One project looks for funding | Construction on the other to begin soon
Ground might be broken this year for two federally inspected beef processing plants in Manitoba.
If they were to succeed, the projects would follow years of talk about the need for a mid-sized cattle slaughter plant in the province.
Almost every beef producer in Manitoba would normally agree that a plant is needed in the province because of the substantial cost of shipping cattle to Alberta or the United States.
However, in the case of these two plants, one remains controversial for beef producers and the other remains off the radar.
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The contentious plant, which has generated the most conversations between producers, was formerly called Keystone Processors but renamed ProNatur in December. The managers of ProNatur want to build a $30 to $35 million plant in Winnipeg that will slaughter 250 head per day to serve the market for halal, kosher and Canadian graded beef.
“I really believe there is a good niche for this type of plant,” said Jim Mitchell, ProNatur vice-president and director of operations who is part of a management team that has built and run cattle slaughter plants in the U.S. and South America.
“For this area, it will fit because with the freight to Alberta, or even going south, we will be able to give the producer an alternative.”
ProNatur president Doug Cooper said a marketing opportunity exists for a mid-sized beef plant in Western Canada.
“As the big get bigger … there are still some folks (consumers) who don’t just want natural (beef) or want something else, they want it done a little different,” he said. “And I use the example of the religious harvest … the kosher and halal (market).”
ProNatur managers appear convinced the plant can succeed, but private investors seem skeptical. The only investors in the plant as of late December were Manitoba cattle producers through a voluntary $2 checkoff, the provincial government and an $18 million loan from the RBC Royal Bank.
ProNatur still requires someone to invest $10 million to help cover the capital cost of building the plant. The funding gap was created last summer when the federal government pulled its $10 million loan commitment to the project, stating the plant’s business plan was unviable.
The government’s decision shocked the Manitoba Cattle Enhancement Council, which is charged with expanding slaughter capacity in the province. It said the “government provided no numbers or detailed rationale for their conclusion.”
Some cattle producers now doubt the plant will ever be built. At its annual meeting this fall, Manitoba Beef Producers passed a resolution to terminate the voluntary checkoff that supports MCEC and the council’s showcase project, ProNatur.
“This is a great opportunity right now … and if something doesn’t happen pretty quickly, it’s going to be harder and harder and harder,” Mitchell said at the Manitoba Grazing School in December.
Meanwhile, construction of a federally inspected beef plant will likely begin in Carman, Man., this winter.
Calvin Vaags, owner and president of Plains Processors, said construction could begin soon on the $13 million plant expansion, which will transform a 80 head per week provincially inspected plant into a 1,000 head per week federally inspected plant.
“We have all of our permitting in place. We fully expect to start construction in the middle of January,” said Vaags, who lives in Dugald, Man., operates a cattle feedlot and owns two meat retail shops in Winnipeg.
Unlike ProNatur, the federal government continues to back the expansion of Plains Processors in the form of a $2.8 million loan.
If all goes well, the expanded plant could be processing federally inspected beef by late 2012 or early 2013, Vaags said.
While a federally inspected designation is helpful, Vaags noted most the beef that comes out of the plant will likely be eaten in Manitoba.
“A lot of people think, well, you’re a federally inspected plant so you’re going to sell everything overseas,” he said. “We will be selling some of our product around the world … but the bulk of our product will probably end up in our own backyard.”
