The company owes $5.067 million to the 181 creditors listed in bankruptcy filings released Nov. 26. Many of the creditors are farmers who sold grain through Agfinity but were never paid. Employees out their last paycheques are also listed in the filing. Listed assets totalled $162,593.

MNP Ltd. has been appointed as the Licensed Insolvency Trustee. Creditors can contact MNP to complete a proof of claim prior to a meeting of creditors scheduled to take place via teleconference on Dec. 16. The meeting is a formality in the bankruptcy process, with the purpose of affirming the trustee’s appointment, appointing inspectors to the bankrupt estate and providing direction to the trustee.

While Agfinity had once operated as a typical grain broker — matching buyers and sellers through broker notes but never handling any money directly aside from their fee — in recent years the company began using grain purchase contracts where they took the payment from the buyer and paid the seller later. In a July blog post, Agfinity’s president Joseph Billett said the newer contracts were necessary to support cash flow due to narrow margins. However, the company was unable to generate enough trade volumes to match costs.

In a draft letter to be sent to creditors provided by Billett, he acknowledged mistakes made over the past year and offered “sincerest apologies for the pain and stress this situation has caused.”

The post Agfinity declares bankruptcy appeared first on Manitoba Co-operator.

“We’re constantly looking for new ways to bring Canadian farmers the expertise they need to succeed,” said Marvin Slingerland, MNP’s senior vice president, agriculture, said in a news release.

MNP said it will join forces with 4R Agronomy, Annex Agro, Arrow Crop Management, Elite Ag, Max Ag Consulting and Sure Growth Solutions. Calgary-based consulting firm Convergence Growth will lead the agronomy practice.

All the agronomy companies will stay in their current locations while connecting with MNP’s 125 offices across the country, including 47 Prairie locations, MNP said.

“We all saw the huge potential to quickly scale up our agronomy services and provide even more Canadian farmers with the critical support they need to succeed,” said Warren Bills, CEO and co-founder of Convergence Growth.

Bills is also listed as an “agri-coach” on Sure Growth Solutions’ website.

“There are more than 34,000 farms in Canada that exceed 1,120 acres in size, many of which need specialized agronomic advice,” he said.

Fewer than 20 per cent of these farms use professional agronomy services, he added.

Bills had already been in talks with the six agronomy companies about joining forces when MNP entered the picture, the news release said.

The geographic spread of the merging-in firms—which collectively manage about1.5 million acres, is part of MNP’s strategy to reach farms, said Tanya Knight, MNP’s executive vice president of clients and services.

“These mergers are really about helping us to reach and support more Canadian farmers with their journeys and so we’re delighted to welcome all six businesses into the MNP family,” she said.

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“He gave us his unvarnished opinion,” college president Mark Frison recalled. “It was helpful. He gave some great advice, not only about how to approach the project, but how to talk to folks inside and outside the sector about the importance of agriculture and how we should approach the fundraising.”

Then Penny agreed to act as an honorary co-chair of the coming campaign.

Why it matters: ACC is looking to position itself as a major provider of skilled labour in the agriculture and agri-food sectors with its promised Prairie Innovation Centre for Sustainable Agriculture.

The late Don Penny, the “P” in “Meyers Norris Penny” — the original name for the national accountancy and business advisory firm — had a history with ACC.

In 2017, two years before his death, Penny was the first to receive an ACC Courage Award, which honoured the entrepreneur’s willingness to risk, his vision for his western Manitoba company and his community focus, according to the college.

He was a Brandon local, with a recognizable name both for his company and his work on various boards and organizations, including Brandon University, YMCA, Indian and Metis Friendship Centre and the United Way. Brandon was the headquarters of ACC (and home to two of the college’s major campuses) and the launch point for MNP firm.

The first office opened in downtown Brandon in 1958, a location still in operation, although MNP’s head office has since shifted to Calgary.

In 2005, Penny was named to the Order of Canada specifically for his extensive community work, as well as his mentorship of young professionals in his field.

“This is where we say Don Penny’s entrepreneurial spirit and energy really ignited,” current MNP CEO Jason Tuffs said of the city.

Today, the company has almost 120 locations and more than 7,700 employees nation-wide, in Canada’s largest cities and in small prairie towns.

