BY DAN FLYNN | OCTOBER 19, 2012 FoodSafetyNews.com
The biggest beef recall in Canada’s history was eclipsed within a few hours this week by a new management agreement shifting control and potentially the ownership of the troubled Brooks, Alberta plant to the world’s biggest beef company, JBS of Brazil.
Brooks’ Mayor Martin Shields immediately said it was positive news that means the processing plant will soon be back in operation. Union representatives also praised the move despite the fact a JBS spokesman said it will include a review of the labor situation.
But while waiting for the new management team to arrive from JBS’s North American headquarters at Greeley, CO, food safety officials in Canada were talking about what has to happen over the “coming days.”
Beef from the idled Alberta plant has been named as the source of 15 E. coli O157:H7 infections among Canadians in four provinces. While as much as 2.5 million pounds of the recalled Canadian beef crossed the U.S. border before it was closed to XL product, no E. coli illnesses in the U.S. have been linked to the recall.
The management agreement means that JBS will immediately take over the operations of XL Foods Inc. in Alberta, including the 70,000-head capacity feedlot and associated ranch lands and the processing and packing plants at Calgary and Alberta with capacities of 1,000 and 4,000 head, respectively
During the coming six-month option period, JBS will run the Alberta facilities and XL will continue to operate two U.S. properties that are also part of the deal, a 1,200-head-per-day packing plant at Omaha, NE and a 1,000-head-per-day packing plant at Nampa, ID.
If JBS pulls the trigger on the deal, XL will get $100 million, half in JBS stock and half in cash. JBS will not assume any XL debt or liabilities. The privately held XL Foods is Canada’s second largest meat packing company.
Beef industry experts in the U.S. say that before the recall those facilities might have fetched $300 million.
XL’s license to operate in Brooks was suspended Sept. 27. By that date XL had exported potentially contaminated beef to more than 20 counties, including the United States, from the plant.
Even before the JBS/XL management agreement was announced, the Canadian Food Inspection Agency (CFIA) was allowing some limited operation, while assuring the public no meat would be allowed out of the packing plant for consumption until its safety was guaranteed.
The closed slaughterhouse has idled at least 2,200 workers and forced Canadian cattlemen to delay taking cattle to market. About 800 XL employees were called back to work on beef carcasses that were being used in the investigation.
Over the coming days, CFIA says it plans to thoroughly review its observations of deboning and cutting activities, specific E. coli controls, meat hygiene, sampling techniques and overall plant sanitization. It then plans to issue a report with recommendations on next steps.
CFIA says that after cutting the carcasses that were in the plant when operations were suspended, personnel monitored the disposal of the meat to a rendering plant. It will continue such oversight and says no XL meat will enter the food system.
“The plant will not be permitted to resume normal operations until the CFIA confirms in writing that it is safe to do so,” the agency said in a statement.
The mid-week management announcement was a surprise to everyone outside JBS and XL, but the companies had apparently started talking some time ago.
During the past decade, JBS has emerged as the world’s largest beef producer, largely through acquisitions that left it with a $7.5 billion debt. But it is also flush with cash because in Brazil beef is raised mostly on grass, not expensive corn and other grains.
JBS has 135,000 employees worldwide and operates 301 production facilities. By picking up the XL facilities, JBS will add 7,200 head per day to its North American capacity, raising its total to 36,050 head per day. That would move JBS from No. 3 in North America to No. 1, ahead of both Cargill (with 30,000) and Tyson Foods (with 29,900).
JBS teams were immediately sent to Brooks and Calgary to take over management of the Canadian facilities. A JBS spokesman said the company is “well positioned” to assist with food safety issues.
- New beef plant management won’t affect inspection: CFIA (sunnewsnetwork.ca)
- Union for XL Foods workers weighs in on new managers (updatednews.ca)
- Industry giant takes over XL Foods (calgaryherald.com)