Risks fall on producers

If Alberta had a planned economy, you’d have to say the plan has worked out exceedingly well. That is, if you happen to be a transnational corporation doing business in either of the province’s two top industries, energy and agriculture.

If Alberta had a planned economy, you’d have to say the plan has worked out exceedingly well. That is, if you happen to be a transnational corporation doing business in either of the province’s two top industries, energy and agriculture.

If you are an Albertan working on the bottom of the corporate pyramid in either of those two industries, you can be forgiven if you believe the odds are stacked against you.

Both in oil and gas, and in agriculture, risk has always been part of the equation that adds up to getting anything done.

The way the planning worked out in Alberta, it’s the junior energy companies, the rank and file workers, and the farmers who face the majority of the risks, while the profitability has been secured for the big players.

The snafu at the Alberta Farm Recovery Program, revealed in the Advocate last week is only the most recent case in point.

The program is only one of many that pork and beef producers rely on for cash flow to keep their operations running.

The world is eating a lot less beef per capita in the past few years, in the world markets where Alberta competes for customers. Alberta just happens to be the nation’s top beef exporter. Taxpayer support programs are almost all that’s left in the margins for producers, and every exporting country in the world has an array of them to keep their farmers in business — and to keep the nominal price of food below the level that sparks riots.

Through a series of mistakes that only a bureaucrat can explain, 163 of Alberta 25,000 farmers were deemed to have received too much money in the first round of AFRP payouts. That incudes about 60 of the province’s largest hog producers.

They were expecting a second round of payments soon, and these farmers had included the value of these payments into financial statements they give the banks when they borrow money to maintain cash flow. But instead of another cheque, they received a bill — and every businessman knows today what can happen at the bank when assets are suddenly turned into liabilities.

A few years ago, when Alberta beef producers were being hammered by the sudden drop in cattle prices during the BSE “mad cow” scare, the province quickly announced a multimillion-dollar rescue package.

Most of the money ended up in the pockets of the foreign owners of Lakeside Packers and Cargill.

The risk involved in the cyclical nature of both pork and beef prices continues to rest on the producers, and the (largely) immigrant labour forces at the packing plants, working in the province on temporary visas.

The same forces apply in energy. The drilling and service companies, and the junior explorers that need capital to run in their industries — not to mention all their employees — end up facing the worst of the downside of the risks, while the international corporations have their profits (and executive bonus packages) secured by taxpayers in bailouts, stimulus packages or new deals on royalties.

Is it by design that the most profitable aspects of both energy and agriculture in Alberta are foreign-owned?

Is it a surprise to farmers, rig hands and junior players in the patch that downturns always hit them first, and hardest, while the support packages for their parts of the industry seem to come up as something less than advertised?

If that’s been the plan, then the plan is working.

Greg Neiman is an Advocate editor.

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