George Weston Ltd. announced Oct. 26 it would sell its Weston Foods fresh and frozen bakery businesses to an arm of Toronto-based bakery firm FGF Brands for $1.2 billion.

The company expects to close the deal before the end of its first quarter of 2022, pending regulatory approvals.

Fresh and frozen bakery goods by themselves made up about 75 per cent of Weston Foods’ 2020 net sales, the parent firm said, noting it’s still “actively engaged” in selling off that company’s remaining “ambient business,” which includes cookies, cones, crackers and wafers.

Just weeks after announcing a total of $25 million in upgrades for bakery plants in Calgary, New Hampshire and Wisconsin, George Weston said in March it planned to sell the bakery segment and focus instead on its retail and real estate businesses, which operate under the Loblaw and Choice Properties banners respectively.

Weston Foods produces private-label packaged breads, rolls, cakes, donuts, pies, tortillas and cones at plants in eight provinces and 11 states, along with brands such as Country Harvest, Wonder, ACE Bakery, D’Italiano, Casa Mendosa, Dave’s Killer Bread, La Baguetterie, Rubschlager, All But Gluten, and Gadoua.

George Weston had previously sold off its U.S. bread and baked goods business — which included brands such as Arnold, Brownberry and Stroehmann — to Mexican baking giant Grupo Bimbo in 2009, and its Neilson Dairy business to Saputo in 2008.

“The Weston Foods business has been the foundation for the Weston Group in Canada since its establishment in 1882 and the decision to sell it was a difficult one,” CEO Galen Weston said in a release.

FGF, he said, is “another long-standing family business with a strong presence in bakery and a significant footprint in Canada.”

FGF, which has facilities in both Canada and the U.S., bills itself as “a tech company that bakes,” making baked goods for the retail and foodservice sectors.

The company’s own brands include Stonefire flatbreads, Santosh vegetarian and vegan naan breads and Simple Joys cakes and muffins.

FGF co-founder Tejus Ajmera, in Weston’s release, said the company plans to invest in “people, facilities and innovation across our entire operations, in collaboration with Weston Foods president Luc Mongeau and his team.” — Glacier FarmMedia Network

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Agricorp, the province’s ag program delivery agency, on Nov. 25 announced the Canada-Ontario COVID-19 2020 Hog Maintenance Feed Initiative, which started effective Nov. 6 and will run through to March 31, 2021.

Hog farmers are eligible to apply if they owned market-ready hogs that were intended for processing, but were instead held back from shipping due to a “reduction in processing capacity at an affected processor.”

Hogs must have been scheduled for processing at one of two affected processors and instead held back from shipping for a minimum of eight days.

Eligible hogs must have been shipped either to Olymel’s federally inspected plants outside the province, or to Weston Abattoir, a provincially licensed facility at Maidstone, Ont., southeast of Windsor, between April 5 and June 13, 2020.

Hogs enrolled under the program are eligible for payment at a rate of 95 cents per animal per day, minus a seven-day deductible, to a maximum $28.50 per hog.

Hogs enrolled in the program must be fed “at a premise or premises located in Ontario” and their ownership must not have changed during the enrollment period. Enrolled animals must also have been sold for processing for human consumption at the end of their enrollment period.

Any further intakes for the program will be posted on the Agricorp website. — Glacier FarmMedia Network

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The scheme lasted from 2001 to 2015. As a result, Loblaw Companies fired several people and gave $25 gift certificates to millions of Canadians who may have been affected. Then Loblaw applied for immunity from Competition Bureau prosecution.

That’s a precious gift for a company for whom image and brand — think the trusted President’s Choice products — is everything.

Any supply chain-related issue is complicated. But in layman’s terms, what happened between Loblaw and Weston was inexcusable. For 14 years, Weston’s bakery products pricing gave Loblaw an unfair advantage, while disadvantaging other food retailers. The strategy was not so much about getting more money out of consumers — at least not recently — as about managing margins.

Bread is often a loss leader, an item sold at a loss to increase traffic in a store. In fact, according to Statistics Canada, a standard loaf of bread is cheaper today than it was in 2013.

