Identification of Potential Agricultural Business …...Identification of Potential Agricultural...

Andrea Gunner, P.Ag. December 13, 2017

A Feasibility Assessment of Agricultural Opportunities at Eagle River 1

Identification of Potential Agricultural Business Opportunities for the

District of Sicamous and Splats’in Nation

December 13, 2017

Andrea Gunner, P.Ag. 4218 Wyatt Road

Armstrong, B.C. V0E 1B4 Phone 250-546-2712

Cell 250-308-6146 [email protected]


A Feasibility Assessment of Agricultural Opportunities at Eagle River i

Disclaimer

This report relies on primary research consisting of interviews with institutional and wholesale market customers as well as industry suppliers and secondary research (government sources and public documents) carried out between October 23 and December 8, 2017. A site visit was made to the property between the Eagle River and Old Town Road, Sicamous on October 16, 2017. The author is an agricultural economist based in the North Okanagan. The author is not a soils specialist and has relied on the work of qualified professionals to assess the agronomic suitability of the site. The author has relied on the most appropriate existing economic and market information on the various potential enterprises. It is understood that this information is reflective of current market conditions at the date of this report.


A Feasibility Assessment of Agricultural Opportunities at Eagle River ii

Table of Contents

Executive Summary.......................................................................................... 2 Introduction....................................................................................................... 3 General Site Context ........................................................................................ 3 Distance to Market............................................................................................ 4 Regulatory ........................................................................................................ 4 Industry Infrastructure and Labour Availability.................................................. 4 1. Potential Production Opportunity – Berry Operation..................................... 5

Background:.................................................................................................. 5 Market Opportunity:....................................................................................... 5 Agronomic Suitability:.................................................................................... 6 Assumptions of the Economic Model: ........................................................... 7

2. Potential Production Opportunity – Market Garden ...................................... 8 Background:.................................................................................................. 8 Market Opportunity:....................................................................................... 8 Agronomic Suitability:.................................................................................... 8 Assumptions:................................................................................................. 9

3. Potential Production Opportunity – Native Plant Nursery ........................... 10 Background:................................................................................................ 10 Market Opportunity:..................................................................................... 11 Challenges: ................................................................................................. 11 Industry Participants:................................................................................... 12 Agronomic Suitability:.................................................................................. 12 Cautions:..................................................................................................... 12

Recommendations.......................................................................................... 13 APPENDICES................................................................................................. 14

Sicamous Market Volume Projections......................................................... 14 Berry Establishment Budgets...................................................................... 15



Executive Summary A short list of potentially suitable agricultural enterprises was identified and examined for a site on the Eagle River adjacent to Old Town Road in Sicamous. The subject property is part of the traditional land base of the Splats’in Nation, who lived along both the banks of the Eagle River. Sekmas, from Old Town Bay to Sicamous, was one of their primary village sites. They were great fishers, hunters and had a tradition of seasonal rounds that included plant and berry gathering.1 The proximity to summer tourist traffic combined with the existence of Class 1 soils and water and power on the site, should make this site attractive for long-term lease to a qualified operator. The potential enterprise would require capital investments for production infrastructure, necessitating a minimum 10 year lease. The short-list of suitable enterprises consists of a berry operation, a market garden and a native plant nursery. Of these, a mixed berry operation was found to be the most feasible due to a lack of consistent supply to retail grocery and at local farmer’s markets. The lack of supply of organic berries is especially insufficient for demand. The berry harvest season also corresponds extremely well to the peak of the summer tourist traffic. A market garden would also work on the site but labour and management requirements are greater increasing the production and marketing risks. A market garden could still be a viable option for an experienced lessee with restricted capital for infrastructure as required by a mixed berry operation. A native plant nursery was found to have a number of risk factors associated with it. The greatest risk factor (marketing) would be alleviated if highway upgrades or similar projects requiring site remediation or reclamation are scheduled in the area. In such a situation, the completion of a detailed feasibility plan and business plan are recommended.

