Value Chains: Strength Depends On Partners’ Commitment To Success

Hands on the wheel, speaking into his cell phone, Gordon Schroeder drives up the Qu’Appelle Valley near Craven shortly before dawn, on his way to yet another meeting:

“ We have Mediterranean lamb sausage, cooked lamb in Moroccan orange sauce, Parmesan and Greek Feta cheese meatballs… and yes, marinated lamb kabobs,” Schroeder says.

Just listening to this exotic list of dishes makes one want to go for lunch right away. Schroeder is a man on a mission, you see. He is both Executive Director of the Saskatchewan Sheep Development Board and now General Manager of Canadian Prairie Lamb — the producers’ latest bid toward industry development.

“Saskatchewan racks and lamb chops are moving well,” he says, “but we need to get the trim, shoulders and legs to the market somehow. We figure that, by preparing dishes that are fully cooked and ready from frozen to hot on the plate in four minutes, our partners and Canadian Prairie Lamb, together, can generate significant revenue through increased consumption of lamb.”

After incorporating in 2003 and issuing shares earlier this year, Canadian Prairie Lamb entered into a promising alliance with Sunterra Meats and the Saskatchewan Food Centre in Saskatoon. Their goal is to develop a new line of frozen lamb dishes out of Saskatchewan. These frozen meals are currently being marketed through small outlets such as butcher shops in the province, but the potential is great when looking at markets where lamb consumers abound in Eastern Canada. To harness that market,
Canadian Prairie Lamb has developed a value chain — a new approach to revenue generation.

Sherri Dobbs is a Value Chain Development Specialist at SAFRR:

“Call it a business philosophy or a business development tool, a value-chain does not simply mean that value is added to a product. It is much more than that. A value chain is developing alliances with different components of the supply chain, who work collaboratively for mutual benefits,” says Dobbs.

Dobbs explains that one of the greatest challenges in promoting the value chain concept is to ensure the audience has an accurate picture of how they work and how they differ from the traditional supplier/buyer business relationships. In the case of Canadian Prairie Lamb, primary producers have entered into an alliance with a processor that readies the meat for transformation at a food preparation facility, where the meat is cooked, the sauces are prepared, and the meals packaged for shipment and distribution to targeted markets.

“It takes work to put an arrangement like this into place. There has to be rewards for all members of the value chain — its strength is in the relationships built between the links themselves and the rewards that ensue from these relationships,” Dobbs says.

Prairie Berries’ Sandra Purdy knows it very well. The Keeler-based company grows, processes, and markets Saskatoon berries and Saskatoon berry value-add products nationally and internationally. Recently, Prairie Berries played a key role in the development of a new company comprised of 16 other independent Saskatoon berry growers who collectively market their Saskatoon berries through Saskatoon Berry Partners Inc.

“Our consortium of producers has committed to providing Saputo all the Saskatoon berry puree it requires to produce its Saskatoon berry-flavoured yogurts, through Prairie Berries’ processing facilities,” Purdy says. “Saputo will, in turn, distribute the yogurts through its own channels. This generates revenue opportunities much beyond those available for syrups, pie fillings and jams on their own.”

Purdy adds that the commitment between value chain partners goes much beyond simple volume deliveries. It actually touches on something much more fundamental: information-sharing at all levels.

“To give Saputo the exact product that it needs, we need to know what texture of berry puree works best for their processing needs. It is to Saputo’s advantage to share this with us. They know it; we know it. There has to be a collective commitment to increasing efficiencies at each step of the process, for it can reduce costs and eventually contribute to increasing each value chain partner’s share of the revenue.”

For instance, “if Prairie Berries knows that it is more convenient for Saputo to work with five-gallon pails of puree, rather than puree delivered in bags, steps can be taken to facilitate everyone’s tasks, and everyone will reap the benefits of this arrangement.”

Clearly, then, value chains are a long-term business development tool to seize new market opportunities. Purdy and all value chain converts are quite confident of the potential of this approach.

“It has to be a win/win situation for everyone from the start. As for the rest, the market will tell us in due course. We’re banking that markets will like our move in the long run.”

For more information, contact:

Sherri Dobbs
Value Chain Development Specialist
Saskatchewan Agriculture, Food and Rural Revitalization
(306) 787-8537