Mbc130912

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digging into the past

MEAT SPAT SPAWNS NEW LOBBY Highlights regulatory hurdles

RURAL VENTURES

september 12, 2013

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Farming at The Forks

SERVING MANITOBA FARMERS SINCE 1925 | Vol. 71, No. 37

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manitobacooperator.ca

$1.75

Big dreams, big dollars lead to big trouble

How a community’s bid to revive its fortunes attracted a pile of taxpayers’ money and a whole lot of grief

By Shannon VanRaes co-operator staff

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e has no employees, no products, and no factory. But every day Keith Hannah walks into a small office building across from Innes’ Garage in Waskada, hoping to salvage some part of his dream — creating a Peak of the Marketstyle business for health foods in the province’s smallest incorporated municipality. “I’m trying to get things straightened around,” said

Hannah. “I lost a lot of money in this myself, a lot, and I’ve got other investors here who have lost a fair bit of money as well.” Taxpayers have taken a bath, too. As part of its “Economic Action Plan,” Ottawa pumped $3.1 million into Farm Genesis Group Marketing Inc. in 2010. But as soon as the money came in, it was flying out the door. One consultant charged $160,000 for just four months’ work — although Farm Genesis also had to loan him a com-

puter. Machinery was bought, never installed, and later sold at a discount. Today, questions about the defunct company loom as large as its empty steel building — the size of two Olympic swimming pools — located a few streets south of the Farm Genesis office. It has no plumbing and a dirt floor.

gag order written into their federal loan agreement. But an eight-month-long investigation by the Manitoba Co-operator has uncovered a cautionary tale for those seeking government cash in hopes of establishing a value-added industry and reviving a local economy — more money can bring more trouble.

What went wrong?

Genesis

Federal officials won’t comment and the principals aren’t saying much either, partly because of a

about to slip under the 200 mark, canola was just $5 a bushel, and today’s oil boom was years away. But no one was willing to let the 138-year-old village disappear without a fight. The plan was to build a biodiesel plant, and 32 community-minded people invested $5,000 apiece to launch Borderland Biodiesel Ltd. Although he had no experience with this kind of business, Hannah was named president of the new company. “I got the job because I farmed the least amount of land and the other guys were pretty busy,” he said. The group managed to garner $270,000 in provincial and municipal grants and commissioned a feasibility study, leading them to turf the biodiesel idea and replace it with a new dream: specialty health foods beginning with a line of hemp products. Markus Schmulgen, a 12-year veteran of the Portage Food Development Centre, was hired in early 2007 as a consultant and wrote the business plan for the rechristened Farm Genesis Group. With limited funds, the principals took a slow-but-steady approach: trips to trade shows in Germany and San Diego to get a feel for markets; a website; and the first sales of hemp protein powder, toasted seeds, and oil. The products were bought — most or all from Ste. Agathe-

In October 2005, Waskada’s future looked dim. The town’s population was

The size of two Olympic swimming pools, Farm Genesis Group’s hemp-processing facility was never completed and now sits empty on the outskirts of Waskada.  Photo: Shannon VanRaes

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