1 Jim Cooperman, The Splats’in Story, retrieved at http://shuswappassion.ca/history/the-splatsin-story/



Introduction This study investigates potential opportunities for an agricultural operation that fit with the resources of the project partners. An initial project meeting with Victor Cumming of Westcoast CED and Evan Parliament of the District of Sicamous, provided direction to explore and identify agri-food production opportunities within direct marketing, tourism or landscape horticulture sectors. In particular, the 3.0 ha (7.413 scres) of cleared, level, reasonably accessible private land (Class 1) in the Agricultural Land Reserve bordered by Crown land and forest between the Eagle River and Old Town Road was identified for its potential production capacity.

General Site Context The site is partially cleared, forested, floodplain bounded on three sides by the Eagle River. The infrastructure for power and water exists at the north end of the site. Evidence of floodplain exists throughout much of the site. Recent evidence of deer tracks, droppings and browse were also observed. Detailed agricultural land capability evaluation is covered in the Associated Environmental Report to the District of Sicamous and Splats’in Nation.2 For the purposes herein, the cleared, reasonable level and accessible 3.0 ha area of >349 m elevation in Class 1 soils, (northernmost (top of the soils map) marked in green portion) is the focus of this assessment. The residual Class 1 lands on the site are not cleared, level or accessible by vehicle most years from late May until early July, creating a substantial restriction to commercial agricultural production. Figure 1 Hybrid Satellite - Soils Map

2 H. Hamilton, M. Piorecky, Agricultural Capability Evaluation: Proposed Campground on the Eagle River, September 2017



Distance to Market The subject property is situated in Sicamous, in the Columbia Shuswap Regional District, off the Trans-Canada Highway with road access from Old Town Road and lake and river access from Shuswap Lake via the Eagle River. Sicamous has a population of roughly 2,4003. It is roughly mid-way between Calgary (population 1.39 million)4 and Vancouver (population 2.44 million)5 Sicamous is also an active summer tourist destination with a thriving houseboat industry which accesses the Shuswap Lakes from June to September. Twin Anchors Houseboats has recently moved their marina to Old Town Road, one kilometre past the subject property.

Regulatory The subject property is within the District of Sicamous as well as the Columbia Shuswap Regional District and is subject to municipal bylaws as well as the Agricultural Land Commission Act, the Food Safety Act, the Environmental Management Act as well as Farm Practises Protection (Right to Farm) Act.

Industry Infrastructure and Labour Availability There is reasonable infrastructure within the Columbia-Shuswap-North Okanagan (eg. production supplies, repair and maintenance services). Labour availability may be an issue given the median age of the population is 56 years old. The 2016 Census reported an unemployment rate of 13.3% with 1,205 people over the age of 15 in Sicamous reporting active membership in the labour force. This equates to 160 unemployed people in Sicamous in 2016.6

3 Statistics Canada, Census Profile 2016, retrieved at http://www12.statcan.gc.ca/census-recensement/2016/ 4 ibid 5 ibid 6 ibid



1. Potential Production Opportunity – Berry Operation

Background: The subject property is located adjacent to the former Abbott Berry Farm. The Abbott family moved to Old Town Road in Sicamous in the 1940’s and established a successful mixed berry operation. The farm was a viable enterprise providing a full family income for its owner and seasonal employment for staff with commercial plantings of strawberries, raspberries and blueberries until the last 1980’s.7 The subject property is located between the Trans-Canada Highway and Twin Anchors Houseboat Marina. It includes approximately 3.0 ha or 7.4 acres of reasonably accessible, level, Class 1 land, above the seasonal floodplain. Access to this land is via a narrow track which would likely require stabilisation in order to facilitate access for agricultural production. The residual Class 1 lands on the site are not cleared, level or accessible by vehicle most years from late May until early July, creating a substantial restriction to commercial berry production.

