Canada’s Connected Supply Chain

Through ups and downs, members of Canada’s fresh produce industry work together to ensure seamless distribution.

Originally printed in the October 2023 issue of Produce Business.

As of June 2023, there are 40 million Canadians, with the population growing at a record-setting pace, according to Statistics Canada. Although small — roughly only 10% of the U.S. — the country’s population supports a diverse fruit and vegetable marketplace, requiring a well-functioning supply chain.

Canada’s geography and market dynamics yield a complex supply chain, according to Steve Roosdahl, vice president of operations for Oppy in Vancouver, British Columbia.

“Due to the seasonality, quick movement and particular care produce requires, and because Canada is the second largest country in the world by land area, it’s a unique market for distribution,” says Roosdahl. “It’s multifaceted for a number of reasons including its weather and significant distance between major metropolitan centers.”

In function, Canada’s supply chain is similar to others. “Our volume may be less, but it’s very comparable in structure to the U.S.,” says Alex Zenebisis, president of Eagle Export in Saint-Remi, Quebec. “We follow all the same norms and regulations as the U.S. But, we have more land and grow more produce than our population can eat.”

Canada’s supply chain challenges are the same as for someone in New York, concurs Chris Sarantis, senior vice president at Canadawide in Montreal, Quebec. “We all want the best, most seamless movement of product, so that it’s smooth without any issues from harvest to final destination, and with the best quality product,” he says.

In terms of logistics, the supply chain is fairly normal, says Larry Davidson, chief executive of North American Produce Buyers in Toronto, Ontario, however the challenge is in availability of product because of weather issues.

“That affects the unpredictability of the chain,” he explains. “We used to have mostly dependable years with a few anomalies, now it’s reversed. It seems every year we have more weather events affecting supply.”

Stewart Lapage, executive director of operations and logistics for Oppy, believes it’s the industry connectivity that makes Canada’s diverse supply chain unique.

“Despite having various competitors and players, different sectors of the supply chain come together through industry associations to promote the well-being of the industry,” he says. “Collaboration is vital in solving immense challenges.”

WIDE PARTICIPATION, EVEN WITH CONSOLIDATION

Canada’s supply chain enjoys wide involvement in all segments, from field to plate, even though the industry is growing and changing in a variety of ways, says Hutch Morton, senior vice president of J.E. Russell Produce in Toronto, Ontario.

“Demographics and technologies are the largest drivers of change. The retail landscape has also changed, with consolidations in recent years.”

Although larger players exert significant presence and influence, Canada also boasts a thriving environment of smaller retailers, wholesalers and foodservice.

“It’s quite diverse, encompassing a range of large players in retail, with a mix of growers supplying regional markets, though they often collaborate under bigger brands,” says Roosdahl. “Retailers do hold significant influence, but the industry isn’t controlled by a single sector. Instead, it involves a mix of participants.”

There is, however, constant consolidation, says Davidson. “It’s the trend on all levels — retail, wholesaler and grower,” he says. “That theme continues and I’m sure this year will be another year of rounds of consolidation.”

According to Morton, the major retail players are the Big Three: Loblaw’s, Sobeys and Metro, each with a number of banners within their portfolios.

“There are still strong independent retailers in Ontario, although a couple of high-profile independent retailers have been acquired in recent years — Longo’s and Farm Boy,” he adds. “However, these stores continue to utilize the Ontario Food Terminal in a variety of ways, and we work hard to satisfy their unique requirements.”

KEY MIDDLE PLAYERS

Wholesalers and distributors play an important part in the Canadian retail space. “The Ontario Food Terminal is a critical cog in the wheel for retailers of all sizes,” says Morton. “Whether it’s finding market shorts for the big chains or buying daily for a smaller fruit stand in a city, there’s product for everyone at the terminal.”

Davidson explains North American was designed specifically to meet challenges in the supply chain. “We own two logistics companies, so we can deal more efficiently with the challenges,” he says. “Our import side deals directly with growers, from California to South America. When things get challenging, we’re in a good position because of our long-standing relationships abroad.”

“Customers rely increasingly on us because distribution is the most expensive part of the supply chain,” says Ezio Bondi, vice president of sales at Bondi Produce & Specialty Foods in Toronto, Ontario, a leading foodservice distributor supporting a myriad of restaurants and large hospitality institutions.

“As more products enter the market, many companies don’t want to finance their distribution. They rely on us to handle all the merchandise fitting their changing needs,” Bondi explains. “On the supply side, more suppliers are relying on our expertise — looking to smaller, regional distributors who can help them grow their business.”

Offshore Canada Logistics is North American’s full-service 3PL and cold chain logistics provider and transportation company. “We specialize in the transportation of perishable products across North America and from countries such as Chile, Argentina, Peru, Brazil, Uruguay, South Africa, Israel and Spain to Canada through ports in the U.S. and Canada,” says Sandro Saragiotto, president.

Eagle Export consolidates produce grown on farms around Canada for redistribution in Canada and the U.S. “Our claim to fame is we have the biggest variety of produce you can order from one company,” says Zenebisis.

“We take care of all the details and communication. Our growers and customers don’t have to deal with supply-demand trends, weather trends or pricing issues. As companies are constrained in terms of employees and labor shortage, we fill the gap.”

Canadawide’s wholesale distribution business imports product from all over the world. “We also handle Canada-grown,” says Sarantis. “We’re a full-service, A to Z wholesaler with anything fresh.”

GROWING AND EXPORTING

According to Agriculture Canada, despite a relatively short growing season, Canadian farmers produce a wide range of fruits, such as apples, peaches, nectarines, pears, plums, prunes, cherries, grapes, blueberries, cranberries, strawberries and raspberries. Canada also has significant production in field vegetables, greenhouse vegetables and mushrooms.

