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Westco offers “contract-kill” deal in N.B.

New Brunswick poultry producer Groupe Westco is proposing to follow the province’s orders on where it ships its chickens, but on its own terms.

The province, on Jan. 20, issued a temporary ministerial order requiring all poultry production in New Brunswick to be shipped to Nadeau Poultry Farm’s federally-inspected processing plant at St-Francois-de-Madawaska, near Edmundston.

Agriculture Minister Ron Ouellette’s order follows Westco’s plans to ship its production to Olymel processing plants in Quebec, thus cutting off a key supply of chickens to Nadeau, a wing of Ontario meat company Maple Lodge. Nadeau announced substantial layoffs in view of Westco’s plans.

Westco, also headquartered at St-Francois, and Quebec-based Olymel have a joint-venture agreement in place for a $30 million poultry processing plant at nearby Clair, N.B., to operate under the name “Sunnymel.”

Their agreement had called for Westco to ship to Olymel’s other plants outside the province until the Sunnymel facility is built. The plant at Clair would handle the two companies’ chicken slaughter, cutting, deboning and distribution operations for the entire Maritimes.

Westco, in a news release Saturday, said it “continues to consider the New Brunswick government’s (ministerial order) to be invalid and unconstitutional, and is exploring all available recourses against it.”

In the meantime, however, Westco has put forward a proposal to ship all its birds to Nadeau, in compliance with the order — but on the condition that the Westco chicken processed by Nadeau be returned to Sunnymel for marketing and distribution.

“Reasonable conditions”

In short, Westco CEO Thomas Soucy said in Saturday’s release, “we are proposing a ‘contract-kill’ contract that will enable Nadeau to keep processing jobs at its St-Francois plant and even surpass its historical volumes.”

The proposal would last for as long as Ouellette’s order remains in effect. The province said Jan. 20 that the order was required to maintain jobs in New Brunswick’s poultry sector.

Ouellette said Jan. 20 his order is “a temporary measure and not my preferred solution to the current state of the chicken processing industry in New Brunswick.” Rather, he urged Westco and Nadeau to settle their “commercial dispute.”

The Sunnymel partners haven’t yet given a specific time frame in which they expect their own New Brunswick facility to be built and commissioned.

Contract-kill arrangements are common in the chicken industry and Nadeau has already taken part in such agreements in the past, Westco said Saturday.

“The terms of Westco’s proposal to have its chickens processed at Nadeau Maple Lodge echo this practice and Nadeau should, therefore, have no problems accepting them.”

However, Soucy said, “we have attempted several times since the summer of 2009 to enter into an agreement with Nadeau Maple Lodge to find a temporary solution until our new abattoir is built. However, they have always refused our proposals as a whole, even though these proposals would have allowed them to continue to process Westco chickens.”

Westco said Saturday that it has already informed Ouellette of its proposal, but added he “might be required to intervene” if Nadeau refuses the “reasonable and standard conditions” Westco proposes.

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