If Japan starts handing out honourary citizenships, you better believe Ray Price will be on their short list. Already, the Alberta-born farm boy has been to the Land of the Rising Sun more than 100 times representing Sunterra, the Price family’s storied, successful and diversified business.
The Prices export a majority of their pork directly to Japan and have taken domestic and international marketing opportunities into their own hands.
They’ve also become the independent food shop standard in Calgary, part of a playbook focused on leapfrogging ahead by tackling questions no one else has asked yet.
Price is the first to deflect any compliments by pointing to the matrix the family was born into.
“We’re farmers, we’re always looking to adapt and innovate,” he says.
Of course, experience shows that few farms have had what it takes to match their rate of growth. Can other farms follow suit?
In a question-and-answer below, Price talks about how agribusiness can be up and down, and how farmers who want to find success had better be prepared to disrupt, react, readjust and react some more.
Remember that advice: “disrupt, react, readjust, and react some more.”
But first, to supply some context, here’s a bit more family history.
Before it became the food production magnate and independent food shop standard it is today, Sunterra started out simply as a family farm near Acme, Alta.
The farm began in 1950 through parents Stan and Flo and grew slowly over time with their seven children. In 1970, the Prices shifted their farm focus over to pig genetics, forming Pig Improvement Canada Ltd.
It was one of the many bold moves that have become a hallmark of the Price family.
“It was a time of disruption,” says Price of their pig genetics. “Up until then, lots of pigs were outdoors, had health challenges and were mostly purebred, not crosses. So, switching to indoors, cross-breeding and intense genetics… it was a really new concept. We took that across Canada and developed the business on the pig genetic side.”
Quickly they carved out a niche across the country and changed the minds and practices of many producers. The Prices continued to work dutifully, building their genetic capabilities for their own operation and other Canadian pork producers alike, all while solidifying themselves as market leaders.
As the dawn of the ’90s approached, younger brother Glen was fresh out of the University of Alberta and spent a year and a half in Hong Kong, developing supermarkets and cutting his teeth in the food business like no other Price had done. When Glen returned home, Ray enlisted his kid brother, 23 at the time, to study up on retail opportunities in Alberta.
“By the late ’80s, we were starting to think about whether we were producing the type of pork that consumers want to buy,” says Price. “We were always interested because we never felt like the quality was getting through to the consumers. Being a commodity, going through a commodity plant, going through commodity retail, it wasn’t apparent on the differential.”
Upon Glen’s review and recommendation, the Acme clan decided retail was a viable play. They sold off their pig genetics and moved more into a combination of retail and pig production, the latter of which is now represented by 450,000 animals between Alberta, Ontario, South Dakota and Iowa.
They knew their seismic shift wouldn’t be a proven success without a risk, so off they went.
The family set up shop in Bankers Hall in the heart of downtown Calgary in 1990. The plan: Be the premier grab-and-go supper spot for Calgary’s C-suite.
However, best-laid plans and market reaction are two very different realities.
“Out of the blocks everyone came for lunch,” says Price. “It was a significant adjustment and we decided we better react.”
They swiftly responded and focused more on the lunch-going crowd by adding more registers, plus on-site production of breads and muffins to go along with their trend-setting unique open-concept kitchen.
“We’re farmers, we’re always looking to adapt and innovate,” Price says. “It was a surprise to us… but if that’s the way the downtown market wants it, we’ll re-configure the store and make it even more successful.”
And successful they were. Over the next 29 years, Sunterra Market blossomed into Calgary’s premier upscale independent groceteria featuring ready-made lunch, and — after all these years — supper to-go.
Today, Price estimates Sunterra has only managed to capture 1.5 per cent of the Calgary market. However, in a city of 1.2 million people, there’s success in such numbers.
Now, here’s that Q & A.
Country Guide: Considering how you have weathered change, including altering the entire business model, what are the marks of strong leadership today in agribusiness?
Ray Price: Part of it is certainly the ability to evaluate and then take risks. Anyone in the food system or agribusiness will have to take a level of risk because it’s a different world. We should be doing a lot more value-add in Canada and Western Canada. That comes with a level of risk — it is management risk, and economic risk and more demands on time.
In many ways farmers are very innovative, even a crop farmer. The technology available to them, the way they adapt, it’s phenomenal, yet some things stay the same. We put wheat in the ground, we harvest it and we sell it to Japan. On the farm we’re innovative, but beyond the farm we need to be more innovative as we work towards collaborating more. Like microbreweries, some of the small value chains (that have started to occur) through the beer, malt barley specifically, that’s exciting. That type of thing where people can get juiced up and excited about going downstream and taking a risk is important.
CG: How do the baby boomers of agribusiness ensure millennials and Gen Z will succeed and carry on what you and many others began?
RP: We have to have the capital side — the financing side — be willing to take more risks. Entrepreneurs and wannabes don’t want to give up the ability to have a big impact. We need a more aggressive approach on value-added ag, and then we can deliver to younger people and we can turn them loose. If it’s really hard, they’ll find another area and agri-food will be a loss for it, because if I can get $100K to do a high-tech startup and it takes $2 million to do one in ag, and it’s hard, it’s just like anything; capital moves to where the opportunity is. If we don’t provide the opportunity, we’ll lose people to other industries.
CG: What about the United States? Is Canada in financial competition with its American counterpart?
