Saskatchewan may have loads of pulse crop buyers, but it appears to have no pulse plant buyers.
Clark Sullivan of Sullivan & Associates Inc. spent the first six months of the year trying to find a new owner for Mainline Pulse Inc., a Chaplin, Sask., processing firm that filed for bankruptcy on Jan. 5.
“Unfortunately we weren’t able to find anybody to take the project on, at least not at an acceptable sale price,” said the receiver for the company.
Eventually he was forced to sell Mainline’s assets bit by bit at an auction sale earlier this month.
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Sullivan chalks up the lack of interest in the firm to the fact that the pulse industry is overbuilt. But specific problems associated with the Mainline Pulse facility didn’t help.
“This particular plant had some start-up issues in terms of getting the plant actually commissioned and working properly,” he said.
Sullivan wouldn’t disclose how much money was raised through the auction process, other than to say it won’t be enough to fully compensate Farm Credit Canada and the Canadian Imperial Bank of Commerce, the failed company’s two primary secured shareholders.
Julie Gerbrandt, administrator for the village of Chaplin, attended the auction. She said just under $1 million was raised through the sale of buildings and equipment, which doesn’t come close to meeting Mainline’s outstanding obligations of $4.4 million.
She thinks one reason the plant wasn’t sold as a going concern is that there was an agreement in place with Saskatchewan Wheat Pool that the facility could never be used to process Canadian Wheat Board grains.
The loss of the business leaves a financial, emotional and architectural void in the community located along the Trans-Canada Highway, between Moose Jaw and Swift Current.
“It’s going to be sad to see it all parted out and have that big empty spot there,” said Gerbrandt. “It makes us look big with it there.”
Along with the reduced skyline comes an economic blow to the village of 292 citizens.
In addition to losing a plant that employed 10 people, the community had to write off $90,000 in uncollected back taxes.
And there is little hope of collecting future revenues at a site that has been the village’s largest tax base for many years.
At the core of the Mainline Pulse plant is the old Sask Pool elevator. While a group of local farmers managed to retain that building, there is little left in the way of support structures and equipment for future developers to work with.
“It would have been really nice if somebody could have taken it over as it stood,” Gerbrandt said.
Shawn Buhr, chair of Saskatchewan Pulse Growers, understands why nobody wanted to assume operations of the plant given how overbuilt the industry is, especially in the Chaplin region.
“A lot of the excess capacity is in the southwest, which was built to handle that million acre chickpea crop that has disappeared.”
With improved varieties and crop management techniques, some of that lost chickpea acreage may creep back, but the rebound could take too long for firms operating on thin margins.
“I don’t think we’re done yet. There’s overcapacity and there’s no easy way of getting out of it,” said Buhr.
However, he said it’s not all gloom in the pulse processing sector. This year’s above average harvest should give some of those cash-strapped plants “breathing room.”
Judging by the collection of processors buying equipment at the Mainline auction, there is still money to be made in the industry, said Sullivan.
“That equipment will get used and deployed in Saskatchewan, so other people will be expanding their lines,” he said.
