Reuters: Regulatory News: UPDATE 1-Canada: new manager won't alter tainted beef plant review

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UPDATE 1-Canada: new manager won't alter tainted beef plant review Oct 18th 2012, 19:14 Thu Oct 18, 2012 3:14pm EDT * JBS assumes management of XL Foods plant, holds buy option * XL Foods-produced beef sickened 15 people * JBS had meat recall in 2009 but touts safety record * Plant shutdown holds back Canadian cattle from market By Rod Nickel and Theopolis Waters WINNIPEG, Manitoba/CHICAGO, Oct 18 (Reuters) - The Canadian government said on Thursday that management changes at an Alberta plant responsible for one of the country's biggest-ever meat recalls would not affect a nearly completed review of changes made to improve the plant's safety. Canadian food inspectors are set to recommend this week when, or if, XL Foods' Lakeside beef processing plant in Brooks, Alberta, can reopen after E. coli contamination of its products sickened 15 people in Canada and prompted the recall of millions of pounds of beef. The Canadian Food Inspection Agency (CFIA), which pulled privately held XL Foods' operating license on Sept. 27, said "any change in management or ownership at XL will not affect our assessment." JBS USA, a subsidiary of Brazil-based JBS SA , said late Wednesday it had signed a deal with XL Foods to manage the Brooks plant and had an option to purchase the Canadian and U.S. operations of XL Foods for $50 million in cash and $50 million in JBS SA shares. The company, which would not assume XL Foods' debt or liabilities, said it would examine events carefully to work out what went wrong at the plant, which can process up to 4,500 head of cattle a day. "We're going to have to sit down with XL and understand what has occurred in that facility to date and bring our expertise to assist in that situation," JBS spokesman Cameron Bruett said on Thursday. "We have a very successful food safety track record and robust food safety program and we think that will be an asset to the facility." JBS has not decided on any specific changes on how the plant will run, he said. The CFIA this week reviewed the steps XL Foods has taken to improve food safety. Agriculture Minister Gerry Ritz, who has been under fire for the government's handling of the beef recall, also suggested nothing will change in the review timetable. "Canadian consumers can be assured that the Canadian Food Inspection Agency will enforce the same rigorous food safety standards at Lakeside facility regardless of the management," Ritz said in an email statement. "(CFIA) has concluded their last stage of review and I look forward to receiving their report which will outline the next steps for this facility." JBS HIT BY BEEF RECALL IN 2009 JBS has also produced beef contaminated with E. coli. The U.S. Department of Agriculture's Food Safety and Inspection Service in 2009 recalled beef produced by JBS Swift. Twenty-three people in the United States were infected. JBS responded by assembling a top-notch food safety team that still advises the company, said Steve Kay, editor of California-based Cattle Buyers Weekly. "What they do will absolutely diffuse the whole issue and all the controversy surrounding the recall because their focus will be 150 percent on satisfying CFIA's requirements and enhancing the food safety systems currently in the plant and getting it back up and running by early next week if they can," Kay said. JBS will decide whether to buy the XL operations within six months, Bruett said. If it does, it will be its first purchase of a processing facility in Canada. In Canada, JBS, the world's sixth-largest exporter of beef and veal, would go toe to toe with Cargill Ltd, which operates two big beef plants of its own. "Canada has an excellent cattle herd," Bruett said. "Our strategy as a company is to have a global platform both in processing and in distribution." The temporary shutdown of XL Foods' plant has forced ranchers and feedlots to hold back their cattle from market, racking up additional costs, or to export them to U.S. slaughter plants. Western Canadian feedlot operator Brad Wildeman said he would be sorry to see a Canadian cattle company disappear, but sees benefits from JBS's arrival. "They have a lot of expertise at running plants and second, they're a world trader, so in the longer term our ability to build export markets is going to be important for us." JBS is the third biggest beef producer in the United States, after Tyson Foods Inc and Cargill. "This whole deal with picking up XL assets, which is eventually what they are going to do in six months, reveals JBS's opportunistic acquisition strategy and strengthens their hand in North America quite considerably," Kay said. Bruett would not say when the company began discussions with XL Foods, which is privately owned by Nilsson Bros. JBS shares in Sao Paulo rose 3.8 percent in afternoon trading. Link this Share this Digg this Email Reprints

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