If Islanders had a list of bad-news stories for 2011, certainly the troubled beef processing plant in Albany would top that list. The word last week that the provincial government is considering whether to continue funding the plant is unsettling not only for beef producers in the region, but the economy.
Finance Minister Wes Sheridan told Islanders that the province allocated $1.5 million to keep Atlantic Beef Products operational last year, but an increase in the price of cattle contributed to a doubling of its budget to $3 million. He has asked the Agriculture Department to review its spending on the plant and the viability of continued funding.
Not surprisingly, the beef industry has expressed alarm. Plant manager Mike Nabuurs says withdrawing funding would hurt cattle producers and regional economies. With the plant being the only federally inspected beef processor in the Maritimes, he says producers would be faced with much greater costs of shipping animals to Ontario or western Canada for processing. He conceded that the ballooning costs of $3 million are "too large", but that those dollars "get spun back to the P.E.I. economy" and have spinoff effects for the entire cattle sector in the Maritimes. "I hope the minister recognizes that," he said.
We hope so, too. After all, the minister is now trying to lead the province out of a perilous deficit position. Islanders learned late last year that the province was projecting an increased deficit for the year -- $73 million, up $31 million from what was originally projected. Premier Robert Ghiz has instructed all government departments but Health to trim their budgets by three per cent.
The delicate task for government here is reining in its spending but doing it in a way that doesn't trigger massive job losses or undermine confidence in the economy. That would only cause further problems. The province needs to consider the beef plant in this context. How far-sighted would it be to pull funding from the plant if this causes hardship for beef producers, who would then have to ship elsewhere, and leads to loss of jobs and business for related industries? This is the kind of backlash government should try to avoid if it wants to take a slow but steady path toward a better financial footing.
That said, the fact that the beef plant isn't self-sustainable right now is cause for concern, and taxpayers shouldn't be expected to simply ignore continued losses at the plant. Mr. Nabuurs said difficult market conditions have led to the losses, and that the prices the plant is paying are the highest it has ever paid. The plant could eventually become self-sustainable in catering to more value-added high-end and niche markets, he says, but it will take time. That's understandable, but it's hardly what taxpayers want to hear at a time when they're being asked to brace themselves for government spending cuts.
Considering the taxpayer investment that has already gone into the plant, it would be a shame to cut funding now, especially when the impact on the economy could be far more harmful in the long run. But at some point, taxpayers deserve results from their investment. Unless plant operators are able to make the plant more viable, Islanders will inevitably find themselves at a crossroads where they may well have to make the decision we're desperately trying to avoid now. So rather than focusing strictly on the funding question, government should put more effort into working with plant operators on ways to make the plant more self-sustainable, and soon.
