Saskatchewan will use hired guns for Canada’s showdown with American cattle producers who want to close the border to Canadian exports.
Washington, D.C., law firm Cameron and Hornbostel will represent the provincial government in United States Department of Commerce hearings into that country’s beef imports. Some American producers claim that Canadian and Mexican cattle are unfairly subsidized. They blame foreign cattle for depressing the price of beef.
A group of producers from the northwestern states, called the Ranchers-Cattlemen Action Legal Foundation, has petitioned the commerce department and the U.S. International Trade Commission to consider imposing countervailing duties on foreign cattle.
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They argue that Canadian cattle are subsidized in many ways, including cheap feed from the Canadian Wheat Board. Canadian producers deny the allegations.
Saskatchewan’s Washington lawyers will review the province’s legal submissions, file and obtain documents used in the case, speak for the province at hearings and ensure that the department of commerce follows its own regulations.
Hal Cushon, of Saskatchewan Agriculture, said the province believes it needs Washington lawyers to make sure Canadian beef producers are treated fairly.
“As we move to more world-based trade, things are getting more quasi-judicial,” Cushon said. “It’s moved into a realm where we need good legal representation.”
Even though the dispute deals with international trade, the commerce department investigation will follow U.S. law only.
Cushon said the government’s lawyer, Michelle Sherman, previously worked on a case in which American hog producers launched a trade action against live pig imports from Canada.
The province thinks the elaborate legal process could cost it $100,000.
Sask. hires U.S. lawyers for cattle fight
By Ed White
Saskatoon newsroom
Mitchell’s Gourmet Foods and SPI Marketing Group have bought into Big Sky Pork Inc. in an attempt to protect their turf.
Mitchell’s Gourmet Foods, in which SPI is a minority shareholder, has given Big Sky $5 million. The money will be used to finance a 2,500-sow hog barn that is now under construction. Big Sky already operates two 2,500-sow barns.
As part of the deal, Big Sky has committed to selling at least 85 percent of its pigs to Mitchell’s. All the hogs will be sold through SPI. The deal lasts 10 years.
All three partners in the deal say becoming formally aligned is essential.
“We’re working hard to keep hogs in the province,” said John Germs, the chair of SPI. “It’s very important that these types of producers market through us.”
Mitchell’s chief financial officer Steven Leakos said investing in hog production is one way of ensuring supply.
“We don’t want to run the operation, we just want people to grow their operations and have some ability to supply us with hogs,” said Leakos.
“Our investment allowed them to put together the financing they needed to build the third barn.”
Germs said packers are trying to secure stable hog supplies because they think competition will greatly increase next summer and fall. By then, Fletcher’s Fine Foods in Red Deer, Alta., will probably have introduced a second shift and Maple Leaf’s Brandon, Man., plant will have opened.
Barn owner happy
Big Sky majority owner Florian Possberg has been trying to expand his company for a couple of years. He pursued an alliance with Maple Leaf, but did not complete a deal with them. He also tried to launch his company on the Toronto Stock Exchange, but abandoned the attempt because of poor market conditions.
Possberg said he’s glad to have found a stable, long-term partner.
“The producer can’t afford not to have a good targeted market and the packer can’t afford not to have a good quality supply of hogs,” he said.
The investment in Big Sky comes from a $5 million fund that Mitchell’s put aside for direct investment into hog production. A consultant was hired to check various hog producers to see which would be the best investment. The consultant chose Possberg because “Big Sky had the best business plan and the lowest cost of production,” Germs said.
Leakos said Mitchell’s wanted a piece of Possberg because “this guy wants to grow. He’s aggressive. He’s got a nice track record.”
Germs said the 15 percent of Possberg’s hogs that don’t go to Mitchell’s will be sold to other packers so that SPI can ensure that Mitchell’s is offering fair prices. By comparing the sales receipts from Mitchell’s with those from other packers, SPI will be able to show producers how their packer compares with competitors.
Mitchell’s has also tried to shore up supply with smaller producers by offering a $3 per pig premium to farmers who commit their pigs to the Saskatoon plant.
As packers begin to fight for pigs in the coming months, Mitchell’s may invest in more producers, Leakos said.
“We would like to see Saskatchewan pig production grow,” said Leakos, whose company wants to more than double its hog kill to two million per year.
“We thought this would be a good opportunity to see it grow.”