Gift to ACC

The company says it hopes to honour Penny’s entrepreneurial legacy. In June, MNP announced a $1 million gift to ACC, which will include work towards a “collaboration zone” to encourage novel solutions as different corners of the ag sector come together.

“This collaboration zone will benefit everyone who is keen to learn, discover and collaborate,” Tuffs said. “It’s for curious minds, for innovators who want to contribute to the growth of agriculture in Manitoba and in Canada. This space is for everyone who, like Don, has a vision they’d like to share, nurture and ultimately bring to life.”

“It will be a pleasure to see his legacy live on through this centre,” Frison said. “Don understood that Canadian agriculture is driven by people working together, and this generous contribution in his honour will be transformational for the agricultural industry and in the lives of so many students.”

The western hub of ag education in Manitoba has plans to expand both its facility and its program options in the agricultural stream. In 2020, the college announced that the campus would soon boast a Prairie Innovation Centre for Sustainable Agriculture.

That facility will form the new heart of ACC’s ag and ag-adjacent programs, the college has said. Programs ranging from the long-established agribusiness diploma to developing programs in mechatronics, chemical technology, food science and agriculturally focused commerce will be offered. Student spaces are expected to nearly triple, up to 800 from its current 300.

On top of Penny’s “collaboration zone,” the centre in general has been pitched as a space of academic and industrial co-operation. Companies are active in developing research and course material, in efforts to tailor programs for the specific labour needs of Manitoba agribusiness.

It will also be the new home for programs like land and water management, sustainable food systems, GIS and communications engineering technology — a program that dovetails with the agribusiness program to develop novel technologies for farms.

“In the last number of years, there’s been an incredible amount of external investment in food processing and other pieces of the agricultural ecosystem that really help drive the economy of Manitoba forward,” Frison said. “The biggest challenge standing in the way is skills, talent and knowledge.”

According to ag labour data collection project AgriLMI, the labour gap in Canadian agriculture was at about 16,500 jobs as of 2017. The organization projected those numbers would double by 2029.

That labour gap underpins many of ACC’s goals for expanding its ag programs. Recently pea processing giant Roquette pointed to its role in developing the incoming food science and chemical technology diploma programs.

At the time, spokespeople for that company pointed to the high-tech jobs needed in the highly automated new plant in Portage la Prairie, jobs of the type they hope ACC’s new programs will accommodate.

The expansion, and the philosophy of collaboration, melds nicely with Penny’s personal philosophies and that of the company he left behind, Tuffs said.

“He was one to lead both with his head and his heart,” he said. “Don believed in people. He believed in discovery, in technology and, of, course, in hard work.

“For us, the fit couldn’t be more ideal. For those of you who know Don, you know that he would love it and would want to spend a great deal of time here interacting with students, with faculty and with industry experts on solving problems.”

Countdown to breaking ground

MNP’s $1-million donation is the latest boost from local businesses to see the Prairie Innovation Centre break ground.

Earlier this year, ACC announced it had reached $11 million in donations for the project. The college has estimated a price tag of $60 million, with $15 million tagged for private fundraising.

There is no fixed date for start of construction.

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Fertilizer Canada, the group representing manufacturers, wholesale and retail distributors for nitrogen, phosphate, potash and sulphur, on Monday warned “cutting fertilizer applications to meet the federal government fertilizer emissions targets could reduce farm income by $48 billion over the next eight years.”

That figure — $48.36 billion over the years 2023 to 2030 — comes from the summary of a report the group commissioned from consultancy and accounting firm Meyers Norris Penny (MNP).

The figure covers Canada’s production of three crops — spring wheat, canola and corn — and isn’t specifically based on Canada’s proposed target for cuts in fertilizer emissions, but rather a separate target proposed for the European Union.

“If Canada adopted the EU model, the potential economic impact of reduced fertilizer use would be devastating to Canadian farmers,” Fertilizer Canada said in Monday’s release.

“The EU model” refers to a target laid out in the “EU Green Deal,” proposing to reduce “nutrient losses” of nitrogen and phosphorus by at least 50 per cent by 2030.

According to a November 2020 report prepared for the European Parliament’s committee on agriculture and rural development, that target would “reduce the use of fertilizers by at least 20 per cent by 2030.”

Canada’s latest proposal on fertilizers, meanwhile, comes from its December 2020 climate plan, “A Healthy Environment and a Healthy Economy.” That document calls for a national emission reduction target from fertilizers — cutting those emissions 30 per cent below 2020 levels.

