Abattoir committee asking for supply commitment

A sub-committee of the Rainy River District Regional Abattoir Inc. has been struck to determine the supply commitment of its members in order to move ahead with an accurate business plan to establish an abattoir in the area.
This came following a majority vote at a general membership meeting in Barwick last Thursday agreeing to finalize a business plan with Sunrise Meat and Sausage based on a kill plant built and operated to provincial standards.

“The sub-committee needs to survey the members for their intentions to supply and then draft a supply agreement, which will be signed later,” RRDRA secretary William Darby explained.
President Steve Loshaw said he understands it’s difficult for members to make a commitment at this stage, but stressed they need reasonable numbers to put in the business plan.
He also asked for three members to join the sub-committee, which currently consists of Loshaw and RRDRA vice-president Trish Neilson.
“We’d like to get the members involved so everyone has some input,” Loshaw said, noting the sub-committee will meet several times over the next few weeks because they’d like to address the issue of supply commitment as soon as possible.
No one volunteered to sit on the sub-committee at last Thursday’s meeting, but anyone interested is asked to contact Loshaw.
The numbers of supply commitment the sub-committee receives will be handed over to Bruce Cowper of Mallot Creek Strategies Inc., who is assisting with the business planning.
The company—well experienced in developing abattoirs—became involved with the project in the last few months after Northend Farms declined the operator opportunity and Sunrise Meat and Sausage submitted an expression of interest.
“We provide members with a selection of options for the construction of an abattoir,” Cowper told those gathered at the Barwick Hall, adding if the facility doesn’t work for the RRDRA, it will look bad for his company.
“We want to provide you with a long-term kill and fabrication capacity in the Rainy River region, and develop a business strategy that will provide you with a realistic toll processing cost and long-term business plan,” he said, explaining his project objectives.
The pyramid structure of these objectives begins with acknowledging the supply and demand and then moving on to the issues of sales and marketing, the facility, finances, structure, and finally developing the plan.
“We’ll need a committed supply of 120 percent of the business plan needs,” Cowper stressed. “You won’t get about 20 percent, but then you are still at 100 percent.”
To deal with the supply needs, he explained the project will require supply contracts, defined pricing mechanisms, long-term committed producers, a plan for non-member supply, and an ability to defend the custom kill charges.
He also offered a sales and marketing vision with forecasted production volumes, estimating the operation initially processing 30 head per week (20 custom cattle, five custom hog, three brand, and two custom other).
In addition, Cowper described three different facility options:
•Option 1—a federal process facility with the location currently undecided (not for profit);
•Option 2—a provincial kill facility built to federal standards adjacent to Sunrise Meats and Sausage in Barwick (not for profit); and
•Option 3—a provincial kill facility built to provincial standards adjacent to Sunrise Meats and Sausage in Barwick (not for profit).
The first option was described as a stand-alone, federally-approved and operated facility in Emo or Barwick, which would have the capacity to process 60 animals per week and the ability to expand.
It also would have the ability to kill and fabricate beef, cull cows, elk, hogs, and bison to boxed meat format.
The estimated grand total of the project was $4,943,041, with a first-year interest working out to $75 per animal and a $215 depreciation per animal.
The second option, meanwhile, was based on a dual structure—a kill and chill facility built to federal standards and operated as a not-for-profit provincial facility supplying carcasses to Sunrise Meats and Sausage.
It would have a capacity of 30 animals per week, with the ability to expand.
It’s estimated grand total was $1,873,080, with a first-year interest working out to $36 per animal and a $118 depreciation per animal.
Finally, the third option would capitalize on the existing management team of Paul and Susan Peters’ at Sunrise Meats and Sausage, and expand on the current provincially-inspected processing facility adjacent to the existing facility.
It also would have a capacity of 30 animals per week, with the ability to expand, but it’s estimated grand total was $1,327,370, with a first-year interest working out to $26 per animal and a $87 depreciation per animal.
“Based on the information we have, the board’s recommendation is Option 3,” said Loshaw.
The RRDRA would own or lease the facility, acting as a landlord to supply capacity as a non-profit entity to Sunrise Meats’ management and local producers.
The committee can obtain two-thirds of the financing as not-for-profit and would provide the remaining one-third investment required to build the facility.
Cowper explained a severance plan for the Peters’ facility will need to be addressed, and both an SRM disposal plan and water and secondary sewage in Barwick will need to be established.
“Representatives of the Rainy River board of directors would be involved in the governance of the new structure,” Cowper added, noting the current Sunrise Meats’ facility would fabricate the carcasses supplied by the RRDRA facility.
Sunrise Meats will need to upgrade its current facility to address current government regulations, and will continue to offer its own brands as well as a toll fabrication service for local producers.
In addition, the expansion facility will include receiving, kill “multi-species,” drip cooler, carcass break, whole carcass shipping, dirty employee services, inspectors services, and offal shipping.
When asked why they chose Option 3 over Option 2, Cowper indicated he didn’t see the benefit of federal kill and that the Peters’ were not interested in running a federally-inspected facility.
However, all walls and drains (anything structural that can’t be changed) will be built to federal standards in case that years down the road, the facility wants to look at a federal facility.
The next steps for the RRDRA include addressing the issue of supply commitment, completing the business plan with Sunrise Meats and Mallot Creek Strategies, and applying for federal and provincial government financial assistance.
They also will have engineered assessments conducted and a Ministry of the Environment review, as well as begin the license application and approval process.
Loshaw said they still anticipate completion of construction next summer.