Can you fail your way to success?
Prairie farmers should hope that somebody makes a winner out of the financial mess at Merit Functional Foods, the canola protein processor in Winnipeg that has been placed in receivership.
Whatever happens to the shareholders and debt holders, which involves numerous players including Burcon NutraScience, Farm Credit Canada and Export Development Canada, the plant and the technology it uses hold a lot of promise for farmers.
Read Also
China’s grain imports have slumped big-time
China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
Related story: Protein dream still lives
For those who grow canola, turning the 55 percent of the seed now selling as discounted feed into a premium food product is an exciting new market, leading to higher demand and better prices for Western Canada’s most important crop.
As long as the technology works and can be used profitably, somebody will almost certainly find a way to run the plant, re-employ the equipment and processes somewhere else, or license them to somebody else who will use canola meal to make money.
In that way, the financial failure of Merit really doesn’t matter to farmers, to the canola industry and to anybody beyond those who have lost money in Merit itself. Of course, with so much government money in the plant through FCC and EDC, all Canadians have probably lost something.
What truly matters is that this failure doesn’t end the decades-long climb canola has been on.
A lot of success is built on business failure. It appears to be next to impossible to run an airline without going bankrupt at some point, but most of us are happy somebody will invest in them.
As farmers at Keystone Agricultural Producers’ annual convention recently heard from a historian of Walt Disney (yes, there actually is one, and he was fascinating,) Walt repeatedly faced financial catastrophe, narrowly avoided bankruptcy several times, and created one of the world’s most beloved entertainment firms.
In recent years, economic historians have looked at the crucial role military and other government spending has meant for scientific leaps. If you’re using the internet, you’re benefitting from a system conceived by the Defense Advanced Research Projects Agency of the U.S. government in the early 1960s. Governments like to call their spending “investing,” because it sounds better, but often they’re putting money into things that won’t ever have a return.
These are things that might be long shots, likely losers, and non-commercial notions. But when they work out, they can have massive benefits.
So many good ideas never get off the laboratory bench because nobody can figure out how to turn them into money-making realities. That’s where governments have often come in, although in recent years we have avoided allowing government to dominate sectoral investing.
Protein Industries Canada, the federally funded science and innovation “supercluster,” is a good example of the contemporary approach: funding goes toward projects that have a good shot at becoming commercial realities, have a private sector lead investor, and seem to make sense.
PIC invested in some commercialization projects at Merit, and hopefully those have created innovations and understandings that will survive the death of the first version of the company.
With any luck, Burcon’s technology continues to be used.
There are undoubtedly lots of furrowed brows at FCC and EDC as they face the prospects of writing off a lot of money, but for farmers, if canola protein keeps working its way up the value-creation ladder, this failure could be just a rung on the way to success.
