API Processor - Red Deer

[Vader]

API, Red Deer has been placed i court ordered receivership. Ther receivers are Price Waterhouse Coopers who are reviewing the operation of the plant and myust report to the court by December 19th.

[crusher]

This operation has been plagued by financial woes since they commenced operations several years ago. Does anyone have any inside info on the operation of the plant? Was it designed poorly? Do they have excessively high fixed costs? Are the markets for its products undeveloped? Has it been mismanaged? I can see why they would be unprofitable when mid grade wheat is $5.50 , but can they make a go of it at $4.50 wheat? Is there any government money in this facility already, and if not is that coming down the line?
Unfortunately this example doesn't look good for value added investors for the prairies. I'm thinking there won't be much activity in new value added processing until commodity prices back off of their record highs.

[rain]

I know that they where in a situation last year where they had to take a certain percentage of there wheat from the CWB, as CWB grain. But the board could not supply them.

It is a bad situation where you are told you have to use a certain supplier by law but the supplier doe not have to supply.

[TOM4CWB]

Charlie;

Is the Alberta gov. serious about value added products like Bioenergy and further processed cerial products?

The Red Deer API should have been a show piece... now it is bankrupt.

The strawboard plant at Forestburg is another example of value added destroying dreams and aspirations of a community and many farmers.

How exactly do we create value added products in a world where only a few multi-national suppliers have been allowed to dominate and dictate who is allowed to be a supplier?

Where exactly does the Alberta government plan to take the farming community... with this huge emphasis on value adding... that 9 times out of 10 creates financial ruin for the initiators?

THE forest industry giants wait till a lumber plants get written down to 10-30% of their original cost... then they buy them and can run at a very low cost because of the low capital cost created by all the write downs.

How can farmers absorb all this cost... on top of US/EU subsidies on our primary grain products?

[charliep]

Don't know the answers to your questions other than these new ventures will be higher risk. What should be governments role be helping farmers evaluate and starting up new ventures that add value to current crops/livestock and provide rural development for farm communities?

[ValueChainFX]

charliep you asked the question I cannot let pass by! WHAT CAN THE GOVERNMENT DO FOR YOU??????????

It is my opinion that we in Alberta have some of the brightest minds in Agriculture in the world working in our government offices. Although they may believe they are doing what they can to help the industry grow, it is also my opinion that when it comes to addressing the REAL issues in the industry, these brilliant minds are gone, stifled in red tape or unwilling to stick their neck out to make real improvements.
Don't get me wrong, I do believe you government folks are people that try to care. You are just out of step with the industry mainly due to your own inability to do the things you tell the industry they should be doing!!! GO FIGURE!!!
We have new ventures coming on stream to add value to our products! The government has been preaching value added products here we are, the government will spend money to study up front .... money to market at the end ... but nothing in the middle the hands on working industry building ... making it happen component .... NAHDAA !!! Even though we have had studies done by and for the government that have stated .... To much money in initial studies to much money in marketing but not enough to tie these two components of the supply chain together.

RISK ... Hmmmm we should talk a little about risk!!!! The whole agriculture industry world wide has changed, even the so called experts are lost in this new world we woke up to!!! Producer programs tend to be more risky!!!! This may be true but why is that!!! Could it be that the producers are able to produce the product we need and then get shafted when they turn it to the next level of the supply chain, so the producer (and everyone else in the industry) knows this is happening and the producer takes the next step (with no government assistance unless he wants to study to start or market the end) The producer doesn't speak the language of marketing, doesn't have the time to build relationships, has huge challenges coordinating processing and delivery and so on and so on. So this does not stop him he learns as much as he can ... moves forward ... slugs it out and gets beat up. Some make it some don't, some get half way there and think they have arrived. So the government in their great wisdom introduce Value Chains and an agriculture policy framework. Now we find that they really don't support those either unless you are the big guys!!! Didn't really think that the big guys needed this but oh well their one page letter to receive funds surely carries less RISK then a several hundred page document months of study and support from several levels of government, industry, producer groups and rural communities.

But what if the RISK is less, what if government actually did some of the things they should be doing, what if the government actually help the agriculture industry build a future so we could make money instead of take subsidies? My goodness what if???

Someone told me somewhere if our fore fathers could see what we think is RISK today. They would fall over in hysterical laughter.

I would love to see our government get on board with agriculture and stop ticking the industry off.

Oh if you want to be innovative and make an industry strong we are waiting for you to join us and share OUR RISK!!!

[TOM4CWB]

Charlie;

I see even API as a failure of government to do a decent job.

WHy???

Gluten, one of the main products that API produces, is subsidised by the EU to an very high level... to the extent a few years back gluten was avaliable for the cost of shipping from the EU plants to the North American market.

THe US put on a 100% tariff.. (Canada was exempt)declining over four years...