The federal government, in the document, said it would “work with fertilizer manufacturers, farmers, provinces and territories, to develop an approach to meet” that target.

The Canadian document said direct emissions tied to synthetic nitrogen fertilizer application have increased by about 60 per cent since 2005 and are projected to keep increasing.

“Improving how fertilizers are used through better products and practices will save farmers money and time, and help protect Canada’s land and water,” the federal document said — though it didn’t specify whether, or how much of, its 30 per cent cut would be achieved through reduced fertilizer rates.

‘Adjustments’

MNP’s report, based on the EU proposal, models a 20 per cent rate reduction for the years 2023 to 2030, and focuses on the effects for corn, canola and spring wheat in Canada.

The results are based on a similar number of acres for the three crops using the five-year average; a straight-line reduction of fertilizer use starting in 2023; a straight-line reduction in yield based on industry yield response estimates for each crop; no inflation effects; and no effects of reduced crop supplies on crop prices until 2030.

A straight-line reduction in fertilizer usage, MNP said, “results in increased differences of actual yields versus potential yields if the status quo had been continued.”

By 2030, yield gaps for the three crops are estimated at 23.6 bushels per acre per year for canola, 67.9 bushels per acre per year for corn, and 36.1 per acre per year bushels per acre for spring wheat.

Given constant prices, MNP said, the total value of lost production for those three crops rises from $1.8 billion in 2023 up to $10.4 billion by 2030 — in all, $48.36 billion over the eight crop years in question.

To meet a 20 per cent reduction in fertilizer rates, “there may be adjustments forced on farmers’ practices that will have varying degrees of net impact on farmers,” MNP wrote.

“This report is however based on the assumptions of continued farming practices (including crop rotation) as they are today to reflect the possibility of farmers accepting the lower production that lost nutrients would have on the production levels of their crops.”

‘Holistic approach’

“When the federal government announced a 30 per cent emission reduction target for on-farm fertilizer use it did so without consulting — the provinces, the agricultural sector or any key stakeholders — on the feasibility of such a target,” Fertilizer Canada CEO Karen Proud said in the group’s release Monday.

Fertilizer Canada said the industry has been working to limit on-farm emissions for over a decade by way of its 4R Nutrient Stewardship program, which aims to “optimize plant nutrient uptake, and increase yields, while achieving verifiable reductions in emissions.”

“We do not have to choose between the environment and the economy,” Proud said in Monday’s release. “By choosing 4R Nutrient Stewardship, as the foundation to a holistic approach to on-farm emissions reductions, the agricultural sector and the government can work together to meet our environmental goals, while at the same time supporting our farmers.”

“Farmers don’t need the government to tell them how to properly use fertilizer,” Gunter Jochum, president of the Western Canadian Wheat Growers, said in a separate release Monday citing the MNP report. “We engage crop consultants, soil tests and use the latest technology available to us. Our government should be strongly supporting the agronomic techniques that we have put into practice.”

The Wheat Growers, in their release, break down the MNP data to show, by 2030, a $4.61 billion loss in Saskatchewan growers’ canola and spring wheat crops; a $2.95 billion loss for Alberta canola and spring wheat; and a $1.58 billion loss for Manitoba canola, corn and spring wheat.

“The Canadian government must recognize that innovation is best driven by the farmers and organizations that support them,” the Canadian Association of Agri-Retailers said in a separate release Thursday, also citing the MNP report.

“The proposed Canadian mandate will lesson our country’s ability to compete on the global market by increasing cost of production and reducing yield.” — Glacier FarmMedia Network

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That’s according to Mike Poole, a Brandon-based accountant with MNP, at a recent Keystone Agricultural Producers (KAP) advisory meeting.

“I think it’s relatively small and manageable,” Poole told reporters after speaking at the meeting here Nov. 2. “The biggest item is going to be that tax on split income.”

Poole also suspects the federal government, perhaps as early as the next budget, might make changes in how dividend income is converted to capital gain, although the change won’t interfere with parents selling family farms to their children. That was one of the unintended consequences of the first proposal, which triggered massive, widespread opposition from the entire small incorporated business sector, and especially farmers.

Plan ahead

If it occurs, there are strategies to mitigate the impact, but they require advanced planning, Poole said later in a followup interview.

