Chicken war divides St. Francois

In the four-year battle over the chicken industry in St-Francois-de-Madawaska, there are divisions within divisions.

Dispute between Nadeau Poultry and Groupe Westco started in 2008

In the four-year battle over the chicken industry in St-Francois-de-Madawaska, there are divisions within divisions.

The village of 750 people has been split since 2008 as its largest employer, Nadeau Poultry, faces a competitive threat from local chicken farmers and their company, Groupe Westco.

In many households, one or more family members works for Nadeau while another works for Westco.

"Imagine what goes on inside a household," says Andre Landry, a Nadeau manager who has relatives working for Westco.

"It can’t be pleasant."

Several employees broke down in tears during interviews with CBC News last month, saying their relationships with siblings, cousins and neighbours were hanging by a thread.

"We had a funeral last week and it was so cold," says Sharon St-Onge.

"Cold feelings. It’ll never be the same. I don’t think so."

Since 2009, Groupe Westco, a partnership of five chicken farmers from the St-Francois area, has been shipping its birds to a slaughterhouse in Quebec owned by Olymel.

Westco and Olymel have formed a partnership, Sunnymel, to build their own processing plant in Clair, 10 minutes away from St-Francois. They say they’ll process the chickens at the new plant when it’s finished, and they’ve promised to hire Nadeau employees to work there.

But in the interim, Westco’s chickens are going to Quebec, leaving Nadeau with far less volume to process: Westco holds 80 per cent of the chicken farming quota for New Brunswick, and Nadeau says by sending its birds out of the province, Westco is deliberately trying to starve Nadeau out of existence.

That sentiment is what has fuelled the deep divisions in St. Francois.

"You don’t dare speak to anyone about it," says Jeanne d’Arc Boucher, a volunteer in a discount clothing store on St. Francois’s main street.

"You don’t know if they’re on Westco’s side or Nadeau’s side."

Gilles Cote, an electrician from St. Francois, says stress and tension are everywhere. "It’s always the little guy who suffers when companies fight," he says.

Jeannot Volpé, the region's former MLA, says the area used to be one of the happiest, most optimistic regions of the province.

Nadeau employed more than 350 people at its peak and was partly responsible for the area having the lowest unemployment rate in New Brunswick.

But that has changed.

"I just loved working out there with people in that community, because it was always positive," Volpé says.

"And for the last two years, it’s not good. Not good at all.

"Families are being divided, and the attitude is very negative, and there are things happening that you would never have seen in that area. I hope it’ll come back. Because they’re losing something. Their community is not as united as it was before."

A divided workforce

Unlike Nadeau employees, Volpé doesn’t blame Westco for the stress and tension in St-Francois.

He says Nadeau itself has put its employees on the front line of the chicken war, raising the emotional temperature.

"This is where they've created some frustration between some families and some friends in the community," he says.

Volpé isn’t alone in suggesting Nadeau’s aggressive strategy has itself put a huge burden on the workforce and has created additional divisions.

Luc Bergeron was the union shop steward at the Nadeau plant until he was forced out at a meeting in January.

He said by putting workers at the forefront of its public-relations campaign—busing them to the New Brunswick legislature for protests on company time, at full pay—Nadeau was adding to the emotional burden the workers have been carrying.

"It looks like they’re putting all the responsibility for saving the company on the workers, and I find that sad," he said. "My God, it’s quite a responsibility they’re giving us."

Progressive Conservative MLA Yvon Bonenfant told CBC News that one of the Nadeau workers protesting at the legislature last December told him she was forced to be there. "She said, `Really, if I wasn’t here today, I wouldn’t get paid. I had to come here because I can’t lose any money.’"

Yves Landry, Nadeau's general manager, says employees who take part in the company’s lobbying campaign do so willingly.

"It’s their choice to come on board and do that," he said.

In fact, it appears the Nadeau workforce itself is now just as bitterly divided as the community.

Bergeron told CBC News a few days before he was ousted that while he supported Nadeau’s effort to persuade the New Brunswick government to create a new chicken marketing board — which the company says would help it survive — he also saw the need for a Plan B.

Because Westco has offered to hire most of Nadeau’s employees, Bergeron felt he needed to start talking to the company about how workers’ seniority and benefits would be respected at the new plant.

He said he conducted a survey of the Nadeau workforce and about two-thirds of those who responded supported his plan to start talking to Westco.

But some workers preferred taking a hard line with Westco, and they organized a special union meeting where Bergeron was pushed to quit.

Eric Pelletier, the new union shop steward, says his advice to fellow Nadeau employees would be to refuse to work for Westco.