Market Opportunity: A good opportunity appears exist to supply fresh berries as well as processed berry products directly to the summer tourist population as well as the resident population due to the proximity of Old Town Road and the associated tourist traffic to the subject property. The local retail grocery stores are currently supplied with local blueberries by Madalea Growers in Mara and local strawberries by the Berry Patch in Salmon Arm but have no consistent local supplier for either fresh or frozen raspberries. D. Dutchman Dairy, a successful value-added processing dairy operation exists just of the Trans-Canada Highway in Sicamous currently purchases all their berries for ice-cream from Sandel Foods in Chilliwack. Sandel is the only BC food processor who can supply berries in a form suitable for ice-cream manufacture. D. Dutchman uses approximately 800 lbs. of blueberries and 600 lbs. of strawberries per year.8 The direct market (farmer’s markets, Community Supported Agriculture programs or CSA, farmstand) for fresh and processed organic berries of all kinds in the Shuswap is undersupplied.9 An immediate market exists for several thousand pounds of organic blueberries, both fresh and frozen. Strawberries are a

7 George Abbott, personal communication, November 19, 2017 8 Jake De Witt, D Dutchman Dairy, personal communication, December 2017 9 Hermann Bruns, Wild Flight Farm, Mara, personal communication, December 2017



challenge to grow organically but innovations in polytunnels have been shown to provide significant yield gains, improve berry quality and facilitate meeting retail market delivery requirements while reducing the risk of frost, hail, wind damage and scorch.10 The proximity of this site to Old Town Road and the weekly houseboat traffic would provide a viable site for farm retail sales during the berry production season June through August. Farmer’s Markets in the nearby communities of Revelstoke and Salmon Arm as well as Sicamous provide additional berry marketing opportunities. Table 1 Projected Weekly Market Volumes (lbs.): June - August11 June July August Blueberries – retail 0 2,400 2,400 Blueberries - wholesale 0 0 0 Raspberries - retail 0 2,000 2,000 Raspberries - wholesale 0 500 500 Strawberries – retail 750 1,000 1,000 Strawberries - wholesale 400 500 500

Agronomic Suitability: The level Class 1 land, mild climate and clay-loam soils would support a wide range of annual and perennial horticultural crops as evidenced by the thriving mixed berry farm on the neighbouring property from the 1950’s until the late 1980’s.12

10 retrieved at http://www.haygrove.com/en/growing-systems/commercial-polytunnels 11 Market volumes based on conservative primary market data from retail produce buyers and area growers 12 George Abbott, personal communication, November 19, 2017



Assumptions of the Economic Model: Recommended acreage = 3 acres (1 acre each of blueberries, raspberries and day neutral/everbearing strawberries)

Table 2 Berry Production Season Crop June July August Blueberries √√√√ √√√√ Raspberries √√√√ √√√√ Strawberries √√√√ √√√√ √√√√

Table 3 Berry Full Production Projected Yields Crop Full Production Yields

(lbs.acre) Blueberries 10,000 Raspberries 10,000 Strawberries 8,000 Capital Costs (estimated, mix of new and used equipment)13

Power Equipment = $20,000 Field Equipment = $15,000 Packing/Equipment Shed with Cooler = $15,000 Irrigation = $5,000 TOTAL Capital Costs (estimated) = $55,000

Annual operation costs depend on crop selection, weather and market conditions and management expertise. Detailed projections are included in Appendix A. Berry Enterprise Budget Synopsis14 Full Production Income = $25,000/acre Development Costs (includes land preparation, production infrastructure and planting) = $7,500-8,000/acre Operating Expenses = $12,000/acre Contribution Margin (to cover operator labour and management, overhead, debt servicing, taxes, insurance, depreciation and other fixed costs = $13,000/acre A range of potential berry processing opportunities necessitates further investigation to determine the projected costs and revenues. A commercial kitchen facility owned by the Splats’in Nation includes processing equipment necessary for making a range of value-added products. 13 BC Ministry of Agriculture, North Okanagan Strawberry, Raspberry and Blueberry Planning for Profit enterprise budgets 14 Income and expenses are based on very conservative yield projections, conservative market returns and generous costs of production.



2. Potential Production Opportunity – Market Garden

Background: The subject property is located between the Trans-Canada Highway and Twin Anchors Houseboat Marina. It includes approximately 3.0 ha or 7.4 acres of reasonably accessible, level, Class 1 land, above the seasonal floodplain. Access to this land is via a narrow track which would likely require stabilisation in order to facilitate access for agricultural production. The residual Class 1 lands on the site are not cleared, level or accessible by vehicle most years from late May until early July, creating a substantial restriction to commercial market garden production.

