Producer ownership under microscope
Kevin Hursh, The StarPhoenix
June 21, 2006
Canada
As producers, do we really believe in more farmer control in the marketplace? Producer-owned slaughter and meat processing plants.
Producer-owned crop processing.
Producer ownership and control of the emerging biofuels industry.
It's easy to give lip service to the concept of producers moving further along the value chain to gain more control and profi t. The theory is marvelous. In practice, it's much more diffi cult.
That's why there's been lots of failures. Take the community of Eston in west-central Saskatchewan, where the producer-owned Canadian Select Grains failed and the lender is still trying to sell off the assets.
A number of other producer-owned specialty crop processors have met a similar fate.
At Eston, the producer-owned cattle feedlot wasn't viable either. It was just nicely in operation when BSE hit.
At least that facility has been sold to someone who will keep it running, rather than selling off the pieces.
Producers who invested in hog barns with Quadra Group/Community Pork Ventures lost their money. So did producer investors in Saskatchewan Wheat Pool's Heartland Pork. The only consolation is that those facilities are now owned and operated by other Saskatchewan companies.
During the BSE crisis, it seemed that every second community was talking about its own beef slaughter plant.
Very few had a real marketing plan.
Even fewer actually came to fruition.
That makes Natural Valley Farms unique. Its beef processing facility at Wolseley opened a year ago. Now, there's fi nally been an offi cial opening of the state-of-the-art slaughter facility in the scenic Qu'Appelle Valley near Neudorf.
Even though it has taken much longer than expected, these producers have so far beaten the odds. There have been pitfalls and the road ahead will no doubt have some bumps as well, but there is an incredible pride among those involved.
You can go almost anywhere in Saskatchewan and meet beef producers who are shareholders of Natural Valley Farms or who have hook space to get their animals processed there. There are 120 investors and more than 200 producers who have signed on to raise cattle "naturally" for the branded beef program.
Scraping together $20 million is no easy task, but Natural Valley has had determination. Most of all, it's had a marketing plan. There was never any intention to compete head-to-head with the really big beef processors. Still, its national and international markets are taking shape and a capacity of 1,250 head per week is signifi cant.
There's a real need for operations like Natural Valley to thrive in order to build confi dence that producers really can take more of their destiny into their own hands.
The brightest light for agriculture is biofuels -- ethanol and biodiesel.
There's a growing realization by producers and by government that primary agriculture must gain its share of this exciting opportunity.
That means producer ownership and control of a signifi cant chunk of the new production.
Governments can help facilitate this, but in the end producers will need the confi dence to invest.
There are never any guarantees in business. You can't predict the future with much certainty. If there was no risk, it wouldn't be business.
There are long-standing success stories, like Pound-Maker Agventures of Lanigan and Weyburn Inland Terminal, to prove the producer ownership model can be viable.
There are also spectacular failures to show the pitfalls.
The progress of more recent ventures, like Natural Valley Farms, will be closely scrutinized. Success stories are needed to help the confi dence of producer investors.
Source: The StarPhoenix (Saskatoon)
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