An empty rubble-strewn lot on Marion Street in Winnipeg is all that is left of the Manitoba Cattle Enhancement Council’s (MCEC) dream to build a a new federally inspected beef processing plant in Manitoba.
MCEC has stopped collecting a $2-per-head levy to raise funds for a plant to slaughter Manitoba cattle and expand the industry in the province.
Levy collection officially ended September 1, 2013. The lot owned by an MCEC subsidiary will be sold and levies collected over the past 12 months will returned to producers who request their funds back. MCEC itself will eventually disband.
This is the end of MCEC’s hopes for revitalizing a beef processing sector which, today, is nearly nonexistent in a province once known as a hub for Canada’s meat packing industry.
When MCEC was formed in 2006, its mandate was to invest in beef processing and conduct market research to enhance opportunities for Manitoba cattle producers.
But plans to retrofit and olf hog slaughter facility in St. Boniface into a state-of-the-art beef plan never bore fruit. In 2011, the federal government abruptly withdrew $10 million it had promised the project two years earlier.
“The project in St. Boniface was not going to go ahead. There were no other major projects on the horizon. In the circumstances, it did not seem appropriate to be continuing with this particular vehicle,” said Anders Bruun, a Winnipeg lawyer hired by the province to wind up MCEC’s affairs.
Bruun stressed that Ottawa’s decision to pull out of the project was not the only reason for MCEC folding its tents, but it was the major one.
The MCEC board tried to keep plans for the plan alive even after the feds withdrew their funding but it was without success, Bruun said.
“They worked hard and sweated mightily trying to make something happen and in the end it wasn’t there.”
The province launched MCEC in an attempt to develop domestic beef slaughter capacity after BSE closed foreign borders to Canadian cattle in 2003. The $2-per-head levy on in-province cattle sales was designed to “encourage cooperation between producers and government, and will ultimately accelerate the creation of Manitoba-owned slaughter projects,” said Manitoba Agriculture Minister Rosann Wowchuk at the time.
The mandatory levy was non-refundable at first. But the government made it refundable after many producers objected to having to pay it.
Since 2006, the levy collected just over $8 million, with 2.4 million refunded to producers on request. The province also committed nearly $4.9 million in matching funds.
MCEC spent $5.7 million developing the Marion Street project based largely on the expectation of funding through the Federal Slaughter Improvement Program, also established after BSE to encourage domestic beef slaughter capacity.
But construction never began, despite demolition of the old facility, engineering plans for the new one and environmental approvals.
Suggicient private investment for the plan failed to materialize as well, said Bruun.
“Everyone baked away from the thing in some fashion or another except the board. They kept on trying to make it work and did so for two years without success.”
Hope for a federally inspected beef plan in Manitoba now rest with Calvin Vaags, who is building a $13 million expansion of the Plains Processors abattoir in Carman, which he bought in 2008. Vaags hopes to be federally certified once construction is complete.
A federally inspected meat plan located in Winkler does not process beef.
At their annual meeting in Brandon last winter, Manitoba beef producers called for MCEC to end the levy and redistribute funds to producers. The same resolution has passed two years running.
Cam Dahl, Manitoba Beef Producers general manager, said producers ran out of patience with an agency that spent their money but never seemed to show anything for it.
The fact that a third of the money collected was refunded indicates producers’ frustration, Dahl said.
The end of the MCEC project is the second failed post-BSE attempt to build a beef plant in the province, Producer-owned co-op, Ranchers Choice, could not generate enough investment capital to build a hoped-for plan in Dauphin.
Manitoba’s beef processing sector is now no further ahead than it was before BSE. Only a relative handful of provincially inspected plants slaughter beef cattle. Otherwise, producers have to ship finished animals to plans in other provinces. Access to slaughter facilities in the U.S. is limited because of Country of Origin Labeling (COOL).
Dahl said the high cost of building and operating a slaughter facility, plus tough times in the beef packing industry are main reasons for the lack of success.
As an example, he pointed to a beef processing plant in Aberdeen, South Dakota, which filed for bankruptcy protection this summer less than a year after opening. Last January, Cargill announced it was idling its plant at Plainsview, Texas because of a shortage of cattle caused by last year’s drought in the Midwest.
Other plant closures are expected as producers continue to ratchet down their herds. North American beef cattle numbers are the lowest in decades.
“It is a difficult link in the chain to compete in. It is such a tough business,” said Dahl.
He said that Manitoba should now concentrate on developing a healthy beef industry from the ground up instead of building plants without enough cattle to fill them.
“We need to look at ways of increasing the health of the entire sector. That includes our feedlots. We are not going to have viable processing here in Manitoba unless we have a viable feedlot industry,” said Dahl.
“We need to make sure that all parts of the sector are healthy, growing and vibrant. Then a plan becomes a commercial success.”
In the meantime, Bruun urged producers to apply for levy rebates as soon as possible and no later than the end of January 2014. Application forms are available at auction markets and on line from MCEC at www.mancec.com.