It’s somehow symbolic that the last remnants of the failed Ranchers Choice Beef Co-op would be a sprawling tangle of steel lying outside Larry Ushowski’s machine shed east of Dauphin.
The galvanized and stainless steel meat-cutting equipment – 30 semi-trailer loads worth – were purchased by the Manitoba government in 2005 from a mothballed Washington state plant and hurriedly hauled north.
Ushowski had originally agreed to store the equipment for three months. The local trucking business owner was like a lot of others who hoped the proposed beef killing plant might bring more work to the area.
He has since left the trucking business and sold the property where it was stored. No one else wanted the junk pile, so he was forced to move it to its present location earlier this spring.
He’s still getting paid by the province to look after it, but he wonders how much longer he’ll have to do that, and why it has taken them so long to get rid of it.
“It’s a waste of money,” he said.
Don’t get him started about the Ranchers Choice debacle.
The unsuccessful bid to create producer-owned packing capacity in the province has left a bad taste in his mouth.
It was bad enough that the job of hauling the equipment went to a larger firm. But then, when it arrived, he saw how it had been “butchered” with torches in the process of removing it from the Washington plant. At that point, Ushowski began to wonder if the whole project wouldn’t end up being another government-funded boondoggle.
“They shot for the sky, but they didn’t know what they were doing,” he said. “I started my trucking business in 1992 with one truck. At the end, I had 40 trucks – without a handout.”
The pile outside his shop, bought at a cost of roughly $1.3 million, contains large refrigeration units, an assortment of shelves, chillers, sinks, tracks, and in one corner, a basket full of stainless steel meat hooks meant to hang sides of hot, freshly killed beef.
Presumably, these are the same hooks that were being offered to potential co-op members for $100 each, back
“No one’s living under the illusion that this stuff is worth a chunk of money. It’s a case of salvage, clean up and get on with life.”
– ALLAN PRESTON
when the border was closed to Canadian cattle after BSE struck in May 2003. The severe shortage of killing capacity in the province caused prices to plummet, especially for cull cows.
LEADING THE PACK
It looked like badly needed slaughter capacity might actually materialize in Manitoba, and Ranchers Choice with a proposed 330-head-per day plant, was leading the pack. A site was prepped, environmental studies done, blueprints stamped, and the equipment bought. Everything was good to go – except for the financing.
The Manitoba government pledged an interest-free repayable grant of $4.5 million, plus up to $7 million in loan guarantees to build a 6,300-square metre plant in Dauphin at an estimated cost of $28 million. Officials at the time stated that the province’s commitment would hinge on a strong show of producer support, and the co-op claimed to have 3,300 members signed on.
In 2005, Ranchers Choice officials were quoted in news reports that the plant could start killing cattle as early as September of 2006. But by early 2007, after more than 18 months of trying to arrange loans, the co-op folded and was eventually forced to return $1.6 million in investor money.
RISE AND FALL
Allan Preston, Manitoba’s assistant deputy minister of agriculture, represented government as an observer on the Ranchers Choice board. He still has a mountain of paperwork documenting the group’s sojourn from heady optimism to despair.
In hindsight, he said, the decision to buy the equipment from the bankrupt Washington packing plant in 2005, even at “10 to 20 per cent of list value,” was premature. The delays in getting rid of the equipment can be partly explained by the fact that the bankruptcy trustee only released its interest in the equipment in April 2008.
“We’ve had a number of individuals and companies wanting to cherry pick, asking if there’s such-and-such piece of equipment in the pile and can they get it,” he said.
“It has certainly depreciated in value, but our approach to maximize the value – and I use the word ‘maximize’ liberally here – is to sell it as a package.”
Getting the equipment out and onto trucks required cutting and disassembly, some of which was done delicately and some less so, he said. Engineers were present when it was removed from the Washington plant, and a video of the layout exists to assist in reassembly.
“No one’s living under the illusion that this stuff is worth a chunk of money. It’s a case of salvage, clean up and get on with life,” Preston said. “From the province’s perspective, if we can see it put to some use in another beef slaughter venture, then that would be an ideal outcome.”
In the meantime, a tendering process to dispose of it is underway. It might also be auctioned off.
Preston noted nearly all of the packing plants built since 2003 across the Prairies have since failed. “It’s a competitive, cutthroat business and the big boys have pretty much got it all to themselves,” said Preston.
Larry Buchinski, an auctioneer with Hodgins Auctions based in Saskatchewan, recently inspected the equipment but remains undecided whether to handle the sale because the stuff is in such poor condition.
“It’s been sitting outside for three years,” he said. The fact that it was cut out with torches and grinders has reduced much of its value to scrap, while some of the equipment might bring 10 cents on the dollar or better.
Kelly Penner, president of Keystone Processors in Winnipeg, which represents the latest effort to build federally inspected slaughter capacity in the province, said that he has been to Dauphin twice to look at the equipment.
His company put in an offer to buy some pieces of the Ranchers Choice equipment last year, but gave up due to delays. The Winnipeg plant has since installed all the interim equipment it needs to process the current run of 100 head per week. As Keystone steps up to a federally inspected killing plant, hopefully by 2009, it won’t be fooling around with equipment that has sat outside for years.
“We looked into that long ago, but they decided to leave it out for another winter. It’s just not in good shape. It would cost more to clean it up than it’s worth,” he said.
If it goes to auction, some of it might be worth bidding on at around 10 cents on the dollar, he added.
“Well, you know, they tried. Everyone tried during BSE, but unfortunately a lot of people lost. That’s the way it goes.” [email protected]