| ||Alberta's Commercial Vegetable Industry Synopsis
Introduction | Definition of the commercial vegetable industry | Canadian vegetable market situation | Alberta vegetable industry snapshot | Greenhouse sector summary | Alberta to Canada, industry benchmarks | Fresh field vegetable sector summary | Vegetable processing sector summary | Vegetable distributors, wholesalers and co-ops summary | Vegetable industry – Alberta interviews, key findings | Industry resources
This profile establishes industry benchmark information on Alberta’s commercial wholesale vegetable industry, including the greenhouse, fresh field and processing vegetable sectors. It also outlines key findings (barriers, opportunities and observations) from secondary research and interviews with 64 companies selected from across the three sectors.
Definition of the Commercial Vegetable Industry
Under the Canadian Agriculture Products Marketing Act (The Fresh Fruits and Vegetables Regulations), the following plants are designated as vegetables and included within this report: table potatoes, beets, carrots, parsnips, field and greenhouse tomatoes, field and greenhouse cucumbers, rutabagas, head lettuce, sweet corn, onions (dry and green), brussels sprouts, celery, asparagus, cabbage, cauliflower, broccoli, radishes, dry and green onions, turnips and leeks. Other vegetables not included in these Acts, but included in this report are: fresh peas, snap beans, spinach, pumpkin/squash, zucchini, leaf lettuce, romaine lettuce, and field and greenhouse peppers.
Table fresh potatoes and specialty (organic) potatoes are included in this report. • Processing – These are vegetables that have been transformed into a value-added product through physical, chemical or thermal means. This includes fresh-cuts, sliced, diced, peeled pot-ready and frozen vegetables.
- Greenhouse – These are crops grown under any kind of protective environment, including greenhouse vegetables and vegetable transplants.
- Fresh Field – This is the production and supply of field vegetables (edible plants or roots) grown in an open (field) area or under growth-enhancement techniques (including high tunnels and row covers).
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Canadian Vegetable Market Situation
From 1990 to 2003, Canadian’s annual vegetable consumption (fresh and processed) increased by eight per cent, reaching a high of 117.5 kg per person in 2001. Fresh vegetable consumption consistently increased at a greater rate than processed vegetables.
Since 1990, fresh vegetable consumption increased by 11 per cent, with the highest consumption volume being 80.7 kg per person in 2003. Albertans’ vegetable consumption patterns are similar to that of the national average. Fresh vegetable consumption in Alberta is up five per cent over 2004. The highest growth category in sales is in fresh chilled salad purchases. Alberta has between eight and 16 per cent of the Canadian market. Over the last few years, Albertans have increased their vegetable consumption. In general, people are more concerned about staying healthy and eating right. Research into nutraceuticals and functional food highlights the health compounds found in vegetables. Pre-cut fresh vegetables are defined as fresh vegetables that have been trimmed, peeled, washed and sliced or diced into 100 per cent useable products that have been bagged or pre-packaged. Alberta’s pre-cut fresh vegetable retail sales for the 52 weeks ending October 1, 2005 were approximately $15 million.(1) Globally, fresh ready-to-eat salads demonstrated an 8 per cent increase in sales(2) while Alberta pre-packaged, bagged salads increased in sales by 11 per cent, reaching $42.4 million in sales.(1)
Alberta’s fresh and chilled exports to the U.S.A. are $1.5 million,(3) while $249.5 million of Alberta’s fresh and chilled vegetable imports are from the U.S.A.(4) The value of Alberta’s frozen vegetable exports is $8.2 million as compared to $2.2 million in imports.
Small and medium-sized fresh field vegetable producers lose an estimated 20 per cent of vegetables during harvest due to lack of highly specialized equipment and/or technical applications. An additional 20 per cent is lost during post harvest handling processes.
Alberta Vegetable Industry Snapshot
While it is difficult to measure Alberta’s vegetable industry in its entirety, in this assessment the three measured sectors combined generate between $160 to $165 million in annual revenues and employ about 1,000 full-time/full-time equivalent positions, with up to 1,500 employees during peak season (See Table 1). It is estimated that the entire commercial vegetable industry and related sectors (field fresh wholesale vegetable producers, processors, commercial greenhouse operations, table fresh potatoes, potatoes for processing and seed potatoes, vegetable contract producers, vegetable co-ops/distributors and the mushroom sector) combined generate an estimated value $700 to $740 million (2004) in revenues. This is comparable to the farm cash receipts for canola (2004), which were approximately $770 million.
Smaller and more difficult to measure segments of producers growing multiple crops (e.g. vegetables with a grain rotation) may report revenues up to $100,000 per year within their overall income statement, yet vegetable crops may form a percentage of designated acres. The result is a significant segment of Alberta’s vegetable industry is largely unaccounted for in terms of direct and indirect contribution to the Alberta economy (estimated at 10 to 15 per cent). This makes the fragmented sector challenging to accurately benchmark. This fragmented sector may be comprised of producers selling product through restaurants, specialty retailers and independent wholesalers, farmers’ markets, farm gate sales, u-pick operations or direct marketing consumers.
