A $30 million potato dehydration plant will locate in the Souris Food Park, according to an announcement made today by the Honourable Lawrence MacAulay, Minister of Labour, on behalf of the Honourable Fred Mifflin, Minister of Veterans Affairs and Secretary of State, Atlantic Canada Opportunities Agency (ACOA) and the Honourable Pat Binns, Premier of Prince Edward Island.
"The Souris Food Park has a lot to offer businesses looking for development sites," said Minister MacAulay. "The park is attractive to business — it's well-situated with a local workforce experienced in the food-processing industry, a seaport, and basic infrastructure needed by business operations. We're pleased that AgraWest Investments is locating here and creating new jobs for the Souris area."
"The establishment of the AgraWest Investments processing facility in Souris is good news for the area and indeed for all of Prince Edward Island," said Premier Binns. "This potato dehydration plant will provide up to 119 full-time direct jobs and provide significant benefits to the Island potato industry by creating a new market for "B" grade and off-grade potatoes."
The plant is being developed by AgraWest Investments Ltd., a new Canadian agri-food company based in Prince Edward Island. The company consists of Canadian and Dutch interests. The Canadian group is led by Charlottetown lawyer, Mark Ledwell; potato dealer, Ray Keenan of Rollo Bay, Prince Edward Island; and an agriculture financial consultant, Shelley Boutilier, of Lethbridge, Alberta. The Dutch group is led by Jan Hak, a food technologist well known in the international potato and vegetable processing industry.
The major supplier of equipment for the plant is H&H Industrial Systems, B.V. of The Netherlands. H&H will subcontract with local and Canadian equipment manufacturers. Anton DeBoef, the founder and current Managing Director of Fri-d'or, B.V., a large potato processing conglomerate based in The Netherlands, will provide technical and marketing support. Hak & Partners will oversee construction and commissioning of the plant.
AgraWest will manufacture dehydrated potato granules at the facility. The product will meet strict food regulatory requirements, using the best equipment and potato technology available in the world. The company has secured market contracts for its products in Europe, Japan, the United States and Canada.
Mark Ledwell, President of AgraWest Investments Ltd. said, "Today's announcement is the culmination of years of research and planning. AgraWest is a unique partnership between Canadian and Dutch resources, know-how, and technology." Ledwell emphasized that the project enjoys support from the PEI potato community.
"Without the encouragement and support of PEI's potato growers, the project could not proceed," said Ray Keenan, an AgraWest Director. "The plant will process over 150 million pounds of potatoes and produce over 10,000 tons of finished product annually." The plant will operate 24 hours per day, 10 months per year, and Mr. Keenan said that commercial production will begin in the spring, 1998.
"I am pleased to be involved in this wonderful project, " said Jan Hak, Vice-President of AgraWest and President of Hak & Partners, a food consulting and engineering company in The Netherlands. "We can see why studies would rate Prince Edward Island as the best place in North America to do business. We are hopeful that our PEI venture represents the first of many investments in PEI and in Canada."
Potato granules are manufactured in a dehydration process. Potato granules are used primarily as an ingredient in value-added food products such as baked-low-fat-potato chips, pastas, soups, baby foods and a wide array of baked food products. Granules are used in institutional and retail markets as a mix for mashed potatoes. The product is ideal for "food-aid" purposes because of its high nutritional value and because the product can be transported in bulk and stored easily. The port of Souris is ideally located for this purpose.
The AgraWest facility, located in Souris, PEI, will be the first stand-alone granular plant on the east side of North America. At the moment, there is a smaller-scale plant located — in southern Alberta. Other granular plants are located in the Pacific northwest region of the United States and in western Europe. Because the facility dehydrates smaller size potatoes, it complements the fresh market and processing sectors of the PEI potato industry. PEI has expressed an interest in landing a potato dehydration facility for over 10 years.
A major factor in AgraWest's decision to locate in Prince Edward Island is the supply of quality potatoes for processing. The primary source of supply for the plant will be off-grade potatoes from packing houses across the province. As well, the facility will benefit from the heavy concentration of Russet Burbank potatoes grown in the province — ideal for making potato granules. AgraWest will be purchasing approximately $3.3 million worth of product annually that would otherwise have little or no market.
The Government of Prince Edward Island, through its immigrant investor fund, is providing the company with a $16 million equipment loan which is to be repaid with interest in five years. Souris Food Park Development Corporation is providing the company, under a five-year lease arrangement, with the necessary site facilities including waste treatment, parking, storage and incubator mall space.
To finance the cost of the basic infrastructure necessary to accommodate the Food Park's scheduled and future food processing tenants, the Atlantic Canada Opportunities Agency will be providing the Souris Food Park Development Corporation with a $1 million repayable contribution under the Canada - Prince Edward Island Regional Economic Development Agreement, and an additional $1.7 million non-repayable contribution under the Canada - Prince Edward Island Co-operation Agreement on Industrial Development.
The Dutch and Canadian shareholders, in addition to providing management, leading edge food processing technology, and European market opportunities, are making an initial investment of $5 million cash in the company.
Other interested industry stakeholders are also expected to participate in this joint Canadian-Dutch venture through the purchase of preferred shares in the company. The company plans to offer up to $6 million of preferred shares on a private placement basis. The Province's economic investment arm, Enterprise PEI, has accepted an offer to purchase $3 million of these shares.