A decade ago, the price of some bakery items doubled in just a few months. In 2007 and 2008, commodity prices were driven up by the growth in ethanol production. The price of a bushel of wheat reached unprecedented levels. Higher input costs were blamed for the enormous price hikes. Many countries were affected. But the market cooled and bread prices remained high.

Loblaw did the right thing by coming forward but questions have cropped up as details emerged.

For 14 long years, two of the largest players in the business altered market conditions, just because they could. Many wonder why it took so long for the company to realize it had a problem. In the grocery industry, a week is an eternity, let alone 14 years.

Most food businesses are a recall away from closing. Quality assurance and ethics are central to most businesses, including Loblaw. So it’s difficult for Canadians to believe the company had only just become aware of the issue. The case for plausible deniability at Loblaw is weak at best.

It’s likely that over several years, more than just a few employees were a part of this. Numerous employees have come and gone, moving on to other positions, probably in the food industry. So there’s a possibility that the culture of collusion and price-fixing may have spread. The movement of human capital, over time, may have created an industry-wide problem. That’s scary.

So we can conclude that Loblaw’s coming out is just the beginning. The Competition Bureau is also investigating Sobeys, Metro, Walmart, Giant Tiger and even bread producer Canada Bread.

It’s quite conceivable that similar schemes could exist in other parts of the grocery store. This matters to all Canadians.

The $25 gift card is just window dressing. What’s at stake is consumer trust and how the industry can maintain its social licence. Without this, growing revenues, supporting communities, innovating, partnerships, loyalty programs all become more challenging.

Independent grocers have the most to win out of this mess. They just can’t do what Loblaw and Weston admitted to doing for 14 years. They don’t have the market power.

But it’s doubtful that Canadians have the stamina or the discernment to punish the company by withholding their shopping dollars. Habits are hard to break, especially with food.

As surprising as Loblaw’s admission may be, the market is cruelly fickle. Despite breaking the law, most will have forgotten about Loblaw’s mea culpa within weeks — perhaps even days, given the time of year.

These cases are inherently complicated. For example, most people have forgotten that Hershey admitted doing the same thing just a few years ago.

And for Loblaw, this incident won’t be as damaging as the Joe Fresh facility disaster in Bangladesh in 2013, when more than 1,100 people were killed. Not even close.

Now Canadians have reason to doubt the grocery industry.

Nevertheless, the fact that a main food staple like bread was targeted by the bureau gives hope for change.

However complicated the situation may be, phrases like ‘price-fixing’ bring some clarity. Canadians understand that’s wrong, plain and simple. Let’s hope the industry understands, too.

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Toronto-based Loblaw and its parent firm, George Weston Ltd., announced Tuesday they’re aware of an “industry-wide investigation” by the federal Competition Bureau concerning a “price-fixing scheme involving certain packaged bread products.” The two companies added they are “co-operating fully.”

Montreal-based Metro also said Tuesday it’s aware of a Competition Bureau investigation into “supply of commercial bread,” concerning “certain suppliers and Canadian retailers.” Metro added that it “fully co-operates with the authorities.”

A Competition Bureau spokesperson, reached by email late Tuesday, said the bureau’s investigations are, by law, conducted confidentially.

The bureau said it can confirm it’s “conducting searches related to a criminal investigation into allegations of anti-competitive conduct contrary to the conspiracy provision of the Competition Act.”

The bureau said it was granted search warrants from the Ontario Superior Court of Justice in Ottawa, based on evidence of “reasonable grounds to believe that certain individuals and companies have engaged in activities” contrary to the Act.

That said, the bureau emphasized there’s “no conclusion of wrongdoing at this time and no charges have been laid.”

Weston’s retail chains includes Loblaws, Superstore, Provigo, No Frills and Maxi + Cie, while its bakery businesses include ACE Bakery, Ready Bake Foods and Weston Foods, which produces Country Harvest, Wonder and D’Italiano breads among others.

Montreal-based Metro operates stores in Quebec and Ontario under banners including Metro, Super C, Food Basics, Marche AMI and Marche Richelieu. –– AGCanada.com Network

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“We’re looking at delivering ALUS (Alternate Land Use Services) to eight new communities, four of which will be in Ontario and four in the West,” said Jim Fisher, Delta Waterfowl Foundation’s director of conservation policy. “It’s quite possible that we would do one of those in Manitoba.

