Sunnymel claims court win, path clear for chicken plant

Quebec meat packer Olymel and New Brunswick poultry producer Groupe Westco are claiming an appeal court victory they say will allow them to move on plans for a New Brunswick chicken slaughter plant.

The two companies reported Monday that the Federal Court of Appeal has ruled in their favour in an ongoing dispute over whether Westco is obliged to supply poultry packers within New Brunswick.

Westco and Olymel — who dubbed what’s now a $40 million joint project as “Sunnymel” after announcing it in 2008 — said Monday that the appeal court’s June 2 ruling was unanimous in upholding a June 2009 decision by the federal Competition Tribunal.

The Sunnymel partners said the court upheld the tribunal’s dismissal of a petition from Brampton, Ont. poultry processor Maple Lodge Farms, which operates New Brunswick’s only federally-inspected chicken plant, Nadeau Poultry. The tribunal had found Westco’s decision to stop supplying Nadeau does not constitute a “refusal to deal” in competition law and was “in no way illegal,” Westco said.

The issue dates back to 2008 when Westco announced plans for “Sunnymel,” a chicken slaughter, cutting and deboning plant it would build at Clair, N.B. in a joint venture with Quebec meat packer Olymel.

Sunnymel, when open, is expected to serve the “entire Maritimes market from New Brunswick” with slaughter space to handle up to 450,000 birds per week.

Westco in 2009 began shipping its chickens to Olymel processing plants in Quebec, pending Sunnymel’s construction at Clair. Nadeau then announced layoffs at its plant at St-Francois-de-Madawaska, a few kilometres west.

Nadeau in 2008 had also filed a complaint with Chicken Farmers of New Brunswick calling for a “guaranteed supply system,” but was rejected.

The previous Liberal government in New Brunswick responded to the layoffs in January 2010 with a ministerial order designating Nadeau as the only federally-inspected plant for processing of chickens raised within the province. That order was later invalidated in court and the Liberals were voted out in September.

Nadeau in February also proposed a New Brunswick Chicken Marketing Agency that would deal “solely” with the marketing of broiler chickens past the farm gate and would allocate live chicken supply to processors both within and outside New Brunswick, but the province has rejected that idea.

“No longer”

“It is high time to recognize that there will be competition in chicken processing in the Maritimes,” Westco CEO Thomas Soucy said Monday. “Nadeau and Maple Lodge can no longer control the processing of chickens in Eastern Canada.”

Maple Lodge — which earlier this spring announced a joint venture with Maritime producers to refit the former Larsen Packers meat plant at Berwick, N.S. for poultry processing — made no official comment as of Tuesday.

The Ontario firm in February contended that the dispute is not just a commercial conflict but a “supply management failure,” in which Westco was allowed to form a “production cartel” now controlling almost four-fifths of New Brunswick’s chicken supply and “attempting to starve Nadeau of chickens.”

Maple Lodge’s Nadeau arm had invested millions in a new plant in 2002 when its original plant burned down, rebuilding “based on the expectation of a stable supply of product as guaranteed in supply management,” CEO Michael Burrows said at the time.

Former federal agriculture minister Lyle Vanclief, who Maple Lodge enlisted in February to help plead the company’s case, warned at the time that national supply management representatives and others are watching the New Brunswick situation with concern.

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