With eager applause, the audience at ALMA’s June 17 Future Fare convention in Edmonton received the man of the hour – Mr. Rich Vesta.
Though Vesta might not be well-known outside of the livestock and meat industry, he’s become a household name in Alberta after buying the defunct Rancher’s Beef plant at Balzac. The plant, re-christened as Harmony Beef, is currently undergoing some massive updates and renovations, and is expected to begin operating this January.
Vesta was raised on a mixed 640-acre farm in northern Illinois, and his family raised corn, grain, 500 head of cattle, 3,500 farrow-to-finish hogs, and 5,000 laying hens. After the corn was harvested, but before the grain was ready, there were a few weeks of downtime on the farm, and it was during this period of summer when he was a 14-year-old boy that Vesta had a life-changing experience.“My father has always been an advocate of an idle mind is the devil’s workshop, so he farmed me out to a good friend of his who operated a locker plant,” Vesta explained.
After working at the shop performing mostly cleaning duties, the family friend, a Dutch master butcher, started to teach him how to cut meat. The rest, as it is said, is history.
“This will sound silly to most of you, but the moment I had a six-inch boning knife in my hand, I was hooked. I had no desire to go to college. I had no desire to farm. I had no desire to do anything but learn how to cut meat, so that’s what I did,” Vesta said.
He worked cutting meat for a few years before moving to retail as an apprentice butcher and later, the head of retail and deli operations. In 1979, Vesta began working in the packing business as a field rep, converting buyers from carcass to boxed beef. He would later buy Packerland, turning the business around, while developing lifelong relationships with those in the Canadian beef industry. After JBS moved into the American market, the company courted Vesta, and eventually he signed a two-year contract with them to lead the JBS U.S. beef division, before retiring in 2011.
“I retired from JBS, but I had no intention of ever really retiring,” he chuckled.
The first Monday after he left JBS, Vesta’s phone rang, and it was Canadian beef icon Kee Jim. “You’ve been retired long enough. Get off your ass – I want you in Canada. We have a plant up here I want you to look at,” Vesta recalls Jim saying.
That’s when the years of dealing with Canadian feeders came into play.
“We did business with the highest degree of integrity of anyone I’ve ever dealt with,” said Vesta, who was compelled to come to Balzac and take a closer look at the plant.
“I took three days with an engineer and we went through this plant and after what I saw, my eyes were opened up. This plant was built after the 2003 BSE crisis in Canada and it was built to standards of technology and innovations that quite honestly no other plant in North America still has to this day – particularly on the slaughter side. We were fascinated and full of intrigue about this plant.”
Vesta continued to research and explore the possibilities, but it became clear there was a large stumbling block ahead of him.
“One of the biggest hurdles that this plant had to overcome was water. Some of it was self-inflicted, but some of it was just a political issue,” he said. Vesta was determined to find a solution.
“One day I ran into a guy who asked me if I ever considered recycling the water. He took me to Europe and he showed me what European technology has done with water recycling,” he said.
That technology was the answer to the water supply issues the plant had been grappling with. Without the recycling system, the plant would use between 450,000 and 550,000 gallons of water a day. That need has been reduced to just 20,000 gallons a day thanks to the innovation.
“I looked at it from an investment standpoint because we have to invest all these millions of dollars in this water recycling, but with the prevailing rates of water and everything that was going through that plant it made good economic sense,” he said, adding ALMA had been instrumental with their financial and strategic support.
In all, Vesta spent about 2.5 years trying to work out the kinks before making the purchase in November of 2013.
“I think we prevailed when others had given up, or didn’t see an opportunity for a solution, or didn’t see the potential that this plant has.”
Vesta is very conscious of the fact that the plant was built by ranchers in the midst of the BSE crisis, and that when it closed, there were many broken hearts.
“One of our goals is to fulfill the destiny of this plant – the legacy of why it was built and I feel that burden every day. I know what the people involved went through and all the agony and anguish and heartache that they went through and I thank them. I want to make everybody who was involved understand they are all invited to come and see us and what we’re doing. We want to make them proud.”
In addition to the new state-of-the-art water recycling system, the fabricating portion of the facility is being revamped, and the refrigeration capacity is being doubled. Vesta says the renovations will cost between $16 -18 million, and should begin processing cattle in January 2015. When the plant is running full bore, it will process 800 head per shift, and employ approximately 325 people.
Although the plant is fundamentally different from the two big plants in Alberta, its cost of production won’t be higher.
“It was the last time (the plant was open), but it won’t be this time. I focus on costs – you have to be focused on cost – but I am more concerned with revenue than I am cost. Revenue is constituted by sale price and cutout value, yields and product mix and those are the things we are very, very good at. The costs are going to be fine. We’ll be as competitive – our cost structure won’t be any greater than at Cargill or JBS,” Vesta said with assurance.
It’s an interesting time to be in the beef business – inventories are low, and demand is increasing around the world.
“In the United States, we’ve got the lowest bovine population since Harry Truman was president. We’re at 86 or 87 million head of cattle and our industry doesn’t work well under 97 or 98 million, and it really works a lot better when it’s up at about 110 million,” Vesta said. “There’s a pent-up demand for protein today. As Third World countries start developing a better lifestyle, they aspire for better things and the first thing they go to is their diet. I use the example of South Korea and North Korea – the average difference in height between a North and South Korean is four inches. They just haven’t had the same nutrition.”
For the first six months of its operation, Harmony Beef will be processing typical cattle, and once the plant is operating fluidly, value added programs will be launched. Interesting, though Harmony Beef is perfectly poised to cater to the EU market, that wasn’t even in the initial business plan. However, with CETA (the EU-Canada trade deal) finally hammered out, the future looks very harmonious indeed.
“That was kind of the icing on the cake. This is the largest EU-approved facility in Canada and quite honestly, not only is it the largest EU-approved facility in Canada – there is no other plant in North America that meets the EU criteria that this plant does. None,” said Vesta. “It was on our horizon but we never penciled anything in for it. When we put together our three and five-year financial plans, we didn’t put Europe as a contributor at all to it. Basically we were going to go Canada, United States and Asia.”
Vesta says embracing what consumers desire is key to success– even if foreign market demands conflict with the status quo closer to home. He says when he first started going to Japan, it took him a little while to catch on to what they wanted, but that once he did, he saw that the need was real, and they were willing to pay for what they wanted.
“And it’s the same thing with Europe,” he said. “Everybody wants to talk about how Europe has all these impediments to trade. But they really have some significant needs they need to fulfill for their consumers – they have a generation of people now that we can’t change. They don’t believe in antibiotics. They don’t believe in beta-agonists or any kind of implant. Maybe it started out as a trade barrier, but it’s real now. It’s real.”
Harmony Beef is a family affair – Vesta’s wife has been incredibly supportive of the project, and their two sons Jeremy and Chris are involved with the company. While Vesta is spending most of his time in Airdrie these days, he still manages to go home to Colorado once or twice a month. Although he’s American, Vesta emphasizes that Harmony Beef is proudly Canadian.
“People ask me why I am doing this at this point in my life. It’s because I have a passion for it. I love it. I am still that 14-year-old boy that grabbed a six-inch boning knife. I will be in this plant every day,” he said with enthusiasm. “In my experience in this industry, which goes back a long time, I’ve never received such support and developed such friendships as I have in Canada. We are very thrilled to be here. Our whole family is excited about our future in Alberta.”