Maurice Maheu wishes the proposed business incubation centre at the Food Processing Development Centre in Leduc had been in operation when he was developing his line of meat products.
He would have been able to move into one of the dedicated bays and grow his business before moving into commercial premises. At the same time, he says, he learned quite a bit from the staff – food scientists and technicians – who help small entrepreneurs develop their food products for the market.
Maheu is just one of the entrepreneurs who have been helped by the centre, where scientists help clients develop and test a product that the client believes has market possibilities. In Maheu’s case, he developed a line of primarily meat products wrapped in puff pastry under the Country Mom label that can be found in IGA and Overwaitea stores in Western Canada.
The centre’s staff help scale up the recipe so the large quantities that are necessary for a production line are as tasty and meet the same quality standards as the original recipe.
The centre also has production facilities where a startup company can bring in its own staff for a day or two a week to process its products, packaging facilities, cold storage, locker and lunchroom space for staff, etc.
Through its connections with other players in the agri-food business – organizations including the Alberta Agriculture Research Institute, Alberta Barley Commission, Alberta Food Processors Association and ATB Financial – the centre is able to put startups in touch with granting and loan organizations.
“As these companies grow, the biggest problem is finding financing to build new plants,” says Ron Pettitt, director of the Processing Development Division of Alberta Agriculture, Food and Rural Development. “Banks are pretty tough customers unless you have the bricks and mortar to put up as collateral.”
The next stage will be a business incubation centre that will be part of a proposed 7,000-square-metre addition. The $12-million facility will be built with contributions of $5 million each from the province and the Alberta Agriculture Value-Added Corporation.
It’s expected the federal government will pitch in another $2 million. Plans for the addition have still to be drawn up, but construction is expected to begin next spring with completion in 2005.
The expansion will allow the food processing centre to bring under one roof the staff from the Centre of Agri-Industrial Technology in southeast Edmonton – which focuses on non-food uses of agricultural products – to Leduc. The Food Processing Development branch also has a consumer product testing centre in Edmonton and an applied research division in Brooks.
“You can engineer a food product, but if you, as a consumer, don’t like the look of it and don’t like the taste, the fact that it’s in a nice package will sell it the first time, but not the second,” Pettitt says.
Business incubation centres are a growing trend in North America, says Pettitt, noting that there are some 1,100 business incubators, ranging from community kitchens to centres, now attached to universities.
“The whole concept is to provide space for a group of entrepreneurs who are in start-up mode who can share experiences and provide some common services like reception, accounting, business planning and marketing.”
The business incubation centre offers 10 dedicated bays for companies that have outgrown the food processing development centre but are not ready to go out on their own. It also will help start-up companies develop business plans and tell them how to access capital.
It’s all part of a plan to grow Alberta’s value-added agri-food industry from a $10-billion-a-year business to $20 billion annually by 2010.
Pettitt reels off the names of companies whose products can be found at grocery stores: Basile’s Lasagna (now expanding beyond lasagna), Quality Fast Foods (which produces and packages fresh sandwiches and employs more than 100 workers), Cari-Bay Fine Foods (which makes chicken wings in a variety of flavours and Jamaican Jerk Seasoning), and Ceapro (not a food manufacturer but a developer of oat bran extracts used in cosmetics and animal shampoos). The shelves along the wall in the reception area of the centre are lined with a large array of products developed at the centre.
Another success story is Harimex in Strathmore, a biotechnology-based company that has developed a fresh meat-binding system that uses two natural meat proteins. Fibrimex is used to bind meat muscle tissues, and is sold in Canada, the U.S. and other countries. It worked out of the Leduc Centre for more than four years before building a production plant in Strathmore for $6 million.
President Conrad Baarda has high praise for the centre, “a unique system” that he credits with helping his company achieve success.
“You don’t have all the knowledge, so the staff in Leduc were very helpful.” The food processing centre is funded on a partial cost-recovery basis, the fee ranging from well below market levels and rising to near-commercial levels as the company’s products move into the food chain.
The centre does not restrict its service to start-up companies only.
Large, well-established food processors will often turn to the centre to develop and test a new product. They don’t get the same break on fees as start-up companies, but, as Pettitt notes, “It’s not always easy to stop a production line to run off a small batch for test purposes. ”