For most Canadians the war in Iraq was far removed. For Dean Fraser it hit close to home and came at a high cost.
“The war thing was exciting,” said Fraser, co-owner of Prairie Sun Seeds, a Souris, Man., company that exports bagged sunflowers seeds to the Middle East and other regions.
Fraser is part of a new breed of grain farmer who is processing and packaging a raw commodity and shipping it beyond the local grain elevator to buyers further up the value chain.
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Academics say this farm-direct sales approach can put more money in a producer’s pocket, but it is also fraught with difficulties ranging from an armed conflict halfway around the world to internal struggles back at home.
For Fraser, the war in Iraq was one of many headaches.
At one time, he had more sales than he could handle in the Middle East but when war broke out, shipping insurance rates to that region “went through the roof” and he was forced to find alternative markets.
Two years earlier, China was the nation that rocked his business. Considered one of the world’s biggest importers of sunflowers, China surprised everyone by suddenly exporting confectionary seeds that year.
Lately, Canada’s soaring currency is giving Fraser fits. Like most commodities, sunflowers are traded in American dollars and Canada’s strong loonie has sliced an estimated 15 percent out of his gross margins.
For others in direct marketing, the challenges are more local.
Gordon Hamblin, owner of Hamblin’s Organic Farm in Qu’Appelle, Sask., has been selling his four-grain cereals, pancake mixes and other products directly to retailers for eight years.
The further he commits to the on-farm venture, the greater his costs become. As his market has grown from local convenience stores to big city co-ops, packaging costs and food safety expectations have also risen.
Hamblin has to use heat-sealed, tamper-proof, food-quality bags. His simple type-written labels are now done by computer and will soon have to include a nutritional guide and a list of ingredients, printed in both of Canada’s official languages.
“That ups the price of your product,” said Hamblin.
Retailers are now asking him to put bar codes on his labels to make it easier on their cashiers.
“That’s one pitfall that is very, very costly for a little on-farm processor like ourselves,” he said.
Tony Marshall, owner of Highwood Crossing Organic Farm, near Aldersyde, Alta., said the costs associated with packaging, labelling and food safety issues are an unavoidable part of doing business.
For Marshall, the biggest challenges involved in value-added pro-cessing are related to distribution and marketing.
One key factor that made Highwood Crossing a successful business was its proximity to Calgary. Being located half an hour south of an affluent urban centre of a million people was a distinct advantage.
Marshall’s company delivers its line of organic goods to a variety of businesses in Calgary ranging from an acupuncture clinic to the Calgary Co-op.
Distribution would be a much bigger challenge for a farm-based business in a more isolated area, he said.
For many producers, making the leap from producing to selling can be excruciatingly difficult, he added.
