Value Added Industry

Basic Aspects of the Issue

Canada has been known historically as an exporter of raw materials. Very little value is added to such resources. They are simply shipped to other countries for them to add value to them. It is only in the last few years, spurred on in part by the expansion of free trade agreements and development of large trading blocks on a global scale that Canada has given much attention to adding value to raw materials prior to export.

One major incentive for the development of value added industry developing in Manitoba has been he removal of the preferential shipping rate for grain known as the Crow Rate. Once this lower rate for shipping grain to the seaports was removed, it became economically wise to feed the grain to animals and ship the higher valued animals as export products. This has accounted for the development of intensive animal farming in cattle hogs and poultry.

Rural Development Institute Research Studies

• "Rural Employment : an International Perspective" -
  

• "Identification of Issues During Start-up and Operation of Value-added Agri-Food Businesses in Rural Manitoba" - Thomas J. McEwan and Richard Rounds
  This study was to identify factors critical to the start ups of value added agri-food companies. It is part of a series regarding opportunities arising from the Ag. industry for rural Manitoba. The study was done with interviews and telephone calls with owners of SME's in rural areas. Of the 55 interviews, 232 are represented in the results. There is a good model letter at the end for adaptation in replicated studies.

  The study looked at seven aspects:

  1. factors of success
  2. Challenges at startup
  3. challenges after start-up
  4. Role of technology in the business
  5. Advice to new entrepreneurs
  6. General comments and suggestions
  _________categories:
  1. Personal work habits
  2. Product Quality
  3. Markets and marketing
  4. Customer Service
  5. Innovations
  6. Teamwork and networking
  7. Risk Management
  8. Location
  9. Planning and Technology
  10. Roles of Government
  11. R&D

  Emphasis was also paced on :

  Business plan
  • Secure financing
  • Mdarket analysis

  This is an excellent resource for start up companies in this Province.

• "Restructuring Industrial Production and Tradable Services In Rural Canada in the 1990's" - Richard Rounds (ed.)
  These working papers are for the spring debate and refinement in order to go on to the fall conference. there are six papers in three groups:
  • #1&2 - Articles regarding settings manufacturing has to develop within and respond to
  • #3&4 - History of rural micro and macro setting development (USA and Canada parallels)
  • #5&6 - Two case studies - Saskatchewan and Quebec.

• "Issues Related to Value Added Processing of Ag Products in Manitoba" - Thomas J. McEwan and Richard Rounds.
  This study was to tease out the impediments to the development of value added processing of agricultural raw materials, owing to the slow pace of development in Manitoba. 11 cross-disciplinary meetings were held of twelve sectors, with representatives of field people in industry. The results are noted as being suggestive rather than exhaustive. Impediments were thought to be:
  • marketing boards (negative)
  • the crow rate (negative)
  • Foreign Trade Sanctions (negative) and the need for capital.
  • Manitoba farmers were felt to be OK at the farm gate
  • Reductions in technical and resource support
  • Unity needed

• "Agri-Processing Industries as a Vehicle for Rural Development -Alberta Case Studies" - Patrick G. Enright and R.G. Ironside
  This report is about how agriculture processors can contribute to employment creation in rural communities. Why does one community do better than another. A good bibliography is included. There are few case studies as this is a very new phenomenon. Three factors are isolated: ]
  • entrepreneruial ability
  • Dynamic local development investors
  • availability of unique agricultural products to work with.

• "Stimulating Rural Economies for the 2000's : The Challenge for Rural Manufacturing and Tradable Services" - Tony fuller, Paula Nichol, and Shirley Davie
  This study looks at the effects of the decline of manufacturing on rural areas(in Ontario especially) which goes with the decline of natural resources.

• "Small and Medium Sized Exporting Enterprises, Rural Restructuring and Local Economic Development in Quebec" - Andre Joyal. Chapter 11 in Changing Rural Institutions
  This report is of a study of 20 businesses in 5 regions and 6 sectors of the Quebec economy. They were all established businesses, with their names changed to protect the companies. The author has a typology for grouping the characteristics sought in the study:
  • Charactersitics of Executives' Behavior (turned out to be the key factors)
  • Characteristics of Business
  • Characteristics of external business environment

  The study was to find input regarding success factors and the impact of the Free Trade Agreement on Small and Medium Sized Companies (known as "SME's") who exported products.

  He does some case studies and illustrates some of the factors of success. He also has an interesting diagram for illustrating the typologies of exporters. I thin his diagram would be clearer if he used a cube with height width and depth to illustrate the three characteristics:

  1. Development of strategies (simple to complex)
  2. Mobbility of resources (Weak to important)
  3. Committment of Management (reactive to proactive)

Other Resources