The Alberta government is preparing to lift its suspension of the loan program offered by Canada’s largest cattle feeder association.
Alberta Ag Minister RJ Sigurdson issued an order on January 27th, 2025, prohibiting the Picture Butte Feeder Co-op (PBFC) from issuing new loans under the Alberta government’s Feeder Associations Loan Guarantee program. The order was based on a report from Alberta Agriculture and Irrigation’s Inspection and Investigation Section, which alleged the co-op was not complying with the province’s feeder association regulation, and that it was being operated in an “unsound manner.”
Founded in 1991, the Picture Butte Feeder Co-op is more than 10 times larger than any of the other 44 feeder associations in Alberta, both in terms of financing and the use of the province’s loan guarantee program. As of January 31, 2025, the co-op had just over $281 million lent out to its members to finance cattle purchases, and in turn, owed approximately the same amount to a syndicate of banks, led by the Bank of Montreal. The co-op entered a credit agreement in 2022 for up to $335 million in revolving financing.
Citing the time and professional expertise required to resolve the matter, PBFC’s board of directors resigned and, in late February, received court approval to appoint Alvarez & Marsal Canada as restructuring officer for the co-op, with a mandate to work toward having the ministerial order lifted.
“The restructuring officer, essentially acting as the PBFC board, is required to solidify a few things operationally, and once that is done, the order can be lifted. The feeling is that this will occur soon,” says a spokesperson for Alberta Agriculture and Irrigation, in an April 28th email to RealAgriculture.
“Once the Minister of Agriculture and Irrigation is satisfied that PBFC is being operated in a sound manner and with the consent of the Minister of Treasury Board and Finance, the Minister can lift the order,” the ministry spokesperson said, responding to a question about what needs to happen for the order to be lifted.
As part of the restructuring, Alvarez & Marsal informed PBFC members on April 28th it has decided to hire Cody McBride as the new supervisor for the co-op, effective May 5th. McBride previously served as the local supervisor for the Alberta Choice Feeder Co-op and held multiple roles at ATB Financial, specializing in beef industry financing.
“This decision marks a significant step forward in ensuring PBFC’s operational stability and progress,” writes Alvarez & Marsal senior vice-president, Orest Konowalchuk, in the April 28th update.
He says they’re also in the process of hiring a new administrator for the PBFC in the near future.
Another key step toward lifting the order, according to the province, was an inventory count conducted in early March that saw inspectors visit 52 farms and feedlots. According to Alvarez & Marsal and the Feeder Associations of Alberta, the provincial audit showed the correct number of cattle on hand, and that they were properly identified and in good condition. They reported no evidence of a shortfall in cattle or deposits.
Much of the province’s scrutiny has revolved around whether the co-op issued loans to people who should not have been eligible under provincial regulations. Feeder associations across the province were informed in 2023 that provincial inspectors would be focusing on member eligibility in future audits.
As of August 2024, the Picture Butte co-op had 227 members, which included some feedlot owners’ family members and employees. A court affidavit for former PBFC vice-chair Tony Ankerman includes a report that some members notably had powers-of-attorney on file, granting control of their dealings with the co-op to others.
“Issuing loans to family members and employees is permitted as long as the family members satisfy the eligibility requirements under the Feeder Associations Guarantee Regulation,” explains the spokesperson for Alberta Agriculture and Irrigation, noting the use of power-of-attorney is “acceptable in certain situations.”
Related to the membership eligibility issues, the provincial inspectors also allege PBFC used guaranteed loan proceeds for “improper purposes,” provided larger advances than allowed, failed to collect required security deposits from certain members, and obstructed provincial inspections.
These findings are disputed, however, and PBFC legal counsel has alluded to the possibility of further legal action. In a bench brief posted to Alvarez & Marsal’s website, the co-op’s legal counsel said there are “certain findings of the ministry that are subject of significant dispute by certain parties.”
As part of having the ministerial order removed, the restructuring officer has been tasked with reviewing all existing members of the co-op to ensure they meet the eligibility requirements, as well as developing/revising PBFC’s internal operating policies and governance structure.
Konowalchuk says Alvarez & Marsal been working closely with Minister Sigurdson’s office over the past few weeks to have the order lifted. They’ve also been talking with lenders to negotiate an updated credit arrangement for PBFC.
“We anticipate providing a further update later this week on the timing of when PBFC will be back to ‘operations as normal’ to allow PBFC being able to provide loans to its members without restrictions,” he says, as of April 28th.
Disclaimer: The owner of this publication has a personal connection to the subject matter discussed in this story and has not had input into writing this story. Every effort has been made to ensure the reporting remains fair, accurate, and objective.
Editor’s note: Please see this statement from RealAgriculture’s Shaun Haney regarding our coverage of the Picture Butte Feeder Co-op story.
