When Ted Soudant talks about Field Gate Organic’s (FGO) story, he wonders where the time went! It’s coming on nine years since a group of 12 organic beef producers approached him about the feasibility of forming a company to sell their beef. They had three goals: to gain more control in marketing, to receive a fair price, and to secure a future for their farms and families. When all was said and done, he advised them to take ownership of the company and agreed to do up a business plan and give them five years of his time.
Today, Soudant is the president of FGO at Zurich, Ont., which is owned by the 12 producers along with 30 other shareholders, almost all of whom are organic producers. They are proud to operate a value chain that is capable of delivering certified organic beef, pork, lamb and chicken from farms across Canada, through processing to retailer customers and consumers.
The company owns FGO Organic Processing Ltd. at Ingersoll, Ont., which is the only 100 per cent organic, multi-species, federally inspected processing plant in Canada. Having received North American organic certification status last summer, FGO is poised to begin selling into U.S. markets and is currently working through the label-approval process with U.S. regulators.
FGO meat products are available from 41 retail outlets in Ontario, including FGO’s original store at London, Ont., which has a loyal customer base that is more than happy to offer feedback on new products before they are introduced to the marketplace.
Attaining this level of success would have seemed like an impossible dream during FGO’s first year in operation. The company was incorporated in December, 2002 and by May it had a retailer on board preparing for the launch. May, 2003 strikes a sour chord across the Canadian beef industry as commodity prices tumbled when BSE devastated export markets.
“All of a sudden, retailers were making great margins on commodity beef and didn’t want to give space to organic beef unless it could provide the same margin,” Soudant explains. “In essence, we skipped Phase 1 of our business plan and went straight into the second phase and opened our own outlets in three cities.” Phase 1 was successfully reactivated in 2005.
Finding a packing plant that could handle organic product wasn’t difficult. Finding one that was large enough and could do the job up right was the real challenge. FGO worked with five plants during the first four years, then, as fate would have it, the provincially inspected plant that proved to be the best fit closed up shop on short notice. FGO arranged to help keep the plant in operation for a couple of months to give the board time to consider its next move.
The decision to sign a lease with an agreement to purchase the plant was seen as the only way in which the shareholders would ultimately be able to realize their original goal of achieving long-term security. Federal status followed a year later in 2008 after Soudant and plant manager Mark Soudant revamped the entire layout of the plant, designing the operating and food safety protocols as well as the equipment to efficiently handle everything from 55-pound lamb carcasses to 1,000-pound beef carcasses.
FGO is currently processing approximately 1,000 head of cattle annually and expects the number to double within the next year to accommodate new markets. Soudant says the plant does have capacity to take on custom processing. They can process a liner load (45 head) of cattle per day when dry aging the beef the traditional way as is the process for FGO beef. However, that could be bumped up to two trailers a day for customers who prefer the wet-pack method.
With his background in marketing, logistics and structuring companies, Soudant was well aware there would be challenges — every company has them; however, he also realized that keeping 40 individual businesses going down the same road would present a special set of challenges.
That’s the primary reason he recommended setting up the company as a corporation rather than as a cooperative. Investing in shares in a company provides producers with more incentive to stick with it through the rough times; whereas, there isn’t the same commitment when paying a minuscule membership fee to belong to a co-operative, he explains. Second, the board of a corporation is responsible to the shareholders, but it has absolute and full control over the company’s affairs and the power to make decisions without going to the shareholders. This allows a corporation to adjust to changing circumstances far more quickly than a co-operative structure can facilitate.
The company has now evolved to the point where it has managers dedicated to specifidepartments, which is allowing the board to leave more of the day-to-day operating details to the management team.
Realizing that not all producers would have the funds or desire to become shareholders and that the supply of certifi ed organic livestock is still fairly limited in Canada, FGO
has always purchased livestock from non-shareholders. Quality being equal, FGO tries to purchase from shareholders first. Shareholders currently deliver about 50 per cent of the cattle, with the remainder coming from all provinces except Atlantic Canada.
“With organic beef, it’s a constant, constant balancing act to match supply and demand. The demand side is fairly constant but the supply side can be challenging,” Soudant says. “Most producers want to calve in the spring and sell finished calves into the under-30-month market, but our customers want beef 52 weeks of the year. Sometimes I would be dealing with five trailers a week and at other times I’d be lucky to get two trailers a month. A monetary incentive, within reason, during times of tight supply has worked very well to encourage producers to plan calving, finishing and delivery periods to help even out the supply. There’s still some fluctuation, but it has come around fairly well and I have to give hats off to the producers for that accomplishment.”
Soudant recalls telling the original producers right from the start that there would be times ahead when they’d regret the day they had ever put their money down and said “let’s do it!” As his account reveals, there have been days like that. Some of the challenges were anticipated — such as having to forgo some individuality to produce a uniform product. Others, like the economic downturn that hit Ontario particularly hard, were unforeseeable.
“With a company, you can never sit still. You have to always try to keep moving forward,” he says. He definitely relates to the author who wrote that starting a new business is like having a newborn child — both demand all of the time and attention you can give. The difference is that the business never grows up.
For more information, visit www.fieldgateorganics.com.