The Elmira Auction
A win-win producers and sellers of local produce

Established as a response to the BSE crisis, this 60-member co-operative has given a boost to the Waterloo Mennonite community, helped change legislation governing on-farm produce sales and provided a bridge between growers and sellers

In 2002, Stuart Horst and his family got out of dairy production and into the heifer replacement breeding business. With demand for Canadian-bred heifers strong in the United States, the new direction looked promising. The family sank a significant investment into farm renovations and livestock acquisitions.

Then, on May 20, 2003, the BSE crisis erupted. “I remember that date well,” Horst says ruefully over the telephone. U.S. borders battened down against Canadian ruminant exports. Ontario’s heifer business disintegrated. By the fall of that year, the Horsts had lost $100,000 in cattle – money “we’ll never see again.”

So the family turned its attention to a small on-farm retail business that it had been developing. Like many others in the closely-knit Mennonite community north of Waterloo, the Horsts also became involved in establishing an outlet for their produce – the Elmira Produce Auction Co-operative (EPAC), Canada’s first wholesale produce auction.

Today, this joint venture is changing the landscape of Waterloo’s Mennonite community, where greenhouses, generous field acreage devoted to produce and farm-gate retail businesses are becoming as common a sight as livestock and barns.

It has been a catalyst for change in local municipal legislation governing on-farm produce sales. Last, but certainly not least, it has formed an essential bridge between those who grow and those who sell locally grown produce.

Established in 2004 in response to the BSE crisis, the auction is owned by a 60-member co-operative. It has been modelled on similar ventures, some of which have operated for more than two decades south of the border, mostly in the Mennonite and Amish communities in Pennsylvania and Ohio. Financing comes 100 per cent from private funds and the venture has received the blessing of the Mennonite church.

Nelson Wideman, the auction’s general manager, recalls that the first summer of operation took place under a lean-to at the Waterloo Farmers’ Market. The next year, it moved to the current location – an 80-by-100-foot building one road north of Elmira. There, it runs from early spring to November, three times a week during peak season (mid-July to mid-September), twice a week in the shoulder seasons and once a week in November.

The only limit imposed on those who can sell is geographic. Growers must be located within a 75-kilometre radius.

“We wanted to stay as local as possible,” Wideman explains. Some exceptions are made, “but we like to know ahead of time what’s coming and, preferably, crops that aren’t so plentiful in this area.”

Sellers range from hobby gardeners to large produce operations. Some use it to offload a surplus in a crop, others as a main method of marketing what they grow. The products they bring range from traditional fruits and vegetables to potted plants, firewood and unusual finds such as puffballs.

So far, the auction’s customers are mostly local. Often, they’re other farmers with farm-gate businesses, locally owned grocery stores, retail markets and farmers’ market vendors (some sellers are also buyers). A handful comes from as far away as Barrie and St. Catharines. Last year, the University of Waterloo began buying produce and this summer the University of Guelph’s hospitality services also visited twice a week.

Breakneck pace
The auction differs a little from other types. On the day of the sale, action begins with the arrival of products conveyed by trucks and horse-drawn wagons. In peak season, bidding begins on the larger lots, which are loaded on flat bed wagons and driven past bidders, who occupy stands on the exterior of one of the building’s narrower ends.

Bill Horst is the auctioneer. He’s been providing the service since the start. Horst says the goal is to sell at least three lots per minute, but even at that breakneck pace the sale usually takes about three hours to complete. 

Staff keeps track of who is owed what by issuing growers permanent sales numbers. A 10 per cent commission is the standard, with a minimum charge of $1 levied on small lots that command less than $10. Wideman says that this charge helps discourage smaller lots that are not only less lucrative for the auction but might also attract end-use consumers, which could put the auction in the awkward position of competing with its main buyers.

For many of those involved, the auction has opened up new directions and opportunities.
The auction plays a significant role as a sales outlet for the beefsteak tomatoes Stuart Horst’s family grows in a portion of their half an acre of greenhouses. He estimates that 95 per cent of these ends up at auction.

Aaron Horst, who lives 10 miles east of Listowel, says that the auction may not have changed what his family is doing – they were already growing produce to supply his sister’s produce stand when EPAC started – but it has had an impact on how they’re doing it.  “We used to just send the stuff off in bushel boxes,” he says. Today, they pack the produce in boxes supplied by the auction.

The auction has also changed how this family approaches harvesting. Where they previously picked as needed, now a crop’s ripened produce gets picked all at once. Horst says he likes the changes, calling the approach to harvest “more efficient.”

Establishing consistency in packaging and grading as well as quality has been among the greatest challenges, according to those involved. They’ve tackled it by offering sellers standardized packaging complete with the auction’s logo and introducing grower education sessions early on in the season. That approach appears to be paying off.

