Aftershocks are still resonating after the Alberta government suspended a loan program at the province’s largest cattle feeding operation.
The Feeders Association Loan Guarantee (FALG) program was halted at Picture Butte Feeder Cooperative (PBFC), the largest of 45 feeder associations in the province, after an inspection alleged a number of financial and regulatory red flags. The FALG program has been in place in Alberta since the Great Depression, with the intention to provide “relatively easy access t0 low interest, leveraged financing backed by government guarantee” according to the province.
In April, the Alberta Cattle Feeders Association discussed the allegations against the Picture Butte Feeder Cooperative at a board meeting. Alberta Agriculture and Irrigation and Alvarez and Marsal also held a closed-door meeting for co-op members.
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“It is extremely disappointing, as a producer, to see what is allegedly happening in our Alberta cattle industry,” he said in an email to The Western Producer.
”I condemn the findings in the released affidavit, as this is not the intent of any public program, nor the course of sound business practices that our industry is built on.” said Vander Heyden. He added he fully supports accountability, and the penalties, and actions taken to rectify the FALG program to its original intent.
Vander Heyden is imploring all industry partners to support the Alberta government and institutions in the corrective process.
“The Alberta cattle industry was built on integrity and a handshake. Alberta produces the best beef in the world, our integrity is second to none. That integrity can not be used as collateral in any way shape or form against any of the practices outlined,” he said.
The province’s claims from an affidavit from mid-February include various mismanagements including obstructing provincial inspections, accepting ineligible feeder members, using guaranteed loan proceeds for improper purposes and providing more advances than were allowed.
Alvarez and Marshal Canada Inc. was appointed as the restructuring officer of the organization to oversee its operations and work toward lifting the loan suspension at hearing in Edmonto at the end of February after PBFC went into receivership. As of the end of January, the PBFC owed lenders under the the credit agreement $281,266,976. In August of 2024, the PBFC had a total of 227 active and inactive members.
John Conrad, assistant deputy minister for the primary agriculture division of Alberta Agriculture and Irrigation was at a closed-door meeting in Lethbridge recently for PBFC members, hosted by receiver-manager Alvarez and Marshal. There are hopes the ministerial order suspending the FALG program for PBFC will be lifted in the coming weeks, he said.
Conrad noted optimism from the outcome of the meeting, and that the receiver and PBFC members were “pulling in the same direction and are on the same page” to ensure good governance and sound operations of feeder associations, and that loans are not defaulted upon. The government wants to instill confidence and stability in Alberta’s feeder association loan guarantee program, he said.
Fallout has included sweeping resignations of board members and administration with the PBFC. There has been some concern voiced by outside observers that taxpayers will ultimately be responsible for some or all the costs associated with the loans.
Conrad went on record with media saying the loan program is nearly 90-years-old and has been operating in Alberta with a very small default rate. There are a handful of major lenders that administer the loan program.
