In an industry increasingly influenced by low-cost imports, two rural pet food makers are hoping to stand out by focusing on quality.
Using only quality, locally grown ingredients is a high priority for the latest company to join the Prairie pet food processing industry.
“I’m not going to be putting in any ingredients I wouldn’t be willing to feed to my own pet,” said Jason Skotheim, vice-president of operations and co-founder of Horizon Manufacturing Inc.
His company, which will soon complete construction of a 6,000 sq.-foot-plus premium kibble processing facility near Rosthern, Sask., will use hulless barley and oats as well as some meat meals and boneless chicken and beef in its pet food recipes.
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“We’re looking to source these as locally as we can because obviously we want to be able to get very high quality products and also provide an opportunity for farmers and another marketing option.”
Horizon will mainly produce dried food pellets but will also sell raw frozen product.
Skotheim likes to monitor quality control, which he feels can be best achieved through monitoring the manufacture of the pet food in his company’s own plant.
Horizon decided to get into the pet food business because it believes there is room for Canadian competition with American manufacturers.
“It just looked like there was an opportunity here, because a lot of the pet food in Canada comes from the United States,” Skotheim said.
U.S. pet food makers have capitalized on a boom in Canadian pet ownership over the last 10 years, through increased investments and sales. In recent years, several familiar pet superstores have set up retail outlets in Canada’s major cities, and all carry the main American brands. U.S. pet food sales to Canada have surged, reaching $384 million in 2004, according to Statistics Canada.
Skotheim said Horizon considered starting his business in Alberta because with no sales tax his start-up capital needs would be cut by about $90,000. But the advantages of producing the product in rural Saskatchewan – namely the abundance of locally grown low-cost ingredients – outweighed the higher tax regime.
“One of the things that Rosthern really has going for it is the close proximity to a lot of the ingredients that we’re going to be using,” said Skotheim, noting that the location of the plant about 60 kilometres north of Saskatoon helps when shipping in supplements and moving away finished product.
Foam Lake, Sask., ranchers Matt and Crystal Fox, along with farmers Paul and Holly Foley from Quill Lake, Sask., also operate a rural pet food processing company, known as Farm Fresh Pet Foods.
Matt Fox said their company’s commitment to quality begins with selecting ingredient that are familiar.
“A lot of the trendy dog foods that are out there on the market now contain a lot of different plants and roots that Paul and I just had no idea about,” Fox said.
“So we wanted to pick ingredients that we were familiar with. We can take a look at flaxmeal in our hand and tell whether it’s good flaxmeal and not have to worry about whether it’s good eukanuba root or not.”
With advances in technology, it is possible to run an international business without having to leave the ranch.
“We’re hooked to the internet just like everybody else, in the middle of nowhere, and we get contacts from all over the place because of that, and we do a lot of our business over the phone. So any time someone tells you that they can’t do it because they’re in rural Saskatchewan, it may depend a bit on what kind of business they’re entering into, because that’s a pretty poor excuse nowadays.”
The Fox and Foley families got the idea to start Farm Fresh Pet Foods after a BSE discovery in Canada closed international borders to Canadian cattle.
They needed a use for their cull cows that couldn’t be marketed elsewhere.
“We were going to have some depressed prices, some large depreciation from a bred animal to a cull, so we had to try and shore up some of that value with a different enterprise, and dog food looked probably the most appealing out of all the ideas that we came up with.”
Two years later, business is growing and could soon meet or surpass the goal the families set of processing all their cull animals.
Farm Fresh decided against building a plant and has contracted its processing to Drake Meat Processors in Drake, Sask., Fox said.
“We didn’t think buying a big plant was wise. So everything that we do is on contract: the transportation, the shipping, the ingredients are brought to us and everything is pretty straightforward in that regard. We didn’t tie up any money in overheads and that meant we could spend it on travel and marketing. We cash-flowed quicker because we didn’t invest in big plans for it.”
Fox said too many people fuss over the production end of their business when resources would be better spent on marketing.
Skotheim said Horizon’s pitch to potential consumers will be crucial to the company’s success.
“Pet food is a very large business in North America. You can’t just put up a pet food plant and expect people to be at your door.”
Both processors have marketing and distribution staff in Calgary.
Both men said getting business plans established in the largely unregulated pet food industry wasn’t difficult. Both companies are also targeting the same market: the high-end consumer of premium pet food and are focusing on Western Canadian sales first.
“When we started, we knew that we couldn’t produce a product that would compete with the low-end kibbles and the cheap kibbles. We knew we had to produce a high-end product that demanded a high-end customer,” said Fox.
The Farm Fresh line of cooked and raw dog food, jerky treats, bones and liver chews are marketed mainly through specialty retail pet food stores. Ninety percent of sales are in Alberta with a few outlets selling it in Saskatchewan.
Although product marketed under the Horizon label won’t fully hit the pet food scene until early 2006, it expects two premium dog kibbles will be released this fall once the plant starts production.
