You work hard, achieve success and then kick back and enjoy the fruits of your labour, right?
That’s a dangerous attitude in any business, but especially if you make a living selling a commodity. Just ask Derek and Earl McLaren, two farm boys turned green industrialists who have made change a full-time occupation.
The brothers were in their early 20s when they started farming near Carberry, Man. Their father and grandfather were grain farmers, but the boys decided the future was in potatoes, although not just growing them.
Read Also
Agriculture needs to prepare for government spending cuts
As government makes necessary cuts to spending, what can be reduced or restructured in the budgets for agriculture?
“At that time, everyone was on a direct contract: grow them and haul them in,” said Derek McLaren.
“We started in 1980 and had the first storage contract, which meant we had to build a warehouse. I think everyone expected these two young guys flying by the seat of their pants to go broke, but it worked. Next year, everybody wanted to get in on that.”
The brothers expanded, built more warehouses and were a model of success until they abruptly quit in 2002.
“Many people were very surprised that we were quitting because, at that time, growing potatoes seemed like such an incredible business,” said McLaren.
The brothers were lured out of the potato business by the chance to buy Manitoba Starch, a local company they figured had great potential. The company processes starch from the province’s four potato-processing plants.
Starch is a byproduct that collects on blades when potatoes are sliced. It can be processed into glues and binders used in making products such as fertilizer and coated paper.
However, starch is still a commodity. As they had two decades earlier, the brothers wanted an edge. At that time, the business relied heavily on a Canadian dollar trading near 60 cents US, and they recognized that was a shaky foundation for a company that sold largely to American firms.
“We realized we couldn’t stay as an industrial starch manufacturer and that we had to value-add,” said McLaren.
They decided to produce food-grade starch, used as thickeners and stabilizers in soups and sauces.
However, it took nearly two years to plan the retrofit, which required new machinery and meeting stringent Hazard Analysis Critical Control Point requirements.
Even while that was going on, the search for new markets continued. In 2004, the McLarens received a grant from the National Research Council for a two-week tour of starch companies and research organizations in Denmark, Germany and Holland.
“It was at the very last meeting on the very last day of the trip. We were in Wageningen in the Netherlands at a research university and they put us onto the name of Rodenburg Biopolymers,” said McLaren.
“Aaik Rodenburg had also been a farmer and he had much the same idea as us, only he was much further along.”
Rodenburg had developed patented technology to convert starch into a plastic-like resin that can be made into biodegradable products such as golf tees, greenhouse pots and tree seedling tubes. In 2005, the trio formed a joint venture and Solanyl Biopolymers was born.
“We are working as hard as we can to develop our own brand and pursue new ideas to break away from the commodity side,” said McLaren.
Their latest venture, still hush-hush, seeks to capitalize on the nutraceutical properties of potato starch. A starch fraction, called resistant starch, is already used in the hog industry as a prebiotic that improves digestive health. Research has shown it also has beneficial effects on humans.
Sales figures and production capacity are closely guarded secrets in the highly competitive starch business, but the McLarens have enjoyed great success. Under their guidance, Manitoba Starch has grown to 15 employees from two, and McLaren said the next round of expansion could see that number nearly double.
“You can never stop because other companies keep going and they’ll overtake you,” he said. “I think that’s the exciting part for us. It’s a never-ending game.”
Those words say a lot, too. You can bemoan the commodity trap and the fact that you’ve no sooner adapted to the latest change when another one is forced upon you. But the lesson from those who constantly seek to be a step ahead of everyone else is that pursuing success can be just as much fun as achieving it.
Archived columns from this series can be found at www.fcc-fac.ca/learning.
Farm Credit Canada enables business management skill development through resources such as this column, and information and learning events available across Canada.
At the same time, Manitoba Starch launched Red Leaf, its own brand of food-grade starch bearing a bright maple leaf and aimed at the Chinese market, a major consumer of food-
