Owners of beef plant being sold received millions in government grants and loans
John Cotter, The Canadian Press
Published Thursday, January 10, 2013 4:39PM EST
EDMONTON -- The owner of the Alberta beef plant being sold to a subsidiary of a Brazilian company received $15 million from the federal and Alberta governments since 2009.
Agriculture Canada says of the money approved for XL Foods Inc., $2.475 million was in federal no-interest loans.
The rest of the cash was in federal and provincial grants to help bolster production at the slaughter plant and to improve food safety procedures.
"The Harper government has long supported the agriculture industry by investing strategically and providing loans that help create jobs and growth for Canada's economy," Agriculture Minister Gerry Ritz said in an email.
"These programs were created to help the agriculture industry across Canada recover and adapt to a variety of challenges over the last decade, including BSE."
The plant in Brooks was at the centre of the largest meat recall in Canadian history last fall and an E. coli outbreak that made 18 people sick.
JBS South America says its Canadian division, JBS Food Canada, expects to complete the purchase of XL Foods properties on Monday.
JBS has said it would pay XL Foods $50 million in cash and $50 million in JBS shares. It has also said it will not assume any of XL Foods' debts or liabilities.
The Nilsson Bros. Group bought the Brooks plant in March 2009 from Tyson Foods Inc., and boasted XL Foods would be the largest Canadian-owned and operated beef processor in the country.
Agriculture Canada said later that year the federal government approved a $1.2 million loan to help modernize the plant.
In 2011 a $1.275 million loan was approved to help the company purchase state-of-the-art meat processing equipment.
A federal official says both these loans are repayable.
XL Foods also received a $9.9 million federal grant in 2010 to deal help it deal with new rules on the handling and disposing of risk material associated with mad cow disease.
The Alberta Livestock and Meat Agency approved $2.6 million in grants to XL Foods for eight projects since 2009, including increasing hamburger production and upgrading the plant's food safety procedures.
"XL is adding a third bank of hot spray which will increase the pathogen kill by 40 per cent from the current kill and increase the line speed by 15 per cent," reads an agency document that indicates the money for this project is to be paid out by the end of March.
"The added boiler allows XL to have the option of adding a pre-evisceration carcass wash."
The Canadian Food Inspection Agency cited unsanitary conditions and problems with XL Foods' E. coli control plan last fall in its review of the plant, which was shut from Sept. 27 to Oct. 23.
The Alberta Livestock and Meat Agency says its role is to help the industry in the province remain competitive and that XL Foods qualified for the cash because it is a Canadian company.
Sean Royer, the agency's executive director of industry investments, said the sale of XL Foods to JBS doesn't matter because the plant will continue to operate in Alberta.
"It would have been ideal to have kept a Canadian company here," Royer said. "For us, it is keeping that plant up and competitive."
Officials with Nilsson Bros. and XL Foods could not be reached for comment Thursday about the government loans.