OP marketing division announces payout to producers affected by processor bankruptcy

Thursday, May 15, 2014

by JIM ALGIE

A minority of the Ontario hog farmers owed millions in the May 6, Quality Meat Packing Ltd. bankruptcy are to receive partial payment through the Ontario Pork Producers’ Marketing Board’s marketing division, the agency announced, Thursday.

Ontario Pork marketing division manager Patrick O’Neil announced the payout for producers its customers who shipped hogs to but were never paid during Quality’s final days of processing between March 31 and April 3. Its May 6 bankruptcy left Quality owing Ontario Pork more than $1.06 million, documents posted by trustee A. Farber and Partners Inc. show.

However, the list of unpaid farmers and livestock truckers caught up in Quality’s financial trouble is much longer. A notice to creditors dated May 12 identifies outstanding debts of more than $55 million and a 20-page list of creditors. That list includes at least 55 hog farmers identified as unsecured creditors. Individual claims range from tens of thousands of dollars to some in excess of $400,000 and $600,000.

The notice shows assets of both Quality and an associated company, Toronto Abattoirs, worth only $10,629,532. That leaves a deficiency of $44,820,447.64, the statement says. Assets listed do not include potentially valuable real estate in the downtown, King and Bathurst St. area of Toronto where the company has done business for more than 50 years.

Ontario Pork’s payout to producers who shipped hogs to Quality using the agency’s market services will use funds from a marketing division surplus. O’Neil could not identify the number of individual producers involved. However, he confirmed the $1.06 million debt owing by Quality to Ontario Pork covers the value of hogs involved in the payout plan.

“If they would normally get their cheque from Ontario Pork they will be covered off,” O’Neil said in an interview, Friday. “It’s only what we call marketing members,” he said, referring to hog farmers who pay to use the agency’s marketing services.

The amount of payout will vary depending on the marketing program used by individuals involved. However, O’Neil said “everybody’s going to get at least half the value of their animals.” For a qualifying farrow-to-finish operator, for example, the payout should cover variable costs such as feed and medication, he said.

“We think it’s really meaningful support,” O’Neil said. Funds used for the payout come from a surplus retained for what O’Neil described as “unforeseen events.”

“What we’re doing is trying to use what we have available to help producers as much as possible,” the marketing division manager said. Meanwhile the pork board will continue to pursue legal options in the Quality case.

“We’re continuing to participate in the bankruptcy process and trying to collect whatever we can,” O’Neil said.

At the same time, Ontario Pork has continued to do business with Mitchell-based Great Lakes Speciality Meats, which is related to Quality Meats owners but not involved in recent bankruptcy actions.

“We are demanding cash and receiving cash in advance based on estimates of the next day shipments; so we’ve got that security,” O’Neil said.

At peak, Quality processed as much as a quarter of Ontario hogs weekly. Since it closed, other packers have picked up the slack, O’Neil said.

“It’s definitely been remarkable how other companies have been able to increase their production,” he said. “We’ve gone from a case of surplus packing capacity to a lot tighter capacity but the pigs still seem to be moving really well,” O’Neil said.

Asset lists in sworn statements by Quality Meats president David Schwartz do not refer to potentially valuable, plant-site, real estate holdings. As recently as last summer there was public speculation about a possible move by Quality from its Tecumseth St. location after the company requested a change in zoning.

A July story in the Toronto Star said the requested shift from industrial to mixed use could have indicated a potential property sale for residential development.

The Star quoted Quality sales vice-president Jim Gracie to say the company had “no plans to move.” However, a Toronto planning department spokesman told the Star the requested zoning change indicated a potential shift to residential use.

Residential neighbours of the meat plant have complained in recent years about odors. The Star articles referred to a city planning report last April that said parts of the slaughterhouse property “could see residential development.” BF