Farming for the future

Chicken, potatoes, pigs: Three stories of how the art and science of agriculture is reaching new levels in Alberta.

Just a few years ago, the thought of competing businesses joining together to form partnerships was unthinkable. But in today’s globally competitive marketplace, businesses linking together in a “value chain” not only makes smart business sense, it makes everyone involved a winner – especially the consumer.

A value chain is when three or more independent businesses work together to compete successfully in the marketplace. As the name suggests, a value chain brings together “links” that would not normally be connected. In the past, the farmer, food processor and retailer were competitors and had little to no contact; in a value chain, the farmer produces raw product to processor specification, the processor manufactures the food to retailer specification and the retailer can not only give consumers exactly what they want, they know exactly where that food came from and how it was produced. It’s a consumer driven process which, because food can be traced to source, is fully accountable.

Already developing in the Netherlands, United Kingdom, Japan, Australia and the United States, value chains (a.k.a. supply chains) are gaining acceptance in Alberta as an intelligent, efficient way to do business.

Chicken ŕ la King

Alberta Chicken Producers (ACP) produce 50 million chickens a year and began to look into the benefits of value chains three years ago, says Don Sundgaard, ACP chairman. “Through discussions with people here in Alberta who were familiar with value chains and attending two conferences in the Netherlands, our organization became convinced this is the way to do business in the future.”

In 1998, ACP formed its first value chain involving a hatchery, 12 poultry producers, a feed company, a major Alberta processor and the customer, Cara Operations Ltd., operator of 170 Swiss Chalet restaurants in Canada. The idea was to create a system that would provide a consistent product to meet Swiss Chalet’s requirements in western Canada. “As a customer of Swiss Chalet, you want to be sure you’re getting the same size and quality of chicken as the person sitting next to you,” says Sundgaard. “Swiss Chalet required a product that was a uniform size and weight that met their specifications for consistent cooking times.” To get uniform birds, the value chain put barns, bird weight and conditions, as well as balanced feed rations, water quality and processing methods, under close scrutiny. ACP, over time, met its objectives, bringing an improved product to the customer as well as improving communication between all the stakeholders involved.

Linking information

Open lines of communication with all links is key to success in a value chain. Consumer preferences drive the process, so sharing production statistics and market information, up and down the chain, is vital to respond to changes in the marketplace. The ACP’s value chain has a long-term objective of bringing a wide range of information to the approximately 320 chicken producers in Alberta so they will know what the market wants and be able to produce it accordingly.

“The goal is to share information with all industry stakeholders as to what happens at the hatchery, on the producer’s farm regarding growth statistics, bird weight, mortality in the barns and the general condition of the birds,” says Sundgaard. “This will give the processor a good indication of exactly what they are going to receive when the birds are shipped. The ultimate goal is to improve efficiency and to better meet consumer expectations. This value chain will enable users to gain immediate access to information about the complete process.”

Going one step further, a market development value chain is in the early stages of planning, says Sundgaard. The goal here is to further increase consumer markets, domestically and internationally, by providing quality, consistent products on a larger scale.

“It’s going to involve the future growth of Alberta relative to our domestic market as well as our export markets. Alberta exports approximately 5% to 6% of annual chicken production. This value chain will involve hatching egg shippers, hatcheries, feed companies, chicken producers, processors and the provincial government.”

According to Sundgaard, the end result for the consumer will be a better quality product at the store. “The key is to be consumer-focused,” he says. “If we’re not consumer-focused, we have missed a very important concept in value chains.”

Chicken FAQs

Q. How are chickens raised?

A. Chickens are raised in one- or two-storey open-floor barns. Clean bedding of straw, wood shavings or shredded paper is placed on the floor. The birds take approximately six to eight weeks to attain their market weight.

Q. What do chickens eat?

A. In Alberta, chickens are grain fed and are not fed any hormones. Hormone use is, in fact, illegal and is not practised in Canada. The birds have continuous access to clean water which is kept fresh and uncontaminated.

Q. Are chickens kept in cages?

A. No, the birds are raised in climate-controlled barns to protect them from harsh winters, hot summers, predators and disease. The birds are not confined and are free to roam the barn.

Source: Alberta Chicken Producers (www.chicken.ab.ca).

Would you like fries with that economy?

The next time you drop by your favourite fast food restaurant for burgers and fries, chances are good those fries were grown, processed and packaged right here in Alberta.

Two major processing plants, each valued at $100 million, recently opened in the Lethbridge area and potato growers, along with support industries, are enjoying unprecedented growth in their industry. Lamb Weston, Inc., a ConAgra company, began production early last year at its state-of-the-art potato processing plant located 10 kilometres east of Taber. A McCain Foods (Canada) processing plant opened for business near Coaldale this past April. Using approximately 800 to 1,000 tons of raw product, combined output for the plants is 2 million pounds of frozen french fries each day.

Clive Schaupmeyer, potato agronomist with Alberta Agriculture, Food and Rural Development, credits the success to the high quality of potatoes grown in southern Alberta, the low-cost business environment and our strategic trade location for attracting the new plants.