"[Westco] has made us suffer for the last two years while they brought their chicken to Quebec, so why would I tell them to go work there?" he asked in an interview before he became shop steward.

"May as well go to to college or something like that instead of going to work for somebody who’s made us suffer for the last two years."

From the egg to the plate

With its own processing plant, Westco will control the entire process, starting with the hatching of chickens through to cuts of chicken being sold to stores and restaurants — "from the egg to the plate," as one of Westco’s owners, Bertin Cyr, likes to say.

During the 1980s and 1990s, Westco, which started as a co-op among a few local farmers, launched an ambitious expansion plan.

After the shutdown of New Brunswick’s only other chicken processor, in Sussex, many farmers in southern New Brunswick decided to retire rather than ship their chickens the long distances to Nadeau.

Listen to a full documentary on the chicken dispute on Maritime Magazine 

Westco started buying up their quota and shifting it to the St-Francois area, consolidating more and more of the farming in the region.

They invested millions of dollars in new, larger barns, and branched out into hatcheries, feed companies and trucking.

Cyr says this was convenient for Nadeau, which saved on transportation costs because more and more of the farming was close by.

But for Westco, it represented a risk.

"No businessman will build his business on one customer," Cyr says.

"In our case, selling to Nadeau was selling to only one customer."

Nadeau has been owned by Ontario-based Maple Lodge since 1989. Cyr says he and his partners worried that if Maple Lodge ever closed the Nadeau plant, all their local investment would go to waste.

The solution, they decided, was to build their own processing plant.

"Then our business is not based solely on one customer," he says.

"We have Sobeys, we have Loblaws, we have all those other customers on the market. That’s another reason why we needed to take that step. It helps the industry in the region. It creates work. It guarantees work in the region."

Cyr says what’s been lost amid Nadeau’s aggressive lobbying campaign is the fact Westco was started by local farmers from the St-Francois area, who care about the community as much as anyone else.

"We built it here," he says.

"My father was one of the founders of Westco, so we have this community at heart."

Westco opted to send its chickens to Olymel’s Quebec plant because, as an Olymel partner, it would share in the profits. Westco says it asked Nadeau for a deal that would be equally beneficial, but Nadeau refused.

Nadeau disputes that claim.

Yves Landry, the company's general manager, says by shipping the birds to Quebec, they hoped to pressure Maple Lodge into selling the Nadeau plant to Westco.

"They manipulated it in such a way that at the end of all this, they want to starve Nadeau out of chicken and get the plant," Landry said.

Early skirmishes

The so-called chicken war became public knowledge in 2008, but the two sides had been moving in that direction for several years.

Landry says Westco skirted regulations in creating their vertically-integrated operation.

First, he says, Westco ignored a cap that prevented any farmer from owning more than 10 per cent of the chicken quota in New Brunswick.

"These producers were individuals up until 2003," he says.

"Until then, when they became a corporation, they were exceeding the limit. And their licence was not revoked. It says clearly in the regulation, a corporation cannot own more than 10 per cent."

Westco's chief executive officer disagrees with Landry’s interpretation.

"One individual could own two companies and each of those two companies could own ten percent," he says.

In 2005, the board of the Chicken Farmers of New Brunswick, which manages the quota, voted to get rid of the cap altogether.

Nadeau says the board was dominated by Westco partners and their allies, and argues the Farm Products Commission, or the provincial government itself, should have intervened to block the move.

"The government has failed in its regulatory role," Landry says.

But Luc Bergeron, the ousted shop steward, points out Nadeau didn’t object at the time. He says Nadeau management ought to have been keeping a closer eye on regulatory decisions made in Fredericton.

Jeannot Volpé agrees that Nadeau bears some responsibility.

"Anyone who would have appealed to the farm product commission would have been heard, and could have given the reason why [they didn’t like the decision]. But there's never been anyone who came in and said, `We don't like it. So some people asked for [the removal of the cap], nobody complained against it, so it was done."

Nadeau acknowledges it didn’t object to the change at the time, but says that’s because it wasn’t aware of the move.

Regardless, it says, the Farm Products Commission ought to have stepped in on its own initiative.

A new partner

In 2007, Westco proposed a deal with Nadeau that would see the two companies jointly own and run the existing plant. But they couldn’t reach a deal.

"They said to us, `Guys, stop talking to us about partnership. We’re not interested in that. You’re the farmers, we’re the businessmen. You do the farming and we’ll do the business,’" Cyr says.

"That’s OK. That’s their decision. We respect that. But after that, we decided to look for another partner who will understand where we’re going."

In January 2008, Westco announced its partnership with Olymel, including plans for their own plant, and their decision to ship chickens to Quebec during construction.

