Word was barely out that the federal government was withdrawing $10 million in financing for Keystone Processors Ltd. beef-slaughter facility last week and Manitoba Beef Producers was calling for an end to the Manitoba Cattle Enhancement Council.
The association that is the voice of Manitoba beef producers, and which is supported by its own voluntary checkoff, wants an end to the $2-per-head voluntary checkoff that supports the council. Presumably, that would also mean the end to the province’s matching funds.
The association says it’s time to stop throwing good money after bad. It points out that in the five years since the MCEC was formed to expand the province’s beef-slaughter capacity in the wake of the bovine spongiform encephalopathy crisis, nothing has developed. It says hard-pressed producers can use that money more effectively on their ranches.
The provincial Conservatives were quick to issue a release accusing the NDP government of bungling Manitoba’s chances of developing federally inspected slaughter in the province, saying Manitoba cattle producers have been paying into the MCEC fund for nothing.
In justifying its decision to transfer the federal financing support to the HyLife hog processor in Neepawa, federal officials cited problems with Keystone’s business plan and its failure to demonstrate it could meet the program criteria before the March 12, 2012 deadline. Officials refused to articulate the specifics, citing confidentiality.
Meanwhile, both the province and officials with the MCEC, which is the major shareholder in Keystone, say all changes requested by the federal Slaughter Improvement Program managers were made and the project was on track to meet its deadlines.
Perhaps there were unresolved issues with the Keystone project. That’s to be expected. It’s doing something that has never been done before in this province, so it’s in uncharted territory. But we suspect some of the posturing in the wake of this decision, and perhaps the decision itself, has more to do with an upcoming provincial election than incompetence of the project’s managers.
Manitoba has not had federally inspected beef-slaughter capacity since Burns Meats Ltd. closed in Brandon in 1990. That’s more than two decades. Re-establishing that, while the industry is going through the kinds of restructuring it has undergone in the past five years, is no small challenge.
Progress has been made – the hiring of a management team with international experience and a proven track record, development of a marketing plan and a commitment of private-lender financing to augment the $7.5-million contribution from the province and producers through MCEC. There was also $10 million in loans from the federal government, but as of last week is no longer available.
Somehow, the $35-million project needs to replace those funds.
The Keystone managers aren’t trying to compete with the large integrated packers that now dominate Canada’s livestock-processing sector and which fill Canada’s major grocery meat counters with meat products. They are aiming for a smaller plant that processes 250 to 300 animals a day and which serves specialized markets, such as kosher and halal, which are underserviced now.
Depending on the year, between 63 per cent and 80 per cent of producers marketing cattle have opted to leave their checkoff funds with the council, which suggests that at the grassroots level, producers are interested in seeing a local plant come to fruition.
Significant dollars have already been invested into this project, notably the $2.4 million the MCEC contributed towards purchasing the St. Boniface plant.
So at what point do people say “enough is enough” and cash in their chips?
For producers, it really comes down to two questions. The first is whether they believe having a plant that meets export standards brings value to the local beef sector.
It’s hard to argue with those who say it has been eight long, hard years in the beef business in Manitoba, and with this year’s flooding, there is no end in sight. Many ranchers could undoubtedly use some extra cash.
But the cost of this experiment to a producer selling 100 animals per year is $200. If and when this plant is launched, producers marketing beef to it will save $100 per animal in transportation costs alone. Halal and kosher meat products sell at a premium. And a local processor could be a useful buffer if disease or trade issues shut down usual export channels, as was the case in 2003.
Secondly, do producers believe this can happen? Because as every successful business knows, believing in the plan is as important as having a good one.
Granted, it’s not our money on the line, but we think it’s worthwhile for producers to hold out for a little longer. Why?
It would be nice to see the little guys win, just once. [email protected]