Sometimes, a trade war is good for business

Haven Greens is a 5-acre indoor farm located in King City, Ontario, Canada about an hour-and-a-half north of Toronto. They grow cut baby leaf greens — things like lettuce.

“Marketplace Morning Report” host Kimberly Adams visited the farm a little more than a year ago on a trip to Canada, shortly after their very first harvest.

At the time, business was picking up because people in Canada preferred to buy Canadian products when possible. CEO and founder Jay Willmot told Adams that’s still the trend today.

Willmot The following is an edited transcript of their conversation.

Kimberly Adams: How has business been?

Jay Willmot: We've been making great progress in the Canadian market. We're now in all five of what we call Canada's major retailers: Loblaws, Sobeys, Metro, Costco, and Walmart. We we just launched our our first shipments to Walmart yesterday. And we also are now sending greens to the Associated Grocers of Western Canada.

Adams: For the benefit of our listeners here, can you just briefly share a bit more about what your business does?

Willmot: Sure. We operate Canada's first fully-automated leafy greens greenhouse here in King City, Ontario. We operate a fully touchless, pesticide-free, advanced indoor growing facility. It's in a greenhouse, and we we harvest fresh leafy greens for Canadians, and we do export a little bit to the U.S., 365 days a year.

Adams: When we last spoke, you said that America’s trade war with Canada — that was last year when the trade war was kicking off — that it was boosting your business because more Canadians were looking to buy Canadian rather than import lettuce from the United States, which people typically did. How have things been going since then?

Willmot: Well, we're we're trying to expand our greenhouse because we're sold out, and we can't grow enough to satisfy market demand in Canada. That's a good problem to have. But the reality is that even with us and a few other new entrants into the Canadian greenhouse market on the leafy green side, there's still a vastly outsized reliance on imported fresh produce into Canada. We've got a trade war going on. But at the end of the day, it's not about whether it's Canadian or American. It's about a fresh product that tastes good, that's healthy, that people can afford. And so, for us, that's the real purpose of expanding our business.

Adams: One of the things you mentioned to me about your process when I came up to visit your facility is that because it's completely touchless, you reduce your risk of foodborne illnesses with your lettuce and your leafy greens. We've had some issues with that here in the United States as of late, and I wonder if that has affected your business at all?

Willmot: There was a cascading economic effect that found its way into the Canadian market as a result of what happened in the United States with cyclospora. The category in the United States for packaged salads in July and August reduced by almost 30%, so a huge drop-off.

And then in Canada, in Quebec in particular, a lot of romaine lettuce is grown in the summer months, and about half of it is typically exported into the United States market. So, in this case, with a 30% reduction in the category in the States, Quebec farmers were either unable to sell into the U.S. or were selling at a loss.

And so, in Canada, we started to see a proliferation of just excess supply across the board. Romaine lettuce, in particular, became very cheap, and so we had to compete with that. You know, our product is differentiated enough. Obviously, the foodborne pathogen issue pushed some people toward us. We actually expanded our share of category by about 11% over the same period. But we were still down in sales on aggregate about 10%.