Manitoba canola growers are hoping the sale of a canola crushing plant
at Ste. Agathe, Man., will create more competition for their crop.
The crushing plant was mothballed in the late 1990s after Canadian
Agra, the owner at the time, failed to restructure its debts to the
satisfaction of creditors.
The plant has been under the control of a court-appointed receiver for
the past three years.
A group of venture capitalists began showing an interest in buying the
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facility last summer, and is now striving to finalize its purchase by
mid-March.
“Competition is always healthy,” said Ernie Sirski, president of the
Manitoba Canola Growers Association.
“I’d be happy to have another crushing plant here.”
The attempted purchase is being backed by Agra Oil International Corp.,
based in Florida.
There seems little doubt about how the plant will be used if the sale
can be finalized.
It was designed to extract oil from canola using cold press technology.
It’s expected that would still be its primary purpose under the new
ownership.
Another aspect of the venture would be the canola meal, a byproduct of
the crushing process.
Because the Ste. Agathe facility uses cold press technology, it leaves
about seven percent oil content in the meal, said Manitoba Agriculture
oilseed specialist Rob Park.
Chemical extraction using hexane leaves the meal with about one percent
oil content.
The margins for canola crushers are slim these days. There would be
little profit from the Ste. Agathe plant unless premiums were found for
the cold pressed oil. Markets also would have to be found for the meal,
Park said, possibly in livestock feed for hog operations.
However, Park said the meal would have to prove its merit against other
feed sources, including soybean meal.
Robert Stefaniuk, mayor for the municipality where the crushing plant
is located, said the prospective owners also have mentioned the
possibility of further refining the oil extracted at Ste. Agathe to
give it more value.
There are two canola crushing plants operating in Manitoba, both
managed by CanAmera Foods. There is also a crusher at Velva, North
Dakota.
The plant at Ste. Agathe would be the only large crusher in the area
without direct ties to grain companies.
There is talk that the plant might contract directly with growers for
canola supplies, said Park.
That would eliminate the middlemen and create an opportunity for the
Ste. Agathe crusher to offer premiums to growers signing supply
contracts.
The Ste. Agathe plant was listed for tax sale last year. However, the
sale was blocked by a creditor owed money by the previous owner for
construction of the plant.
Stefaniuk said the municipal taxes that were in arrears have been paid
up. The cheque for more than $250,000 came from the general contractor
who oversaw the plant’s construction, the mayor said.
Stefaniuk said he’s encouraged by the business acumen shown by those
now striving to buy the facility.
Clayton Manness, a former provincial Tory finance minister and
spokesperson for the group attempting the purchase, said the emphasis
is on raising the capital needed to complete the deal.
Until that is achieved, it’s premature to speculate on how the facility
might be diversified or expanded in years to come, he said.
There has been some hope in Manitoba that the plant might be modified
or expanded to crush other edible oil crops such as sunflowers, hemp
and soybeans.
Manness also is working with a group of venture capitalists wanting to
build North America’s first world-scale pulp mill that relies on straw
rather than wood to make paper.
That venture, which could entail building costs approaching $1 billion,
will require several years of planning and the effort is moving ahead
in “slow gear,” Manness said.