“The auction is getting a tremendous reputation for high quality,” says Peter Katona, executive director of Foodlink, a Waterloo non-profit organization which promotes locally grown foods to consumers.

Steve Martin, who buys regularly at the auction and sits on Foodlink’s board, agrees. That’s no mean feat for a community which ventured only four years ago into utterly new territory, he says. “They have learned quickly not only to grow but to market and package.”

Coping with sometimes dramatic price fluctuations has been another challenge. At this year’s June 12 sale, for example, strawberries sold for an average of $17.50 for a six-quart flat.

By June 25, that same flat sold for an average of $7, but then rebounded in the June 27 sale to $12. Prices remain steadier for some products, such as green beans, which have averaged about $15 to $20 for a half bushel for most of the season.

Noah Gingrich, who often sells potatoes and raspberries at the auction, says that the price drops are related to over-supply and usually happen during a product’s peak harvest period. He advises getting product in early during the harvest period to take advantage of higher prices and balance out the lower prices later on.

Consistent supply
Many pin their hopes of beating the sudden downward plunges on the yet-to-be-seen larger buyer, defined as either a large wholesaler or grocery chain. Stuart Horst says that the auction needs a more consistent supply to attract such buyers. “There are times when there is next to nothing there for certain products and that makes it impossible for wholesalers to get involved in the auction.” A larger buyer needs a consistent supply of a range of produce to justify trucking expenses, he points out.

To achieve consistency, Horst advocates taking surveys in the winter months to establish the amount of acreage growers are planning to dedicate to certain crops for the next season. So far, response to his proposal has been cool, he admits, with individual privacy being the main concern. Yet he maintains there may be ways to keep the individual information anonymous, and access to such statistics will help people to make informed choices. “We need to influence growers to balance out so we can have a consistent supply during the growing season,” he says.

Buyers, too, see the auction facing a host of other challenges, such as lack of computerization, a selling process that takes too long and cramped loading quarters.

While no one denies that there are growing pains, the successes are tangible. Sales in 2006 exceeded $900,000, a significant jump from $550,000 in sales the year before. That’s still a far cry from the estimated $800 to $900 million in annual sales that take place at the Ontario Food Terminal in Toronto. Yet the figures compare favourably to the auction’s U.S. counterparts. For example, sales at three auctions in Kentucky established about the same time as EPAC average between $1 million US and $2 million US in combined sales. The largest auction in Ohio sells about $2 million annually.

The Elmira auction is also beginning to be recognized as an essential tool in Foodlink’s ongoing campaign to foster local consumer markets for locally grown foods. Peter Katona says that consolidated supply, which the auction offers, is pivotal for attracting the support of larger buyers.

Until those larger buyers come along, the auction is providing smaller buyers, such as farm-gate retail operations and farmers’ market vendors, a way to augment their offerings to consumers. Consumer interest in buying locally grown foods is building and the auction enables these retailers to meet the demand.

Martin’s Family Fruit Farm is a case in point. Steve Martin buys produce at the auction to round out what’s offered at both his family’s on-farm retail store and its stand at the farmers’ market in St. Jacobs. The family specializes in apple production and what’s bought at auction helps to diversify their offerings, especially in the months before the apple harvest. If the auction wasn’t around, “we probably wouldn’t be carrying the stuff that we are carrying now,” he says.

Indeed, having the auction so close at hand has played a role in the decision to expand the on-farm store’s floor space. With the produce available, “it made sense to try and sell a bit more of it,” he says.

The auction even has a tie to the Martins’ ability to expand their store. Earlier this year, the Township of Woolwich, where the Martins’ farm and the auction are both located, changed its bylaw concerning farm gate sales. The new bylaw permits farmers to dedicate 50 per cent of an on-farm retail business floor space up to a maximum of 37 square metres to selling produce sourced from neighbours or local growers.

Previously, growers were permitted to sell only the products they grew. The only exception in the new bylaw applies to cut flowers, which must be bought either from Woolwich farmers or from the auction.

Stuart Horst and Peter Katona were both part of an agriculture advisory committee which worked with the township to promote local agriculture. They say the bylaw was put into place to help nurture the auction. That supportive attitude, they say, is a far cry from the township council’s response to the auction when it was first proposed.

Jeremy Vink, a planner with the township, agrees. Back then, there were fears the auction would become a farmers’ market, he says. (A large farmers’ market already operates in nearby St. Jacob’s.) Since that time, it’s become clear that the auction is an entirely different beast. “By its nature it won’t become large,” he says. “It’s not going to attract farmers from a significant distance away because it wouldn’t be cost effective.”

