Tendering stage next for new Sask. pork plant

(Resource News International) — Plans to build a new one million-head-per-year hog slaughtering plant at Saskatoon are advancing as planned, with construction set to begin this summer, according to a consultant involved in the project.

The Saskatchewan Hog Slaughter Plant Initiative, a partnership between Fishing Lake First Nation, the Saskatchewan Pork Development Board and Big Sky Farms, is planning to construct a hog slaughtering facility in Saskatoon. The Saskatchewan government is supporting the project but is not interested in an equity position.

“Originally we were talking about construction starting in June or July of 2008 and we have not moved off of that mark,” said Jim Ramsay, project consultant for Fishing Lake First Nation and chairman of the project.

“We’ve passed our major milestone, which was the completion of the business development plan and we’re currently getting the resources together for the next phase, which is the tendering stage,” he said. Ramsay is also in the process of talking to individuals interested in forming the senior management team that will ultimately head the project.

Plans to build the plant began shortly after Maple Leaf announced in October 2006 that it would shut down its slaughter facility in the city, leaving the province without an active hog slaughtering plant. As a result, farmers have had to absorb greater transportation costs as they move their hogs over greater distances.

Despite the crisis facing the Canadian hog industry and the herd liquidation that is taking place, Ramsay firmly believes now is a good time for the construction of a new plant in Saskatchewan.

“The crisis just shows how important it is to secure this industry in the province. This will expand the market and reduce producers’ transportation costs, which are significant. All the current conditions have done is ensure that we get things done rather than hold us back,” he said. “The crisis has had the opposite effect of what you might suppose.”

Neil Ketilson, general manager for Sask Pork, a partner in the Saskatchewan Hog Slaughter Plant Initiative, was more reserved in his assessment of the progress being made.

“We are moving the project forward but there is a lot of financial hurt in the industry right now and a lot of things are changing. The project is probably reflecting that. We’re stepping back for a little while to make sure that all of our assumptions are correct,” he explained.

Among the issues being watched by the Saskatchewan Hog Slaughter Plant Initiative is the contraction of the Canadian hog herd, which could potentially cause sourcing difficulties. Ketilson, however, remains optimistic on that front.

While the 2008 calendar year is likely to be very tough for primary producers, Sask Pork hopes to see a resurgence in farmer profitability for 2009, he said.

“When that happens it’ll make sense to grow and raise hogs in Western Canada again and the supply will be here. We have no problems in primary production in terms of baby pigs. The issue right now is where they are finished and that is complicated by a whole array of things, one of them being the availability of slaughter capacity on a reasonable basis, what with transportation costs and other things included.”

“When you look at things such as country-of-origin-labelling (in the U.S.) or the strength of the Canadian dollar, the picture is never simple,” he said. “It’s never clear one way or another. We believe though there are strong arguments for a very strong slaughter business in Western Canada.”