CHICAGO, Ill. – It is unlikely that the manufacturer of North America’s top-selling organic cereal brand will build a processing plant on the Canadian Prairies.
Two years ago at the Organic Connections conference in Saskatoon, Arran Stephens, president of Nature’s Path Foods Inc., said part of the company’s planned $30 million expenditure on upgrades and expansions included building a plant in one of the three prairie provinces.
Those plans have changed and it is now “more than likely” the plant will be built somewhere in the U.S. Midwest, Stephens said during an interview at the All Things Organic conference in Chicago.
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A number of factors are pushing one of Canada’s largest organic firms, with headquarters in Richmond, B.C., to build its grain processing plant south of the border, but that won’t stop the company from buying grain products from mills in Manitoba, Saskatchewan and Alberta to make snack bars, cereals and pastries.
“We’ll still continue to support hundreds of Canadian organic farmers,” Stephens said.
The new plant, which will be built “in the next year or so,” will be the company’s fourth. It already has plants in Delta, B.C. and Blaine, Washington, and a new baking factory in Mississauga, Ont., is set to start production later in May.
The Delta and Blaine plants together produce about 54 tonnes of organic cereal a day, marketed under Nature’s Path, EnviroKidz and LifeStream brands.
The logic behind building a fourth processing plant in the Canadian Prairies or the U.S. Midwest is to cut down on rising transportation costs.
Stephens said it is wasteful to collect grain from Saskatchewan, ship it to the West Coast for processing and packaging and then back to markets east of Chicago, where 70 percent of the company’s customers reside.
He called it a decentralization approach to business that fits nicely with the company’s social and environmental agenda by spreading the wealth and reducing fuel consumption.
“It’s partly altruistic but it also makes a lot of financial good sense to reduce miles travelled,” he said.
He would like to build in Canada, but there are good reasons to head south, including the soaring Canadian dollar, which is rapidly eliminating one of the big benefits of building north of the border.
Other considerations include access to a larger employment base and better transportation lines, closer proximity to customers and a better package of tax and other financial incentives.
“Canada has been notoriously weak on offering incentives for putting up food plants,” Stephens said.
However, he stressed that while the project may head south, the company has not given up on Canadian growers.
Stephens noted that much of the oats in the company’s products were produced in Alberta’s Peace River region. They are processed at mills in Canada and Oregon.
He said it is still Canadian grain, no matter what side of the border it is milled.
“We’re supporting Canadian farmers and we will continue to do so.”