Market Opportunity: An opportunity exists to supply fresh fruit and vegetables directly to the summer tourist population as well as the resident population due to the proximity of Old Town Road and the associated tourist traffic to the subject property. DeMille’s Farm in Salmon Arm supplies the Mara Foodliner with in-season vegetables while Askews Foods, the main retail grocery, buys from a variety of distributors and producers throughout the Interior but both agree that the opportunity exists for a Sicamous grower to replace or augment, particularly if they could offer early, late or off-season selection.15,16 The Sicamous, Salmon Arm and Revelstoke Farmer’s Markets offer an additional market channel. Table 4 Projected Weekly Market Volumes17 June July August Salad Greens (bag)– retail 100 500 500 Salad Greens - wholesale 100 200 200 Sweet Corn (doz) - retail 0 1,000 1,000 Sweet Corn - wholesale 0 500 500 Tomatoes (lbs.) – retail 0 500 500 Tomatoes - wholesale 0 200 200

Agronomic Suitability: The level Class 1 land, mild climate and clay-loam soils would support a wide range of annual and perennial horticultural crops. Hot season crops such as 15 Chris Cannon, Produce Manager, Askews Foods, personal communication, November 2017 16 Thomas Hawkins, Manager, Mara Foodliner, personal communication, November 2017 17 Market volumes based on conservative primary market data from retail produce buyers and area growers



sweet corn and tomatoes would benefit from row crop covers early in the season to trap heat and ensure sufficient and timely production volumes for the tourist season.

Assumptions: Minimum feasible acreage = 3 acres Capital Costs (estimated, mix of new and used equipment)

Power Equipment = $20,000 Field Equipment = $15,000 Packing/Equipment Shed with Cooler = $15,000 Irrigation = $5,000 TOTAL Capital Costs (estimated) = $55,000

Annual operation costs depend on crop selection, weather and market conditions and management expertise. Market Garden Enterprise Budget Synopsis

Detailed information (pricing and costs) on small scale vegetable production is available at http://www.kpu.ca/isfs/enterprise-budgets.

Capital costs, input and labour expenses and returns all vary considerably,

depending on the type of crop grown.

Relatively easy entry into vegetable production can significantly affect market volumes and prices.

Small scale vegetable production requires skilled production and

marketing abilities.

Production labour requirements may be as much as 600-800 hours/acre.

Direct to consumer sales requires a marketing focus and appropriate marketing strategy.

Market Garden Enterprise Budget Synopsis18 Full Production Income = $40,000/acre Development Costs (includes land preparation, production infrastructure and planting) = $1,000-2,000/acre Operating Expenses = $15,000/acre Contribution Margin (to cover operator labour and management, overhead, debt servicing, taxes, insurance, depreciation and other fixed costs = $25,000/acre

18 Income and expenses are based on very conservative yield projections, conservative market returns and generous costs of production.



3. Potential Production Opportunity – Native Plant Nursery Background: The subject property is located between the Trans-Canada Highway and Twin Anchors Houseboat Marina. It includes approximately 3.0 ha or 7.4 acres of reasonably accessible, level, Class 1 land, above the seasonal floodplain. Access to this land is via a narrow track which would likely require stabilisation in order to facilitate access for agricultural production. The residual Class 1 lands on the site are not cleared, level or accessible by vehicle most years from late May until early July, creating a challenging restriction to commercial nursery production. The seasonally inundated floodplain may also create an opportunity for intercropping selected riparian species. Such an opportunity has not been investigated in this assessment. Vegetative species currently established on the subject property include: Yarrow (Achillea millefolium) Grand Fir (Abies grandis) Princess pine (Lycopodium obscurum) Poplar (Poplar spp.) Heal-all (Prunella vulgaris) Douglas Fir (Pseudotsuga menziesii) Bracken Fern (Pteridium aquilinum) Western Red Cedar (Thuja plicata) Wild rose (Rosa spp.) Thimble berry (Rubus parviflorus) Elderberry (Sambucus nigra) These species all have traditional medicinal and/or botanical uses. As well, woven baskets were made from cedar root, birch bark and pine needles19. The Secwepemc people manufactured fishing nets, dip nets, baskets and clothing from Apocynum cannabinum, commonly known as dogbane or Indian hemp. This was an important trade item before the white settlers colonised their traditional territory. Dogbane grows in average, dry to medium wet, well-drained soil in full sun. It is commonly found in gravely or sandy fields, riparian areas, in meadows, along creek beds, irrigation ditches, hillside seeps and fence lines in cultivated pastures. New plants begin growing in the late spring or early summer.20 Dogbane is harvested in the fall and left to dry or cure for 2-3 months. The cordage is harvested once the stems have properly cured. Willows are another important native species, both for stream bed stabilisation and fish habitat enhancement but also for basketry. Etsy and Pinterest have contributed to a resurgence of interest in basket weaving across North America21.

