* Slaughter, processing to gradually resume
* Inspection staff, testing ramped up
* Reopening of plant will ease cattle backlog
Oct 23 (Reuters) - The Canadian plant that produced millions of pounds of tainted beef was set to reopen on Tuesday as food inspection officials tried to restore consumer confidence in the country's food safety system.
XL Foods' Brooks, Alberta, plant has been closed since Sept. 27 after producing beef contaminated with E. coli bacteria that sickened at least 16 people in Canada.
Products including ground beef and steaks were pulled off store shelves across Canada and in most U.S. states. The U.S. Department of Agriculture (USDA) halted imports last month of products traced to the plant.
The Canadian Food Inspection Agency (CFIA) said it has lifted its suspension of the plant's operating license after XL made a series of improvements. That means the plant, which has the capacity to handle 4,500 animals a day, can gradually resume the slaughter and processing of cattle.
``We are confident that all issues have been fully addressed,'' said Paul Mayers, associate vice president of programs for CFIA.
Problems at the plant ranged from failing to follow its own food-safety plan to poor analysis of testing results and numerous sanitation concerns, such as workers not wearing beard nets and improper washing.
The CFIA has increased the number of inspectors at the plant and will conduct more testing for E. coli than normal, the agency said.
But Bruce Cran, president of the Consumers' Association of Canada, said consumers are ``not confident at all,'' about the plant's safety, with some saying they would eat less beef, or avoid beef from Alberta.
Alberta is Canada's biggest cattle-producing province, and had a herd of some 5.4 million head of cattle as of July 1.
Privately held XL Foods last week transferred management of the plant to JBS USA Holdings Inc, a subsidiary of Brazilian meat giant JBS SA, which holds an option to buy the company's Canadian and U.S. operations for $50 million in cash and $50 million in JBS SA shares.
A JBS USA spokesman could not be reached immediately.
E. coli bacteria can cause illness, or even death, and symptoms include severe stomach cramps, vomiting and diarrhea. Cooking meat to the correct internal temperature kills the bacteria.
The recall has led to calls for the resignation of federal Agriculture Minister Gerry Ritz, who was also at the helm of CFIA in 2008 during a recall of deli meat that killed 22 people.
XL Foods product recalls began only on Sept. 16, almost two weeks after the CFIA learned of the contamination and began to investigate.
CFIA has said that one of the reasons for its delayed response was that XL did not produce information as promptly as the government required, a shortcoming that Ritz has said will be fixed under new legislation.
REOPENING GOOD NEWS FOR RANCHERS
The plant, which slaughters nearly 40 percent of all Canadian cattle, competes mainly with facilities operated by Cargill Ltd, which has boosted production since XL closed. Cargill spokeswoman Brigitte Burgoyne said the company will continue to run its High River, Alberta, plant for an extra day this week.
Supplies have backed up on Canadian ranches and feedlots, many of which have held cattle from market longer than usual at extra expense or have exported them to U.S. plants.
``The sooner we can get that plant up in operation the better,'' said Alberta cow-calf producer Doug Sawyer.
Cattle prices in Western Canada have dropped sharply with one of the two biggest buyers of slaughter-ready cattle closed for nearly four weeks. The market for cows has dropped 12 to 16 Canadian cents per pound, or about C$168 to C$224 ($170-$226) per head, Sawyer said.
Canada is the world's sixth-largest exporter of beef and veal.
Mayers said the plant will eventually be allowed to reach its normal production speed. The USDA has not yet decided to resume imports from the plant, he said.
Food inspection officials will now turn their attention to whether changes are necessary to boost food-safety in the broader meat-packing industry, Mayers said. Along with XL and Cargill, leading Canadian meat processors include Maple Leaf Foods and Olymel l.p.
CFIA spokesman Guy Gravelle said that XL Foods will dispose of recalled meat at garbage dumps.