If there is one thing Saskatchewan is known for, it’s agriculture. It’s the first thing most people associate with the name, likely picturing waving wheat fields under a warm prairie sun. And, they’re not wrong, since Saskatchewan is home to more than 40 per cent of the country’s total cultivated farmland.1 We’ve been feeding the world for over a century, shipping out everything from durum to mustard, lentils to chickpeas, canola to barley, plus plenty of beef, pork and poultry. A year ago, Industry West took a peek at our homegrown food production sector, and pondered why we’re not doing more of it. Today, we’re having a closer look at local food processing, and its potential.
There are more than 300 food processors operating within the province, employing over 5,000 people.2 The industry is worth an eye-watering $4.3 billion, and climbing.3 While the food industry is expanding here, there is still plenty of room for growth as much of our agricultural exports leave the province for processing and returns to our store shelves as goods finished elsewhere.
Where to Start
The Saskatchewan Food Industry Development Centre Inc. (Food Centre) in Saskatoon is often the first stop for a food producer looking to start or scale up their food processing venture. With processing facilities in new Agri-Food Innovation Centre and pilot plant on the University of Saskatchewan Campus, the Food Centre offers over 53,000 ft2 of processing development space, accessible to food producers in the province. Since its start, the non-profit organization has helped over 275 businesses develop and process approximately 800 food-related products.
Food Centre president Dan Prefontaine says that overall, various levels of government and the business community are doing a good job supporting this emerging sector. “We need to continue to build relationships and partnerships among the various players within the sector—the producers, processors, suppliers, distributors, researchers, agri-service providers, and government,” says Prefontaine. He sees positive, continual support from provincial and federal agencies such as the Saskatchewan Ministry of Agriculture and the Industrial Research Assistance Program (IRAP) from the National Research Council—both of which provide funding for agri-businesses at various levels and activities. “The Saskatchewan Ministry of Agriculture’s ‘Product2Market’ program has been well received by entrepreneurs,” he says. “It’s helping agri-businesses get started in the value-added industry as well as supporting business growth.”
So, how does a food processor start their venture, or increase their production? Prefontaine has some advice. “Make use of funding programs that are offered by the province in value-added agriculture,” he says. “Some funding, like the Product2Market program, will help small processors with things like product reformulation and packaging, to ensure their products meet the food processing and labelling regulations.” Prefontaine also says investing in market research is vital. “You have to know what the market is for your product, and develop the food accordingly,” he says. There are also hurdles to prepare for. Access to the right technologies can scupper food processing ideas, as can competing in an already-crowded space. “Innovation is key. Think about how innovative the end use of your product is, what sets your product apart and how you can market it successfully,” says Prefontaine.
Thinking About Growth
Lindsay Ward produces jams and jellies as Sweet Tree Preserves, based in Regina. Her food journey started in nearly two years ago after some experimenting with honey sweetened jam. Ward joked with her spouse that the jams should be sold at the farmers market, and after some brainstorming her business was created. Today, Ward sells her jams and jellies at the Regina Farmers Market, through a few small retailers in the Regina area, and through pop-up shows. She’s also working on an online store.
Ward has met challenges as she’s grown. “Moving into the retail space has been a real eye opener as far as regulations are concerned,” says Ward. “Selling product at a farmer’s market comes with its own set of health and safety regulations which differ from the rules and regulations of selling in a retail space.” Ward can sell a jar of jam at the Regina Farmers Market with the labeling approved by the market and the Saskatchewan Health Authority. If she wants to sell the exact same product at a retailer in Regina, she must provide additional, specific nutritional information on the label along with other requirements. “Both products are made in the same city, by the same maker, and can be bought by the same customers who shop in a retail setting on the same day, yet the regulations for the product are different,” says Ward.
While labeling is an expense of doing business, these differences increase operational costs for a small business trying to establish itself, and can hold businesses back from growth. “While major manufacturers can absorb these costs, for many small businesses these additional expenses are very much a deciding factor in expanding into retail,” says Ward. She also notes the cost difference for locally produced goods, versus goods made elsewhere in large facilities. “Many Saskatchewan-made products tend to charge slightly more than a similar product available in major Canadian food retailers. Thankfully, most customers understand the extra time, money and energy it can take a small business owner to create their products, often by hand,” says Ward.
