Province lifts licence of Kitchener cow killing plant
Wednesday, August 31, 2011
by BETTER FARMING STAFF
A Kitchener cull cow processing plant is scrambling to maintain its business momentum after the an Ontario Ministry of Agriculture director Livestock Financial Protection Board yanked its cattle dealing licence last week.
The suspension of the provincial licence is the latest blow against Arnold Meat Packers Inc, says Claudiu Ciuciureanu, one of the business’ co-owners. The board The director suspended the plant’s licence 2 p.m. on Friday Aug. 26.
The plant, which has 56 employees, began operating in February in the former Gencor Foods Inc. facility in Kitchener. Ciuciureanu says the company mostly serves export markets and has shipped its beef products to Japan, Mexico, Cuba and Africa.
“We work hard to put our finished product on the market,” Ciuciureanu says, and notes there have been many hurdles along the way, including a high Canadian dollar value on the international exchange, poor spring weather that delayed the barbecue season, falling beef prices in the United States and increased competition.
“Cargill went in our business almost a month ago,” he explains, noting that it immediately became more difficult to source animals. Until August, the company processed about 100 animals a day. Since then it has processed about 50 a day. However, many of the overhead expenses remain the same.
“We made some losses and obviously the losses started to affect the daily cash flow and that came right away to late payments” to farmers, Ciuciureanu says. He estimates Arnold owes money to about 400 farmers and is about three weeks behind in payments. The Ontario Livestock Financial Protection Board requires dealers to pay farmers within nine days of purchase if the transaction is less than $15,000 and six days if it’s more than that amount.
Ciuciureanu says the company is asking farmers to consider converting their debts into business shares. Although establishment has been a struggle, the company is now breaking even and supplies about 100 clients, he says. The owners are also trying to raise money from the bank or find another partner, he adds.
Ciuciureanu says a solution needs to be found quickly to maintain supply to customers. Negotiations to do custom killing for other companies are taking place and Arnold recently obtained government approval to process sows. “But it’s another beginning,” Ciuciureanu says. “We need to raise money somehow, that’s the bottom line.”
He notes that even if the Ontario Beef Cattle Financial Protection Program pays the farmers now, Arnold will have to reimburse the protection fund to reinstate its licence. “We can’t deal with live animals unless we have that licence,” he says.
Jim Wideman, administrator/secretary of the Livestock Financial Protection Board, says the board decided to “provisionally suspend” the plant’s licence “because we believe it was in the best interest of the security of producers and for the fund that secures those producers.”
The board administers a financial protection fund that compensates producers when a provincially licensed dealer defaults on payment. The fund can compensate producers for 95 per cent of their losses.
Producers who want to file a claim with the Ontario Livestock Financial Protection Board can do so by either faxing 519-826-4375 or emailing Wideman at jim.wideman@ontario.ca. They need to state that they want to file a claim against the company and provide contact information. According to the program’s website, producers must file claims within 30 days of a sale.
Wideman says he has already received some claims but it is too early to tell how many.
No formal discussions with the plant owners about relicensing have taken place, he says.
LeaAnne Hodgins, communications manager with the Ontario Cattlemen’s Association says there are other plants in Ontario as well as in Quebec and the United States that accept cull cows. At those plants it will be business as usual and “we don’t foresee any holdup in the market,” she says. BF