Investors looking to cash in on the increasingly popular organic industry now have an opportunity to do that in Saskatchewan.
Regina-based FarmGro Organic Foods Inc., which plans to open by March 31, issued a prospectus in February. The company intends to sell one million class D preferred shares to Saskatchewan residents by June 30.
Board chair Bob Balfour said last week the offering was “well along.”
The shares are $2 each, with a minimum purchase of $5,000 and a maximum of $50,000. Balfour said the goal is to raise between $1.6 and $2 million.
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“We wanted to have the organic farmer and the people of Saskatchewan to have an opportunity to be a partner with the company,” said the organic producer.
Balfour and Regina restaurateur Fred Soofi founded FarmGro and initially financed it through WestCan, a private investment group controlled by Balfour. As a farmer, he was able to borrow money from organizations like Farm Credit Corp. and obtain letters of credit to finance construction of the mill and processing facility, which are located two kilometres east of Regina.
“Now we’re sort of replacing that equity,” Balfour said.
He believes organic producers will respond to the invitation to invest. About two-thirds of the province’s organic growers are located in southern Saskatchewan, relatively close to the plant. Those who invest will receive preferred, but not guaranteed, delivery rights.
Balfour said FarmGro won’t guarantee delivery because the product has to meet stringent quality standards. He said the company offers producers marketing opportunities in North America, Europe and Asia.
“They’ve brought the industry to where it is right now,” Balfour said. “We want to take it as far up the food chain as we can before we move it off the Prairies.”
FarmGro will be helped by Nichimen, a major Japanese commodities trading company and an equity investor. Nichimen owns just less than 20 percent and will be marketing FarmGro products in Japan and Asia.
There is also a growing demand in North America for organic foods, which consumers view as safe and healthy.
Balfour said FarmGro will not process genetically modified food.
The company will produce white and whole wheat certified-organic flour, durum semolina, byproducts such as screenings, bran, wheat germ and shorts, and bagged grains, lentils and peas. It will also custom clean and package for producers who are marketing their own products.
The $12 million plant will employ up to 25 people once it is operating 24 hours a day. It has a milling capacity of 18,000 tonnes and can process 32,000 tonnes of grain and special crops a year.
Future expansion plans include developing an organic food processing “village,” which will be a one-stop shopping service for international customers. Chief executive officer Gerry Liski said it will include facilities to produce organic pasta, frozen bakery products, soup mixes and processed vegetables, as well as an organic feed mill to help develop an organic meat industry in Saskatchewan.
