurt and other dairy products. He sold those enterprises and bought a cattle ranch near St. Laurent, Man., in 2012.
Eighteen months ago, Yong was hoping to establish a network of Chinese-owned farms around St. Laurent, with a emphasis on cattle production.
Since then, he has shifted the focus of his enterprise and now wants to partner with businesspeople such as Vaags to sell Canadian beef to China.
Vaags doesn’t have a formal business agreement with Yong, but he’s already decided that True North Foods will target the Chinese market.
“You’ve got a really quite large, extremely high-end market (in China), and there’s a lot of wealth in that upper end of the market. And they want to make absolutely sure that their food is 100 percent safe and of the highest quality,” said Vaags, who travelled to China last fall, where he met with potential buyers.
“There’s an underlying tone of demand for beef in China, in particular for Canadian beef.”
A WYNN spokesperson said the company wants to collaborate with prairie slaughter plants to increase capacity and export beef to China.
Expanding slaughter plants and achieving a federal license typically requires millions of dollars.
Despite the up front cost, Chinese investors have a vast appetite for farming and food opportunities, the WYNN spokesperson said.
“Right now, agriculture investment is the hot word in China.”
Federal agriculture minister Gerry Ritz and agricultural industry representatives have travelled to China to drum up business for Canadian beef.
Canada exported US$59 million worth of beef to China last year, while Australia sold more than $650 million. Australia’s share of China’s beef market is expected to expand rapidly following the signing of the Australia-China free trade agreement in November.
The WYNN spokesperson said Australia will never satiate demand for beef in China because the market is too large. Canada’s beef industry needs to intensify its efforts to take advantage of the opportunity.
Vaags has applied for a federal license, but continues to wait for government approval.
“For me, it’s a frustrating thing. I know there’s demand there,” he said.
“After (the federal license) we would still have to get the certification from the Chinese government. And then we’d be ready to go.”
The bureaucratic obstacles are a headache, but Vaags believes he’s on the right path.
Manitoba’s beef sector has suffered from a lack of feedlots and slaughter plants, and Vaags wants the local industry to shift away from selling live animals and focus on global opportunities for beef.
“We’ve got to look at the bigger picture. There are other players in the world (besides the U.S) who need our product,” he said.
