A pasta company calls government incentives ridiculous and unfair.
If all the plans bear fruit, Canada’s pasta industry is on the verge of a major expansion.
And behind many of the announcements lurks the helpful hand of government.
It makes the four major companies with operating plants uneasy and sometimes more than a little angry.
“I find it ridiculous and completely unfair,” fumed Eddy Petaccia, president of Grisspasta Products Ltd., which operates a small plant in Longueuil, Que. “I came here to Canada, worked hard, saved, put up a plant from nothing. I got nothing from government. I should not have to compete against my own tax dollars.”
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He paused for breath. “It boils my blood.”
For Don Jarvis, executive director of the Canadian Pasta Manufacturers Association, there are broader issues as well.
Canada’s pasta industry already is working at just 70 percent capacity, which in 1995 was more than 165 million kilograms.
It faces competition from subsidized Italian pasta that is being dumped into Canadian markets at prices lower than what it costs to make it. And there are fears of American retaliation if plants built with government support begin to export into the U.S.
“We do not need that kind of an expansion,” Jarvis said from his Ottawa office. “I just don’t see the market.”
Market in the U.S.
Promoters of the plants disagree.
They see growth in an American market protected by the government from dumped Italian product. This market gap is available to Canadian firms because of free trade.
Their announcements have been stacking up in recent months.
- In Halifax last July, the Nova Scotia government announced a deal to build a $51 million pasta plant with $24 million provided by an Italian state government and $10 million in subsidized loans from the Nova Scotia government.
- In Montreal a year ago, federal and Quebec governments announced a $24.9 million plant near the Grisspasta plant, financed in part by almost $3 million in loans from Quebec and Canada.
- In southern Saskatchewan, a $60 million pasta plant and flour mill has been announced for Swift Current. Officials of Pasta D’Aurum say they are still raising capital to build a plant with an annual production capacity of 45 million kg.
- In southern Manitoba, a $5 million plant was announced last year for Altona, complete with a $1 million federal loan and a three-year grant from the town. Those plans have stalled since the company, Prairie Harvest Canada Ltd., purchased a small pasta plant in Edmonton.
- In southern Alberta, Canada West Foods, of Edmonton, has announced plans for a pasta plant in Milk River, near the American border. President Garry Haley says the market is there in the U.S. but the plant will be built only when contracts are secure and funding of at least $20 million has been raised.
He said there is no government money involved, although Milk River will offer a property tax break if the company wants it.
In Ottawa, Jarvis notes the announcements have not yet produced much construction.
But he said the announcements to more than double the capacity of the industry have created uncertainty, stifling investment and expansion plans among the existing companies – Nabisco Brands Ltd. with a plant in Toronto; Italpasta Ltd. with a plant in Brampton; Borden Foods Canada with plants in Montreal and Lethbridge; and Grisspasta with a plant in Longueuil.
And most industry players dispute the logic of building a plant designed to prosper by servicing the American market.
“The Americans can build their own pasta plants and in fact, some have been closing down there,” said Jarvis. “And if the Americans think Canada is being used as a backdoor to get around the U.S. duties on Italian pasta, you can be sure they will be investigating our entire industry.”
