A poor Asian economy and unfair Canadian subsidies have forced three prairie alfalfa dehydration plants into receivership.
More plants may meet the same fate without government help, says the executive director of the Canadian Dehydrators Association.
All three of the plants under the National Alfalfa umbrella, with its head office in Melfort, Sask., were put into receivership last week at the beginning of the busy dehy season, said Garry Benoit of Edmonton.
“I fear if the government doesn’t step forward and give us a fair shake, there’s a possibility of more,” he said.
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The three plants, Carlea Alfalfa Processors in Tisdale, Sask., Midwest Alfalfa Products near Norquay, Sask., and Seven Persons Alfalfa Processors near Medicine Hat, Alta., represent about 15 percent of the industry’s production.
The plants will likely stay closed during this dehy season, said Robert Meldrum of Price Waterhouse in Saskatoon.
He was appointed as receiver June 9 to sell the plants and their assets either individually or as a package.
“We’ve had some inquiries but how serious those are, I’m not in a position to say.”
Another plant, Parkland Alfalfa Products near Tisdale, Sask., announced three months ago it was permanently closing because of depressed prices.
At its peak in 1995, Canada exported 871,000 tonnes of dehy products worth about $130 million. A combination of dry weather and depressed prices led to exports below 600,000 tonnes in 1999.
“It’s a very significant hit,” said Benoit.
Alberta produces about 60 percent of the dehy production with Saskatchewan making most of the rest.
At the peak period, there were 30 alfalfa processors in Canada. Bankruptcy and mergers have reduced that number to 22 plants still in production.
The root of the problem is competitor subsidies, said Benoit.
The European Union subsidizes its production, Americans subsidize their grain, Asian markets have collapsed and the Canadian government offers aid programs to other export commodities but not alfalfa.
“It’s bad enough the Europeans’ subsidize, but when we’re competing with our own Canadian government subsidies and we’re not included in those…,” Benoit said.
Alfalfa production isn’t eligible for traditional government aid programs like Agricultural Income Disaster Assistance, Net Income Stabilization Account and Alberta’s Farm Income Disaster Program.
“We haven’t even been able to receive the same support the grain farmers have,” said Benoit.
Canadian government aid may have been enough to keep the plants afloat for this long.
