The Saskatchewan government stands to lose another substantial sum of money on an investment in agriculture gone bad.
Between Crown Investments Corp. and the department of agriculture, the province sunk nearly $2 million into Birsay Livestock Ltd. Partnership, a 1,200-sow southern Saskatchewan hog operation that filed for bankruptcy Nov. 4.
Both are listed as secured creditors on bankruptcy documents, but the estimated value of their security is pegged at zero.
Money raised from the sale of land, buildings and other assets will go to Birsay’s top secured creditor, the Bank of Nova Scotia.
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Saskatchewan Party MLA Bob Bjornerud said the impending loss is another example of the government’s investment ineptitude.
“Once again it just shows us that government should not be getting into private business,” said the critic for Investment Saskatchewan Inc.
The New Democratic government lost $28 million in Spudco and $5 million in the demise of FarmGro Organic Foods Inc., said Bjornerud, listing other recent agriculture-related flops.
Zach Douglas, senior vice-president of investments with Investment Saskatchewan, said it’s misleading to focus on the failures when the overall track record of government investment has been “very positive.”
Over the past 10 years the government’s investment portfolio has generated $1.2 billion in cash flow and $840 million of net income for Crown Investments Corp. and the provincial treasury.
Douglas said a few failures in a portfolio of 128 investments is hardly what he would categorize as a disturbing trend.
“From time to time when you’re in the investment business, businesses that you invest in will fail.”
But Bjornerud said the problem runs deeper than the multimillion-dollar losses because the NDP is chasing investment dollars out of the province.
“I think private business won’t come into Saskatchewan because they’re scared they might have to compete with tax dollars.”
He said the government picks and chooses companies it wants to invest in, leaving others to fend for themselves. A prime example is in the hog industry where the province has put money into select operations like Big Sky Farms Inc. and Birsay.
“The average hog barn out there that’s owned by the private guy must be shaking their heads,” said Bjornerud.
Douglas said there is no evidence investment dollars are being driven out of the province.
“We help make things happen. We don’t drive private capital out of the deals.”
He said the government will continue to invest in ventures that have “a reasonable probability of success.”
Bjornerud is calling for an end to that philosophy of direct investment in industry. He said there are better ways to assist the private sector, such as doing away with the small business tax.
