At the Canadian Agri-Food Policy Institute's annual conference, Canadian producers explained that processing and selling under their own brand can double the value of the product, though it requires investments of hundreds of thousands of dollars and payback periods of three to five years.
Canadian agri-food producers and executives analyzed the role of value-added agriculture in capturing more revenue amid trade and cost uncertainty at the Canadian Agri-Food Policy Institute's annual conference in Ottawa. The shared conclusion is that in-house processing, brands and a connection with the consumer can multiply the value of the product, though they require high investments and long payback periods.
Barb Stefanyshyn-Cote and her husband came up with the idea of creating Black Box Farm and Distillery while discussing how to get more value out of what they were growing on their 5,000-acre Saskatchewan grain farm. “We came to a crossroads in our career where we either needed to be a larger grain farm or do something different,” she said. “We chose to do something different, and we chose to harness our agricultural expertise so that we could grow the ingredients that went into our bottles.” She added: “I am creating a market for myself that will double the price of my product. That's the way I'm scaling.”
Value-added has gained prominence: a recent study from the Canadian Chamber of Commerce and PwC Canada ranks additional processing and ingredients among Canada's next opportunities as a global agri-food powerhouse. Wayne Arsenault, CEO of Avena Foods, cited organic and gluten-free products as examples of opportunities that often require partnerships between producers and industry. “One of the terms we have, if you play rugby, we always say, ‘Well, how do we get out of the scrum?’” he said. “How do we add more value to the customer?” He added that this approach “moved us into organic, which is now going to be half of our oats business (up from) only 16 per cent three years ago, and then moved into regenerative agriculture.” Arsenault explained that part of the process involves direct interaction with farmers, bringing them together with marketers in New York, London and Los Angeles, and bringing in partner brands to collaborate on sustainability projects.
Stefanyshyn-Cote argued that one of the most powerful tools in a value-added world is a good brand and the ability to connect with the consumer. “We need to put a lot of emphasis on sales and marketing,” she said. “We have to look at that whole sales chain when you're looking at value-added.” Casper Kaastra, CEO of agriculture co-operative Sollio Agriculture, noted that consumer trends often make their way back to producers and even change production styles. The public's current interest in protein is one example, with effects on demand for some dairy products. “We can't just ask the cow to produce more protein versus butter fat the next day, right?” said Kaastra. “We have to evolve that through farm practices, through diets, and the types of products that you bring in, in order to be able to respond to that changing consumer behavior.”
For producers, another clear barrier is the time between investment and return. Organic production can be profitable, but it requires operating organically for three years to obtain certification, a period recently extended to five years for those returning to organic after having moved from organic to conventional production. Distilleries also face delays: “For whisky, the law in Canada is you cannot sell it till it's been aged for a minimum of three years,” said Stefanyshyn-Cote. “The holding of inventory is just ridiculous.” RJ Taylor, whose Ontario fish farm Springhills Fish is moving toward more value-added opportunities, explained that the investments are significant: “It costs somewhere between $400,000 and $500,000 to put a pen in for 150,000 fish, but it takes almost three years to grow a fish to market. So, I have … $10,000 shy of a million dollars into that pen before I can even harvest it.”
