FCL reducing to three of six feed mills
Brandon, Melfort feed mills to be closed, Edmonton feed mill sold Business will be consolidated to Calgary, Saskatoon and Moosomin mills
May 23, 2019 9:39 am
After reviewing its feed business, Federated Co-operatives Limited (FCL) is consolidating feed production from six facilities across the Prairies to three—Saskatoon, Calgary and Moosomin.
FCL will make significant capital investments to modernize the remaining plants.
One investment is in new bagging equipment that will be installed to support better stitched, open-mouth bags that will be distributed through the entire Co-operative Retailing System (CRS).
According to FCL, the review and decision to close facilities, along with the investments in the business, address unprecedented competitor consolidation and a changing market in the feed sector. FCL says it is making these changes to help ensure that it can continue providing Co-op feed products and services in the long-term.
“While we don’t make these decisions lightly, by consolidating manufacturing and taking measures to refocus our resources in the livestock sector, we’re better able to serve our local co-ops and their producer customers across Western Canada well into the future,” said Ron Healey, FCL Vice-President of Agriculture and Consumer Business.
FCL is transitioning products and services from the Brandon, Man., and Melfort, Sask., plants that are closing to the remaining three plants. The Melfort plant will wind down in August 2019 and the Brandon plant will cease operations in October 2019. FCL’s other feed facility in Edmonton will transfer its operations to Wetaskiwin Co-op in September 2019.
“These plants have been in their communities for many years and I want to thank all of the team members who have contributed so much for so many years,” said Shelley Revering, FCL Director of Feed. “The concentration of our feed manufacturing operations results from industry challenges and in no way reflects the substantial efforts of our plant teams.” Through its feed plants, FCL manufactures cattle, horse, sheep and poultry feed in bags and bulk orders. It also produces pet food for retail co-ops.
World-Spectator editor Kevin Weedmark interviewed Patrick Bergermann, FCL’s associate vice-president for Ag and Home, about the impact on the Moosomin feed mill. The complete interview follows:
First of all, what is the motivating factor behind the consolidation to three feed mills?
Well certainly the biggest motivating factor behind it was the industry dynamics, market dynamics in the feed industry. There has been a lot of consolidation within the sector both on the producers side as well as on the manufacturing side and we’re certainly not in isolation within the industry as far as the need to gain greater efficiencies, as we’ve seen other manufacturers start to consolidate and amalgamate.
There has been consolidation in some of their production as well and we were facing the same market circumstances as everyone else. Our fleet of six plants are certainly not new—they’ve been in operation for quite some time and many of them required a significant amount of capital investment to sustain operations into the future.
When we looked at the total costs of continuing to operate six facilities it just didn’t pencil out for us.
We wanted to make sure that we could continue to serve local retail co-ops for their packaged feed needs and continue as best as we could from the remainder facilities to service producers on bulk needs. So with the Moosomin, Saskatoon and Calgary facilities continuing on with operations, we believe that we’ll have the right sized footprint that we can begin to amp up our investments in those three remaining facilities and still service the needs of local co-ops and their producer customers.
How did you determine which three you would consolidate the operations to?
Good question. It was a mixture of local market dynamics around those facilities, the age of the facility, the amount of capital investment required on each of them, and the logistics requirements from each to be able to help service our facilities.
One of the factors that was certainly favorable for the Moosomin facility is the fact that we produce textured feed there and right now among our fleet of facilities it is the only one that does textured feed, so that was an important consideration.
Is the main customer of FCL’s feed mills the individual retail co-ops or is the main customer individual farmers?
I would say a mixture of both. Federated Co-op is really there to support the relationships the local co-ops have with their producer customers, so where it’s somebody that has livestock and requires feed we would often work in collaboration with the local co-op to make sure that we serve that customer on behalf of their co-op. In parallel with that, we also produce packaged goods that go on the shelf at your local co-op all across Western Canada—bagged poultry feed, bagged horse feed, our bagged feed for cattle, minerals etc. We produce those from our production facilities as well.
With the closure of the plant in Brandon, would the area served from the Moosomin location expand, or is expansion limited by the logistics of trucking?
Great question Kevin, and that is certainly part of the vision is that where we can viably serve the producers in the area from the Moosomin facility we will look to do so without question.
We have good loyal customers in the marketplace of the Brandon facility.
The Brandon facility will remain open until October 15.
Once we wind down operations at that facility, we want to do whatever we can to continue to serve the needs of that market place wherever viable from the Moosomin area.
What kind of investment is FCL planning for the Moosomin plant?
Definitely we have plans to put some capital investment into the facility and there are a few different fronts where we’re planning to do that.
There are things like the pellet mill at the facility, but probably the most tangible one that folks can connect with is the bagging equipment at the facility.
Right now we have a valve packed bag that we produce at the mill site that we will send out to retail stores. Most of our competitors moved in the last few years over to an open mouth stitched bagging technology and so we are going to do the same.
This fall we will be implementing a new bagging system in Moosomin which will move us to that open mouth stitched bag style.
How significant of an investment would Federated Co-ops be making in the plant in Moosomin?
I wouldn’t want to get too deep into the dollar amounts but certainly within the grand scheme of the investments we’ve made at the Moosomin facility over the last few years, this would definitely represent a significant step up.
Would any employees be moving from Brandon to Moosomin? Would you be expanding the staff at all in Moosomin?
We’re having those conversations with employees right now.
Once we get a chance to complete those conversations with folks, we’ll have a better sense of where people are looking for those types of opportunities to move to, or where we have those types of opportunities.
We’ll be looking for employment opportunities for folks out of Brandon throughout the Co-operative Retail System wherever we can.
I can’t say at this point in time, so whether or not we’re going to need additional staffing in Moosomin—that is certainly part of what we are continuing to assess right now with the announcement we made Monday.
How many people work at your Moosomin operation right now?
Moosomin operation has 10 people employed there in the current state.
That is the same size we would have in Brandon.
When you make a decision like this, how long of a process is it, the gathering information and decision making that goes into something like this?
Another good question. We’ve put about two years worth of work into analyzing our current operation and understanding our fit within the marketplace and where we believe we have some opportunities for the next stretch of time and into the future, so it was quite a lot of time that was invested in making sure we had a sustainable plan for the future.
What do you see as the long term outlook for the FCL feed business?
We think that we have a solid plan in place to continue to be a major market presence in the feed business.
Certainly we’ve got an important niche to fill within the industry as far as having a unique retail network—the fact that we have so many local co-op outlets that help serve producer needs on the fuel side, the crop input side, the ag equipment side.
There are lots of ways that we help support producers, and we’re really happy that we will be able to continue to support their needs from a packaged feed perspective all across the West, and then of course where we have the feed mill facilities we’re going to be able to do that with bulk tonnes too.