Perry MacKenzie was in a festive March mood, having literally moved from the dentist’s chair to the ice cream shop.
With his tooth appointment behind him and his pasta project making the transition from simmer to a rolling boil, it was time for a DQ Blizzard.
“I’m just at the Dairy Queen here celebrating this,” said a jubilant MacKenzie from his cell phone.
Beset by a seemingly un-ending string of failures and frustrations, the Prairie Pasta Producers project is again gaining momentum.
The group of about 200 Canadian durum producers has received an extension on the option to purchase shares in Dakota Growers Pasta Co., the third largest pasta manufacturer in North America.
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But just as the long-suffering pasta venture gets a new lease on life, there appears to be division among key promoters.
Prairie Pasta Producers chair MacKenzie said he believes members will jump at the chance to become owners of the mill and pasta plant based in Carrington, N.D.
He anticipates the co-op will take up all three million of the company’s 30 cent shares made available to them. Each D series share entitles the holder to deliver one bushel of durum to the plant and to receive a two cent US premium every time a dividend is paid on the company’s equity shares.
“He has a potential for return on shares, plus potential for return on delivery into the plant,” said MacKenzie. “I think we have an opportunity here that we really are looking forward to participating in.”
Vice-chair Allan Brigden isn’t so sure.
He is struggling with the investment decision because he said there are too many unanswered questions.
Is there a way for Dakota Growers to avoid paying the two cent premium by issuing dividends to equity shareholders through other means?
Is the grain only deliverable when Dakota Growers calls it?
Why do the American shareholders want to rid themselves of their D shares?
“There are too many unsure statements that I have trouble with,” said Brigden, who added that he has been kept out of the loop on the Dakota Grower negotiations.
His concerns don’t stop there. The company’s latest annual report didn’t instil confidence in him. Dakota Growers lost $429,000 in 2003, down from a $1.8 million profit in 2002.
“The company experienced a considerable drop in net earnings during the last six months of fiscal year 2003, primarily due to lower pasta sales volumes,” stated the annual report.
That has Brigden thinking twice about investing.
“I think they’ve got a TDS like Brigden has – a tremendous dollar shortage. They’re in a deep hole.”
MacKenzie said the popularity of low carbohydrate, high protein diets like Atkins have hurt Dakota Growers’ bottom line.
“The forecast for pasta consumption is not good,” he said.
But the company is addressing that by developing and promoting low carbohydrate pasta.
MacKenzie said the bottom line is that prairie farmers have to produce some sort of cereal grain and for those who want to continue growing durum, this is a golden opportunity to get more value for that crop.
