Cattle Levy Axed, But Will Ranchers Get Their Money Back?

Want to bury news? Send out your press release late on a Friday afternoon. You get bonus points if it’s the Friday before a long weekend, and the spokesperson most versed in the subject takes the next week as holidays (I call that the trifecta of bad news sharing). So, when I saw the Manitoba government’s announced axing of the $2/head cattle “enhancement levy” around 2 pm on Friday, I knew this was a bigger story than it first appeared.

This announcement should have been good news, in some ways. The levy, controversial from the start, was one many in Manitoba’s cattle industry wanted gone (or never instituted in the first place). I started making some phone calls and sending emails to the precious few who were still around late in the day. I had questions, like: was this unexpected?  How much money had been spent? Is any or all of this money recoup-able? How did the council last this long without having ever actually accomplished anything? And, most importantly, how will ranchers get their money back?

But first, some back story. No Canadian rancher will forget the day 10 years ago when it was announced that BSE had been found in the Canadian cow herd. Manitoba’s cow/calf industry was hard hit, there’s no doubt, and the sudden loss of the over-30-months of age market brought calls for increased slaughter capacity in the province. Few in the Manitoba cattle industry would disagree that it’d be great to have more slaughter capacity close to home, if the business case was sound. The problem, to over-simplify a very complicated and years-long argument, was that many within the industry didn’t think there was a business case to be made.

But that didn’t stop the powers that be (the provincial government) from creating the Manitoba Cattle Enhancement Council, with a mandate to “Initiate, promote, support conduct and manage research and programs, including research or programs relating to financing or processing, that enhance value-added marketing activities relating to cattle; and, Gather, compile and distribute information related to the cattle industry.” The council would be funded by a $2/head levy paid when an animal went through an auction mart. From there, the council would decide on how to allocate funds to meet its mandate.

Of particular note, the MCEC spearheaded what became known as the Marion Street Project. Or, as many would like to call it, a 2-acre gravel parking lot in an industrial area of Winnipeg. The dream of local slaughter capacity was supported, at first, by the feds and the province, even if those in the cattle industry themselves weren’t in agreement that it was a development worth taking on. In all, $5.7 million was spent on a project that never got past demolishing an old building. (In fairness, there is a chunk of money that was invested. That asset, as far as I can tell, will be liquidated and returned to ranchers).

The $2/head levy was refundable, yes, though some producers claim it was never a straightforward process. In all, nearly $6 million has been collected since 2006, the year the MCEC started. Guess how many slaughter facilities were built in that time frame? Guess how much money was spent on administration, salaries, consultants, etc.? (Over a million, FYI). There is one other project besides the Marion Street Project that was in the queue for support through this program — that of Plains Processors based at Carman, Man. According to a provincial representative, that agreement and project will continue, subject to Plains Processors securing financing from additional sources. So, for those keeping score, that’s not quite one facility in eight years for nearly $6 million. Not a great track record.

I called MCEC to see how ranchers could go about getting their money back, (there are forms on the website for levies collected in the last 12 months, but I was curious about the money collected prior to that), and I was directed to a lawyer. I then spoke with lawyer Anders Bruun, the official in place to ensure that ranchers get their money back. According to Bruun, assets, including the 2-acre piece of land that the plant was to be built on, will be liquidated to pay back levies, however the total value of assets is not known at this time. The province released a preliminary report on money collected and spent to date. You can view that by clicking here.

The province says that it is “hopeful” that MCEC’s current assets will cover liabilities, however, a province spokesperson says there may be requirement for the province to pay some liability costs. The province is prepared to cover those costs to ensure producers that request a rebate receive it, but it’s up to ranchers to file the paperwork. It’s clear this applies to the last 12 months of levies collected…but makes no mention of the last seven or eight years.

All of this leaves me with more than a few questions still unanswered, like how this council and levy continued for so long with so little to show for it. I sincerely hope that these millions of dollars collected from Manitoba’s ranchers will be returned, but we’ll all have to wait and see.

What do you think? Were you opposed to the levy and council from the start? Do you think there is a business case for increased slaughter capacity in Manitoba? Why did so little get done in eight years? I’d like to hear from you, ranchers! Email me at [email protected]