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Functional Food Business A Tough Sell

“I think we’ll all say that the commercialization piece has been the slowest to happen.”

– LEE ANNE MURPHY, CO-ORDINATOR OF THE MANITOBA AGRI-HEALTH RESEARCH NETWORK (MAHRN)

Scott Sigvaldason sold part of the family’s 106-year-old farm, rented out the rest and invested about $800,000 of his own money to develop a product that could provide his fellow Canadians with a healthy alternative to rice.

Yet still he found himself confronting business moguls on the reality television show “Dragon’s Den” this year seeking a capital investment that could get his fledgling company off the ground.

Sigvaldason is the product developer of Cavena Nuda, a hulless oat, that looks, cooks and tastes like rice.

You could hear the dragons wince when he described how much he has personally invested into the company. “My father is shaking his head in his grave and asking ‘what the heck has he done?” he confided to millions of television viewers Oct. 14.

“Scott, doesn’t that tell you something?” shot back fiery-mouthed Kevin O’Leary. “You’re selling the family cutlery to pursue this.”

MAKING THE PITCH

As if Sigvaldason can’t see that. That’s why he was in the “Dragon’s Den” in the first place.

The farmer’s reality TV pitch for investors to help him advance a food business illustrates the kind of hurdle facing would-be players in the emerging functional food sector.

Expertise for research and food product development abounds, but the cash to utilize it by no means grows on trees. Food entrepreneurs who do come up with a great product then find market development and product commercialization very tough and expensive.

“I think we’ll all say that the commercialization piece has been the slowest to happen,” says Lee Anne Murphy, co-ordinator of the Manitoba Agri-Health Research Network (MARHN).

The MARHN consists of three Manitoba-based organizations: the Centre for Agri-Food Research in Health and Medicine (CCARM), Richardson Centre for Functional Foods and Nutraceuticals and the Manitoba Government’s Food Development Centre.

This province is home to the Canadian International Grains Institute (CIGI), the AAFC’s Cereal Research Centre, and University of Manitoba’s departments of human nutritional science and food sciences. Manitoba Agriculture Food and Rural Initiatives staff also provide expertise to help Manitobans advance food business ideas.

CAPACITY

With all this infrastructure in place, Manitoba is well positioned to implement the kinds of strategy a federal think-tank, the Canadian Agri-Food Policy Institute (CAPI) proposed this summer, including the development of a concept of a “Canadian diet,” to emphasize the nutritional quality of foods produced by domestic

farmers, such as pulses, canola oil, and whole grains.

“We’ve had that capability for quite a while,” says professor of physiology Peter Zahradka, who is the leader of the CCARM research team and also chairs the MARHN network.

But food-related research and development isn’t exactly flush with cash either these days.

For example, the CCARM team in April released findings showing a diet containing pulses can help those suffering from peripheral artery disease, which thickens leg arteries and makes walking

difficult. The researchers saw major improvement in blood vessel function after eating pulses every day for eight weeks and note that no drug has shown the same benefit.

What’s next for those investigations? It’s uncertain for now, according to Zahradka.

“It’s languishing because there isn’t any money to

continue with that work,” he said. “We’re hoping that some funding will come soon.”

LACK OF INVESTMENT

The problem he sees is an overall lack of public investment both for research and development and for the kinds of product innovation work required to get more Canadian-grown functional foods to market. Dollar for dollar, we’re still investing far more to fix existing health problems, than preventing disease through better diet, Zahradka says.

The pay-back from the latter approach would not only improve Canadians’ health, but shrink the health-care budget. Diet-related chronic diseases presently consume a full two-thirds of the health-care budget.

An approach of health prevention through encouraging consumption of wholesome Canadian-grown foods also might help clear the kinds of costly hurdles products such as Sigvaldason’s hulless oats currently face getting to market.

One Manitoba initiative funded under the APF – ending March 2008 – focused on Manitoba-based products was the Manitoba Functional Food Opportunities Program.

The $1.5-million program directly involved growers and focused on the identification, isolation and characterization of functional ingredients with near-term market potential. The MFFOP supported 10 separate food-related projects including market development for flax-based products, developing novel beverages with saskatoon berries, evaluation of a value chain for forage-finished beef, and others.

“We’ve learned from MFFOP that engaging producers, being very targeted and then trying to reduce some of that start-up risk by using our facilities would be a way to advance,” said Murphy.

TECHNICAL CONSORTIA

That program preceded the formation of MARHN, which is now taking a cue from it and engaging in a new initiative: helping growers’ groups form technical consortia with researchers and small to medium enterprises. Until now, there’s been no mechanism to link these players, noted Murphy.

Consortia can help leverage resources to focus research and development, help mitigate startup risks by encouraging investment in commercial-scale production, and get farmers closer to the table so they don’t end up as merely price-taking, raw ingredient suppliers. The consortium model is set up so that each party has a share position that will allow the party to receive a royalty should they wish and should commercialization occur.

There’s clearly interest in forming these groups. Several producer groups, including the Manitoba Pulse Growers Association are expressing interest . The Nat ional Sunflower Association has recently agreed to form a technical consortia with MARHN. So have buckwheat growers.

CLASSIC EXAMPLE

Manitoba’s buckwheat crop is a classic example of a healthenhancing food crop in limbo for lack of funding to go anywhere. Research at CCARM has shown buckwheat may be able to help people with diabetes manage their blood glucose levels. But acres are now on the decline, and there are few dollars from checkoff to fund further research and development.

Buckwheat growers hope that forming a consortia will help them figure out the value of buckwheat as a functional food will be to farmers, said Manitoba Buckwheat Growers Association director Les McEwan.

But, once again, cash is the thing.

MAHRN and grower groups that form consortia will need to work with researchers to develop targeted, three-year, research proposals for consideration.

Those will then be put forward to the Strategic Innovation Fund, under the Growing Forward program. The SIF supports investment in initiatives brokered by the province among government and industry stakeholders.

EXTREME SPORT

As for Sigvaldason, he got the $250,000 he asked for in the “Dragon’s Den.” But he gave up a 50 per cent equity stake to get it.

In a recent Winnipeg Free Press interview he remarked that “after 20 years of farming as an extreme sport, going up in front of the dragons didn’t intimidate me in the least.”

The question remains – why should he have to?

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About the author

Reporter

Lorraine Stevenson

Lorraine Stevenson is a reporter and photographer for the Manitoba Co-operator with 25 years experience writing news and features. She was previously a reporter with the Farmers Independent Weekly and has also written for community newspapers in Winnipeg and Manitoba's Interlake.

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