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Support For New Processor Questioned

The addition of Keystone Processors Ltd. to the small Manitoba beef market has ruffled the feathers of some of the province’s existing processors.

Keystone Processors Ltd. opened March 10 at the old Maple Leaf facility on Marion Street in Winnipeg. It is currently processing beef for Manitoba retailers such as De Luca’s Specialty Foods, Winnipeg Old Country Sausage Ltd., and Selkirk Butcher Shop.

As a provincially inspected plant, Keystone is currently only licensed to sell within Manitoba. The company hopes to become federally inspected by 2011 at the earliest, which would allow it to ship within Canada as well as abroad.

The delay in seeking federal inspection has some existing Manitoba packers and processors crying foul.

Their “beef” is with the funding the plant received from the Manitoba Cattle Enhancement Council and the provincial government.

The MCEC was created in 2006 by Manitoba’s provincial government and was given a mandate to expand the province’s beef-processing industry. The council collects a refundable $2-per-head checkoff on all cattle produced and sold in Manitoba. The money that is not refunded is matched dollar for dollar by the provincial government.

So far the MCEC invested $2.4 million in Keystone and has committed another $3 million towards the construction of the federally inspected plant.

Pat Haywood owns BJ Packers, a provincially inspected meat-packing facility in Beausejour that employs a dozen workers.

As Haywood sees it, until Keystone Processors becomes federally inspected, the MCEC is funding a company that is competing directly in the small local market against existing independent companies such as his own. “I’m not against the MCEC. I think they’re doing a good job, but I think they’re going about it the wrong way,” Haywood said.

Another provincially inspected plant is not beneficial for Manitoba producers if other local packers are forced out of business, Haywood said.

Robert Jowett, the owner of Country Meat and Sausage in Blumenort since 2000, expressed similar concerns.

“It looks like Keystone will go federal in two years, but in that time they will cripple the existing plants and then when they go federal, they’ll leave all of this devastation behind them,” Jowett said.

MCEC UNAPOLOGETIC

MCEC executive director Kate Butler said when the MCEC was created, the province’s existing packers and processors were invited to a meeting where they were briefed about the opportunities that MCEC could provide, including funding assistance to become federally approved.

Keystone Processors was “the only one that stepped up to the plate,” said Butler.

The existing plants were given the same opportunity to receive MCEC’s assistance but when many of them were contacted they indicated they were fine or said they were not interested in expansion, she said.

Also, MCEC’s financial support for Keystone moved ahead when it did because the old Maple Leaf plant was for sale with a transferable environmental licence that would have expired had the plant sat empty.

The MCEC agrees that Keystone needs to become federally inspected as soon as possible, Butler said. The federal government has been given Keystone’s business plan to review as part of the company’s effort to secure financing.

The Conservative government’s February budget earmarked $50 million for expanding Canadian slaughter capacity.

However, only last week did the federal government provide parameters for its funding program and the MCEC had already invested in Keystone before federal funding was announced in 2009.

Before that, plans were in place to access federal funding through a number of different programs, Butler said.

“Securing funding would not have been so dramatic and clean, but by hook and crook we planned to piece together the federal component,” she said.

NOT STEALING BUSINESS

Kelly Penner, Keystone Processors’ president, said it is a misperception that the company is going head to head with existing processors.

A small percentage of the business it does overlaps with other companies, he said. However, a large portion of its work is to supply distributors that had previously been buying Alberta – not Manitoba – beef.

Penner said he is sensitive to the situation but emphasized that Keystone Processors does not want to be a provincial plant.

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