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The biggest issue still in play is income splitting. Poole used an example of parents retiring from the farm and converting their common shares in the farm corporation to preferred shares to give them retirement income.

“We’re concerned right now that retirement stream could fall under the split income rules, which would then make all that retirement income subject to the top personal tax bracket on dividends, which would be in Manitoba about 46 per cent,” Poole said. “That could be a huge impact because if they’re thinking their tax rate is going to be much lower because they are drawing the money out over time now they have essentially reduced the value of that nest egg…”

A similar scenario could exist if preferred shares are issued as part of an estate plan to non-farming kids, he said. Any amount that goes to them could be deemed unreasonable by the Canada Revenue Agency and be subject to top personal tax.

“So we’re (MNP) bringing up these other items so that when they (government) do finalize the legislation we’re not going to get this retroactive effects happening,” Poole said.

“What happened was there were a lot of unintended consequences as a result of the (proposed) legislation. And that is something the minister of finance said — ‘there were items and results in there we just didn’t see.’”

Conversions

Given the 20 per cent, and growing, gap between the tax rate on dividend income and capital gains, Poole said he and other accountants have expected the federal government to stop the conversion of one to the other. And in fact it proposed doing just that with its most recent tax reforms.

The problem was it caught parents selling their farms to their children, making it more expensive tax-wise to sell to a family member than to an unrelated third party.

“If you went around our group at the firm level and you said, ‘what are you expecting coming put of the budget?’ my opinion would be we’re going to get something that’s more pointed at that income conversion into capital gains,” Poole said. “It might be me just being a pessimist, but I’d rather be a pessimist than surprised.

“I think they will shut the door completely on it.”

In an interview later he said if such a change is made the government could easily write the legislation so as to not affect farm sales to the owners’ children, or to add additional cost to a farm estate.

The incentive to convert dividend income to capital gain has evolved over time because the corporate small-business tax rate has been falling, while tax the rate on dividends has been rising, Poole said.

“Ten to 15 years ago when the dividend rate and capital gain rate were close enough together you’d never do this type of planning (conversion) because it just wouldn’t be worth it,” he said. “But when you get a 20 per cent differential now you have a huge incentive for taxpayers to use the income tax act as it is worded and achieve that type of a tax savings. I just don’t feel like they are going to allow that to continue. I hope I am wrong.”

If the federal government does shut down that conversion, there are ways for farmers to deal with it, including taking smaller amounts of money from the corporation over a longer period so the farmer is in a lower tax bracket. What’s left after paying the taxes can then be placed in a Tax Free Savings Account.

“With tax planning, time is your friend,” Poole said.

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Organic Meadow Co-operative announced Monday it had filed for creditor protection “in order to complete a restructuring of its operations.”

The company said its hand was forced by “onerous business terms recently placed upon it” by Dairy Farmers of Ontario, the provincial milk marketing agency.

DFO, in documents filed Tuesday by MNP as Organic Meadow’s insolvency trustee, is listed as an unsecured creditor of Organic Meadow Ltd., owed $850,000.

In a separate statement Monday, DFO said it “had been working with Organic Meadow for a substantial period of time in an effort to assist it with growing its market” but “must also ensure Ontario farmers receive compensation for the milk they produce and sell.”

While the amount owing is unsecured, DFO said it “will ensure that the organic producers are paid for the milk that DFO delivered” and will dip into its bad debt protection fund to cover those payments if need be.

Neither Organic Meadow nor DFO said in their statements what specific terms had changed in their business arrangement. Organic Meadow CEO Don Rees, in the company’s release, said the protection filing “is about protecting the earned rights of the founding farmers of the organic dairy category in Ontario.”

The company, he said, plans to “work with the milk marketing board and all of our creditors to put a restructuring plan in place that allows us to emerge from this process stronger, and which allows us to work with (DFO) in growing the organic milk market we started in 1989.”

“Impossible hurdles”

The co-op’s dairy farmer members are all “disappointed that we could not find a resolution which would have enabled the co-operative to continue conducting business without the need for creditor protection,” co-operative vice-chairman and organic dairyman Ted Minten said in the same release.

Organic Meadow’s “new business model was beginning to significantly improve our results and we were well along a process to bring in a new investor group,” he said.

