SPRING BAY—While the number of animals the Manitoulin Island Community Abattoir (MICA) processed in 2015 was significantly higher than in 2014, the abattoir has been operating at a loss financially in the past two years. Hence, members of MICA were asked if they would support a restructuring and refinancing plan working with LAMBAC, which was presented to them at the group’s annual general meeting held last week.
“The animals processed at the processing plant increased by 25 percent this year (2015) and 30 percent the year prior to that,” stated Birgit Martin, chair of the MICA board.
Ms. Martin pointed out the first processing of an animal in the plant took place on February 7, 2012. She also noted that as part of the business licence to operate the abattoir the Ministry of Environment and Climate Change (MOECC) requires monthly testing of the output system to show there are no contaminants out of the septic system. “For the last two years we have been well below the thresholds (set by the MOECC) in terms of the septic, so we have asked the ministry if this (monthly requirement) can be reduced, as it is expensive.”
“MICA processes beef, hogs, sheep, goats, deer and the plant volume (animal units) went up 25 percent over 2014,” said Ms. Martin. “There was a dramatic increase in hogs 126 (last year) compared to 33 in 2014, which is really positive.” A total of 280 animals (units) were processed in the MICA plant last year.”
Forty percent of beef bought by MICA went for wholesale, and there was approximately a 50/50 split between MICA’s beef going to Andy’s and Manitoulin Island Meats, the meeting was told. Sixty percent of the beef is custom processed for farm gate sales and 56 percent of both lamb and pork is custom processed. “Member sales activity is strong,” Ms. Martin told the meeting.
The financial statement for MICA to September 30, 2015 was provided. “The take home message is that under the income statement we have been operating the abattoir under a loss for the past two years,” said Ms. Martin. “If you look at the loss to December 31, it was not as much as it was as of September 30. The losses are shrinking but are not quite where they need to be. That is why to get over the hump we are looking at the restructuring and refinancing plan with LAMBAC.”
“The financials are still challenging,” said Ms. Martin. “The business plan showed deficits to be expected in years one and two, while year three was to be a break even year but it did not happen. Costs were higher than budgeted, and the plant efficiency has not been maximized yet, although our plant manager says this will be attained in the future.”
The plant is currently opened two or three times per month, the meeting was told.
“Part of the challenge we’re facing is that the meat shop has had difficult times, 40 percent of the sales have gone to Manitoulin Island Meats and Andy’s for wholesale, so the meat shop has been slower to pay for the livestock being bought,” continued Ms. Martin. “In hindsight when Jim and Lois McCormick ran the business it was run differently than it is now. But things are improving with the meat shop.”
Ms. Martin provided a description of the restructuring plan being developed with LAMBAC. “We worked with LAMBAC on this plan, and we’re restructuring one into one corporate entity, MICA, and dissolved the numbered company (meat shop) which will be operated under the umbrella corporation which gives us efficiencies and streamlined and is run as part of one business instead of two. And it provides the opportunity to work with Lambac and other funders. The meat shop would repay the MICA cost centre, which creates significant cash reserve for MICA livestock purchases.”
Ms. Martin outlined the long term plan. This includes improving efficiency another 20 percent, and increase the income per animal two times by-product sales. “We are looking to grow the business by 40 percent increase in MICA volume in 2016, 25 percent in 2017, and 10 percent in 2018 by looking at the tech-food market as well,” she continued.
“We are also looking at having a marketing/sales intern in place by April 2016 to promote Manitoulin Island meat or by-product sales through the use of social media, and continue the Facebook box meat sales program, which was almost 15 percent of the meat shop sales, by using e-commerce; on the ground sales, especially for wholesale trade; increase membership to increase farm gate sales; commit to produce excellence at the meat shop; and reconnect with members about supplying livestock,” said Ms. Martin.
“There is a great market for local, family-farmed meat, and we need to coordinate our efforts to tap into it through sales/marking of livestock and procurement-prompt payment,” she continued.
“We get customers from Espanola and Sudbury. For instance, people meet us in the mall in Espanola and Sudbury (having contacted about purchasing MICA products on Facebook), and they think it’s fun to do,” said Jeff Hietkamp. “We’re going to them, and it is the only way to increase retail business.”
“The directors have approved this restructuring plan, and we are now asking for members support,” said Ms. Martin, prior to the members passing a motion in support of the plan.
As part of the restructuring plan, MICA, which has about 50 members, changed the number it requires for a quorum at a meeting from three to 10, and adding a seventh member at large on the board of directors (made up six members).
