NFU calls on feds to block Lakeside sale

A major beef packing plant sale that would create “one of the most concentrated markets in the North American food system” shouldn’t be allowed to go ahead without major concessions, the National Farmers Union urged Tuesday.

U.S. meat giant Tyson Foods announced last month it will sell its Lakeside Farm Industries plant at Brooks, Alta., to XL Foods, owned by Alberta’s Nilsson Bros. Group, for $107 million.

Lakeside operates a cattle feeding, slaughtering and processing plant, as well as a fertilizer facility and farm, employing about 2,300 people, processing about 4,700 cattle daily into boxed beef for Canadian and U.S. markets.

The sale as proposed, would leave XL with nearly half of national meat packing capacity — and would leave XL and U.S. agri-food firm Cargill with virtually all of western Canadian capacity, the NFU said in a release.

Nilsson Bros.’ holdings include beef plants at Edmonton and Calgary and the former Western Canadian Beef Packers plant at Moose Jaw, Sask., which make it Canada’s largest domestically-owned and -operated beef processor. The company also owns beef plants at Omaha, Neb., and Nampa, Idaho.

The cattle feeding and marketing firm also owns “extensive” auction facilities in Western Canada, the NFU noted.

“The proposed sale would not only make XL Canada’s biggest packer, it would also make XL a major cattle supplier, and leave XL as the largest owner of auction facilities,” the NFU wrote. “If the sale is allowed to proceed, XL will be buyer, seller, and auctioneer. The Canadian government cannot be an accomplice to creating this type of competition-distorting corporate entity.”

XL would also be able to provide more than 20 per cent of its cattle needs from its own feedlots or from cattle it controls, the NFU said. “Government must take action to stop the competition-subverting and price-depressing practice of captive supply. These practices harm family farmers and independent sellers of fed cattle.”

The farmers’ group’s letter asks the federal government and Competition Bureau to either block the sale and keep Lakeside running through Tyson or an interim operator until another buyer, such as a farmer-owned co-op or one who’s in the food processing business but owns no North American cattle processing facilities, can be found.

That, or the government should allow XL to take over the plant but require Nilsson Bros. to sell its cattle production, finishing and marketing assets, including its auction rings, feedlots and cattle on feed. The NFU, in that case, would also urge Ottawa to make sure XL doesn’t control cattle through contracts or other arrangements.

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