“We’ve talked to a number of communities in Manitoba over time and we will continue to do that.”

The Weston foundation recently gave Delta Waterfowl two grants totalling $3 million to help expand ALUS (pronounced Alice), a farmer-designed, community-led program that pays farmers for providing ecological benefits, such as protecting riparian areas or ecologically sensitive land. Portage la Prairie farmer Ian Wishart came up with the idea in 1999 and the Keystone Agricultural Producers and Delta Waterfowl have championed it ever since.

The first ALUS pilot project ran in Manitoba’s RM of Blanchard for three years starting in 2006. The pilot cost $2.1 million, with government funding supplemented by the RM of Blanshard, Delta Waterfowl, and the Manitoba Rural Adaptation Council.

The project ended when the funds did, but it fulfilled one of its goals — sparking interest. There are now projects in Prince Edward Island, Norfolk County in southern Ontario, and Vermillion River County in east-central Alberta, Fisher said.

In P.E.I., ALUS is funded largely by government but elsewhere it relies on community support, with Delta Waterfowl working with a “partnership advisory committee” made up of local farmers, municipal councillors, and conservation and agriculture groups.

“They’re heavily engaged,” Fisher said. “We want those communities to run ALUS.

“We don’t want to be running ALUS across the country. We like to see ALUS run at the local level.”

The committee sets the prices farmers will receive for the ecological services provided — usually tied to land rentals — and decides which farms get funded. Delta Waterfowl, via the Weston foundation, supplies seed money, which is used to leverage additional funding, said Fisher, noting the Norfolk project is supported by 16 organizations. Farmers also contribute to projects on their own property.

“They’ve got skin in the game too,” Fisher said. “That tells you a lot. They want to pass their farms on to their kids and grandkids in better shape than they found it.”

Two of the four new western Canadian ALUS locations have been selected. One will include four rural municipalities east of Regina — Indian Head, Lajord, South Qu’Appelle and Francis. The other is Parkland County east of Edmonton.

There’s still lots of support for ALUS in the RM of Blanchard, Fisher said.

“The passion for it is there,” he said. “People in the community really want to get it going again. There are a lot of champions for it there.

“We learned a great deal from that. We’ve advanced ALUS on many fronts. Now we’re at the stage of demonstrating it.”

As with anything, the proof of the pudding is in the eating. When other communities, farmers and potential funders see ALUS working, the program gains supporters, Fisher said.

“This is a grassroots, community-led, farmers-delivered process,” he said. “At the end of the day we’d like this for all agricultural Canada and available to all producers in each province.”

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An ALUS project in Ontario’s Norfolk Country recently received $1.5 million to help farmers carry out environmentally sound practices on their land.

Meanwhile in Manitoba, ALUS remains stalled after its lone pilot project ended two years ago.

“It’s frustrating,” said Ian Wishart, who developed the concept while president of Keystone Agricultural Producers.

The Norfolk County’s ALUS project received a $1.5-million three-year donation from the W. Garfield Weston Foundation, a private foundation established in the 1950s by the Weston family which owns the food retail company Loblaw.

The foundation funds projects in land conservation, education and science in northern Canada, according to its website.

The Norfolk ALUS project was originally piloted in 2007. This money allows the pilot to move into a second phase, enabling it to “expand and make the ALUS concept a permanent way of life in Norfolk,” according to a statement from program administrators.

Wishart said he was glad to see his brainchild, developed in 1999, moving ahead in other provinces.

“Sometimes you have to export an idea before it becomes a good one,” he said. “There’s no more verification of a good idea than to have other people use it.”

But Wishart, who resigned as KAP leader last fall to run as a Progressive Conservative candidate in the next provincial election, expressed disappointment that ALUS appears to have ground to a halt in Manitoba.

Although born here, ALUS has spawned only one project in this province: a three-year pilot launched in 2006 in the western Manitoba municipality of Blanshard. Over 70 per cent of the landowners in the municipality participated.

