MOOSE JAW, Sask. – Brian Nilsson says closing the beef plant in Moose Jaw was the hardest decision he and his brother, Lee, have had to make since entering the packing business.
They had never had a slow down before events this spring culminated in the decision to close the XL Foods facility until the end of September. Some have speculated it will stay closed.
But Nilsson, who was recently in Moose Jaw to address the Saskatchewan Stock Growers Association annual meeting, said he expects the plant will reopen Sept. 28 as planned.
Read Also
Government, industry seek canola tariff resolution
Governments and industry continue to discuss how best to deal with Chinese tariffs on Canadian agricultural products, particularly canola.
“As we move into the fall, which traditionally has more cull cattle available, we should be able to start up again,” he told reporters.
Two major factors – the lack of cows and stringent rules for handling specialized risk material (SRM) – are to blame.
He said as supply became more limited, XL couldn’t compete with aggressive American packers for cows, particularly those from Manitoba heading to Minnesota.
The Canadian requirement to remove about 120 pounds of SRM, render it and “put that toxic waste in the landfill” is a cost that American packers don’t have, he added.
The same cow, if slaughtered in the U.S., will have just 12 lb. removed, and the product is eventually fed to pigs and chickens.
“Right now the Canadian cow packer, we’re $30 a head wrong,” Nilsson said. “You could maybe lose $20, $30 normally through the summer by forcing these cows to stay here, but if you’ve got to lose $60 or $70, that gets into a tremendous amount of money.”
Packers will continue to challenge the government on the need for different SRM rules in the two countries. Nilsson said the cost particularly shows up in cattle older than 30 months.
“If the difference was $8 or $10, like it was supposed to be in a cow, I can tell you today Moose Jaw would still be running because we would lose that money rather than (close).”
XL kept its buying staff in Saskatchewan and continues to buy cattle.
Nilsson admitted he is nervous that the plant’s 200 employees might not be around by the end of September. He said it could be a slow start for a month or two as the full staff complement is reached.
“We very much believe that we are going to start the plant in the fall,” he said. “Now, I get to September and there’s no cows or the U.S. packers continue to draw Manitoba … you cannot fight some of the logistics.”
Saskatchewan maintains a strong position in the cattle industry, Nilsson added, because the largest cow herd contraction has been in Alberta and the smallest in Saskatchewan.
“That tells you that Saskatchewan is going to maintain a strong production base, and we hope to see more development of feedlots and in other parts of the industry as we go along,” he said.
“We believe Saskatchewan has an economic advantage.”
