Receiver BDO Canada Ltd. has found a mess at the plant that
Chinese built in Scarborough to make infant formula to export to China.
The two businesses – Canadian Dairy Manufacturing Inc. and
Maple Dairy Inc. – are in bankruptcy.
The office portion of the business has flooded and frozen
after pipes burst. The plant has been without natural gas and heat since 2010,
but the manufacturing-area water pipes had been drained, so it was not flooded.
A partially-finished dryer stands behind one of four
buildings with assembly stalled by the Toronto building inspector who has ruled
it’s not in compliance, apparently because the footprint is three feet too
large.
Dairy Farmers of Ontario apparently invested $500,000 in the
venture that never got off the ground, partly because of the maze of
regulations and politics surrounding supply management.
When the venture was first announced, it seemed an ideal fit
for the Ontario dairy industry because it would be a high-paying customer for
surplus skim milk powder.
Because World Trade Organization rules keep Canada out of
lucrative export markets, large volumes of skim milk powder end up as feed for
calves at prices far lower than markets for human consumption.
The World Trade Organization has ruled that Canadian dairy
farmers are subsidized through their supply-management system, therefore they
can’t export dairy products in unfair competition with other countries’ dairy
farmers who are not subsidized.
The Chinese venture was to be a combination of four
investors in the Toronto area and four in China with marketing and distribution
connections, including ownership of a major supermarket chain.