Canada has a variety of products exported to principal markets around the world including pip fruit, greenhouse, berries, potatoes, root crops, onions and more, according to Oppy’s Lapage. “While their reach spans across regions from Asia and Europe, the U.S. remains a significant destination for our exports due to its proximity and demand.”

Canada’s fresh and frozen fruit exports have grown by 30.2% over the last five years to reach an all-time high of almost $904 million in 2021, as reported by Agriculture Canada. The statistics show, with over $530 million in exports, blueberries continue to be Canada’s top fruit export, accounting for 58.7% of the country’s fruit export value in 2021, followed by sweet cherries, cranberries and apples.

Canada’s largest greenhouse vegetable trade partner is the United States. In 2021, the value of exports to the United States accounted for over 99% of all Canadian greenhouse vegetable exports, says Agriculture Canada. The U.S. is also the top export destination for fresh mushrooms, accounting for more than 97% of export values.

IMPORTING TO FILL DEMAND

Canada’s supply chain relies on imports to fill the diverse demand of its population and accommodate its short domestic growing season.

“Approximately 90% of the products sold in Canada have been imported into its supply chain, so it covers a wide range across the produce department and at different times of the year,” says Lapage. “There are really no categories that Canada can be self-sufficient on year-round without supplementing our domestic supply with imports.”

Yet importing adds risk to the chain. “Generally speaking, the further away something is, the higher the risk something can go wrong,” says Julian Sarraino, chief operating officer at FreshTaste in Toronto, Ontario. “It becomes delicate and tricky.”

The import process primarily involves importers and marketing companies. “Although some growers see an opportunity to go direct, the benefit of partnering with a company such as Oppy is that we find the right home for the product growers send,” says Roosdahl.

Importing is the largest part of North American’s business, says Davidson. “The end result is the consumer having more and better product available.”

“For example, we’re fortunate to be one of the 17 Sun World licensed importers in North America, which gives us the opportunity to import AutumnCrisp,” he explains. “The ability to import this product and make it available really changes the category for the better.”

J.E. Russell imports a high volume of leafy greens, packaged salads, berries and vegetables from California, Arizona and Mexico through the course of a year, according to Morton.

“We rely on close relationships with shippers and a small group of logistics companies to ensure the smooth flow of product across borders,” he says. “It’s a long way from a field in California to a plate in Ontario, and ensuring product safely and efficiently moves across that distance is paramount to what we do as a wholesaler.”

Canadawide also imports product from Europe, according to Sarantis. “We have challenges from there as well, but logistics have been much improved,” he says. “Last year, we had some maritime issues with vessels and scheduling, but it’s been corrected and we’re seeing much more reliable shipping.”

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Influence Of Technology Widespread in Canada

All parts of Canada’s fresh produce supply chain are implementing technology.

“We’re getting to the point where technology touches all aspects,” says Chris Sarantis, senior vice president at Canadawide in Montreal, Quebec.

One example he cites is shipping companies installing temp readers, GPS and tracking systems. “We are much more precise in the information we give to customers waiting for the product. Every piece of information we get can have a huge impact on something in the chain,” says Sarantis. “We’ve been using GPS forever, but now we’re using it to get real-time updates on exactly where the truck is.”

Steve Roosdahl, vice president of operations for Oppy in Vancouver, British Columbia, agrees technology plays a crucial role in Canada’s supply chain. “It’s driven by challenges in traceability, food safety and efficiency,” he says. “Automation and integration of systems are key components.”

Growers are implementing tech solutions for greater productivity. “There’s more machinery, packaging and harvesting systems,” says Alex Zenebisis, president of Eagle Export in Saint-Remi, Quebec. “There’s also more tracking and temperature control systems. If companies are missing employees, they need to turn to technology to fill the need.”

Sarantis says growers he talks to are constantly evaluating technologies for planting and harvesting. “One of my grape growers told me they’re looking at technology to harvest grapes in the dark, which would be more advantageous than harvesting in the heat,” he says. “There are a number of things on the grower/shipper side, and I see some individual growers experimenting with their own technologies.”

According to an Agriculture Canada report, Canadian producers have made significant capital investments in high-tech greenhouses to meet increasing demand for fresh vegetables year-round. Also, wholesalers and distributors employ tech to gain efficiency.

“The biggest technologies used by J.E. Russell Produce are those that power our internal systems,” says Hutch Morton, senior vice president, in Toronto, Ontario. “All our ordering, receiving, warehousing, inventory, sales, accounting and food safety are handled by a single system. It has proven to be a powerful and efficient tool.”

Eagle Export uses an inventory management system for traceability and food safety certifications. “This is crucial and has been the norm for a while now,” says Zenebisis. “We’re pretty ahead of the curve. We are always connected to the system with cell phones and tablets. We can see what trucks are loading where, how many drops are in the truck, how many customers are in the truck, all remotely.”

Oppy has its own proprietary internal system called Optimo that supports virtually every aspect of operations. “It has full integration between departments and partners, leading to lower operational costs and improved communication, along with more customization and agility in responding to market demands,” says Roosdahl.

Technology is increasingly important, particularly as the supply chain becomes more complex, says Ezio Bondi, vice president of sales at Bondi Produce & Specialty Foods in Toronto, Ontario.

“You need more sophisticated software and tech to navigate the chain. This year, AI has become a hot topic of discussion. It’s something we need to be looking at on the horizon, and it will be crucial for companies such as ours to have an AI strategy.”