“French fry processors require potatoes with high dry matter because they produce crisp, mealy fries with low oil content,” explains Schaupmeyer. “Because of southern Alberta’s climate, soil, irrigation and how we manage our crops, we grow some of the highest dry matter potatoes in North America.”

And it’s not just fries – Old Dutch makes potato chips in Calgary and FritoLay does the same in Taber. Maple Leaf Potatoes, based in Lethbridge, also produces frozen french fries and other potato products.

It’s big business for this province. “Alberta’s potato processing plants will process between 500 and 600 thousand tons of raw potatoes annually with a farm-gate value of between $60 and $70 million,” says Schaupmeyer. “The estimated value of potato products processed in Alberta will be between $350 and $400 million annually.” He adds that products are sold domestically and internationally to consumer and restaurant markets. Restaurants such as McDonald’s, Wendy’s, Burger King and A&W are major customers who demand a high quality, consistent product.

Two varieties of potatoes are used to make french fries: the Russet Burbank and the Shepody – and the former being used in approximately 80% of french fry production. Schaupmeyer attributes this to the Russet’s high dry matter content that produces a crisper, sturdy fry and its oblong shape which is ideal for producing the finger shape cut.

While the potato industry may yield big profits, it comes with significant capital and operational costs to growers. Overall, producers are estimated to spend between $20 and $30 million on inputs to grow potatoes for the new fry processing plants alone.

“Potato equipment and storage buildings cost between $4,000 and $6,000 per acre of production,” says Schaupmeyer. “In addition, the costs of land and irrigation systems are about $3,000 or more per acre in southern Alberta. New growers can reduce capital expenses by purchasing used equipment, but onfarm storage facilities must be purchased new at a cost of approximately $2,500 to $3,000 per acre of production. And then there are cash costs which vary from farm to farm, but can average $1,200 to $1,600 per acre and include seed, fertilizer, pest management and land rent.”

Whew! But since the start-up of the two new french fry plants, established and new growers have met increased demand for product by growing an additional 22,000 to 24,000 acres of potatoes.

The economic spin-offs of this growing industry are tangible. Along with the creation of approximately 200 new jobs at each of the plants, Schaupmeyer points out that new services have built up around the plants to support the ongoing production.

“In Taber, companies have built new facilities specifically to support the potato industry. A machinery supplier has recently opened a new facility as well as trucking companies that have established divisions to haul potatoes directly from the grower to the processing plant.” Potato farmers also use plant testing companies and labs for tissue sample work on their crops. “The support required to support this industry is snowballing,” says Schaupmeyer.

Worldwide market demands for processed potato products like french fries show no sign of declining. To Schaupmeyer, that’s nothing but an opportunity for processors, producers and support industries.

So whether you enjoy your fries in poutine, with a side of gravy or dipped in ketchup, keep in mind the Alberta connection. Not only are the potatoes grown and processed here, so are the profits.

Hog honey

Intensive livestock producers have a balancing act on their hands. To remain profitable, they must produce on an ever-shrinking land base, maintain environmental sensitivity, deal with animal waste and odour issues, ensure good water quality and keep their neighbours happy. At the best of times, it’s a difficult juggling act and, contrary to popular belief, it is being done.

Meet Doug Hall, a pork producer near Airdrie. For over 20 years, Hall has been using pig manure, a natural, renewable resource to fertilize his fields.

“Properly managed, it’s an input-saver and a profit maker,” says Hall. “As my neighbour used to say, it’s hog honey.”

A gas and steam fitter by trade, Hall, 56, began farming in 1978 and immediately saw the value of using liquid manure as fertilizer. “At that time, people didn’t see manure as an asset. But I had read some articles and a booklet Alberta Agriculture published claiming that there was 50% more nutrient value injecting manure rather than spreading it on the land surface.” Using approximately 3,500 to 3,800 gallons per acre, Hall injects the liquefied manure four to six inches into the soil. “This gives greater return for the nutrients available in the manure as well as controls odour,” he says.

He estimates he fertilizes 300 acres a year of wheat, barley and sometimes canola with liquid manure. Working with an agrologist, Hall assesses the soil’s nutrients by taking soil samples in spring and then tissue samples from the crops during the growing season to make sure the nutrient balance is right.

While he saves between $15 and $20 per acre over conventional fertilizer, Hall sees an added benefit. “With hog manure, I’m not only putting in nitrogen, phosphorous and potassium which are the basic nutrients, I’m also putting in all the trace elements, returning organic matter and building up my soil tilth.” As a result, he says his best land, crops and return per bushel comes from the land he has fertilized with liquid hog manure.

Being close to a large community, Hall stores the manure either in-barn or outside in covered containers. “We don’t have open lagoons,” he points out. “And by injecting the manure directly into the soil, odour is practically eliminated.” Fertilizing with hog manure has to be closely

managed, says Hall. “If you don’t manage it, it becomes a liability rather than an asset. If you put too much manure on the land at high volumes, it’s bad for the land. It’s that simple.” But by managing it properly, he not only limits the amount of chemical fertilizer he puts on his land, he’s doing something good for the environment by recycling manure.