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Federal Slaughter Funding Cheers, Disheartens Cattle Enhancement Council

“They understand that there is a need for regional placement of these funds.”

– KATHLEEN BUTLER, MCEC

Athree-year $50 million federal program to expand beef slaughter capacity in Canada is getting mixed reviews from the Manitoba Cattle Enhancement Council.

The MCEC says it’s heartened by a reference in a recent federal news release to “addressing regional gaps” in the beef-processing sector. That means new local plants will qualify for funding, which didn’t appear so before, said Kate Butler, the council’s executive director.

MCEC earlier this year voiced fears the money would go to large existing processors, not small new ones.

But Butler was disappointed the $50 million will be in the form of government loans, not dollar-matching grants as previously believed.

That means the program may not stimulate beef capacity the way Ottawa hopes, she said.

REPAYABLE LOANS

The fact that the program will only lend money is already affecting MCEC’s own applicants.

“One of our proponents has stepped back from that program because it’s repayable. They won’t apply if it is,” Butler said.

MCEC, a provincial agency, helps fund new and expanding beef slaughter projects with money from a mandatory, refundable levy on cattle sold in Manitoba.

The $50 million program was announced in the January 27 federal budget. Finance Minister Jim Flaherty’s budget speech said Ottawa “will make federal contributions available to match private-sector investments in sound business plans aimed at reducing costs, increasing revenues and improving operations of meat slaughter and processing operations in Canada.”

A June 5 government news release said the program will soon accept applications. Full program details are expected by June 31.

However, the release said the program “will make federal repayable contributions available to support investments made by the private sector and other levels of government.” That differs from the budget speech, which promised dollar-matching grants.

NO CONTRADICTION

A spokesperson for Agriculture Minister Gerry Ritz said there was no contradiction and the minister has said from the start these were repayable loans.

“He’s said that over and over,” the spokesperson said. “There’s been no change. It’s always been a federal repayable contribution.”

Indeed, Ritz did say in a March 13 news conference that the money would be in the form of loans.

“It is a loan with low interest rates and payback schedule of some 10 years after (projects) become viable,” he said.

However, the transcript of a January 27 interview with Ritz is not as clear.

“This is not free money,”

Ritz said. “This is money that will help and we’ll use it to lever more money out of the private sector.”

Butler said the remark does not prove the money was always intended to be repayable, only that it would require sound business plans first.

“(I)f it were to seriously encourage private-sector money in this economic climate, it would not be repayable,” she said in an e-mail.

RENOVATING

However, the switch from dollar-matching grants to loans will not affect Keystone Processors Ltd., a joint venture of MCEC and Natural Prairie Beef, said Butler.

Keystone Processors is renovating a former Winnipeg pork plant into a federally inspected abattoir for cattle. It expects to qualify for the federal program and plans to apply, she said.

MCEC has lobbied Ottawa since the budget for regional support under the program. In a paper released in February, the council warned against funding only large existing plants in Alberta and Ontario, saying that would “only exacerbate the industry’s current malaise.”

The fact that the latest government statement refers to addressing regional gaps is reassuring, said Butler. “They understand that there is a need for regional placement of these funds. That wasn’t the case at the start.”

A Canadian Cattlemen’s As sociat ion spokesper -son said it doesn’t matter whether the money goes to large or small plants as long as it improves beef sector competitiveness. [email protected]

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