When Malcolm Garner looks over the ingredients in the frozen food his company makes, it’s not the grain-based products that make his blood boil.
Garner says he pays competitive prices for the flour for tortillas in Old El Paso burritos and the crust of his President’s Choice quiche.
He doesn’t argue with the cost of beef, beans or vegetables.
But eggs, cheese, cream and chicken also go into his recipes.
“None of these are available competitively in this country,” Garner told the recent Grain World conference held here.
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“Your grain sales to me are at risk because of the failure of supply-managed sectors to compete.”
Twelve years ago, Garner started Cam-bridge Canadian Foods Ltd. in Cambridge, Ont., with six employees. Today, 80 employees make the frozen microwavable food the company sells across Canada and in the northeastern United States.
“It is just like farming,” he said. “Everything is at risk all the time.”
But when Garner looks across the border at his competitors, who next year will be free to compete in Canada, he worries about the future of his value-added business.
He said prices of dairy, chicken and egg products are too high. It’s sometimes hard to get enough supply or the right kind of supply and small businesses have to spend too much time making supply arrangements, he said.
Changes are beginning
He admits the sectors are starting to recognize processors’ needs.
Chicken is about 30 percent more expensive in Canada than in the United States. Garner buys all of his chicken across the line using a special free trade quota.
His company turns one tractor-load of chicken into 20,000 to 30,000 cases of product, which go to 100 different destinations along with 20 or 30 other products.
The business has to meticulously document how the U.S. chicken is used, where it goes and give the government audited statements showing the chicken went into allowable products.
“We’ve got boxes full of invoices,” Garner said, describing the paper trail. “It’s a barrier to trade.”
Garner can’t buy U.S. dairy products, but he can get reduced prices for Canadian milk, butter and cream, although he faces a similar complex paper trail.
He can buy industrial eggs at a price roughly competitive to the U.S. prices, about 60 cents per dozen compared to about $1.30 for eggs in the shell in grocery stores.
Pay more than necessary
Garner said consumers who have the time to crack eggs for breakfast subsidize the increasing numbers of people who only have time to eat further-processed eggs in items like his quiche.
But he wonders how long it can go on.
The quota system is “bizarre, can’t last, and it’s a huge political problem,” he said in an interview.
In the short term, Garner wants to buy cheaper ingredients in the U.S. without restrictions.
“I will bet you that many of those raw materials will then become competitively priced in Canada without government, without anybody doing anything.”
And while he says he doesn’t advocate an end to marketing boards, he complains they’re powerful organizations that don’t listen to processors.
But Garner said prairie grain farmers have political savvy they can use to help value-added industry. He appealed to farmers at the conference to use their power.
“Having us flourish is in the best interest of the farming community as it assures a market for your products,” he said.
