Alberta Beef Magazine - BeefNews.com

Creating stability by Bonnie Warnyca
November, 2009

Don't tell these northern area cattle and grain producers that helped to raise the roof on Plains Livestock Inc. that there's a recession and that the livestock industry isn't high on the list of good investments. Back in the fall of 1997, local area farmer, Randy Reed and a handful of other like-minded farmers met to develop a marketing plan to try to attract investors to build a feedlot. The community of Porcupine Plain had already lost its elevators and rail line and they wanted to protect their schools, hospital with its doctor, and prevent anymore erosion of the community. But, about this same time, another opportunity came knocking.

"Big Sky was looking for a site to build some hog barns and approached our committee to find a site and help secure all the necessary permits," recalls Reed. "We worked with them for more than a year to jump through all the licensing hoops before they were able to build a breeder barn, weanling barn, feed mill and three finishing barns. They now employ 40 people and run 6000 sows. Even though the hog industry is in a meltdown situation, this operation is still surviving."

While the bulk of the acres in this area of the province are cropped, there is a smattering of cattle farms. Because these northern community operations were consistently discounted by transportation costs for both calves and grain, the committee was still bent on building a feedlot to reduce these losses.

After working so diligently to get the hog barns, some members of the committee stepped down and others stepped in to take their place. "BSE set us back about a year," admits Reed. "We wound down our meetings until we could see what the fallout would be for the industry. It was soon obvious that we had to continue to strengthen our Canadian feeding industry. Our original plan for the feedlot was to include an ethanol plant, but once the governments put the spotlight on ethanol production, established companies such as Poundmaker and the bigger ethanol plants were in a much stronger position to receive the quotas. We decided to focus solely on a 10,000 head feedlot."

The committee stretched out their vision to include a wider circle of communities. They knew they would need many others to believe in the project to make it happen. They canvassed other areas such as Preeceville, Tisdale, Hudson Bay, Mistatim, Bjorkdale, Arborfield, Nipawin, Carrot River, Rose Valley and Archerwill. Before they were done, they raised close to $1.7 Million for the project and were able to leverage it to build the $5 Million dollar facility.

"We watched others such as Natural Valley and Pipestone Feeders and Border Line Feeders to see what challenges they had faced," says Reed, now President of Plains Livestock. "We decided to bring in some professional help right off the bat and that really helped to get this done. The original business plan was put together by Meyers Norris Penny and Gil Azzie. Human Resource Management led by Larry Lang out of Broadview came on board and revised the plan. Blair Hextall coordinated the building and Elved Hughes did the survey work. They both had worked on Border Line and Pipestone so were invaluable for the project. Our own committee threw in some seed money and then we accessed grant monies from different sources and with our shareholder drive we were in a sound financial position to go to the bank for the rest of the funds. It took a lot of volunteer hours and many different resources to pull it all together."

One of the biggest challenges in building this lot, which is located 12 miles north of Porcupine Plain, was that there was no water on the site that met all other specifications. "We access our water about a mile away from the lot out of the Red Deer River," explains Reed. "We built an offshore sump on the river and set up a pump house on the river bank with two four-inch lines that feed the lot."

Constructing a project along the river proved to be a challenge in order to meet Dept. of Fisheries and Oceans regulations. Since one of the board members is an engineer, he worked out the design details. In order to do the construction without entering the river, a modified infiltration gallery was developed which allowed all the work to be completed before cutting into the river and at the same time meeting DFO requirements. The design allows water to enter the gallery at river bottom elevation while being filtered with a geotech filter screen mesh. As long as withdrawal rates meet DFO requirements, water can be withdrawn when river levels are low.

Feedlot attracts Albertans
One of the loudest complaints in this province for many years has been that Alberta steals our young people with the promise of higher paying jobs in the oil patch. But in the last few years, we've seen a marked increase of Albertans moving into Saskatchewan drawn by lower land prices and higher available acres. Before Plains Livestock opened their pens, they knew they needed a manager with strong credentials to help to fill the lot. Enter - Richard Wilson.

Prior to accepting the position of General Manager of Plains Livestock Inc., Wilson spent 14 years working as a manager for Cor Van Raay Farms of Lethbridge responsible for a couple of 25,000 head feedlots. He brought with him Gerry and Pat Rempel also from southern Alberta to take on the duties of yard foreman and office manager. Rempel was a lot foreman for Cor Van Raay Farms for 16 years.

But, why would someone who already worked for one of the largest feeders in North America decide to move to a smaller feedlot located in northern Saskatchewan? "I saw a lot of opportunity for both the feedlot and my family," replied Wilson. "The land here is much cheaper than Alberta, feed costs are substantially lower and my wife and I want to purchase our own land. I've been a cow/calf producer and a feeder. This position offers the possibilities for me to feed my own cattle as well as feeding others. Working for a feedlot in southern Alberta, we sourced cattle from this area. These cattle were always discounted by at least 5 cents per lb because of the cost of transportation. We also sourced a lot of grain from these area farmers. It made so much more sense to me to keep the calves and the grain right where they were."

Wilson says that the feeding strategies in a much colder environment really aren't that much different than those in the feedlots of southern Alberta. He says he can get comparable gains and conversions even with the harsher weather conditions. Last year's winter was a good test for the feedlot which opened in early November of 2008. "We had calves that arrived in December and when we weighed them in mid February, the steers were gaining 4.5 lbs a day. These were steers with good genetics for sure, but because of the area we are in and the size of the feedlot we can achieve good gains for less cost."

While bedding is limited and costly for larger lots, Wilson says that he is landing straw in the feedlot for roughly half of the cost in Lethbridge and can therefore use more of it. Barley prices run $1 to $1.50 less. "We have some inefficiency due to the cold as it relates to lb of feed to lb of gain," admits Wilson. "But with the cheaper input costs there is room to be more flexible in our feed rations. If we find a good buy on a certain commodity, such as wheat or rye, we can easily work it into our ration which is something that just isn't feasible in a much larger operation. Oats are plentiful in this area and it works well for backgrounding calves."

As of mid October, the lot was already close to being half full and there are contracts to fill the lot by mid December. Even with this kind of acceptance of the new feeder on the block, Reed and his committee are still hard at work to help to ensure future stability for the lot.

"We've just begun a share pen program to help educate others about the feeding part of the industry," says Reed. "Our business plan is built around custom feeding, and we didn't plan as a company to purchase cattle. But we can see the benefit of area individuals getting into the feeding industry. The feedlot is starting to feed as a partner in the share pen. We've raised about $100,000 from several investors and will leverage that to purchase a few pens this fall. To continue to make this business work, we have to reach out to lots of hands. As grain farmers and cow/calf producers, it makes a lot of sense for us to invest in that part of the industry that buys our raw products to create, hopefully, another profit centre."

Industry Question

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