However, “substantial milk allocation shortfalls in the December-to-February period and the change to business terms by our largest vendor were impossible hurdles for us to overcome.”

However, Minten said, the company will continue to operate as usual during the restructuring process, and DFO said it “has arranged to supply milk (to Organic Meadow) during the restructuring process.”

Organic Meadow Ltd.’s other major listed creditors include RBC Royal Bank, owed $1.4 million; Ontario dairy firm Elite Dairy, owed over $224,000; Lac-Megantic, Que.-based cheese firm Fromages La Chaudiere, owed over $183,000; and dairy giant Saputo, owed over $129,000.

Another related company, Organic Meadow, Inc., is in protection under the same filing and is listed as owing $9.3 million to an arm of Calgary-based Avrio Capital and $3.21 million to Farm Credit Canada.

Also under the same filing, Organic Meadow Co-operative Inc. is listed as owing almost $700,000 by way of over three dozen “member loans” from parties including individual farmers, farm corporations and Amish colonies, in amounts ranging between $5,000 and $100,000 per loan.

Organic Meadow Inc. is also listed as owing $2.43 million to Organic Meadow Co-operative, while Organic Meadow Ltd. is listed as owing $3.1 million to Organic Meadow Inc. — AGCanada.com Network

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A near-capacity crowd in the Keystone Centre amphitheatre listening to a speaker talk about why it’s so tough hiring help on the farm these days is one sign there might be a problem out there.

Brandon-based MNP farm management consultant Peter Manness says he thinks part of the problem may be how farmers are trying to recruit, or not trying hard enough. A common complaint is, ‘we can’t find people because the oilpatch has taken them all,’” he said.

“But have we done all we can to find people and literally can’t find them? I don’t think that we’ve really done as much as we can to try to solve our labour problems.”

Manness said he mostly sees farmers who can’t find employees buying bigger equipment to get the job done faster with fewer people — a very expensive way to deal with the problem, he said.

Farm businesses are trying to meet their labour needs hiring local retired farmers who possess the required skills. But when trying to hire mainly from their own local agricultural community, they’re fishing in a dwindling pool as the rural farm population shrinks. They could improve their prospects by looking further afield, Manness said. Just because someone hasn’t grown up on a farm doesn’t mean they don’t have transferable skills, or couldn’t be trained. Farm-based employment is an attractive prospect to the right person.

“Think about the trucking industry right now,” he said. “I find it hard to believe that there aren’t people driving a truck right now that wouldn’t be qualified equipment operators and whose families would be very interested in having them working in a job closer to home.”

But looking further afield requires boosting the farm business’s presence online, he continued. You are going to need to create an online presence to drive people to you, Manness said, and that’s where he isn’t seeing enough effort. His own Google searches don’t turn up many farm job advertisements, he said.

“If I Googled your farm, what would I find out about you and your farm business?” he asked the Ag Days crowd. In an interview, he added that the days of putting a two-line ad out on Kijiji or in the farm press and expecting a response are over.

A better approach is a combination of Internet advertising and a farm website, detailing who you are and giving prospective employees a way to find out about you and learn about the work opportunity you offer.

“I think we’ve got to be able to sell ourselves more,” he said. “Because if I’m looking for full-time employment, I’m more likely to call people who have an online presence, so I can learn about them a little bit before I go to see them.”

Manness says some farms do fine hiring and retaining staff. They’re the ones who have not only adopted a professional approach in recruitment and hiring practices, but have devoted time to better understanding what employees want and need.

Those needs and expectations aren’t just about money. Surveys show one in every five workers say they expect to change jobs in the next five years. You need to be clear about benefits, work expectations and what sort of an opportunity you are offering a prospective employee, said Manness.

And what they want is job stability, respect in the workplace and work-life balance in addition to fair compensation. Work-life balance has become a bigger issue even among the incoming generation on the farm, he added.

Manness said he’s convinced farm workplaces have attractive and unique employment opportunities. What they need to do is talk up the benefits. Meals, use of vehicles and certainly accommodations are all of value to prospective employees. Farmers are also able to offer an outdoor worksite, and opportunities to engage with their work that enables an employee to see the progress and purpose of it. Many farm employees become an integral part of the farm family too, he said.

“I think there’s a huge opportunity to go out and resell agriculture as an opportunity that exists for meaningful employment for people.”

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