WINNIPEG (CP) — More than 1,000 cattle farmers in Manitoba have yet to repay nearly $33 million of government loans they took out after the discovery of mad cow disease closed markets to Canadian beef and cattle.
An official with Manitoba Agricultural Services Corp. says 288 of the loans, worth $4.5 million, are in arrears.
The Manitoba government has already written off $1.1 million in loans.
In May 2003, after an Alberta cow was detected with bovine spongiform encephalopathy, the United States and other markets closed their borders to Canadian beef and cattle, sparking a free fall in prices.
A few months later, Manitoba began offering special low-interest BSE recovery loans to producers devastated by their inability to market their cattle and the losses they were suffering.
Some 1,815 producers borrowed $70.2 million in 2003 and 2004, and the money was supposed to be repaid within two years.
"I think it's fair to say there have been protracted difficulties in the cattle industry that started with BSE in 2003," said Charlene Kibbins, a senior vice-president of the agricultural lending agency.
The lucrative U.S. market didn't fully reopen to Canadian cattle until 2007. Meanwhile, the beef industry has been burdened by high feed prices, a high Canadian dollar and trade irritants such as U.S. country-of-origin labelling legislation.
When the original BSE loans came due, most farmers were forced to roll them into a new loan, with a maximum of $75,000. Farmers were given the option of five- or 10-year terms.
As tough times continued for the industry, the province gave farmers a three-year holiday on paying off the loan's principal, effectively extending the length of the term.
As a result of the restructuring, scores of farmers won't be finished paying off their loans until 2018 and a handful will still be whittling away at them until 2021, Kibbins said.
Sheila Mowat, general manager of the Manitoba Cattle Producers Association, said those who took out BSE loans aren't the only farmers who are suffering.
"Any producer who had loans out when BSE hit will still be struggling," she said.
But many have invested too much of their lives and money to exit the industry, Mowat said. "They can't afford to just pull the pin and walk away from it, because (then) they have nothing."
Agriculture Minister Stan Struthers said the economic health of many small Manitoba communities is tied to the fortunes of the cattle industry. Some of these communities started to lose their grocery stores and hotels after BSE hit, he said.
Meanwhile, cattle producers have been heartened by a recent improvement in prices, which has come despite the price-dampening effect of a strong loonie.
Mowat said slaughter cattle prices rose to 83 cents a pound last month, compared with 72 cents in December.
She said producers are hoping it is the start of a high cycle for the industry.
