Financial snapshot helps with tax planning

Best Cooking Pulses expanded its marketing reach last week by signing a deal with SunOpta, one of North America’s largest processors and distributors of natural foods.

The Portage la Prairie, Man., company will supply organic and conventional pea fibre to the SunOpta Ingredient Group, which will sell the product under the trademark SunOpta Pea Fiber.

The fibre, made from the hulls of field peas, can be used in breads, crackers, meats, pasta and other foods because of its neutral properties, said Margaret Hughes, sales and marketing manager for Best Cooking Pulses.

The company has a pea splitting plant in Rowatt, Sask., and a mill in Portage la Prairie.

“You don’t taste it, you don’t see it and you don’t smell it,” Hughes said, explaining how the fibre can easily be incorporated into a variety of foods.

In addition to its neutrality, pea fibre fills a gap in the company’s product line, said Laura Cooper, marketing manager for SunOpta Ingredients.

“Our other fibres, except for soy, come from cereals,” she said.

SunOpta also prefers products that are sustainable, such as Western Canadian peas grown without irrigation.

“We’re very much into healthy. From both the nutrition angle, and the other angle that people care about is the ethical angle, if something is sustainable,” said Cooper, who works at SunOpta Ingredients’ headquarters near Boston, Mass.

The partnership between SunOpta and Best Cooking Pulses was initiated last year when Hughes met representatives of SunOpta at a natural ingredients trade fair in Europe.

The key to the deal, Hughes said, was that Best Cooking Pulses’ pea fibre was approved for sale in Canada in 2006.

“That was really what clinched it for them. Because in order for the fibre content to be included on a nutritional label, it has to be approved by Health Canada,” she said, noting that her company has sold pea fibre into the U.S. for more than 20 years.

“In the U.S., there’s no need to be approved,” she explained.

While the SunOpta partnership is welcome news, it may not have an immediate impact on Best Cooking Pulses’ operations.

“There’s lead time to get a product into a commercial recipe,” said Trudy Heal, president of Best Cooking Pulses.

“We don’t expect there to be a huge spike in our sales. We expect more gradual and organic growth.”

As part of that growth strategy, the company is now focusing more on direct retail sales of its pea flour and pea fibre.

“We’ve just begun to launch small packaging of our flours and fibre, so people will be able to get them in one kilogram bags,” Hughes said.

Best Cooking Pulses wasn’t planning to launch a retail version of the fibre and flour, Hughes said, but a clinical trial at Richardson Centre for Functional Foods and Nutraceuticals in Winnipeg created demand for the two products.

The trial found that 12 grams of pea fibre and 53 grams of pea flour per day helped regulate insulin levels in overweight adults. When the trial concluded, Hughes said, participants wanted to keep using the pea products to manage their blood sugar levels.

“People who were on that trial… contacted us and said ‘can we get these products?’

“The whole movement into small packaging has been driven by customers.”

Waiting until tax season to figure out how much you owe the government could cost a lot in income taxes.

Taking a snapshot of your financial position before year-end provides greater control over the income taxes you pay.

The first step is to identify cash flow needs and create the wiggle room to apply various tax strategies to adjust your taxable position for current and/or future years.

There are two basic strategies for year-end tax planning:

n Defer income and capital gains until next year.

n Bring anticipated tax-deductible expenses and capital losses into this tax year.

The opposite strategies may apply to someone in a loss or non-taxable position:

n Accelerate income and capital gains into this tax year.

n Defer tax-deductible expenses and capital losses until next year.

Here are ways to minimize this year’s taxes:

n Planning to sell machinery or equipment? If you delay the sale until your next fiscal year, you can claim another year of capital cost allowance (CCA).

Planning to buy depreciable assets? Buying them before your fiscal year-end will increase your CCA claim by half the annual rate in the year the item is acquired. Remember that computer equipment and system software bought after Jan. 27, 2009, and before February 2011 is eligible for a temporary 100 percent CCA rate, which results in eligible costs being fully deductible.

n If you live in an area that the federal government has prescribed as a drought or excess moisture region and you sold eligible breeding livestock this year to avoid financial losses, you may be eligible for a one-year tax deferral on 2009 income from those sales to help replenish breeding stock in the following year. Up to 90 percent of income from net sales can be deferred, depending on how much you reduced your herd.

Do you use the cash method for reporting income? If so, there are many other steps you can take to reduce your net farm income before year-end:

n Prepay for cash inventory supplies or other farm inputs. The supplier must be capable of delivering the goods, and the goods must be delivered and used in the normal course of the farm operation.

n Defer additional cash inventory sales until after year-end.

n If your cash grain tickets provide for a payment date after the fiscal year in which you deliver the grain to the elevator, you can sell your crop inventories in the current year and defer taxes on the sale until next year.

There are other strategies for saving taxes, but you need to have that financial snapshot of your operation before year-end and a good tax adviser who understands which strategies will provide your operation with the minimum tax exposure.

Canada lags in efforts to turn innovative ideas into commercial products that use agricultural produce as a base, says the president of a company that specializes in commercializing agricultural research.

Dave Smardon, president of BioEnterprise Corp. in Guelph, Ont., told MPs on the House of Commons agriculture committee last week that Canada needs a national commercialization program that links not-for-profit groups across the country that can help entrepreneurs get products to market.

He said Oct. 27 Ottawa should create a fund that could be used to attract private venture capital investment into the sector.

“My message for you today is that there is a new wave of agri-technology innovation occurring globally and Canada can be part of the wave if we get our formula right,” said Smardon. “We can create new opportunities for farmers and create new high value-added jobs.”

However, he said most of the hundreds of ideas his company has been told about in the past year will never see the light of day.

“Most will languish for a period of time, then fade away because they cannot obtain the support necessary to commercialize their products.”

He said the number of venture capital firms has declined to fewer than 50 across Canada, down from 145 a decade ago. Many of those are reluctant to invest in agriculture, in part because they read stories about farmers protesting low incomes.

“With all due respect to farmers and producers, there is one negative aspect that comes out of this when farmers and producers are driving their vehicles around Queen’s Park,” he said referring to the Ontario legislature. “The investors pick up the Globe and Mail and see that picture on the front page and wonder why they would invest in a money-losing industry.”

But there have been some innovation success stories, said Smardon.

Entrepreneurs built on research at the University of Guelph to add omega 3 to dairy products. The dashboards of many cars are made partially from bioplastics containing oil from crops.

A company in Ontario’s Niagara wine region has learned how to turn grape skins and stems once discarded as waste into a product used in food and cosmetics. He said wineries now earn between $35,000 and $100,000 annually selling wine flour from a product once thrown away.

However, he said those are the exceptions.

In contrast, France has created a $250 million fund to help commercialize innovative ideas. Brazil has a half billion-dollar fund. Many American states and western European countries also have dedicated product commercialization funds but Canada does not.

Smardon said a report written for Agriculture Canada in February “linked Canada’s abysmal track record in commercialization of new agriculture and agri-food products to the lack of support programs focused on commercialization of innovation.”

He did not estimate how much money Ottawa should set aside to help lure private sector investment.

Coincidentally, three days after Smardon was on Parliament Hill pleading for government action, Agriculture Canada announced that it is providing almost half a million dollars to a Sherbrooke, Que., plant that will turn thyme oil into a natural disinfectant. Economic Development Canada is loaning the company an additional $350,000.

The announcement said that within five years, Laboratoire M2 Inc. will be buying $3.6 million worth of locally grown thyme each year.

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