- EDMONTON -- Alberta's largest
three meatpackers reaped a huge windfall from the mad-cow crisis when a
flawed government aid program resulted in a glut of cattle the firms bought
cheaply and sold at near-regular prices, the province's Auditor-General
concluded in a report yesterday.
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- Fred Dunn said the discovery of bovine spongiform encephalopathy,
or mad-cow disease, in an Alberta cow on May 20, 2003, and the resulting
federal-provincial aid package drove down prices and created a "distorted
market" that nearly tripled the earnings of the three companies, two
of which are owned by U.S. firms.
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- Mr. Dunn was asked to review the issue by the provincial
government in light of allegations the processors had received financial
support earmarked for producers. But yesterday, he said the meatpackers
did not profit improperly.
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- "The packers benefited," he said. "They
benefited because there's cheap cows available and they couldn't slaughter
them fast enough."
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- He said the slaughterhouses increased capacity to deal
with oversupply.
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- In his 119-page report, Mr. Dunn found the average earnings
of the abattoirs in the last six months of 2003 were 281 per cent higher
than before BSE was detected. In that time period, they made an average
$176 per head, compared to an average of $46 before BSE.
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- Gary Michaelson, spokesman for Lakeside Packers, which
is based in Brooks, Alta., and owned by Arkansas-based Tyson Foods, said
yesterday's report confirmed that Canadian markets are driven by supply
and demand.
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- "While the oversupply of cattle has resulted in
some short-term benefits for packers, we're concerned about the long-term
health of the cattle industry," he said.
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- Officials at the other two slaughterhouses -- Cargill
and XL Foods -- were not available to comment yesterday.
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- The companies did directly receive at least $45-million,
to which they were entitled because they also own cattle. However, the
province made them ineligible for such support in later programs.
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- Mr. Dunn, who concluded taxpayers got value for money,
said it took him three months to secure financial records from the companies,
which claim they incurred higher costs because of new processing regulations.
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- The Auditor-General also said food retailers profited
because they bought beef at cheaper-than-usual prices but did not pass
on the savings to shoppers, who increased demand for beef, partly because
of public-relations campaigns calling on them to show support to farmers.
As well, he noted retailers are loath to lower prices and then raise them
again.
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- However, opposition critics and some farm groups said
the bottom line of the report is that a taxpayer-funded program aimed at
ranchers actually benefited multinational packing companies. As well, they
say Canadians who bought more steaks helped retailers, not farmers.
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- "Our taxpayer dollars have padded the profits of
companies based in the very country that's closed its borders to us,"
Liberal Leader Kevin Taft said.
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- Jan Slomp, a board member of the National Farmers Union,
said the government should set a controversial floor price, or minimum
cattle price, to prevent already struggling ranchers from suffering such
losses.
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- "We are doing nothing with these subsidies propping
up the corporate interest," he said.
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- However, some beef-industry groups said Mr. Dunn's conclusions
were long expected and simply the result of a distorted market.
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- "The content of the report . . . is not a surprise.
We understand what happens in a market when there's an oversupply. Prices
simply go the wrong direction for people selling and that's been the plight
of cattle producers since May 20 [2003]," said Arno Doerksen, chairman
of the Alberta Beef Producers.
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- The $402-million federal-provincial subsidy package that
Mr. Dunn said helped fuel the companies' profits was the Canada Alberta
BSE Recovery program, which was the first attempt to help producers and
involved the most money.
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- Mr. Dunn said three elements of the package created a
"distorted market": a predetermined end date, which resulted
in farmers rushing to sell their herds; a cap on total funding and regular
updates on how much was paid out, which also contributed to the glut of
supply; and a short adjustment period.
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- The Alberta government argued against some of these conditions
and considered walking away from the program, but did not because it did
not want to forfeit almost $250-million in federal funding, Agriculture
Minister Shirley McClellan said.
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