The Liberal government of Shawn Graham briefly tried to help Nadeau, passing a law that would force chicken grown in New Brunswick to be processed in New Brunswick.

The law was aimed at stopping Westco from shipping its birds to Quebec while the new plant was under construction.

But because New Brunswick has never claimed for itself the power to regulate processing — a power available to it under a federal-provincial agreement on supply management — the law was struck down.

Ron Ouellette, who was the Liberal minister of agriculture at the time, admits now that he knew the legislation would fail.

"Right from the beginning, I was told, `This is far-fetched. It might not work.’ But at least I wanted to put an effort in there to show the [Nadeau] employees I supported them," he said.

Ouellette later appointed a mediator to try to forge an agreement between Nadeau and Westco, but that failed as well.

"After the third meeting, he sent me a message and said, `Look, don’t waste any money here. There’s no way they’re going to get together. There’s no way they’re going to work together,'" he said.

Wins for Westco

The current New Brunswick government has refused Nadeau’s request to revisit the removal of the cap.

It has pointed to a series of legal rulings, both by the courts and the Federal Competition Tribunal, that have said under the existing regulations, it’s legal for Westco to build its own plant, and legal to ship its chickens to Quebec in the interim.

"They haven’t done anything illegal from my perspective," Agriculture Minister Mike Olscamp said in December.

While some of the rulings have been narrow and technical, the effect has been to clear the way for Westco’s continued expansion.

Landry believes the province is reluctant to revisit the 2005 removal of the cap because Premier David Alward was the minister of agriculture at the time, and trying to reverse it now would be an admission that Alward made a mistake.

For the last year, Nadeau has been asking the province to completely overhaul the system.

New Brunswick’s chicken growing quota — the volume farmers are allowed to produce — is regulated by an industry group, the Chicken Farmers of New Brunswick. That organization is overseen by the provincial Farm Products Commission.

But there is no similar system in place to regulate processing or the slaughtering and packaging of chickens.

Nadeau is asking the province to create such a system, and to allocate 50 per cent of the processing quota to Nadeau. That would guarantee the company enough chicken to stay in business.

But  Thomas Soucy, Westco's chief executive officer, says that would have the perverse effect of forcing Westco to sell its birds to its competitor and punishing the company for its success.

"We, the producers here, all the shareholders here in St-Francois, made a decision based on a business case. And I don’t think the government should mingle with that," he said.

"If they start mingling with everything they have a hold on, or control on, they’ll spend all their time controlling business."

Shutdown looming

Nadeau has been able to keep operating with a reduced workforce thanks to a supply of chickens from Nova Scotia. But that will end in June when a new plant opens in that province.

It has also tried to find a supply of chickens from Quebec, but that hasn’t been easy.

 At first, Quebec blocked the export of chickens to New Brunswick, a clear example of a double standard in interprovincial trade, given Westco chickens are going to Quebec.

Last year, a Quebec ruling said the province’s chickens could be shipped to New Brunswick, but that ruling is being appealed. The result: Nadeau’s future supply of chicken is uncertain.

"We’ve been open here for 50 years," says Sharon St-Onge, a Nadeau worker.

"And I find that it’s pretty bad to let the place close down."

Ed Landry, another employee, says the uncertainty is a constant burden.

"It’s just the not knowing if I’m going to have a job next year, or next week. I know that happens all over the country. Times are tough. But we’ve got a good plant. It’s been going good. It’s just not knowing what’s going on."

Meanwhile, Westco’s Sunnymel plant is taking shape in nearby Clair, and the company's CEO says despite the fight within Nadeau’s workforce, 70 workers there have applied for jobs.

But he has recently taken out ads encouraging people to apply by phone.

"We live in a small community, so we know yes, people are being intimidated, being bullied, in order not to apply," Soucy says.

Soucy and Cyr, who say they’ve deliberately chosen not to put their employees in the media spotlight as Nadeau has done, say they know St-Francois has been badly split by the chicken war.

In fact, they say they have a better appreciation of it than Nadeau’s Toronto-based owners.

"We live here," Soucy says.

"My house is here. Bertin’s house is here in Lac Baker. . . . We see the local people. We go to hockey games at night and we’re with them."

Cyr says he has no hard feelings against Nadeau workers, who angrily confronted him at a public meeting last September.

"They really don’t know the whole story," he says.

"They were told we would never process our chicken in town, in the local area. And they believed it at the beginning, so they campaigned against us."

Cyr says once the new plant is running, he hopes the chicken war will end. He thinks it will, as people realize Westco is here to stay.

"Our head office is here so we have to stay here. So for the people and the community, I think it’s a better solution in the long term."