Farmer Jason Verkaik sees a business case for diversity in the vegetable patch.
Carrots and onions are his mainstay crops. But this third-generation grower is also experimenting with exotic produce such as Indian red carrots, Jamaican pumpkins and Mexican tomatillos at his Bradford, Ont., farm. This year, he’ll try his hand at fuzzy melons.
Beyond his own hankerings for such foods, Mr. Verkaik, who is of Dutch heritage, says demographic change is creating a burgeoning business opportunity for Canadian farmers at a time when major retailers including Wal-Mart Canada Corp. and Sobeys Inc., are experiencing growing demand for world crops. While recent immigrants are largely fuelling this trend, many exotic vegetables are already considered mainstream fare in cities across Canada.
“It really does start with that ethnic culture,” Mr. Verkaik says. “It starts there, but there are [business]opportunities to expand it further.”
Experts are still trying to quantify the market’s full potential, but one estimate pegs domestic sales of exotic vegetables at roughly $800-million a year. The bulk of that produce is imported from the Caribbean, South America and Asia. But with demand booming, Canadian farmers have a fresh incentive to carve out a meaningful slice of that market by diversifying their crops.
Although cooler Canadian climates can present a production challenge, scientists spearheading world crop research at the Vineland Research and Innovation Centre near Niagara Falls, Ont., say a surprising number of exotic vegetables can be successfully grown across the country.
As they strive to get an upper hand on Mother Nature in the field, those researchers are also collaborating with farmers and retailers on expanding the domestic market for locally grown exotic vegetables and export opportunities to the United States. Their overarching goal is to increase the size of the market by making many of these South Asian, Chinese and Afro-Caribbean vegetables as mainstream as prepackaged sushi.
“Sushi was super exotic stuff 15 years ago and now you buy it everywhere – at the supermarket counter and all over the place,” says Vineland’s chief executive officer Jim Brandle. “It is sort of ubiquitous, good-for-you snack food. So, here is the same strategy.”
While a strong Canadian dollar makes vegetable imports cheaper, farmers and retailers are wagering that consumers will pay a premium for fresher, locally grown produce. That’s partly because new Canadians, many of whom are vegetarians, spend up to 40 per cent of their food budgets on vegetables, according to the research from the University of Guelph.
The trick, though, is consistently growing domestic crops that are as good – or better – than immigrants can get “back home.”
“It is a pure sensory response in a supermarket,” Vineland research director Michael Brownbridge says. “You see it: ‘Ooh. I want to buy it.’ You touch it. Different people, they smell it, they feel it, they’ll want to touch it. So you have to pass all of those criteria to get that into somebody’s basket for sale.”
Mastering the crops (and ultimately the taste) is a critical challenge, since importing seeds from other countries requires certification. Additionally, there is a lack of registered pesticides for many ethnic vegetables and the need for hand labour can increase costs.
Getting the science right, however, could prove highly lucrative to Canada’s entire food industry, which encompasses farmers, food processors, grocery distributors and retailers. Ethnic grocery stores are already ringing up annual sales of up to $5-billion and growing at a clip of 15 to 20 per cent a year, according to CIBC World Markets Inc.
Mainstream retailers, meanwhile, are working vigorously to poach customers. Chinese eggplants, bok choy and bitter melon are now regular features in the produce aisles at many Wal-Mart Supercentres. Sobeys has also taken a similar approach with its FreshCo banner. Loblaw Cos. Ltd., meanwhile, acquired Asian food retailer T&T Supermarket Inc. and Metro Inc. scooped up a controlling stake in Marché Adonis, a major Quebec-based ethnic-food retailer.
Michael Forgione, director of produce at Ontario-based Longo Brothers Fruit Markets Inc., says consumer demand for exotic vegetables has grown for more than five years. In addition to collaborating with local farmers, Longo’s uses test kitchens and in-store publications to educate consumers on how to prepare ethnic foods.
“What’s been working well for us or selling well in our stores is [Chinese]eggplant, baby bok choy, okra, Napa [cabbage] bean sprouts,” he says. Already, bok choy and Napa cabbage are among its locally grown offerings. The retailer is eager to expand that list especially since its president and chief executive officer, Anthony Longo, sits on Vineland’s board of directors.
Satnam Bhathal, a produce buyer at Golden Groceries Ltd., a South Asian supermarket retailer with five locations in the Greater Toronto Area, is also seeing growing demand from mainstream consumers for exotic produce. “Our employees obviously make it at home, right? So they [our customers]know they can get the information from us,” he says.
Nonetheless, coaxing consumers to pay a premium for locally grown produce can be a hard sell in an era of food inflation and stagnant wages. To illustrate that challenge, Mr. Bhathal says he can sell Mexican round eggplants for 99 cents a pound, but he’d have to pay $1.50 a pound for a comparable Ontario-grown product – before applying his own markup.
“Some customers do care about whether it is [grown in]Ontario,” he says. “But some, they look at price and quality. They don’t care where it comes from.”
Golden Groceries is already buying okra, long squash and Chinese eggplants from Vineland’s field trials and the early feedback has been positive – although some customers report the taste is not exactly the same as imports from the Dominican Republic. “I think, over time, [Ontario-grown produce]will get even better than what Dominican Republic produces,” he says.
Back in Bradford, Mr. Verkaik acknowledges that crop diversification is fraught with risk but he remains focused on the long-term business potential. For instance, he’s been growing the Indian red carrot, which is shaped more like parsnip and has a sweeter taste, for about eight years now. While he has yet to master it, he is leveraging the production knowledge of his South Asian employees and keeping costs in check by using his existing equipment.
Aside from domestic sales, he’s also betting on growing export opportunities to the United States, which is already Canada’s top market for vegetables. In particular, Mr. Verkaik sees escalating demand in cities like Chicago, New York and Boston.
“If it goes well, it [crop diversification]doesn’t cost you anything and you’ve made money,” Mr. Verkaik says. “If it goes bust in the field, you lose your input costs and you could have a few thousand dollars per acre, if not a little bit more, in loss.”