RP: The Canadian banking system is touted as the most conservative banking system. From an entrepreneurial standpoint it was already tight, and by virtue of the fact that we came through (the global financial crisis of 2008) without much loss, now it’s tighter.
The U.S. will take bigger risks on anything. Pigs is an easy comparison. The U.S. pig herd has grown over the last three years; Canada’s has not. We’re competitive on every criteria in pig production, but we’re not growing. At best, ours is static. We can get barns built in the U.S., but we have a heck of a time getting them built in Canada in terms of financing. We can do five barns for the same number of equity barns in the U.S. for every one in Canada.
In South Dakota, there’s zero state tax. Is it the reason we’d go to South Dakota? No, but if you add up the pieces, it’s not, “Why wouldn’t we be in South Dakota?” It’s, “Why would we be in Alberta or Ontario?”
In Canada you have higher uncertainty, taxes and barriers to enter the business, and higher capital requirements. It adds up to less competitiveness.
CG: Was the marketplace 30 years ago less competitive than today’s?
RP: The answer would be no. When we started in 1990 doing the meat plant and markets, we would have said that Alberta and Western Canada is, if not the leader, it’s amongst the leaders, to produce pigs on an efficient basis. At that time we were building barns… and were successful. We felt Alberta was the place to be: low-cost feed grains, supportive infrastructure in terms of federal, provincial and municipal governments, and access to markets through the Port of Vancouver. This was about the best place in the world to produce pigs and that’s why we started down the path of expansion.
Thirty years later, it’s a combination of us not looking at the potential political implications. Now you look at it, growth is hard. Instead of seeing opportunities, it’s daunting. If money is getting tied up… how do we get other things to happen? It grinds on you.
CG: For the fresh faces of agribusiness, what is the best pearl of wisdom you could offer?
RP: Develop relationships. That can be people that can invest with you, your customers, the people that work for you… suppliers, all those things. That’s the fun part of business.
We enjoy the relationship side of the business. If you’re having fun, then usually success and passion come with that, and if the suppliers come along, that’s exciting and fun. Others can do it by the art of a deal, getting the last possible cent out of a deal. That’s not our style. People can be very successful and that will work well for them, but where we strive and have fun is seeing the people that work for us all the way through.
Look at our new Soleterra d’Italia prosciutto plant. A family from Italy and us built a plant in Acme, Alta. I was just (in Italy). (They are a) great family with shared values and they’re building and growing their business. We both saw it as an opportunity. That wouldn’t happen without building strong relationships.
Store buyers really don’t have time or want to develop a relationship because what they’re after is the lowest possible price because it’s a lot easier to manage a formula than a person. That comes at the expense of the relationships. People want to learn more about their food and there is some return to that and I think that’s good.
I’ve seen big organizations that talk about relationships but don’t know what they are, but they can get away with it for a long time because they’re big and they buy low. For people small and starting out, you have to have relationships… whether it’s family, friends, bankers or workers. You have to find places to have relationships.”
CG: After the establishment of Sunterra in downtown Calgary, you moved heavy on the Japanese market. Why?
RP: As we started our Trochu pork plant, we saw markets outside Canada. We improved the plant from a food safety perspective, but it eliminated the ham and sausage production. We had to remove ready-to-eat… we had to dedicate ourselves to a dedicated pork plant, and that took us to Japan.
The first two to three years in Japan were a real big learning curve. We invested a lot to show them we were in it for the long haul. If you look at it as profit-loss money, we lost money for the first two or three years we were over there, but we looked at it as a long-term investment. Now, 26 years later, they’re still our best customer.
CG: Japan is known to have high standards on production and quality. What did this mean for Sunterra?
RP: The guy in Japan said, “Great quality pork, but you don’t know how to cut it.” In the first two years, 15 to 20 Japanese came over, including meat cutters, and we went over to Japan about 10 times, to understand what they wanted and how they cut it.
In 1996, we changed (our facility) over to a Japanese way. Using a CO2 stun process, they showed us how to cut and we started doing a hot skin pull rather than a blast chill. That enhances the quality, too.
We filled a container in a few days versus a week, and with some of the food safety we learned, it was coming in as chilled. It went from commodity frozen to better spec and chilled. It was better than what they required and had the same or better quality than their domestic Japanese products.
They’d say, “This is a Japanese plant, but in Canada.” Our food safety standards were higher than anybody else at the time I believe.
CG: Another important characteristic for Japan is presentation. How did Sunterra navigate that challenge?
RP: We learned very early on; if you can’t present well, then what is inside can’t be very good. We package our pork in boxes that are really strong, and appear very well. We have multi-colours on the boxes and a picture of Mom and Dad on the outside. It’s still important to customers there, even if they don’t see it. We also put Japanese characters on so they can easily tell if it’s a belly or loin.
CG: With such a laser-sharp focus, can you describe the transition away from pig genetics with many customers to a more table-top-focused international market?
RP: We were lucky to have outstanding people on our retail side, same thing on the meat side; the dedication and passion to do something different. It’s not really what our family has done because there’s only three or four of us that work in the business day-to-day. We have 1,000 people that work with us.
It took a few years, but it became exciting in a different way because we were selling pork into Japan. In order to remain viable, you always have to be changing. It was good before, but now it’s really, really good.