Crop, cattle operations for Saskatchewan, Alberta | Public share offering considered for next year
One Earth Farms plans to expand its crop and cattle operations in Saskatchewan and Alberta as the company eyes a possible initial public offering next year.
Officials with the subsidiary of Toronto-based investment company Sprott Resource Corp. used a conference call with investors late last month to provide an update on its operations, including a plan to crop 100,000 acres this year.
One Earth Farms created a splash in 2009 when it announced plans to partner with First Nations with the eventual goal of operating on one million leased acres.
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Chief financial officer Stephen Yuzpe said on the conference call that the company doesn’t have significant external financing needs for this year, but an IPO could help bankroll growth as the company expands.
Yuzpe offered few details but said it’s a realistic move for the company, which in 2010 sold 15 million common shares at $1 per share in a private placement offering.
“As I look at it, One Earth Farms is still a very young company, but they’ve been required to meet the public company disclosure standard that satisfies Sprott Resource Corp.’s reporting needs,” he said.
“So I do feel confident that the management team could be ready to be public in fairly short order.”
Crop operations have grown from 13,000 acres in 2009 to more than 90,000 in 2011, One Earth Farms president Larry Ruud told investors. One Earth Farms worked on 96,000 acres of cropland and 14,000 acres of grassland for its cattle business last year.
The company made moves last year into northeastern Alberta, which is a key area because of its access to domestic and export markets, and northeastern Saskatchewan, close to processors and canola crushing.
Twenty-five percent of the company’s operations are in northeastern Alberta, 15 percent in northeastern Saskatchewan, and 20 percent in eastern Saskatchewan. The other 40 percent is in southern Alberta where a good portion is under irrigation.
“We continue to expand our geography,” Ruud said.
“Expanding our geography aids in mitigating these risks by spreading our production over different climate zones and also by being able to grow crops that are specific to some of those climate zones, which in turn helps to mitigate some of the commodity price risks that we face in this business.”
One Earth Farms also made a deal for 29,000 leased acres in Alberta, two-thirds of which are privately owned.
“Given the industry demographics, which points towards additional opportunities in the future for this, we were very much focused on completing this type of transaction in 2011,” said Ruud.
He said yields were close to average in Alberta but didn’t match expectations in Saskatchewan, where the company was hurt by weather and “certain operational decisions.”
“There’s other issues that we experienced and those were a combination of being on new land because of our extremely rapid growth, as well as … bringing on and acquiring a significant amount of new labour into a business model that has never existed before,” said Ruud.
The company’s cattle operations, first launched in 2010, grew and has targets of 8,300 cows and 4,300 yearlings and bulls for this year.
Yuzpe told investors the company remains committed to transforming farming — “reversing the current model of buying retail and selling wholesale” — and will begin a project this year that could see it enter into yet another business.
“We definitely see the potential for additional value creation through the development of branded food and branded food products,” said Yuzpe. The profit opportunities are much better than in farming.
Ruud said the company has started a search for a president of product marketing and branding.
