November 21, 2008

Plans for Saskatchewan hog plant remain in place


The chairman of the Saskatchewan Slaughter Plant Initiative says the group continues to move ahead with plans to construct a one-million-head-per-year hog slaughter plant to open by next fall.


"We know that the best time to start production is the fall, to open when the prices are right, so we're anxious to get going by fall 2009," said Jim Ramsay.


Ramsay is project consultant for Fishing Lake First Nations, one partner in the Saskatchewan Slaughter Plant Initiative. Other partners include Big Sky Farms and the Saskatchewan Pork Development Board.


The environmental and permit process for the C$100 million primary processing plant have been initiated, Ramsay said.


So far, the problems afflicting the financial sector haven't affected the group in terms of debt or financing, he said.


"Our plan was never to have this as a heavily debt-financed project," Ramsay said. "Our plan was to go primarily with equity."


He said he is optimistic that by the time the group begins looking for financing, much of the current credit woes will have been smoothed out.


Ramsay also said he remains confident that Saskatchewan is a good location for a primary hog-processing facility.


The Sept. 30 implementation of mandatory country-of-origin labelling, or COOL, in the US, for instance, acts as a disincentive for Canadian hogs to be shipped to the US for slaughtering, Ramsay said. That's because of paperwork and costs involved in adhering to COOL legislation.


Also, US processors largely have stopped buying Canadian hogs because of uncertainty on how COOL legislation is going to affect, among other things, hogs born in Canada and slaughtered in the US


Saskatchewan currently has no hog-processing facilities. A secured destination for their hogs will mean Canadian producers will be able to avoid the uncertainty and price pressure from US COOL legislation.


"COOL just makes our plant that much more attractive," Ramsay said.


Ramsay declined to discuss reports in Saskatchewan newspapers in August that quoted a provincial government official saying that the Saskatchewan Party wouldn't fund infrastructure for the plant.


"The provision of capital infrastructure to the project is something that we have always asked for, and that is something that we would expect to be helped with, just like any other business," he said.


He emphasized that at no point did the Saskatchewan Slaughter Plant Initiative expect any level of government to put equity into the project.


Plans for the plant first took shape following Maple Leaf's (MFI.T) announcement that it would close its Saskatoon processing facility.

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