For the second time in three years, Big Sky Farms (BSF) of Humboldt is in financial trouble. It was announced on September 12 that the largest hog production company in Saskatchewan, and the second-largest in Canada, producing over one-million pigs annually, had entered receivership. Under receivership, an outside party controls a company until it can restructure its debt or be sold. According to reports, BSF plans to operate for now with no plans to lay off staff or liquidate inventory. Casey Smit, CEO of BSF, would not respond to the Journal's request for an interview. However, he was quoted as stating that a severe drought in the United States has led to higher costs for feed grains, which has resulted in a loss to BSF of $40 to $50 per hog sent to market. The drought "has certainly impacted feed costs to where they are at record highs today," Smit told NewsTalk 650 CKOM. "Just over a year ago, we were probably looking at $90 to $95 on a per pig basis and historically that was even high. Traditionally, we've been around the $75 mark. Today (Sept. 11) they're right around $120 per hog."With corn, barley and wheat prices leading many hog farmers in both Canada and the U.S. to liquidate their herds, hog prices have dropped at the same time. This combined has resulted in BSF losing a lot of money. Court documents state that BSF owes close to $69 million to banks and millions more to its suppliers, for a total indebtedness of $77 million. Ernst and Young is the receiver for BSF. Kevin Brennan, a senior vice-president with the company has stated that they plan to sell the entire operation as a unit. "We think there's much more value in selling the company as an operating entity, with producing facilities, and with the genetics facility in place," Brennan told CBC News.BSF was working with suppliers, it was noted, to ensure their pigs are still fed."Animal welfare is our greatest concern," Smit was quoted as saying by CBC News. "Our employees, of course, as well, and our role is to stabilize the company and ensure all the animals are being fed and there's no issues along the way."Three years ago, Big Sky Farms was also in a bad position, one they managed to pull themselves out of.On November 10, 2009, BSF announced that due to the unprecedented downturn in the North American pork market, the company was seeking court approval for creditor protection."The extended downturn and a recent collapse in hog prices associated with the risk of an H1N1 flu pandemic, which has resulted in an abatement of consumer demand for pork products, coupled with the rising Canadian dollar and American trade barriers, left us no other option," stated Smit in a press release issued from Big Sky's head office in Humboldt at that time.By March 20, 2010, BSF was no longer operating within the Companies Creditors Arrangement Act (CCAA). A financial restructuring plan saw small creditors owed under $4,000 receive 99 per cent of their money, but those owed more than $40,000 only received 10 cents on the dollar. At that time, the company owed about $101 million to creditors, including $81 million to secured creditors and $20 million to unsecured creditors.An internal restructuring the company had undergone was to better allow it to meet the demands of the cyclical industry.
