An agreement reached earlier this spring that would have seen Cavendish Farms receive $4.7 million from Island taxpayers to help store and transport processing potatoes will not be activated due to an uptake in restaurant sales.
The province pledged the money earlier this year after the closure of restaurants throughout North America resulted in millions of pounds of potatoes throughout the world being declared surplus by processing companies. When the PEI deal was finalized in March, there were approximately 100 million pounds of processing potatoes in storage. Figures released by United Potato Growers of Canada in mid-July showed that figure had been reduced to 3,725 hundredweight.
The program was to be administered by the PEI Potato Board and Cavendish Farms had until the end of the year to access the funds. During debate on budget estimates on the final day of the spring session, Opposition Agriculture and Land Critic Michele Beaton asked Finance Minister Darlene Compton for an update on how much money had been spent under the deal.
"My understanding is that the market was increasing so we might not need to use it at all," Compton said.
Beaton said she was happy to hear that, noting he had recently spoken to an industry representative who told her french fry manufacturers were experiencing a rapid increase in demand and "they were frantic to buy stock from growers in order to meet that demand." She wondered whether the money was now needed given the changing situation.
"I’m wondering that myself," the finance minister replied. "The very big concern at the beginning of this was we had all these potatoes in warehouses across the Island and we wanted to make sure that farmers did not lose that supply and that they were processed and that we had a place to store them. The $4.7 million was put there to be a contingency for that."
In response to a question from Beaton, the assistant secretary to the Treasury Board said he was not aware of an written agreement between the parties.Gordon MacFadyen told the agriculture critic "There was some discussions, for sure. The agreement was being discussed between the PEI Potato Board and Cavendish Farms and the Department of Agriculture. When I asked when the budget was going through whether or not that agreement a) had any money been spent, and b) whether the agreement was signed − at least as of last week (the week of July 6), it wasn’t signed at that point in time."
Beaton was surprised at that answer saying "I’ve asked a lot of questions on this one and I was led to believe that there was an agreement. I actually asked if that agreement will be tabled in the House immediately and I think that was about four weeks ago or five weeks ago now. Am I understanding that there’s not actually an agreement?"
That resulted in an intervention from Agriculture and Land Minister Bloyce Thompson, who indicated "The latest update is that this money probably won’t be needed because of the situation. It won’t be needed in that sense but we are still in talks with the PEI Potato Board over the seed potato shortage – or the seed potato situation where a lot of seed potatoes wwere left on the table, so that money will likely go that direction."
The agriculture critic said she had no problem with redirecting the money to the seed sector and Compton told her it would have to come back to Treasury Board before the dollars could be reallocated. Beaton also wanted to know whether the money would be coming out of the department's COVID-19 contingency fund.
"When it comes to Treasury Board, will you require a signed contract to identify what that money is – how that money is supposed to be spent and what the parameters are around the contract?," she asked the finance minister.
Compton assured her that would be the case adding "the $4.7 million was part of COVID and was there, earmarked, to be used for that particular purpose, it couldn’t be used for anything else but we wanted to ensure that it was there in case it was needed. There were a lot of emergency decisions made but definitely, everything went to Treasury Board and was agreed upon beforehand, so we knew where the money would go if it was spent."
Beaton said she was surprised the money was allocated without any formal contract. That again brought Thompson to his feet explaining "The contract has been with the PEI Potato Board all this time and it hasn’t been signed because they don’t believe it’s going to be activated. It’s been in their possession all this time."
When she again asked for the contract to be tabled, Compton replied "None of that has been spent, so it would not have been – if any of it had to be spent, there would have been a signed contract before that happened." The finance minister agreed to table the unsigned contract.