Owners of a northern Alberta feed company mired in debt have refused to take the easy way out of their financial problems by declaring bankruptcy.
Instead, the three brothers are putting together a plan to slowly pay back the $3.8 million to farmers, banks and suppliers.
Their staunch Mennonite background won’t allow Ron, Cal and Doug Thiessen to close the door and walk away from their debts, said Cary Chernoff, general manager of Wanham Valley Feeds, located a few kilometres south of Wanham.
“I was touched by the standard,” said Chernoff, who noted the most common way to deal with money troubles is to declare bankruptcy and race to the doors.
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“They’re extremely ashamed they’ve come to this point. It’s a big shame to these guys, but they have such good support and they refuse to declare bankruptcy,” Chernoff said of the family who has lived in the area for 85 years.
In an added twist, some of the farmers who are owed money are putting thousands more into the company to help it stay afloat.
“These guys have old-world standards but there are farmers out there with old-world standards and they’re not even Mennonite. They’re amalgamating and getting together,” said Chernoff. He has already received agreement from at least three farmers who have lost money and are investing more.
Dan Rossworm of Clear Prairie, Alta., is a farmer taking a chance on the brothers. He said the loss of one more grain market would be a blow to Peace River area farmers now forced to truck their grain hundreds of kilometres to the nearest buyer.
“I’m just trying to get it going. We need every market we can get,” said Rossworm. He wouldn’t say how much money he now has in the company except that it’s a “substantial amount” about equal to his year’s net profit.
Ron Thiessen, one of the owners, said the brothers are putting a plan together to pay their bills.
“They will all get paid. That’s the thing that we’re working on.”
The nine-year-old company that started as a feed mill has hit tougher times. In the past three years, six of its customers have gone bankrupt and cost the firm hundreds of thousands of dollars. Agro Pacific in Chilliwack, Burgess Agri Supplies of Agassis, and Crossier Livestock in Aldergrove, all of B.C., and Marel Agri of Calgary, Agri Trans of Winnipeg, and All Grain Alberta Ltd. of Bentley, Alta., have all gone bankrupt and adversely affected Wanham Valley Feeds.
Four years ago the company was growing rapidly. The brothers hired a former banker who worked with them for six months before quitting and setting up a competitive business in nearby Grande Prairie.
An accountant hired to set up a new logistics and computer system allegedly left them with a $50,000 bill and an accounting system that didn’t work. Finally, accounting firm Myers Norris Penny straightened out the books, but it didn’t come cheap.
With gross monthly sales of $1.6 million, the company had a good enough cash flow to ride the rough weather.
Then came the drought.
Farmers who signed contracts to supply the company with oats broke their contracts when the price jumped from $1.80 a bushel to more than $4. The brothers had no choice but to buy expensive oats to fulfil their own contracts. Oats is the largest part of their business.
But Peace region oats didn’t grow well because of the weather.
Instead of a smooth, white coat, the oats grew a thick husk that was difficult and expensive to remove. So millers bought from Scandinavian countries instead.
Add in grain markets lost to thousands of tonnes of cheap American corn imported to Alberta and the combination was too much.
Chernoff agreed to join the company in an effort to generate sales. He estimates it will be at least five years before Wanham Valley Feeds regains the confidence of its customers and suppliers and rebuilds its business.
A group of 12 investors, some of them farmers, has put money in a type of trust account to allow Wanham Valley Feeds to pay cash for feed and freight for grain delivered now.
By paying for the feed immediately, the company hopes to regain the confidence of the farmers who are owed money and rebuild sales, said Chernoff. Paying cash allows for cheaper trucking.
Garry Hoover, a Hines Creek farmer out $20,000 for two truckloads of oats, said Wanham Valley Feeds called him at his farm in January, when he was home for a few days after a month of logging.
“They phoned me and desperately needed grain,” said Hoover, who started his auger in Ð30 C weather to load the oats.
Hoover didn’t know then that Wanham Valley Feeds hadn’t paid its bills since October, four months earlier. Now he wonders why he wasn’t told of the company’s problems before he delivered his oats.
Paul Graham, information officer with the Canadian Grain Commission, said it has received half a dozen complaints from farmers that the Wanham company hasn’t paid them, but there was little the CGC could do because the company is not licensed or bonded.
In 1998, Wanham Valley Feeds applied to be licensed, but the commission granted an exemption because it was operating as a feed mill. In February 2003, it was asked to reapply for a licence because it had changed operations.
Graham said Wanham Valley Feeds has an application form but has yet to make a submission.