When the tariff got down to 50% the US gluten producers went to the US President... and said they would be destroyed if it got any lower.

What happened?

THe President decided that tariffs were not in the spirit of free trade... so instead the essence of the action was to pay off the capital costs of the US gluten plants.

Here sits API... no tariff protection, a large capital investment, no return.

How are the farmers who invested in this value added plant, supposed to feel now?

WHat about those who took less for their grain to see this plant keep operating... don't we have a right to feel betrayed?

If our federal government will not negotiate, internationally, in good faith on our behalf, and sacrifice western Canada for supply management in Eastern Canada, what hope do we have?

[parsley]

Just as some producers beg for Government money to produce, some folks out there are wanting grants and government money to value-add. Can't get up in the morning and get dressed without tax dollars.

Both Federal and Provincial government's role should be that of a referee and regulator, not as a player. At any level. If the Government subsidizes any level of the food chain, they automatically became a player in that level.

Players in food production should be trying to move away from government involvement, not court it. The further away we place ourselves from government tinkering, the healthier the industry will be and the more money we will make.

Unless, of course, you want to grow potatoes in Saskatchewan and have the Saskatchewan NDP Government as your "industry partner". Good grief.

Parsley

[TOM4CWB]

Parsley;

I agree that we, in theory do not want government involvement, yet how do we survive competeing against those who become more and more subsidised?

Taxes for instance... make us less competitive, they are overhead costs that are not a cost created by farmers to a large extent, yet all the imputs we use have a large component of tax value priced into the item, no matter what it is.

At the end of the day where is western Canadian Agriculture? Canada spends significantly less per % GDP than both the US and EU on Agriculture.

I would just like to know where all this "value added" promotion and talk is trying to lead us as farmers?

Are the new saftey net programs going to deal with these issues?

[charliep]

ValueChainFX

Thanks for your thoughts. Your comments about current AAFRD are understood(and likely agreed with).

What types of activities would help support a new business venture? Skill development/consulting support on an on going basis (not just the start up business plan)? Government investment/grants? Assistance to source venture capital (tax incentives for investors to offset risk) to help attract new investment capital? Activities to assist new entrepreneur in being introduced to new customers, marketing tools, etc.?

[ValueChainFX]

parsley is so right in saying we do not want to see the Government as a player in the food chain. BUT ... Go figure To late!!! As our national representatives and the ones that set import export rules we need to understand the program and get with it. Government is a player like it or not, if they want out and we want them out then we better make this a goal and build a strategy that will get them out, frankly the way it is working now, I would like to see a lot less government Ag-employees and those funds going into agriculture in other ways!

Our goal in my opinion is to make the industry as viable as possible, this means visiting some of the issues and making some changes where we can.

Let's just assume for a moment we all agree that the system is not working out there. What do we do. Well I can tell you one thing I see producers that are giving up the farm (six I know of off the top) Why is this, well the banks want to go farming I guess (or is it the Government since the are government backed loans) When the offer was made to visit agri-loans to see if we could jointly come up with some solutions or alternatives the bank just flat out is not interested. Seems to me an agri-financial service that actually kept in touch with the front line issues and was focused on solutions rather then "The BIG BANK thought process" may be more useful.

The government needs to work directly with the innovators to help us move through the system in alignment with the system, addressing industry challenges as we move forward. As producers we are willing to share the risks, pay the price and work our tails off, but to do this and feel every step of the way your government is trying to cut your throat, pull the rug out and put road blocks in place .. well this just doesn't make sense.

Please don't get me wrong here. I do believe there are good people in government, I believe we have a future in the industry, I just think the government has to open there eyes be leaders for a change instead of politicians and help us make changes that address todays issues and todays challenges.

You want Canada and Alberta to be agriculture leaders well we will be, But as Government Lead, Follow or get out of the way!

[TOM4CWB]

Charlie;

Much was said in the mid 90's about the Alberta government/feds providing a "level playing field".

If this then happened... farmers would let the competitive advantages/disadvantages decide who would produce the products for our AG food markets.

Now, who has kept tally, and exactly where are we at on the "level playing field"?

Is western Canada serious about remaining in the Ag Food industry... Ontario and Quebec sure are... and they are willing and ready to see that their Ag sectors remain commpetitive and viable.

I take one look down memory lane at Paliser/API and really have to question just how serious our AB gov. is about value added... and innovative creation of infrastructure to provide the 20/10 billion targets we are to acheive...

SO what exactly are we as farmers supposed to do?

Railways and elevators being ripped out...

All the infrastructure being ripped up, for a few measly dollars, that could have been real assets to reaching the 20/10 by 2010 really should make us wonder shouldn't it?

Or have I missed something?

Please tell us what we have missed?

Is someone going to do something about API?