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Beef packing and Manitoba

Calvin Vaags was up front in saying the decision to host a “media” event Jan. 26 at the Plains Processors facility near Carman was about credibility.

After three years of planning, lining up finances and preparation, he wanted people to see for themselves that the earth has started to move to make way for the planned $13-million expansion to the small, provincial plant he purchased in 2008.

Vaags is bucking convention with his bid to reinstate Manitoba as an exporter of beef, not just cattle.

In its heyday, Manitoba slaughtered more than 500,000 head of cattle a year, peaking in 1976 when 581,000 head were processed through plants in Winnipeg and Brandon. Those plants started to close in 1979 and the province’s federally inspected slaughter capacity shrunk by 97 per cent over the next 20 years.

There were a lot of things going on during that time, both politically and economically, to push those meat factories into obscurity. The Alberta government was subsidizing the establishment of the livestock-feeding industry through its so-called Crow Offset program. The Manitoba government couldn’t or wouldn’t pay them to stay, so the packing industry followed the cattle west.

The grain business was booming, causing some producers to work up their pastures and sell off the cows. With grain prices going through the roof and no end in sight, who needs the aggravation of checking calving cows during those cold, dark winter nights?

The Manitoba plants were older and small by world standards and didn’t make the cut in the rapidly consolidating beef business. Canadian production costs were considered uncompetitive, especially when stacked up against the U.S. meat packers. Manitoba workers were unionized and well paid, while larger U.S. plants could use non-unionized labour, much of it living in the U.S. illegally with no rights.

The prevailing idea in the meat-packing business back then, and still now, is to go big or go home.

What did the Nilsson Bros. do with their XL packing plant in Brooks when their high-volume, high-speed packing plant ran into quality control problems? They turned it over to JBS, an even bigger player to root out the E. coli mess and get the plant’s production lines back on the sanitary tracks. Four major packers process about 4,000 head a day and account for nearly 90 per cent of Canada’s federally inspected beef processing.

With competition like that, it might be easy to pooh-pooh the prospects for an upstart Manitoba company shooting for world class — without the world scale. At 1,000 head a week, one-quarter of what its competitors can do in a day, the Plains Processors plant will have its work cut out for it if it tries to go head to head with its “competition” in the commodity beef business.

As well, cattle producers collectively haven’t been big boosters of locally owned processing. Despite a closed U.S. border and disastrous cow prices after BSE in 2003, Manitoba producers wouldn’t commit enough animals to the Ranchers Choice Beef co-op, which wanted to build a plant at Dauphin.

But a smaller-scale plant also has some advantages, such as the ability to handle multiple species. It has long been recognized that federally inspected slaughter capacity is one of the biggest gaps holding back further development facing the province’s sheep and goat industries.

Federal inspection doesn’t just give Plains Processors the ability to ship offshore. It also means its products can vie for space in the major grocery chain retailers locally. The major grocers buy through distribution centres, which only buy from federal plants.

A freight advantage is cited as a major advantage for the Plains Processors proposal. A MAFRI study in 2004 assessing the opportunity for local meat processors suggested a 50,000-head per year facility could break even at 26,000 head. But it noted that in the years prior to BSE, export markets for live cattle frequently paid enough to compensate for the cost of freight and then some. Will this plant be able to draw in the numbers it needs?

The 2004 report also cited the potential for skilled labour shortages, a concern that hasn’t disappeared as evidenced by the growing reliance of manufacturers in the province on imported labour. Will this rurally based operation be able to find enough workers?

Despite the challenges, it’s clear that Vaags and hiscolleagues know how to market beef and run a processing plant, and they’ve done their homework. It would also be nice to be able to buy Manitoba beef that hasn’t gone to Alberta for processing first. Here’s hoping they succeed.

About the author

Vice-President of Content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected]

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