Springfield, Ontario –Think of peas and the ubiquitous Green Giant brand comes to mind. Global processor Bonduelle supplies peas for that brand yet chances are, its name doesn’t register high awareness in agriculture. But it should. With eight vegetable processing plants in Ontario, Quebec and Alberta, it contracts 90,000 acres of Canadian vegetables.
Unlike the high-profile departure of Heinz from southwestern Ontario, Bonduelle Americas is digging in. A fire in its Tecumseh, Ontario plant on July 18, 2014 devastated 4.5 million kilograms of frozen vegetables and its warehouse. Bonduelle rebuilt. This month, more than a year later, the company is opening its new refrigerated warehouse with streamlined packaging lines.
The 2015 acquisition in Lethbridge, Alberta and the reinvestment in Ontario are noteworthy for the conglomerate headquartered in Villeneuve d’Ascq, France and helmed by the founder’s great-great grandson, Christophe Bonduelle. The processor also owns four plants in the states of New York and Wisconsin, so it has working knowledge of the vagaries of business on both sides of the border.
For Canadian growers, it’s worth knowing how the processor is reading the competitive landscape. Brothers Gary and Russell Woolley, for example, and their father before them, have been growing peas, green beans and sweet corn for decades.
“We like the flexibility that vegetable crops provide to us,” says Russell Woolley, a dairy and crops farmer. “The peas are harvested in August and we don’t have to wait to rotate into wheat. This area, south of the 401 highway, is considered to be in the Carolinian-Canada range. There are lots of plant species here and it’s a climate conducive to growing field crops. The Great Lakes basin is not a bad place to be with adequate yearly rainfall and access to land.”
Jim Poel, chair of the Ontario Processing Vegetable Growers, is a pea grower himself. He agrees that the 2015 season ended well despite a rainy start. “We’ve come off a terrific fall,” says Poel, “where our tillage practices are not damaging the soil. We’ve put everything to bed for winter well.”
What Poel worries about is the long-term future of the processing industry. About 45,000 acres of processing vegetables – peas, carrots, sweet corn, celery, green beans and Brussels sprouts – are contracted to Bonduelle at plants in Tecumseh, Strathroy and Ingersoll, Ontario.
“The reality is that the vision of the corporate world is not as long-term as of farm families looking to the fertility of their soils for the next generation,” says Poel. “In these corporate deals, it’s all about trading labels and infrastructure.”
That said, he applauds Bonduelle’s professional outreach during and after the Tecumseh fire. Much of that credit goes to Rob Anderson, vice-president Bonduelle Americas operations for Canada and the U.S. During this troubled time, there were silver linings. The global company had the financial resources to rebuild quickly. Bonduelle honoured all its contracts, diverting $20 million of crops standing in the field to other southwestern Ontario facilities.
“We’re a private label partner,” explains Rob Anderson, who adds that Bonduelle processes and sells 85 per cent of the frozen and canned vegetables in Canada. “We serve retailers and foodservice and provide bulk ingredients to industrial companies such as Campbell’s and ConAgra.”
What are the opportunities and threats in the near term?
Rob Anderson’s perspective straddling the Canadian and American markets is valuable. Because Bonduelle already owns such a high market share in the Canadian market and earns half of its revenue in exports to the U.S., there isn’t much room to expand. In fact, all of Bonduelle’s plants in Canada are nearly at capacity. By the nature of the business, plants can process only as much as the local area can grow. Peas, for example, have a travel time of only 1.5 hours to maximize freshness.
“The challenge in Canada is to keep up with changing trends and demographics,” says Anderson. “We have a healthy product, but we need to communicate that we’re local, we’re Canadian.”
Bonduelle is currently trialling new technology that might revitalize the frozen food category. It has negotiated the global rights to the proprietary radiant energy vacuum technology of Vancouver-based EnWave Corporation. Agriculture and Agri-Food Canada also has a stake in the research with a $2.5 million investment earlier this year.
“It’s a very controlled process to extract moisture from inside the vegetable,” explains Anderson. “For each commodity, the percentage of moisture removed is different, but essentially the process protects the integrity of the cell structure.”
In early tests at Bonduelle’s Sainte-Martine, Quebec plant, the result is better texture, enhanced colour and nutrient concentration of vegetables. While these early results are encouraging, he anticipates another two years to expand and to develop the market. He sees a niche with restaurant chefs and for industrial companies looking for a fresh pizza topping.
“This is not a technology which will cannibalize our current product offerings,” Anderson says.
While the Canadian business climate is favourable to research, he also cites the high costs of operating in Canada. Utilities, labour rates and labour regulations are onerous compared to the U.S. The Canadian dollar, now valued at about 0.75 cents U.S., is positive for the near-term future.
The American marketplace has its opportunities and threats too. Bonduelle has 10 per cent market share of what Anderson calls an “emerging” market. While a population of 319 million beckons, it must be remembered that Americans are also patriotic in buying locally. Hence the processing plants in New York and Wisconsin states.
Processing overcapacity plagues the very competitive U.S. marketplace. Will Bonduelle grow in the U.S. through acquisition? Watch the Bloomberg wire service to know for sure. What’s promising is that General Mills’ sale of the Green Giant brand to B & G Foods – finalized on November 2 – still contains a contract for Bonduelle to supply product for the 2016 season. Bonduelle is in discussions to continue that relationship, which is key for Canadian growers.
“We’re working hard to position ourselves as a North American processor,” says Anderson. “With 48 plants around the world, we share best practices and consider ourselves to be very good processors of vegetables.”
To remain competitive, Anderson encourages growers to work with Bonduelle in field trials, whether they are testing new fungicides and insecticides or new varieties.
“It’s very important to us to keep those crop rotations in place to keep up crop yields,” says Anderson.
While 2015 may have been a challenging year in eastern Canada, most crops weathered the weather. Contrary to the headlines about climate change, the business climate is more of a threat.
PHOTO CUTLINE A: Global processing giant Bonduelle contracts about 90,000 acres of vegetables in Ontario, Quebec and Alberta for processing into frozen and canned foods at eight plants. South of the border, Bonduelle operates three processing and one packaging plant. Look at a map and they’re all clustered around the Great Lakes. The company is an interesting case study of the opportunities and threats on both sides of the border. Gary (left) and Russell Woolley along with Bonduelle’s agricultural technical program manager, Jennifer Thompson, sample the August pea harvest at Springfield, Ontario. Photos by Glenn Lowson.