MOOSE JAW, Sask. Ñ Producers agree they need more control of the packing industry, but it wasn’t clear at an informational meeting here last week which producer-owned proposal would earn their support.
About 150 people attended the meeting hosted by the Saskatchewan Stock Growers Association.
Spokespersons for four projects outlined their plans to date Ñ Great West Beef of Swift Current, Sask., the Alberta-based Beef Initiative Group, Canada Farm Direct and Natural Valley Inc., which is now building facilities in Neudorf and Wolseley, Sask.
Several producers noted the merits of each project, but after drought and BSE they have little money left to invest.
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One said the government should create the environment to make investment easier.
Rick Toney, who ranches at Gull Lake, Sask., said the federal government would be wise to allow producers to invest their Net Income Stabilization Account Fund 2 money in projects like packing plants.
NISA is being wound down, and the money must be completely withdrawn by March 31, 2009. However, Fund 2 money is taxable in the year it is taken out.
Other producers have also suggested Ottawa should not tax this money and should allow it to be rolled over into value-added investment.
“There’s millions of NISA money,” Toney said. “They could transfer it into the building of these.”
He said the government is already going to earn significant revenue from the construction of new plants through taxes paid on the purchase of materials and by employees who build and work at the facilities.
“They’ve created a net tax gain and they don’t have to be involved,” he told the meeting.
The Beef Initiative Group has based its plan to construct a new facility on bridge financing from the government, to be paid back through a $3 per head checkoff or levy.
Spokesperson Cam Ostercamp said the government could participate through long-term infrastructure investment rather than “useless bailouts.”
Still, it would be three years before a plant would be ready to accept cattle.
Dennis Duncan said Canada Farm Direct is on its way to achieving its goal of acquiring an existing plant.
“We will more than achieve the $30 million,” he said, referring to the amount it needs to raise through the share offering that closes in April.
Natural Valley is furthest along in its plans. The slaughter plant at Neudorf, Sask., will open in late summer and the beef fabrication facility at Wolseley, Sask., will be ready in April.
In the meantime, custom slaughter agreements have already put the company’s beef on the market.
Great West Beef was expecting to receive a feasibility study this week, said chair Jim Parsons.