Table 1 illustrates vegetable sectors with predominant wholesale and commercial operations and does not include direct to market or u-pick operations, greenhouse operations under one acre and/or not within the grower co-ops (Red Hat or Pik-N-Pak), contract (processing) vegetable field producers or small-sized vegetable operations with less than 75 acres.
Table 1. Alberta’s Vegetable Industry, Estimated Economic Impact, (millions $) Table 1 attached
This profile measures the processing vegetable, fresh field wholesale producers and greenhouse commercial operations, but it is also important to note the size of the potato and mushroom sectors within the province. Fresh table potatoes generate an estimated $5 to $6 million, with potatoes for processing at $100 to $120 million, seed potatoes at $40 to $50 million and the processing of potatoes at $300 million in annual revenues. Alberta’s mushroom industry contributes another $30 million in annual revenues. Based on the above estimates it is possible that the greenhouse and fresh field sectors of the Alberta vegetable industry are seriously undervalued. The
processing industry may also be underestimated.
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Greenhouse Sector Summary
The Alberta commercial greenhouse vegetable sector is estimated to generate an estimated $40 million in revenue and employ 420 full-time/full-time equivalent workers. Approximately 57 producers have invested $84 million dollars to build greenhouses with a total vegetable production area of approximately 105 acres. Approximately 90 per cent of the greenhouse vegetable producers market their product through one of two packing facilities, Red Hat Co-op and Pik ‘N Pak Produce Ltd., The remaining 10 per cent market through direct sales to restaurants, retail outlets and farmers’ markets. Eighty per cent of Alberta greenhouses are heated by hot water boilers, fueled by natural gas and coal. There has been a movement towards alternative fuel sources.
Alberta to Canada, Industry Benchmarks
Vegetable Greenhouse Sector
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Fresh Field Vegetable Sector Summary
Alberta’s fresh field vegetable sector is broken into two sub-sectors: ‘wholesale,’ with the majority of crop going through wholesale distributors; and, ‘nonwholesale,’ better known as direct-to-consumer. The fresh vegetable sector can be further grouped by the acreage farmed by producers: large wholesale, medium wholesale and small wholesale specialty or contract grower.
Fourteen per cent of Alberta’s fresh field wholesale producers (medium and large) net an estimated $44.2 million in farm gate value (FGV), collectively employing 252 full-time equivalent (FTE) workers, with an additional 292 employees in peak season, for a collective 541 employees. These same producers harvested an estimated 5,847 of the 11,480 designated vegetable production acres in 2005.
Two per cent of fresh field vegetable producers farm over 36 per cent of designated production acres (2005). These producers are key in the entire vegetable valuechain in Alberta, producing over 64 per cent of the industry’s wholesale farm gate sales, employing over 170 workers and exporting the highest volume of product. Eleven per cent of the industry’s wholesale producers have designated vegetable production operations ranging from 75 to 550 acres. In total they had 1,747 acres in production in 2005, and reported the majority of their revenue ($500,000+) by selling through mainstream wholesale and/or distribution systems. In addition, approximately 86 per cent of Alberta’s vegetable producers are considered small multi-crop farms or specialty produce operations, where they grow mixed crops and vegetables on 75 acres or less. They may also be classified as “contract producers” who produce quantities of certain types of vegetables according to a sales contract. Although this segment is largely unmeasured, it is estimated to generate over $6 million in the vegetable sector. It also includes 14 of Alberta’s estimated 200 Hutterite colonies that are known to sell direct to retail or wholesale markets.
Vegetable Fresh Field Sector
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Vegetable Processing Sector Summary
The processed food sector in Alberta employs over 345 workers and generates over $76 million in annual revenues (2004). Seven commercial processors bag, peel and process carrots, peas and vegetable snacks, along with sliced, diced and table fresh potatoes for commercial and wholesale distribution. A number of producers and greenhouse producers process pickles, relishes, tomato-based sauces and soups for local or regional distribution, but not on a commercial wholesale level. Alberta’s largest vegetable processor
(other than potatoes) is Lucerne Foods of Lethbridge. It processes peas, corn and carrots. Peas and corn processed by Lucerne are produced by contract producers.
Vegetable Processing Sector
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Vegetable Distributors, Wholesalers and Co-ops Summary
Seven Alberta-based vegetable distributors and wholesalers move over $65 to $70 million of produce and employ over 200 individuals.
Vegetable Industry – Alberta Interviews, Key Findings
From the 64 interviews conducted with vegetable producers, distributors, wholesalers, retailers and processors, and upon reviewing the industry focus group facilitated January 2005 by Alberta Agriculture, Food and Rural Development (AAFRD), the following is a summary of key points which need to be addressed in order to create a viable and sustainable vegetable industry. With the exception of the cost of energy crisis faced by the greenhouse sector, all issues presented are common to all three sectors of Alberta’s vegetable
- Industry interviews indicated that vegetable growers may not be aware of existing business development programs and AFSC financial programs.
