54,000 bushels delivered | Several farmers considering lawsuit
MORDEN, Man. — Sitting at his dining room table, Robert Wiebe looks like a man who hasn’t slept much since the middle of September.
It’s been two months since Puratone entered creditor protection, but Wiebe is still enraged because the hog production company owes him more than $300,000.
Wiebe, who farms north of Morden, delivered 54,000 bushels of winter wheat to Puratone’s feed mill in Winkler in late August and September. Puratone paid him for only 16,000 bu. of wheat.
“I hauled all my winter wheat to them,” said Wiebe, who has sold grain to Puratone for years. “They owe me for 38,000 bu. I delivered them about 54,000 bu.”
If it wasn’t for an excellent corn crop on his 2,200 acre farm, Wiebe said it would have been difficult to cover the $300,000 deficit.
“I had a super corn crop this year and I am going to survive. Last year I would’ve had to re-mortgage or shut down,” he said.
It will take several years to recover from the $300,000 loss, he added.
“That was me and my family’s paycheque for the year,” he said.
The two weeks after Puratone en-tered creditor protection Sept. 12 were particularly stressful because he didn’t know his corn crop would pull him through.
“The first two weeks, there was no sleeping,” he said. “It was a dry fall so (I) didn’t think the corn crop would even make average. What are you going to have to sell? How are you going to survive this?”
Puratone produces 500,000 hogs per year and is the third largest hog production company in Manitoba. With record high feed costs this summer, Puratone was losing $20 to $50 on every hog it sold.
Maple Leaf Foods announced in early November that it was buying Puratone’s 50 barns and three feed mills for $42 million. The deal will likely be completed by December.
In a statement, Maple Leaf said it isn’t planning immediate changes for Puratone’s barns, which have remained operational during the creditor protection period.
However, it is unclear how the $42 million will be distributed to Puratone’s creditors.
A court appointed monitor, Deloitte and Touche, is overseeing the creditor protection process. Puratone owes $40.8 million to the Bank of Montreal, $40.2 million to Farm Credit Canada and $5 million to Manitoba Agricultural Services Corp. All three are secured creditors.
A creditor list, which is available online, indicates that Puratone owes $20,000 to $300,000 each to dozens of Manitoba farmers who delivered grain to the company before it applied for court protection.
John Sigurdson, who farms near Riverton, Man., is out $60,000 after delivering grain to Puratone’s feed mill in Arborg, Man.
“As it stands right now … we are looking for a lawyer that works in bankruptcy and insolvency,” Sigurdson said. “As soon as your grain got there, it was made into feed and away it went.”
Wiebe assumed Puratone was bonded and that he would eventually be paid for his grain. Besides, Puratone had called and asked him to deliver his winter wheat.
“They phoned me and kept bugging me to bring in grain. They were short of grain, they said. So I brought grain in for three weeks.”
On top of his financial loss, Wiebe said a telephone conversation in the middle of September with Puratone chief executive officer Ray Hildebrand put him over the edge.
“When I phoned the CEO, the big boy, he told me his pigs were more important than my farm.”
The Western Producer phoned Puratone for comment but the company declined.
Because of his loss and what he calls a flippant reaction from Puratone, Wiebe has joined the group of Manitoba farmers considering a lawsuit to recover their money.
At this point, however, it’s not clear who they will sue because Puratone owes more money than it received from Maple Leaf.
As well, Maple Leaf bought Puratone’s assets rather than the entire company, which means it isn’t responsible for Puratone’s liabilities under Canadian regulations.
“We had a specific agreement in place for the purchase of the assets, which does not include the outstanding debt,” said Maple Leaf spokesperson David Bauer.
Keystone Agricultural Producers president Doug Chorney has heard more than a dozen complaints from Manitoba farmers about the Puratone deal.
He said it’s unfair that the entity that replaces Puratone can walk away from its financial obligations.
“We don’t think it’s acceptable for this business to carry on and all these farmers not getting paid anything for their grain,” he said.
“This creditor protection … prohibited anyone from taking any action and now it seems like everyone gets off without any responsibility.”
KAP is looking to organize a meeting in the next few weeks with the players involved, including Maple Leaf, Puratone and producers, to see if there is a way forward.
Bauer said Maple Leaf is open to the idea.
“We’re open to engaging all stakeholders as part of the process.”