In September, council finally gave the auction its official stamp of approval: permanent zoning (conditional on EPAC conducting an archeological study of the property first) to replace the temporary zoning that previously allowed it to operate.

Now, there’s nothing left to do but grow, something both buyers and sellers are confident will happen.

“It’s a win-win situation,” says Martin. “It’s good for them (the growers) but it’s also good for the community to have healthy local agriculture being grown.” BF

A learning curve for Floralane Produce

For Stuart Horst, who operates Floralane Produce north of Waterloo with his family, making the switch to growing produce has not just been about becoming involved in the Elmira Produce Auction Cooperative (EPAC).

Since 2003, Horst has added half an acre of greenhouses to grow beefsteak and grape tomatoes.

The family also grows about 7,500 square feet of flowers to sell in the spring along with basket and bedding plants.

Some of the produce is sold at the family’s on-farm fruit and vegetable market. Horst sells about half of his grape tomato crop to an area wholesaler and about 95 per cent of his beefsteak tomatoes through EPAC. Demand for his grape tomatoes is also growing at the auction, he says, estimating that this year he’s sold an average of a pallet and a half a week (he sold none there last year). Eventually, he would like to sell all of his grape tomatoes through the auction.

In the meantime, demand for his products and business at the on-farm store is brisk and he says it has meant a real headache to figure out financing to keep up with the rapid growth.

He credits EPAC for helping to stimulate interest in buying locally-grown foods and, like many of those who sell at the auction, he also buys there to help augment what’s sold at the on-farm store.

The former dairy farmer says there has been a learning curve to operating a greenhouse operation.

When the family first started, the tomatoes were planted in soil which was too heavy and didn’t have a good ability to leach. On the advice of an Ontario Ministry of Agriculture Food and Rural Affairs specialist, they replaced the soil with coconut fiber bags. Horst says the growing medium sustains a garden-grown tomato flavour. So, too, does the decision to leave tomatoes on the vine until they’re ripe. BF

Commitment is the key to a produce auction’s success

Produce auctions have operated Stateside since the launch of the Leola Produce Auction in Pennsylvania in 1984.

Amish and Mennonite communities in Pennsylvania, which were seeking an alternative to growing tobacco, came up with the idea. Auctions have since emerged in several other states.

Many attribute the success of the business model to the unique features of the communities that developed them. “The auction is serving a natural and very cohesive and well-ordered community,” says Peter Katona, executive director of Foodlink, an organization that promotes locally grown foods to consumers in the Waterloo area. Among the strengths these communities bring to the table are the ability to compete in delivering labour-intensive crops and a long-term commitment.

Commitment is key, says Katona. In the case of the Elmira Produce Auction Co-operative (EPAC), “the temptation to deal with the wholesaler and deal one-off is huge,” he says. “Yet the community knows that one-off dealing would disrupt the auction.”

So can those who don’t live within a closely-knit religious community repeat its success?

Produce auctions in Kentucky may hold the answer. Mennonite and Amish populations migrating to the area founded two of the state’s four auctions, one in 1996 and the other about three years ago. The other two were established about three years ago with the aid of tobacco transition funding intended to help the state’s farmers shift to new markets.

Tim Woods, an extension professor with the University of Kentucky’s department of agricultural economics, says the two state-funded auctions are struggling. Despite having the advantage of prime locations, there are problems attracting growers. Without the growers, it’s difficult to attract buyers.
For many of the U.S.-based auctions, the ability to attract buyers and retailers from a broader geographical area is the mark of maturity. The early arrival of produce such as cantaloupes at Kentucky’s oldest auction will draw buyers from out of state, Woods says. And at the Mt. Hope farmers’ produce auction in Ohio, which has been in operation for 12 years, the biggest buyer is a locally owned family grocery store with about 14 outlets. It’s one of two such regional retailers who buy there regularly.

Attracting those larger buyers was a challenge, admits Jim Mullet, Mt. Hope’s manager, and some preconceptions had to be dispelled. Many thought, for example, that watermelons and cauliflower couldn’t be grown in the state. Then there was the need to ensure enough produce would be available to fill large truckloads. It’s easier to sell a semi-trailer truck load than a pick-up load, he explains.

Woods adds that the auction’s greatest appeal – the seasonality of its products - is also its greatest vulnerability in a wholesale marketplace used to working around the seasons by using refrigerated semi-trailer trucks to collect produce from any corner of the country.

Back home, Jason Ryder, chair of the Fresh Vegetable Growers of Ontario, doubts that the auction model would benefit growers in Ontario outside of Amish or Mennonite communities. Without the steadying influence of a community behind the venture, auctions may be too vulnerable to market flooding and the resultant price fluctuations, he says. BF