A provincial working group is trying to keep the concept alive with a proposal for a province-wide program, using ALUS as a basis. The committee consists of representatives from KAP, Manitoba Beef Producers, conservation groups and five provincial government departments.

Progress appears to be slow. The group last met in June 2010.

But Yvonne Rideout, KAP general manager, said a draft report is currently being circulated among member organizations for comment. A final report should be ready later this year.

Wishart said government leaders support the idea of ALUS but money appears to be a stumbling block.

KAP tries to show that paying farmers to conserve land would actually save government money in the long run. But “(i)t’s very, very hard to show that to Treasury Board,” Wishart said. ron@fbcpublishing.com

———

“There’snomore verificationofagood ideathantohave otherpeopleuseit.”

– IAN WISHART

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“My role is to help ensure the best-quality potatoes as possible.”

Another crop of process potatoes destined for McCain’s french fry plant east of Coaldale is in the ground. Typically, McCain contracts about 11,000 acres with 32 growers in the province. About 25 per cent of the growers is exclusive to McCain, while the rest also contract with other potato processors in southern Alberta, such as Lamb-Weston and Maple Leaf.

While negotiations were still underway in mid-April, McCain’s field manager Mitch Cook expected an agreement to be reached shortly. He has meetings with a group of five growers under the Potato Growers of Alberta, who negotiate on behalf of the rest of the process potato growers. The negotiation takes about five months. Last year, an agreement was signed on March 28.

At the field level, growers for McCain plant about 90 per cent Russet Burbank, but also grow Shepody and Ranger Russet varieties. Growers plant around the middle of April, and harvest August 6 to 10 for earlies and mid-September for Russets.

Potatoes are stored on the farm up until the following August. Nothing is stored on-site at McCain. Instead, farms truck the potatoes to the plant on a regular basis throughout the year, delivering anywhere from 600 to 1,000 tonnes each day.

While Cook spends much of his time handling the phone lines and being the “go-to” guy for growers, agronomist Ross May spends his days working at the field level. May and a field rep work with growers to monitor agronomics, storage conditions and potato colour, using McCain’s CropMet and StoreMet programs. Different temperatures are required for different lengths of storage, since some potatoes are stored for 12 months or longer, while others are more short term. “My role is to help ensure the best-quality potatoes possible,” says May.

Some of the field issues for growers are blackleg and potato leaf row virus, says May. Over the past few years, blackleg has become more of a problem. There are no pesticides that control the bacteria, which thrive in cool, wet soils. It often comes in with the seed and can spread quickly, rotting the tubers to liquid. May says that 2004 to 2005 was one of the worst blackleg years in southern Alberta. Since then the growers have done a good job of controlling the spread.

Another disease affecting process potatoes is potato leaf roll virus. It is spread by the green peach aphid, which can be controlled. The most effective control method, however, is to plant virus-free seed. On the whole, the Alberta potato industry has low disease rates and relatively few insect pests.

According to the Potato Growers of Alberta, 68 per cent of Alberta’s potato crop is grown for processing potatoes into french fries and chips or other potato products such as shredded potato patties.

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Bimbo, one of the world’s top makers of bread, said it would finance the acquisition using a long-term credit of $1.7 billion, in two tranches, and a $600 million bridge loan with a one-year maturity (all figures US$).

Pending authorization from regulatory authorities, the deal is expected to close in the first quarter of next year.

The U. S. operation, Weston Foods Iwnc., will give Bimbo access to the Boboli, Brownberry, Entenmann’s, Freihofer’s, Stroehmann and Thomas’ brands of breads, rolls, muffins and bagels and strengthen its presence in the eastern U. S.

For Weston, the Torontobased owner of the Loblaw Companies, this sale marks the second such transaction this year, after it closed the sale of its Neilson Dairy operations to Saputo on Dec. 1.

“Having sold both the dairy business and the U. S. fresh baking business at good multiples, we will sit at George Weston Ltd. with strategically well-positioned companies with leading market positions in food retail and baking in Canada and a significant sum of cash,” the company said in a release. “We intend to use that cash wisely and at the appropriate time.”

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