With losses this year ballooning to $3 million, the provincial government is taking a hard look at whether to continue funding Atlantic Beef Products in Albany.
But plant manager Mike Nabuurs says pulling funding for this plant would cause serious damage not only to cattle producers but also to regional economies.
The province released a grim fiscal update in mid December, projecting an increased deficit for the year totaling over $73 million. This is $31 million more than original budget projections for the year.
Finance Minister Wes Sheridan said the beef plant’s losses bore some of the blame for adding to the province’s deficit.
The province allocated $1.5 million to keep the beef processing plant in afloat this year, but an increase in the price of cattle led to a doubling of its budget to $3 million.
Now Sheridan says he’s going to ask the Agriculture department to review its spending on this plant and the viability of continued funding.
“As a responsible government I think that all Islanders would want us to take a look at this and ensure, going forward, that we’re making the right decisions on this institution,” Sheridan told The Guardian.
“We know how vitally important it is to the cattle industry here on Prince Edward Island, but we have to be looking at everything. This is a small part of business inside all of government, but we have to take a look at everything at this time, otherwise we’d be irresponsible”
Nabuurs admits the losses this year are steep, but stressed the difficult market conditions that led to those losses.
“Right now we’re in the highest prices for cattle that the plant has ever paid,” he said.
“The market price for boxed beef has also increased, but not enough to compensate for the much higher expense to purchase the live cattle.”
Nabuurs believes the plant could eventually become self-sustainable as it tries to cater to more value-added, high-end and niche markets. But building to that level of sustainability takes time. Pulling the plug on the plant now would have devastating effects across the region, Naburrs said.
The plant is the only federally inspected beef processor in the Maritimes. Without it, cattle producers would incur higher costs to ship animals to Ontario or Western Canada for processing.
By investing in the beef plant, the P.E.I. government is investing in the local and regional economy, Nabuurs said.
“Really what they’re doing is continuing to support a vital part of the agriculture sector, which is the engine of P.E.I.,” he said.
“Yes, the plant bottom line has been $3 million and I recognize that’s too large, but those dollars get spun back to P.E.I.’s economy and it gets spun back on a number of different levels. And it has spinoff effects for the entire cattle sector for the entire maritime region. I hope the minister recognizes that.”
The finance minister is asking all provincial departments to submit management plans and identify ways of getting the province’s spending under control.
He said this could lead to government making some tough decisions about certain funding streams, including the beef plant.
“Government at the end of the day is going to have to make some tough choices on things like that,” Sheridan said.
For one thing, they can't even produce enough beef to satisfy PEI. How in the world could they supply Sobeys with all their stores. They can't even produce enough meat for Co-op Atlantic. From what I am told, and I could stand corrected, but there are only about 17- 20 beef farmers supplying the plant. I've heard of farmers who truck their beef to Ontario to be slaughtered and end up making more money. The people who have the most to gain by keeping the plant open are the beef farmers and they are very reluctant to put any of their own money into it, and they own the plant.