PEI bails out beef plant with $14-million debt write-off

The Maritimes only federally inspected beef plant is no longer in the red thanks to a generous $14 million debt write-off by the province of Prince Edward Island.

Atlantic Beef Products Inc. first opened in 2003 but has been suffering financially ever since due to poor commodity market prices and high input costs. The plant has lost millions since it opened.

At this time last year it was losing $100,000 a month.

Beef farmers worried about seeing the plant close have been long been looking to all three Maritime governments for aid. They finally got their wish.

The province of PEI has really stepped up to the plate and said this is important industry for Prince Edward Island, and not just for the beef industry but for the farming industry in general, said the plants new general manager, John Thompson.

He arrived this week (Dec. 5) to take over the plants operations in Borden.

This eases the burden in terms of interest payments and things along those lines. So that contribution theyve made will help the plants long-term viability financially.

Innovation Minister Richard Brown said the decision was made to pay off the $14-million plant debt because he was told this would be the only way to keep it alive.

Brown said he likes the new plant managers ideas for the future of the business and told them to go ahead and do what it takes to make it work.

But in saying so, Brown hinted the plant might be scaling back its workforce.

Were saying, Make the plant work thats our No. 1 objective. Make it break even or make money. And theyre saying tough decisions have to be made, Brown told The Guardian in a recent interview.

But Id rather a plant up and running in Borden employing 60 people or 30 people and breaking even and putting 200 or 300 head (of cattle) through a week instead of a plant with 70 or 100 people putting 500 cattle through a week and going to shut down anytime.

Brown said the new managers will be running the plant as a private sector business and that the province will not interfere with its operations.

They said, Long term we want to scale down the plant a bit. We want to reorganize the plant. We said go ahead. Run it. But youre competing against the private sector and you have to run this plant like the private sector would run it.

Brown also hinted the province might just give the plant to the new managers if they are able to make it viable.

Some of the things Im saying to them is someday theres options there for them to assume the ownership of the plant.

Thompson said these kinds of ownership issues are being discussed in confidence at this time.

In the meantime Thompson has big plans for the beef plants future. It will take about two years, but he is positive the plant will move from its current break-even status into a moneymaking operation.

Right now the plant is mostly a commodity-based plant where we do very little value-added. But what we want to do is become a food processing plant in the beef products market, Thompson said.

So we need some time to get into that marketplace and we need some time to be able to establish Atlantic Beef Products in the market. The Guardian