- The high cost of energy has heavily impacted the industry, creating a crisis in the greenhouse industry. There are indications that upwards of 52 per cent of vegetable greenhouse operations (smaller, less efficient) could go out of business over the next three years. Crisis management options include financial programs to aid the industry in transitioning to less volatile fuel markets, or sourcing alternative heat sources.
- Seasonality is one of the most challenging barriers for the vegetable industry, with gaps in produce supply providing competitors with large portions of the Alberta market.
- It is estimated that only six to 10 per cent of vegetable products sold by distributors in Alberta are Alberta grown. In 2004, Alberta imported 160,000 tonnes of fresh or chilled vegetables at a value of $192.5 million.
- The potential for import replacement is significant. Consistency of supply (quality and quantity) is important to buyers. The development of cooperative storage or co-operative marketing strategies may extend product availability and increase market access of Alberta product.
- A lack of both skilled and unskilled labour is a consistent concern across the three vegetable sectors. This shortage means that many operations cannot run at full capacity, and miss market opportunities. Competition for labour with the oil and gas sector is significant and the ability to access foreign labour programs is not consistent.
- Increased mechanization or technology can reduce labour requirements. Access to financial assistance and capital financing is an important issue in each of the three sectors. In some cases, producers are not fully aware of the programs available or the processes for accessing financing.
- Labour development and training programs and access to assistance and coaching with the foreign labour application process would be beneficial.
- A portion of Alberta’s vegetable industry is unmeasured due to fragmentation and differences in tracking between the different levels of government. Improved communication between producers, processors and government, and the use of reporting tools (such as measurement templates) would allow for better tracking and measurement of the real economic impact of Alberta’s vegetable sector.
- Alberta producers are price-takers, with buyers setting prices based on competitors with more advantageous production conditions. Competitors “dump” produce into Alberta when they have an over-supply of in-season vegetables. Increasing the implementation of existing laws and developing policies to discourage dumping may be a solution.
- Co-operative marketing strategies could increase consumer awareness and allow access to larger markets.
- A significant amount of product is lost at all levels of the production and distribution chain. Minimizing waste or finding alternative uses for culls would probably increase net margins for producers.
- Alberta vegetable producers and processors need an advocacy group to represent the needs of all three industry sectors to government. It is suggested that an Alberta vegetable industry advisory committee, similar to the USDA's Fruit and Vegetable Industry Advisory Committee, be formed to champion issues faced by the whole industry. This organization could bridge the gap between producers, processors and retailers/distributors, with government in an advisory role. The organization could serve as one voice for communicating the needs of the various parties to the industry.
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Government Contact - Alberta Agriculture and Rural Development 403-310-FARM (3276) www.agric.gov.ab.ca
Alberta Greenhouse Growers Association – www.agga.ca
Alberta Vegetable Growers (Processing) – email@example.com
Alberta Food Processors Association – www.afpa.com
Canadian Produce Marketing Association - http://www.cpma.ca
Canadian Horticulture Council – www.hortcouncil.ca
International Fresh Cut Produce Association (IFPA) – www.fresh-cuts.org/
Canadian Greenhouse Conference and Tradeshow – www.canadiangreenhouseconference.com/
International Hortifair – www.hortifair.com/
Greenhouse Industry Show and Conference – www.agga.ca
Canadian Produce Marketing Association Conference & Trade Show - http://www.cpma.ca/en_conv.asp
Great Lakes Fruit, Vegetable and Farm Market EXPO – www.glexpo.com
United Fresh Fruit and Vegetable Association Produce Expo and Convention – www.uffva.org
Fresh-Cut Expo – http://freshtech.org/
Food Marketing Institute Show (FMI) – http://www.fmi.org/forms/MeetingCalendar/
Publications and E-journals
Greenhouse Canada (Annex Publishing & Printing Inc.)- http://www.greenhousecanada.com/index.php
The American Vegetable Grower (Meister Publications) – www.americanvegetablegrower.com/
The Greenhouse Business (AARD, Bi-monthly publication) – www1.agric.gov.ab.ca/$department/newslett.nsf/homemain/ghb
Fruit & Vegetable Technology (International Magazine for Production and Technology of Fruits and Vegetables worldwide) – www.HortiWorld.nl
The Great Lakes Vegetable Growers News – http://ianrpubs.unl.edu/horticulture/nf106.htm
The Packer (The Packer Publications) – www.thepacker.com
Fruit and Vegetable (Annex Publishing & Printing Inc.) – www.fruitandveggie.com
Produce Business (Phoenix Media Network) - http://www.producebusiness.com/
Western Grocer (Mercury Publications Ltd.) - http://www.mercury.mb.ca/
Food in Canada (Rogers Media) - http://www.bizlink.com/food.htm
Fresh-Cut – http://www.freshcut.com/pages/index.php
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(1) ACNielsen. (November 2005). “ACNielsen Grocery Retail Banner, 52 weeks ending October 1, 2005”.
(2) ACNielsen Global Services. December 2004.
(3) Statistics Canada, World Trade Atlas