19 Sharing Traditional arts Across the Generations, Splats’in Tsm7aksaltn Society 20 Dogbane, retrieved at http://www.primitiveways.com/hemp_dogbane.html 21 Handmade – Basket Weaving Still Popular with Crafters, Detroit News, September 21, 2017



Figure 2 Splats'in Fishing Weir on the Shuswap River, 1891

photo courtesy of the Enderby Museum

Market Opportunity: Native plants are used in parks, municipal and private landscaping projects, and in site remediation (riverbank/streambed stabilisation, highway bank stabilisation and industrial site remediation. First Nations in the USA are very active in landscape restoration and site remediation. Tipi Mountain in Cranbrook and Twin Sisters in Moberly Lake are B.C. examples of First Nation owned and operated native plant nurseries offering plants for remediation and revegetation. Tipi Mountain also provides restoration services.

Challenges: Site reclamation and remediation contracts often specify very large

numbers of plants which are challenging for a newly established operation to supply

Retail contracts desire plant uniformity and consistency of supply on an ongoing basis



Native plant propagation has a high level of difficulty and requires a high level of horticultural skills and experience

Industry Participants: Bluestem Nursery, Christina Lake: formerly supply basketry willows and landscape grasses, sales limited to Enviro-Turf lawn seed as of spring 201722, www.bluestem.ca Natural Habitat Gardens, Sorrento small retail nursery supply shrubs and perennials from locally collected (Shuswap) seeds and cuttings for landscaping and restoration projects, operating by appointment only 23 http://ruralnetwork.ca/buyers-sellers/hatural-habitat-gardens Sagebrush Nursery, Oliver: native plant nursery offering trees, shrubs, grasses and perennials, also offering habitat restoration, hydroseeding and landscaping. www.sagebrushnursery.com Tipi Mountain, Cranbrook: a 100% Aboriginal Owned Native Plant Nursery which offers re-vegetation planning and implementation as well as custom seed harvesting, cleaning and propagation. 24 http://tmnp.tipimountain.com

Agronomic Suitability: The level Class 1 land, mild climate and clay-loam soils would support a wide range of annual and perennial horticultural crops. Variations in terrain and micro-climates from existing vegetation, combined with site selection and shade structures can provide good growing conditions for a wide range of native plant species

Cautions:

Nursery production requires specialised technical production and marketing abilities.

Native plant propagation has a high level of difficulty and requires a high

level of horticultural skills and experience

22 Jim Brockmeyer, Bluestem Nursery, personal communication, November 2017 23 Trish Wallensteen, Natural Habitat Nursery, personal communication, November 2017 24 Jason Meuleman, Tipi Mountain, personal communication, November 2017



Site reclamation and remediation contracts often specify very large numbers of plants which are challenging for a newly established operation to supply

Retail contracts desire plant uniformity and consistency of supply on an

ongoing basis Capital costs, input and labour expenses and returns all vary considerably,

depending on the type of crop grown. Demand for specific nursery crops may change faster than growers’ ability

to adapt. The industry has a shortage of unskilled workers and skilled management.

Nursery programs at Kwantlen College and regional colleges and universities attempt to alleviate this shortage.

Annual operation costs depend on crop selection, weather and market

conditions and management expertise.

