Banding Together: Canola Growers and Virtex Farm Foods

Farmers create a partnership to capture market potential and build a model for long-term sustainability of the family farm.

By Will Stillman

Guy Conan

Guy Conan

Guy Conan has a knack for finding enterprising ventures. Throughout good times and downturns, bumper crops and droughts, they’ve helped sustain his fourth-generation farm near Marcelin, Saskatchewan.

Consider his early buy-in with Virtex Grain Exchange, a farmer-owned, grain-selling agent founded in 2009, with roots going back 10 years prior, that provides a variety of services, including grain procurement, contracting, seed inputs and logistics.

“To do block marketing—to put everybody’s together in one big block—we get paid more for it,” says Conan of why he signed on. “It’s about having a consistent profit margin without the ups and downs of the commodity graph line,” he explains. “You’re hedging yourself against the market.”

That industrious spirit, that willingness to try something new, also led Conan to be on the forefront of a more recent opportunity, when he, along with 120 other area farmers, signed on for a new value-added venture into the world of non-genetically-modified canola oil. Producer- and shareholder-owned, the company, called Virtex Farm Foods, leased, in 2013, a previously mothballed canola crush facility in Saskatoon.

“That’s what the market wants,” says Conan of non-GMO canola, 600 acres of which he grows on his 3,500-acre operation. “So, let’s give them what they want at a premium. Let’s run with it.”

Growth Market

It appears that consumer demand for non-GMO canola oil will continue to grow, creating new opportunities for producers and processors. “Right now, consumer trends indicate that consumers are more interested in whether their foods are genetically modified than whether [they’re] organically or conventionally produced,” says Rick Guenther, vice president of Virtex Farm Foods.

0315canola2One barometer of potential market growth is the drive for GM labeling on foods at the retail level. While numerous countries in the European Union and elsewhere have laws requiring the listing of foods with GMO ingredients, the U.S. and Canada do not. However, several large grocers and food companies have considered voluntarily labeling their foods, and Whole Foods recently set a deadline of 2018 for its suppliers to do so.

The Virtex plant, which only processes Clearfield canola, does so without using solvents. It’s the only non-GMO crushing facility in the province and one of three in North America to be Non-GMO Project Verified. Company executives are confident their venture into canola crushing will prove to be successful and are planning for future growth.

According to Guenther, Virtex Farm Foods’ business plan includes eventual expansion into several ventures, including hulless barley. “This ended up being a convenient way to get us to that goal much quicker,” says Guenther. “We can build a business plan around selling canola oil and get us to where we can start debranning hulless barley,” a process that, in short, separates the kernel into various parts, each of which has distinct nutritional qualities used in food processing.

“It’s about getting one product successful and then branching out into others,” says Conan. “Once we become established in canola, which is just around the corner, it will open up all kinds of doors for us.”

As shareholders in the company, Guenther and Conan share the same general attitude of trying new ventures. “Farmers have been commodity producers for years. We are now a part of actually selling the food to the consumer,” says Guenther. “[Virtex] is built around the premise that farmers working together is better for their bottom line, and in a value-added venture, farmers working together can actually be more responsive to the consumer and what they want.”

For instance, says Guenther, “Consumers increasingly desire to buy their food directly from the farmer. Working together as a group allows us to do this in a bigger way than an individual farmer could, and allows us to create a national brand, instead of just selling at the local farmers market.

“The actual portion that goes to the farmer … if it was just purchased from them as a grain, would be quite minimal compared to what the total value is on the retail shelf,” Guenther continues. “So, the farmer, in this case, is now finally being able to pick up on those extra margins because of that.” As more and more farmers expand their operations, even become players in the supply chain, they are ultimately trying to ensure long-term sustainability of their individual farms. “The way [the Virtex quota system] is set up is they pay a one-time fee … and they can transfer it to their children on the family farm,” says Guenther.

Despite a dry spell this growing season, Conan, who also raises wheat, oats, and hulless and malt barley, says his crop of non-GMO canola is looking pretty good in the flowering stage. It won’t be long before he’ll fire up the swather, then combine his second crop for Virtex.

As one of the first farmers to invest more than 15 years ago, he remains one of the company’s major shareholders. Conan is adamant that farmer shareholders/quota holders will reap the financial benefits from their investment. Indeed, it has never crossed his mind to sell his shares.

“If our plant works as an investment, then that will bail us out during a downturn in the commodity market,” he says.

“If not,” continues Conan, always the industrious optimist, “then we’ll try something else.”