A Manitoba hog production company has staked a claim in the Saskatchewan pig feeding industry.
New Generation Pork Finishing Inc. announced last week that it is buying Cargill’s feed processing plant in Swift Current, Sask.
The deal is expected to be final May 15, said New Generation president Dickson Gould.
The mill will provide feed for five finishing barns in southwestern Saskatchewan that New Generation bought earlier this year.
New Generation, based in Hamiota, Man., bought the finishing barns from Stomp Pork Farm Ltd., a Saskatchewan company that was granted creditor protection last year and is restructuring its operations.
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Gould said the acquisition of the Swift Current feed mill will complement New Generation’s existing business interests on the Prairies and will allow the company to strengthen its position in the Canadian hog industry.
“Our strategy has always been to produce all of our pigs in Canada and to have a strong presence in Canada,” Gould said.
“When these barns came up, we knew they were excellent facilities and we thought they would be a nice fit for us. The feed mill is ideally suited for those barns and it completes a nice circle for us.”
Gould said New Generation’s finishing barns in southwestern Saskatchewan represent 50,000 finishing spaces.
The feed mill will produce feed exclusively for the barns, which are located near Ponteix, Admiral and Cadillac.
The barns will operate as weanling to finish operations, he added.
New Generation will transport 12 pound pigs from its Manitoba farrowing barns, feed the pigs to market weight in Saskatchewan and then ship finished hogs back to Manitoba for slaughter.
When it reaches full capacity, the company will produce 125,000 market pigs per year, Gould said.
New Generation has farrowing barns in Hamiota and Strathclair, Man., about 600 kilometres from Swift Current.
It also finishes weanlings in southeastern Manitoba.
The sale of the finishing barns in southwestern Saskatchewan is the latest development in the financial restructuring of Stomp Pork Farm Ltd.
As part of Stomp’s restructuring plan, the company’s assets were divided into two groups, one containing productive assets and the other containing non-productive or residual assets.
Kim Anderson, a lawyer with the Saskatoon law firm Robertson Stromberg Pedersen, said Stomp’s productive assets are now operated by three new companies: Stomp Pork Farm (2008), Titan Ventures and Stomp Pork Farm USA.
Stomp will sell its residual assets when market conditions improve, Anderson said.
Revenue from the sales will be used to pay secured creditors, including Farm Credit Canada and the National Bank of Canada.
Remaining revenue will be split between the company’s unsecured creditors on a prorated basis.
Stomp had unsecured debts of roughly $8.56 million when it was granted creditor protection.
The company’s largest unsecured creditors included Saskatchewan Agriculture, which was on the hook for about $5 million, and Cargill Animal Nutrition, which held a bill worth $2.2 million.
Some of Stomp’s smaller creditors have already reached a financial settlement with the company.
Besides the southwestern Saskatchewan barns, Stomp has also sold two production units east of Lake Diefenbaker near Loreburn, Sask., Anderson said.
As well, it sold a feed mill in North Battleford, Sask., earlier this year to the University of Saskatchewan for $3.3 million.
“Over the past year, there’s been some indication of interest (in residual assets) and when there was something serious, a sale took place,” he said.
“There’s been some of the barns sell but certainly there’s been no big clamour for them yet.”
Stomp is in no hurry to sell its remaining assets because markets are weak and the barns are undervalued, he added.
“The market right now isn’t going to fetch what everybody wants it to fetch.”
Anderson did not say how many Stomp barns are available for sale and how many have been retained by the new companies.
