New business model | Firm seeking growers to supply raw materials for processors in United Arab Emirates
When she was an international trade commissioner for Agriculture Canada in Dubai, Nicole Rogers saw the opportunities that Canadian farmers were missing.
Dubai and other wealthy Persian Gulf countries don’t grow food.
“They’re import dependent,” she told a forum at Canada’s Farm Progress Show in Regina June 21.
“Ninety percent to more of their food is imported.”
Rogers is now the principal behind Agriprocity, a Dubai-based company that will connect Canadian farmers to processors in the United Arab Emirates.
She believes her new job will allow her help both suppliers and buyers.
“The Agriprocity model is really about linking the producer directly with the end user processor and taking out as many of the middle men as possible,” she said.
“It’s completely different from a trader-broker model where they’re speculating year over year and tendering and using the commodity markets. In a way, I’m hoping to circumvent the commodity markets.”
Processors in North America have relationships with growers who provide the raw materials they need, she said. UAE processors rely on tendering to obtain their raw products.
She has worked with the three largest UAE processors, who say they have seen too much non-delivery and don’t want to deal with dozens of people between them and the growers. UAE buyers say Canadian production is desirable, and they like its political and economic stability , she said.
Canadian farmers would supply a percentage of their production to an independent handler, who would then supply the UAE processor. Each farmer would have an independent relationship with the handler and the processor.
The terms would be a minimum of 10 years, and while prices may go up or down, farmers would benefit from the security of guaranteed income.
Rogers particularly sees this as beneficial for small- to medium-sized farmers, who she said are overlooked in the current export model.
She said farmers wouldn’t have to worry about what crops will be “hot” the next year.
Bryce Thompson, president of GroPartners Inc., was at the presentation and said Rogers’ model is on the right track.
“Farmers are often told that they need to produce a product that the end customer wants, but the current marketing system for crops such as canola and wheat have little mechanism to transfer this information,” he said.
Thompson said farmers usually rely on price signals to know what to grow, but a model that connects farmers and end users can help producers make better decisions.
Brian MacKay of Crystal Green Farms in Bedeque, P.E.I., said he sees the value for smaller producers.
“I think it’s a great model,” he said.
He and his wife have a community-supported agriculture operation that has gone from 18 customers a week to 200. He also grows canola and sells organic buckwheat to Japan.
MacKay said the model promotes what consumers have been saying they want: to get to know their food suppliers better.
“You know your lawyer’s name. You know your doctor’s name. What’s your farmer’s name?” he said.
Rogers said the processors benefit from security of supply.
The Middle East is known as a food-processing centre. Raw products are imported, processed and then shipped throughout the region.
Processors in the region buy $400 million worth of Canadian canola a year.
“The major crusher, they’re crushing between one million and two million tonnes per year,” Rogers said.
“They want raw inputs and then it makes sense for energy and labour costs to process it there. It’s far more expensive to process here.”
She said CWB dealt with only one central customer in the UAE. The end of its export monopoly opens up all types of possibilities.
“There’s an opportunity for, regionally, new partners,” Rogers said.
“This one partner was reselling to all other millers in the region. It’s really truly opened up this market.”
Rogers set up Agriprocity a year ago and has been meeting with farmers and handlers. Her work slowed recently — she is the mother of an eight-week-old son — but she is spending the summer in Canada and intends to meet with as many farmers as she can. She said she needs 200 committed farmers, depending on the size of their operations.
“I have handlers signed up, which is great, and so by default their producers are likely signed up,” she said.
“But I don’t have an independent producer signed up.”
She’s found the most interest in Alberta, which she describes as export ready and export focused. Saskatchewan is the slowest and Manitoba is in the middle, she said.
Manitoba has the port of Churchill, which puts it in a good position to be part of the model. However, Rogers said she needs the volumes of grain that are produced in Saskatchewan and Alberta for Agriprocity to work.