Province suspends loan program at Alberta's largest cattle industry lender after inspections

The Alberta government has suspended a loan program at Picture Butte Feeder Cooperative, the province's largest cattle financing cooperative, after an inspection alleged a number of financial mismanagement and regulatory issues.

The suspension could mean "a significant and unprecedented disruption" to members of the cooperative and their farming operations, according to one former official. The news comes as many Alberta ranchers are already worried about the financial impact of U.S. tariffs. 

The Picture Butte Feeder Cooperative, which formed in 1991, is part of the province's Feeders Association Loan Guarantee (FALG) Program, which helps livestock producers get easier access to loans. The cooperative is based in "Feedlot Alley," located in southern Alberta.

The FALG program has been in place in Alberta since the Great Depression, and is intended to provide "relatively easy access to low interest, leveraged financing backed by a government guarantee," according to the province.

In January, Alberta Minister of Agriculture and Irrigation RJ Sigurdson signed an order that stated the province would prohibit the cooperative from issuing further advances to its members under the program.

The province's claims were attached to an affidavit for Tony Ankermann, who was vice-chairman of the cooperative, dated Feb. 18.

They include that the cooperative allegedly accepted ineligible feeder members, used guaranteed loan proceeds for improper purposes, provided more advances than allowed and obstructed provincial inspections, among other violations. 

In response to the order, the cooperative sought court approval to appoint a restructuring officer, Alvarez & Marshal, to oversee its operations and work toward lifting the loan suspension. 

A number of board members resigned after the order was issued, while the remainder were set to resign upon the appointment of a restructuring officer, according to documents on Alvarez & Marshal's website. 

"In seeking the appointment of a restructuring officer, PBCF's intentions are to make the changes necessary within PBFC to ensure that PBFC is best positioned for continued operational success going forward, ideally with the support of the ministry and lenders," Ankermann wrote in the affidavit.

Alvarez and Marsal consultants are now acting as if they were the PBFC board and staff while they handle business affairs, according to a statement from Alberta Agriculture and Irrigation.

According to information posted to Alvarez & Marshal's website, PBFC owes a little more than $281 million to its lenders under the credit agreement, which it says is approximately the same amount the PBFC lent to its members.

As of Aug. 31, 2024, the PBFC had a total of 227 active and inactive members, according to Ankermann's affidavit.

Provincial inspections

According to information posted to Alvarez & Marshal's website, a letter was delivered to the cooperative that stated the inspection and investigation section of Alberta Agriculture and Irrigation conducted inspections of PBFC between Sept. 7, 2023 and May 15, 2024.

That inspection turned up the alleged violations, which triggered the suspension of the cooperative's loan program. 

Those findings were disputed.

The PBFC had sought to seal Ankermann's affidavit, writing that it "contains a copy of the report and compliance memorandum, each of which reference certain findings of the ministry that are subject of significant dispute by certain parties."

"The contents of the report may also be the subject of further legal proceedings by various parties, including PBFC," reads a bench brief posted to Alvarez & Marshal's website.

According to a statement from Alberta Agriculture and Irrigation, there is no formal process for disputing a ministerial order under the Feeder Associations Guarantee Act. However, affected parties could consider applying for a judicial review.

A spokesperson for Sigurdson declined an interview request, writing in a statement that "to protect the confidentiality of Albertans, Agriculture and Irrigation has a policy to not make compliance records public."

"Twice per year, Agriculture and Irrigation inspects feeder associations that participate in the Feeder Association Loan Guarantee Program to ensure compliance with its rules," wrote Darby Crouch in an email. 

The Alberta government has agreed to guarantee 15 per cent of PBFC's loan facility, Ankermann's affidavit states. It goes on to say that the government guaranteed to cover up to $60 million, but reduced that to $50.25 million on July 17, 2024.

Possible 'significant and unprecedented' disruption

Given the order, Ankermann's affidavit states that PBFC is presently unable to provide quick and reliable access to funding for members. In seeking a restructuring officer, Ankermann warned about impacts should members be unable to access funding or obtain financing elsewhere.

Given the ministerial order, the PBFC said its members cannot currently access financing that it said is "critical to many members' operations and livelihoods."

"If … PBFC is unable to satisfy the compliance requirements [laid out in the order], there will be a significant and unprecedented disruption to the members and their respective farming operations," the affidavit reads.

"This has the potential of creating a ripple effect throughout the Picture Butte area, considering that PBFC is the largest feeder association in Alberta."

It goes on to state that "rumours are spreading throughout the Picture Butte community about the order and PBFC" and that "urgent attention is required to bring stability and restore confidence in PBFC."

Curtis Vander Heyden, vice chair of Alberta Cattle Feeders Association, an advocacy organization for beef producers, wrote in an email that there was currently "stress and concern" in two ways when it came to the situation.

First, he understands some members that own cattle financed by PBFC can't currently advance additional funds to cover feed costs, he said. Second, he believes others have security deposits or approved funding tied up and can't use it to purchase livestock.

"We want to ensure [the FALG program] remains viable and available to producers," Vander Heyden wrote in an email.

CBC News sent emails to all of the cooperative's most recent board of directors listed in the receivership documents. Some declined to comment, while others have yet to respond.

George L'Heureux, a spokesperson for the Feeder Association of Alberta — the umbrella organization to which feeder associations in Alberta belong — said the provincial board was working with all parties involved to come to a timely resolution.