For now, Ward plans to stay local and deal with smaller retailers. She would like to expand outside the Regina area, but doesn’t see major retail in the future. “In Saskatchewan, we have such an abundance of local support from customers and smaller retailers alike. Even with all the challenges that have come along, as they do, it’s inspiring to know that there are people out there who love local products and appreciate the time, energy, money and passion that goes into creating each one,” says Ward. She sees how small business supports people directly and finds that while a direct connection to your customer may mean slower profit growth in the beginning, it far outweighs the ‘big box’ retail options in many ways.
She has learned a lot on her entrepreneurial journey and has advice for others like her. “It surprises me, even after only a couple of years, how connected local growers, makers, and processors really are,” says Ward. She says to educate yourself and network with other local makers and food processors as much as possible, and prepare to face challenges and regulations. “Challenges aside, there is always room for growth even in the smallest of ways,” she says. “I’ve learned that patience is key, and obstacles can be overcome, even if it just takes time.”
Been There, Done That
Nicole Davis is the owner of Estevan’s Daybreak Mill. She purchased the mill in 2012 (which was founded in 1963) and grows, processes and packages a variety of 100 per cent certified organic grains including einkorn, flax, oats, rye, barley, millet, buckwheat and hard spring wheat for the consumer market. The company also makes value-added goods including cereals, pancake mix and granola. Daybreak Mill products are found in retailers mainly across the prairies, with some stores in British Columbia and Ontario as well as in their online store.
“As a food processor, we have our challenges,” says Davis. “We’re not a large producer, and we serve smaller, independent retailers as opposed to the main grocery chains.” Daybreak Mill has all the required food safety certifications, but to move into the major retail space, the company needs to meet HACCP certification. This certification would allow Davis to seek space on the shelves of retailers like Costco, but meeting HACCP compliance rules are cost-prohibitive at the moment. “We’re in an older facility that will need upgrades to meet the standards,” says Davis. “We have to figure out whether the upgrades will be worth it financially, to access those larger grocery chains.” Davis also grapples with the cost of shipping within Canada. Her products can be sold across the country, but getting them there can be very expensive. “Shipping costs can prohibitive, especially to eastern Canada,” says Davis. “Canada is a large market, but reaching it is pricey.”
Right now, Davis is comfortable with her retail presence and online store. Daybreak Mill doesn’t see the large flour and baking brands as her competition. Like Prefontaine advises, she’s created a niche for herself in the food space. “Our brand is very personal, and that resonates with our customers. People seek us out because we are different than the big brands. We know where our products come from because we grow them and that means a lot to our target market,” says Davis. For growers and processors looking to start or scale their venture like she did, she advises to be clear about the steps to grow. “Make sure that when you grow, that you’re still going to love doing it. If your business is your passion, keep it that way,” says Davis. “Owning a business like this is a personal journey, so ensure it’s a happy one.”
Buying and Selling Local
Major retailers have recognized the opportunities in locally grown and processed foods, and many work together with producers to meet this growing demand from food shoppers. Federated Co-operatives Limited (FCL) in Saskatoon prides itself on its commitment to local food, and being accessible to growers and producers. The company has an online publication—the ‘local product sell to us’ guide—and works with hundreds of growers and processors across Western Canada. “We’re proud to be a leader in this space,” says Ron Welke, FCL’s Associate Vice-President of Food. The company also works with smaller manufacturers that may not have the capacity for a full retail line, but can service the Co-op Gold or Pure Gold private label lines. “Our private label brands can be easier for some processors to leverage,” says Welke. “No matter the size of the producer, we’re willing to meet them and see their presentations.”
