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age of instability

All of Livestock Water Recycling's customers for its waste water filtration systems were American but recently it made a deal with a Lebanese dairy firm. The Calgary-based company also has its sights set on Europe and its home market for expansion.Sami Siva/The Globe and Mail

For Livestock Water Recycling, it’s both a bad and a good time to be in the manure business.

The past year was difficult for the Calgary-based company, which manufactures filtration systems that extract clean water from animal waste, given the turmoil caused by North American free-trade agreement renegotiations.

Steel tariffs imposed by the United States in June and Canada’s retaliatory tariffs nearly sent the company, which was using U.S.-made materials in its machines, into crisis mode.

“It was too much for us to be able to take in,” says chief technology officer Karen Schuett of the 25-per-cent tariffs. “It was enough of a cost uptick that it was going to affect our year in a big way.”

With customers expecting deliveries, LWR was forced to scramble for alternatives.

The company settled on a decision to build its own moulds, which would use a recycled composite blend to produce necessary materials. The shift was expensive, running at more than $200,000 in capital investment, but management believes it can again produce systems at the same cost as before the tariffs were enacted.

“It was the difference of being able to fulfill the contract or not,” Ms. Schuett says. “We won’t be buying that material from the U.S. any more.”

The situation highlighted for LWR the risks of being too exposed to suppliers in just one market, especially during an era of uncertainty. It also made the company, a subsidiary of Calgary-based water filtration parent IWR Technologies Ltd., think twice about having all of its customers in the same place. All 15 of the farm sites it services were in the United States.

Livestock Water Recycling's system extracts clean water from animal effluent. Its new Lebanese customer, for example, derives 600 cubic metres of clean water a day.

Yet, global turmoil of a different kind – climate change – is now also presenting the company with new, unexpected opportunities.

At the same time as the steel problem was unfolding, LWR received a call from Liban Lait, one of the biggest dairy operations in Lebanon. The farm, which oversees 3,000 dairy cows, was looking for new sources of clean water.

Lebanon, like much of the Middle East, normally has a dry climate, but increasingly unpredictable weather patterns are now making agricultural operations in the region even more difficult to run.

“We operate between two mountain ranges and we normally get plenty of snow,” says Marc Waked, Liban Lait sales and marketing manager. “[But] for the past three years, not a single drop.”

The farm company discovered LWR online and set up a meeting. Mr. Waked was impressed with how LWR’s system removes solids and phosphorus materials from effluent, so he signed on as a customer in October. Lebanese Prime Minister Saad Hariri was at the contract signing.

Liban Lait expects its new system to deliver 600 cubic metres of clean water a day once it is up and running, a veritable bonanza at a time of drought.

(Most of LWR’s current clients use the processed water for either irrigation, cleaning facilities, or spritzing cows to keep them cool. The water can also be used for drinking with an added drinking water module.)

For its part, LWR is looking to use the Lebanon deal as a beachhead to the region. The company is also planning to service farms in Europe as well as its home in Canada now that it is able to produce smaller, less expensive systems more suitable to operations with just dozens or hundreds of cattle, rather than thousands.

“The environment doesn’t have borders,” Ms. Schuett says. “We feel like we can sell anywhere.”

On a dairy farm, filtrated water can be used for irrigation, cleaning or cooling off cows.

Agriculture industry observers say governments need to be more proactive in encouraging environmentally oriented companies, such as LWR, to help combat or mitigate the effects of climate change on farms.

“If the government were regulating closely how people dispose of manure and putting big incentives into buying this kind of machinery, it would really help the industry,” says Grace Skogstad, chair of the political science department at the University of Toronto, who also specializes in agriculture and food policy.

“If governments are into the business of doing anything, this is one of those things they should be doing – protecting the environment.”

Bruce Muirhead, a professor of history at the University of Waterloo, says the need for Canadian companies to expand beyond the United States has always existed, but it’s more acute now, given the political and environmental uncertainty.

The problem is that Canadian companies are ill-prepared for the new reality.

“We’re almost in a transition period where we don’t know how to react to this,” he says. “It’s almost a completely different world. The things that we’ve done traditionally haven’t worked.”