The Price We Pay For A$$embly-line Pork
by Larry Powell
Here is an important update to this story.
Taxpayers in Manitoba had better get ready to dig deeper. Our provincial government has just relaxed the rules so the hog industry can expand. And, given past history, more corporate welfare will, surely, soon be flowing again into the trough for producers.
I’ve compiled a probably-incomplete history of largesse which has already been bestowed upon factory barn operators in just the past ten years.
I think you’ll agree, the numbers are impressive.
I'll begin with HyLife Foods.
It’s located on the outskirts of the small, central Manitoba town of Neepawa, where I used to live.
HyLife describes itself as “the largest pork processing company in Canada.” (“Pork processing” is actually a euphemism for a place where thousands of hogs are butchered each day, in this case, right on the edge of town.)
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| Workers take a break at the HyLife plant. A PinP photo. |
According to Town of Neepawa bylaws, the three levels of government agreed in 2007, to help Springhill Farms (HyLife’s forerunner) pay for a wastewater treatment plant, costing more than $8 million. While it would treat the sewage from the town’s 3,000 human residents, it would mainly help Springhill meet the province’s clean water standards, by dealing with the blood, hair, manure and offal from the pigs being slaughtered there at the time. Springhill and Neepawa taxpayers would each chip in $1.5 million. Even churches, which would normally be exempt, had to step up. Taxpayers at the federal and provincial level together put up the rest - over $5 million.
But two years later, by '09, the cost of that project had almost tripled - to nearly $24 million. According to an informed source, this was to accommodate plans by HyLife (as it had then become) to expand beyond the plant size originally envisioned. (As we speak, it is doing just that.) HyLife had to cough up an additional $10 million. But, while local taxpayers were spared any additional levy this time, the Manitoba and federal governments had to shell out $12 million more.
All that money was going into an industry which, in the previous three years, had virtually “tanked.” It was being plagued by a series of disasters, including oversupply, low prices, high costs and a global economic crisis. Because of the risk of swine flu, the US and Japan were refusing to buy our pork. Hogs were being sold at a loss. Many producers were almost bankrupt. It’s estimated that Canada lost 28 percent of its pig farms and 20 percent of its pigs during that time.
In Hogs We Trust - Part 111 "Animal diseases devastate herds, worldwide."
Then, the same year as HyLife’s treatment plant costs were skyrocketing, along came the Feds with the “daddy” of all bailouts (for pork producers across the country). At the urging of the Canadian Pork Council (CPC), the industry’s lobby group, Ottawa stepped in with two separate loan programs totalling almost $500 million. One, with a budget of more than $400 million, was designed to make it easier for “viable operators” to get long-term loans. These do not have to be repaid until 2024, another seven years.
The other was aimed at helping producers deal with the "oversupply" problem (too many hogs for the market to handle). It allowed them to borrow more than $82 million dollars, but only if they agreed to get out of the business, altogether, and stay out for at least three years. It is estimated that more than four million pigs were "removed" as a result.
A government evaluation found the programs were "mostly effective" in achieving their goals.
But, at what cost?
Many of the borrowers defaulted on their loan repayments. According to the evaluation, “The percentage of reserve-backed loans that continue in the first 36 months to be repaid without defaulting is at 53%. This suggests just under half of the loan amounts given to producers are impaired or are at risk of being impaired.”And, altho the loans were handled through banks and other financial institutions, it is unclear who is repaying the interest on those loans - bound to be in the tens of millions of dollars - the hog producers or the government.
My attempts to clarify these points with the government have been unsuccessful, so far.
Turns out, '09 was a good year indeed for factory hog producers. Manitoba and Ottawa also announced a joint payment of $37 million to Manitoba producers in that year, many of whom had been losing money for years.
Meanwhile, back in Neepawa, in 2011, not long after helping HyLife out with its wastewater treatment, Ottawa announced it would lend the company $10m. Since it seemed to be doing well after a multi-million dollar expansion (it’s now processing 1.69 million hogs yearly and selling its products in Canada, the US, China and Japan, I wanted to know how the company was doing with its repayments, six years after the loan was announced. The government wouldn’t tell me. So I launched an Access to Information request. Three months and scores of e-mails later, I received a heavily-redacted document - with entire pages missing.
Turns out, HyLife doesn’t have to pay any interest on the loan. While the deadline for repayment is 2023, it’s also described as a “conditionally repayable contribution.” It allows the Minister of Agriculture to grant the company more time to repay, or even to release it “from any term, condition or obligation” that may apply.
Does this mean HyLife may not be required to repay anything, at all?
My attempts to clarify this question with some certainty with the government have gone unanswered, so far.
Then, in 2012, the Puratone Corporation, a major pig producer in Manitoba, went bankrupt. Maple Leaf Foods, also a major player in Canada, with a huge killing plant in Brandon, bought it out. Puratone owed $92 million at the time and was,"in breach of its loan covenants.” But my efforts to find out whether it was Maple Leaf or the taxpayers of Canada who absorbed those costs, have also been unsuccessful.
Two years later, Ottawa loaned $5 million to Maple Leaf to help upgrade one of its Ontario plants. (It’s worth noting that Maple Leaf’s CEO, Michael McCain, could have made that loan himself
out of his yearly salary and still had more than a million dollars left over!)
And two years later, the federal and Manitoba governments teamed up to "invest" another $500 thousand in Maple Leaf to help it make more bacon at its Winnipeg plant. News reports at the time did not explain whether the “investment” was a grant, a loan with interest, an interest-free loan or, like the one to HyLife, a “conditionally-repayable contribution.”
Just weeks ago, it was revealed in the so-called Paradise Papers that the same Maple Leaf Foods owns an offshore company, the kind often designed to avoid paying taxes at home. (A truly "win-win" for the corporation - a "lose-lose" for the rest of us.)
So, by my count, government assistance of some sort has happened on at least ten occasions over the past ten years, totalling well over half-a-billion dollars.
If one extrapolates the frequency of such handouts and projects them into the future, it is not unlikely we can expect the next one, in one form or another, in a year or so!