Recommendations The proximity to summer tourist traffic combined with the existence of Class 1 soils and water and power on the site, should make this site attractive for long-term lease to a qualified operator. The potential enterprise would require capital investments for production infrastructure, necessitating a minimum 10 year lease. The Young Agrarians network www.youngagrarians.org is a potential avenue to attract a potential, qualified lessee. A mixed berry operation was identified as a feasible opportunity due to a number of factors:

Inconsistent/inadequate supply to retail grocery and at local farmer’s markets

supply of certified organic berries is insufficient for current demand

berry harvest season corresponds very well to peak summer tourist traffic

A market garden would also work on the site but labour and management requirements are greater increasing the production and marketing risks. A market garden could still be a viable option for an experienced lessee with restricted capital for infrastructure as required by a mixed berry operation. A native plant nursery was found to have a number of risk factors associated with it. The greatest risk factor (marketing) would be alleviated if highway upgrades or similar projects requiring site remediation or reclamation are scheduled in the area.



APPENDICES

Sicamous Market Volume Projections Blueberry July August Retail Farm Gate 1,200 1,200 Retail Farmer's Markets 1,200 1,200 Wholesale Askews 0 0 Foodliner 0 0 Total Weekly Volume 2,400 2,400

Raspberry July August Retail Farm Gate 1,000 1,000 Retail Farmer's Markets 1,000 1,000 Wholesale Askews 300 300 Foodliner 200 200 Total Weekly Volume 2,500 2,500

Strawberry June July August Retail Farm Gate 250 1,000 1,000 Retail Farmer's Markets 500 1,000 1,000 Wholesale Askews 300 300 300 Foodliner 100 200 200 Total Weekly Volume 1,150 2,500 2,500



Berry Establishment Budgets Blueberry Enterprise Budget, 1 acre, Retail $3.00/lb. Wholesale $2.50/lb Income Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Retail $2,400 $4,800 $12,000 $16,800 $24,000 Wholesale 500 1,000 2,500 3,500 5,000 Total Income $0 $2,900 $5,800 $14,500 $20,300 $29,000 Direct Expenses Year 1 Year 2 Year 3 Year 4 Year 5 Year 5 Land Preparation $200 Pre-Plant Operations 2,000 Planting 5,000 Care & Maintenance 1,500 500 500 500 500 500 Harvest 800 1,600 4,000 5,600 8,000 Cartons & Baskets 200 400 1,000 1,400 2,000 Marketing 0 100 200 500 700 1,000 Total Direct Expenses $8,700 $1,600 $2,700 $6,000 $8,200 $11,500

Contribution Margin -

$8,700 $1,300 $3,100 $8,500 $12,100 $17,500 Raspberry Enterprise Budget, 1 acre, Retail $3.00/lb. Wholesale $2.50/lb Income Year 1 Year 2 Year 3 Year 4 Retail $12,000 $19,200 $24,000 Wholesale 2,500 4,000 5,000 Total Income $0 $14,500 $23,200 $29,000 Direct Expenses Year 1 Year 2 Year 3 Year 4 Land Preparation $200 Pre-Plant Operations 2,000 Planting 3,000 Care & Maintenance 2,000 2,000 2,000 2,000 Harvest 4,000 6,400 8,000 Cartons & Baskets 1,000 1,600 2,000 Marketing 0 600 1,000 1,200 Total Direct Expenses $7,200 $7,600 $11,000 $13,200 Contribution Margin -$7,200 $6,900 $12,200 $15,800



Strawberry Enterprise Budget, 1 acre, day neutral, perennial plasticulture Retail $2.50/lb. Wholesale $2.00/lb Income Year 1 Year 2 Year 3 Retail $10,000 $16,000 $16,000 Wholesale 2,000 3,200 3,200 Total Income $12,000 $19,200 $19,200 Direct Expenses Year 1 Year 2 Year 3 Land Preparation $200 Pre-Plant Operations 2,000 Planting 3,000 Care & Maintenance 2,000 2,000 2,000 Harvest 4,000 6,400 6,400 Cartons & Baskets 1,000 1,600 1,600 Marketing 500 800 1,000 Total Direct Expenses $12,700 $10,800 $11,000 Contribution Margin -$700 $8,400 $8,200

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