With average-price contracts and a carefully considered board of directors, Mustard Capital Inc. is setting itself apart from many specialty crop startups headquartered in small prairie towns.
MCI is a dry mustard mill that began commercial operations in Gravelbourg, Sask., last week to produce flour, oil and bran products.
“The community did a lot of planning in process of attracting a value-added agricultural industry to their town,” said Tom Halpenny of Saskatoon’s Triticum Consulting.
Halpenny helped plan the business and will continue on the MCI board, along with Jim Mann of Farmers of North America, Bob Tyler, associate dean of agriculture at the University of Saskatchewan, Denis Prudhomme, president of the Saskatchewan Trucking Association, and local farmers and economic development representatives.
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“It gives our board insight from all the sides of the business that will affect our success,” said Halpenny.
“Production, business planning, research, economic development and of course, critical to any prairie agricultural business, transportation,” he said.
That use of experts led MCI to create an averaged-price contract that gives producers the opportunity to share in the upside of price surges in mustard markets.
Starting Dec. 1, the business is offering four 60-day contract periods with price averaging and guaranteed delivery. Growers can also choose a contract that will provide a price based on the whole crop year average, with delivery based on MCI’s call.
Storage is paid mirroring the Canadian Wheat Board’s barley storage program.
Farmers can also choose to take a spot price on delivery.
Halpenny said the options provide marketing choice.
“We are in interesting times when it comes to the mustard business,” said Halpenny about unusually strong mustard prices.
Yellow mustard has topped 40 cents a pound this fall. For producers who think the rally will continue, the averaging contracts will be enticing. For those who want all of their cash up front or feel the market has reached or exceeded their target price, the cash option may be their choice.
“When prices are low, you can attract sellers with less competition. When prices are this high, there is a lot pressure from competitors,” he said.
MCI hopes these options will attract long-term farmer suppliers who will provide the company with the stability it will need in a tough international market for food ingredients.
Canada is the largest supplier of mustard products in the world. The dominant player is GS Dunn, an Ontario miller that was resurrected from a 1995 bankruptcy. The Gravelbourg company attracted two of the senior staff from milling and marketing at GS Dunn to its nine member staff.
MCI is processing yellow, oriental and brown mustard and hopes to differentiate itself with a unique deheated, de-oiled mustard flour.
It’s competition is five other millers, including GS Dunn, which has 61 percent of the market, Wisconsin Spice with 15 percent and, sharing six percent each, Baltimore Spice, Demeter and Minndak.
MCI’s product is higher in protein than competing products and offers greater binding capacity in processed meats with improved oil and water holding capacity, said company officials.
This year MCI will process about 5,000 tonnes of crop from its $1 million plant. It hopes to handle about 24,500 tonnes of mustard annually.