Sobeys Inc., works with more than 30 local Saskatchewan growers and producers through their local program at their 26 stores in the province. “Our Sobeys, Safeway and IGA stores also partner with many more growers directly on a store-by-store basis. These local partnerships exist across all of our Sobeys, Safeway and IGA stores in Saskatchewan,” says Gary Hughes, Local Business Development Manager, Alberta, Saskatchewan, Manitoba and Northern Ontario for Sobeys Inc.
The Sobeys team works with local suppliers that are brought forward by their store teams and their Field Merchandising teams, who meet with local growers and suppliers at places like local farmers’ markets, and within their communities. Potential suppliers are always welcome at Sobeys. “We are open to having a conversation with any supplier to discuss the opportunity for both parties. The process starts with an assessment of the potential of the product—does it offer something unique to the assortment,” says Hughes. “If so, we then move to an assessment of food safety, which is our number one priority.” If the product is deemed safe, Sobeys moves onto the paperwork to set up the supplier into their system. “That minimizes the administrative work for our stores when bringing the item into the store to sell,” says Hughes.
Like Davis and Ward, Welke recognizes the importance of food safety and labelling. Welke notes the requirements to get on the grocery store shelf. “You’ll need a UPC code, a nutrition panel and an ingredients list as a start,” he says. “And, processors need to decide how they will sell to retailers—direct or through a distributor.” He recommends the Food Centre as a resource to deal with these things. “The Food Centre is an excellent provider of advice and information. We have had great success working with them and their clients,” says Welke.
Any new food producer or processor working with Sobeys needs to ensure they meet all food safety and labeling requirements to expand into major retailers. “After that, it’s really dependant on the scale the supplier wishes to grow to and achieve,” says Hughes. “Everything is considered, from production and storage to transportation and ingredient sourcing and everything in between. The great part about working with Sobeys and our Local program is that we are willing to grow with the supplier. For example, if they can only supply two stores today and three by next month, we are able to scale with them.”
Into the Future
The Food Centre sees great opportunities on the horizon for current and aspiring food processors. Prefontaine says that prospects lie with research partnerships, in diversification and in export. “Collaboration with local researchers is an excellent idea. Saskatchewan is home to many food and agricultural scientists working on breakthroughs that can be commercialized,” says Prefontaine. As well, diversification holds much opportunity with consumers interested in new products, such as plant-based proteins, both at home and abroad. “Growing international demand in the Asia Pacific has huge potential, as does Canada’s diverse population. The ethnic foods category for groceries has a wealth of opportunities,” he says.
Welke echoes Prefontaine’s thoughts on food consumers and food trends. He sees customers demanding more transparency and clean ingredients with good taste and quality. In addition to trends like gluten-free goods and organic foods, FCL is also seeing demand for more plant-based proteins and ‘culinary’ items. “People travel more now, and are exposed to foods from around the world,” says Welke. “That, plus our diverse population means more people are moving away from our more traditional ‘meat and potatoes’ diet.” He also advises to know your niche. “50,000 new products are launched in Canada every year, in a very crowded marketplace,” says Welke. “Being local is great, but it may not be enough to stand out. Products need to be different in a way that resonates with consumers.”
Hughes also sees the changing tastes of Canadian consumers offering new opportunities in food processing. Sobeys has seen a huge shift with consumers looking to buy more locally-produced items, and knowing and understanding the story behind the products they buy. As well, technology is changing how our food is grown and produced locally. “Our world is changing quickly, especially in technology, with innovative solutions like vertical growing that is enabling producers to grow produce, such as lettuce, in a controlled climate in a sealed space on a consistent schedule,” says Hughes. “These types of technology are going to change the way we grow and supply food as well as our dependence on imports.”
Come and Get It
Saskatchewan, with its ready supply of quality agricultural commodities, has all the ingredients for food processors to start or grow their venture. Besides the actual foods we grow and raise, there is assistance from governments and organizations like the Food Centre. There are grocery retailers ready and waiting to work with local producers. There are customers looking for locally-made foods for their dinner table. Mix these together, and that looks like a recipe for success.
2,3Food and Beverage Processing, http://publications.gov.sk.ca/documents/310/93212-Food%20and%20Beverage%20Processing%202018.pdf