P.E.I. to limit funding for Atlantic Beef losses

Prince Edward Island’s new budget caps the province’s exposure to any more losses coming out of the Atlantic Beef Products plant.

Finance Minister Wes Sheridan’s budget, released Wednesday, notes the province has put over $40 million in both capital and operating subsidies into the Albany plant since it was set up in partnership with local producers in 2005.

"Our government is prepared to continue to support the plant, and by extension, Island beef producers," he said, "but that support is not unlimited."

Wednesday’s budget imposes a cap on assistance for Atlantic Beef at $1.5 million per year.

"While it was hoped that this plant could get to break-even status, there is little likelihood that this will be achieved in the foreseeable future," Sheridan said, noting the province is on the hook for $3.2 million in losses from the past year alone.

The plant has booked losses each year from the outset, after which the province in 2007 negotiated a "multi-million dollar investment" in the plant with backing also from the federal, Nova Scotia and New Brunswick governments.

"In spite of this support package, and in spite of the direction of a highly-skilled board comprised of knowledgeable, capable business leaders, losses at the plant continue, and production levels continue to fall," Sheridan said.

The province noted its costs across the agriculture file are up by $5.3 million, due mainly to support for Atlantic Beef but also to "increased demand" by producers on the Production Insurance program.

Sheridan noted that Agriculture Minister George Webster plans to meet "in the near future" with Atlantic Beef’s board and management, the Atlantic Canada Opportunities Agency, the other provinces and local industry leaders to "determine the best path forward within this policy direction."

"Proactive initiatives"

Among other moves in the ag sector in Wednesday’s budget, the agriculture department said it will "no longer provide" its Hog Transportation Program but plans to consult with the hog sector on a new Hog Farm Investment program.

The new program, the government said, will be "designed to develop proactive farm initiatives to assist each hog operation into the future." To help reduce debt loads on individual hog operations, the department recently eliminated over $900,000 of outstanding hog loans, Sheridan noted.

Sheridan also announced that the P.E.I. Liquor Control Commission plans to expand its operational model to include "agency" stores similar to those seen in the other Atlantic provinces, thus "improving consumer convenience across the Island."

The province also pledged to continue to support the P.E.I. Culinary Alliance "in its work to better promote Island food products, and to establish Prince Edward Island as a culinary destination."

"Disadvantage"

One of the main line items in the budget calls for the province to enter talks with the federal government on sales tax harmonization, aiming for an effective date of April 1, 2013.

"Representatives of our most important economic sectors — agriculture, fisheries, tourism, manufacturers, as well as small and medium-sized businesses — have repeatedly pointed to the disadvantage they face in the absence of harmonization," Sheridan said Wednesday.

Under a harmonized sales tax, the provincial sales tax rate is expected to drop from 10 per cent to nine per cent. Combined with the federal GST rate, P.E.I.’s HST would be 14 per cent, compared to a combined 15.5 per cent currently.

The proposed HST would apply the tax on the same base as the GST which, for example, does not include basic groceries or prescription drugs.

Related stories:
P.E.I. seeks buyers for Atlantic Beef: CBC, May 14, 2009
Federal-provincial investment made in Maritime beef processing industry, Dec. 10, 2007

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