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Construction of New Saskatchewan Hog Slaughter Plant Targeted for Spring of 2008

by 5m Editor
17 November 2007, at 9:36am

CANADA - The Fishing Lakes First Nation is confident the group planning to construct a new one million head per year capacity hog slaughtering plant in Saskatchewan will be ready to break ground by the spring of 2008.

The Saskatchewan Slaughter Plant Initiative is a partnership involving the Fishing Lake First Nation, Big Sky Farms, a producer group represented by the Saskatchewan Pork Development Board, and support from the province of Saskatchewan. The group has been working toward the construction of a new hog slaughtering plant since Maple Leaf announced, just over a year ago, that it would close its Saskatoon plant.

Plant to be Located on Urban Reserve

The current plan calls for the creation of an urban reserve on which the proposed plant will be located. The designated site is a 65 acre block of land located in the north heavy industrial area of Saskatoon. The parcel is bordered by a rail line, two existing streets and by an extension of Marquis Drive being built by the city.

Fishing Lake First Nation project consultant Jim Ramsay notes, “We’ve completed our first level review that shows, from a business planning and a market analysis point of view, that it’s a good project. It makes sense.”

He says, at this point, an additional three million dollar pool of funds is being raised from investors to hire the team that will design and build the plant, finalize the purchase of the land and create the urban reserve. He expects that to be completed over the next couple of months.

Bulk of Funding to Come From First Nations Based Investment Group

100 million dollars is being budgeted for the first phase of the project, the construction of a one million head per year capacity kill and cut plant but future plans include expansion into pork processing and selling processed meats.

“We’ve set up an investment group called Anishnabe Foods Limited Partnership,” Ramsay explains. “That’s a partnership investment group for first nations governments and that will be the source of the funds.”

He notes Fishing Lake First Nation is the founding member and 15 other bands in Saskatchewan and Alberta have expressed an interest in participating.

With the completion of the first level of review investors are now being asked to make commitments.

“I think we would be looking at wanting to have the commitments in place within three to four months with a major part of the equity in the bank,” says Ramsay. He says there is a 90 percent likelihood that the project will proceed but the equity investment needs to be in place.

Sask Pork Cautiously Optimistic

Saskatchewan Pork Development Board general manager Neil Ketilson agrees, saying that the business plan shows some positive numbers within a reasonable three to four years from start-up. However he is not prepared to commit to any time lines for construction to begin or to make any guarantees.

“We need to do a couple of things,” Ketilson says. “We are in the process of putting a team together that will manage the process, sending out the engineer design tenders so that we’re working with real numbers and not estimates out of a business plan.”

“The other part of it is the marketing,” he adds. “ We need to make sure that our marketing strategy is correct and that we actually have somebody that’s willing to buy the product and that we can make some money at it.”

“The last thing we want to do is get into a venture that is unsuccessful so we’re taking our time, we’re cautious but we’re moving along very positively.” He says the target is next spring but, concedes, “Whether that’s realistic remains to be seen.”

Big Sky Farms Forecasts Turn Around in Hog Markets

Big Sky Farms CEO Florian Possberg is convinced Saskatchewan is ideally located to take advantage of the turn around in hog prices when it comes. “We have to look at things in a longer term.”

He observes, while Canadian hog producers are severely stressed now, many other countries with the exception of China and the United States are seeing much the same situation.

“I would anticipate we could see up to ten percent of the sows disappear in the non-U.S., non-Chinese pork production industries. That’s going to lead to quite a contraction of supply and we know what happens when there’s a shortage of supply. Prices go up.”

He expects the severity of the situation now to lead to higher prices when the markets do recover and he has publicly predicted $2.40 per kilogram dressed by May 2009. “I believe that’s quite achievable because of the contraction we’re going to see in pork supplies.”

Natural Advantages Expected to Play in Saskatchewan Industry’s Favor

Possberg believes a lack of water, a lack of feedgrain supplies and a lack of infrastructure will make it more difficult for producers in other regions to recover and the factors that made Saskatchewan such an attractive place to raise pig just two to three years ago will again come into play.

First Nations Consider Employment of Critical Importance

The proposed slaughter plant is expected to create 300 to 400 jobs and that number is expected to climb to one thousand jobs once the facility moves into further processing.

Allan Paquachan, chief of the Fishing Lake First Nation says, for first nation leaders, employment is the most important thing.

“There’s a huge opportunity for our first nation people to work at this plant.”

He says first nation young people are constantly talking about being labelled as a burden on the tax payer. “They want to do away with that. They want employment. They want to make a living where they are comfortable spending heir own money, not someone else’s.”

Producers Have to Stay in the Game to Win

“If you don’t buy a ticket you can’t win,” Possberg concludes.

“Every producer is going to make their own decision whether they can survive to better times. There are producers out there that don’t for see better times and they’ll exit the industry. Some may not have the resources to get from here to there and they’ll have to look at leaving the industry. But there’ll be a group of hard liners that have this firm optimism and they’ll stick with it.”

He is convinced that Western Canadian producers who stick with it are going to be rewarded down the road. He concedes that it will be tough sledding for the next year or so but maintains that there are reasons for optimism at the end of the day.

Possberg is adamant, “We will see a return to profitability.”

Further Reading

- Go to our previous news item on this story by clicking here.

5m Editor