Canada’s largest oat miller hopes to increase revenue by almost 50 percent by 2000 with help from a new plant it is building north of Saskatoon.
Can-Oat Milling has been running at full capacity at its Portage la Prairie, Man. plant for three years, officials told the annual meeting of Manitoba Pool Elevators last week in Winnipeg.
Karl Gerrand, executive vice-president of marketing, said the company had more than $40 million in revenue last year. He projected revenue of $57 million next year and more than $75 million for 2000.
“We’re all anxiously looking forward to our new plant coming on board,” he said.
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By volume, the company shipped 64 percent of its products to the United States, 26 percent to South America and the Caribbean, five percent to Mexico and five percent stayed in Canada.
Double production
Trevor Pizzey, executive vice-president of operations, said the Saskatoon plant will double the company’s production capacity to 120,000 tonnes of oat products once it is fully operational in 1999.
The plant is expected to start operating Dec. 19.
“This operation is going to draw heavily on Saskatchewan raw material base, but that means that we’re going to need more of our oats in Portage to come out of Manitoba,” said Pizzey.
Gerrand said the company bought 46,000 tonnes of oats from Manitoba Pool in 1996-97 and expects to continue to buy about 50,000 tonnes from the company in the long term.
Last year the oat company used 112,000 tonnes of oats but at full production, the two plants will consume about 250,000 tonnes of oats per year. That is about eight percent of what Canadian farmers grew this past summer.
The Saskatoon plant will handle only primary processing: Oats will have their hulls removed and be heat-treated. They will move into South American markets or to Portage for secondary processing for North American markets.
Pizzey said the company will invest almost $14 million in the new plant in 1998, and $6 million to the Portage plant to increase its flaking capacity.
Ward off competition
Can-Oat’s expansion prevents other, older North American competitors from trying to grab a bigger share of a growing market for oat products, said Mike Maschek, its chief executive officer.
“They contemplated building, and really, our announcement preempted that, we believe, and was a very important change in the industry,” Maschek said.
Gerrand said the company has been paying $2.20 a bushel for oats for February delivery at its Portage plant, based on Chicago Board of Trade oats futures prices in the range of $1.60 to $1.70 (U.S.).
“Unless we see a major U.S. corn rally or some new, impending El Nino disaster hits the press, we shouldn’t see anything too different through the end of the crop year,” said Gerrand.
