Specialty Milling in Canada, part II

by Stormy Wylie
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Canada's milling industry, like many Canadian businesses, went through a major restructuring in the 1980s and 90s in response to stronger global competition and technological change. The number of mills in Canada declined dramatically between 1970 and 1990, but observers say the industry is healthier today because of consolidation and modernization, good capacity utilization, improved two-way trade with the U.S. and a rise in per capita flour consumption spurred by the growth of in-store baking. Two new mills in Canada, featured on the following pages, have invested cautiously and wisely in niche markets, hoping to capture market share through a service approach.

In the early 1990s, two words — oat bran — became the mantra of health conscious consumers in North America. After decades of being consumed mainly as a warm porridge on cold winter days, oats were suddenly rediscovered as being a "heart healthy" food. Soon, supermarket shelves were overflowing with oat-based breads, muffins, waffles, cookies, cold breakfast cereals and even some snack foods.

Although Canada is the third-largest oat producer in the world and the top exporter of oats (with most going to the U.S.)1, there were only a half-dozen oat milling facilities in all of Canada at the height of the bran craze.

In June 1991, a group of entrepreneurs and venture capitalist Arthur Block out of Vancouver started Can-Oat Milling Products, Inc. and built a state-of-the-art oat mill in Portage La Prairie, Manitoba. Sales doubled every year as the U.S. export market for oats exploded.

Can-Oat — which in mid-1998 became a wholly owned subsidiary of Canada's largest agricultural and food cooperative, Saskatchewan Wheat Pool — is the second-largest oat miller in the world today.

In late 1997, Can-Oat built a new oat processing facility on the outskirts of Saskatoon, Saskatchewan, in the heart of Canada's oat-producing belt. The Saskatoon plant, which was built for a cost of about U.S.$15.5 million, won an award earlier this year for combining unique design elements and construction principles with leading edge technology.

The Saskatoon features a concrete storage facility with storage bins that were slipformed in seven days. The bins are a honeycomb design instead of the traditional round shape, a design feature selected as much for cost effectiveness as for functional benefits.

The storage bins are connected to the mill by a "floating" concrete slab, which allows the bins to move as much as six inches when full or empty.

The Saskatoon mill also incorporates the latest in employee safety concepts, advances in kiln design, automation and process control, unique air handling concepts and intensive procurement and logistics. The plant was up and running within 14 months from design initiation in October 1996 to plant start-up in December 1997.

Dave Thiessen, plant manager at Saskatoon, and Ian Slimmon, who was plant manager at Can-Oat's facility in Portage La Prairie before taking over as operations manager earlier this year at FarmGro Organic Foods, Regina, Sas-katchewan (see story on opposite page), were given free reign in the conceptual design and process flow.

Trevor Pizzey, vice-president of operations for Can-Oat, said the company was looking for "creativity and the use of innovative technology."

THE WAVE OF CHANGE. Can-Oat's facility at Saskatoon processes an average of 350 truckloads of oats each month, each truck carrying 20 tons, for a daily milling capacity of 230 tonnes. The mill operates seven days a week, 24 hours a day, except for the two days each month it is shut down for maintenance and housekeeping.

While Can-Oat's Portage La Prairie mill produces a range of oat products, from rolled oats to oat flour to oat bran, the Saskatoon facility is an intermediate processor of two basic products: whole oat groats and steel-cut oat groats. The groats are sold to other down-line processors who make oat products.

Combined, the two Can-Oat facilities produce over 1 million pounds of finished product each day.

To ensure a steady supply of raw material, Can-Oat contracts six months in advance with oat farmers within a 200 mile-radius of each of the two plants. An employee at the Saskatoon plant sources raw materials and coordinates the logistics for his facility, rather than having that function done at the company's headquarters in Portage La Prairie.

"By buying the oats at our plant, we have a physical hands-on relationship with producers," Mr. Thiessen said. "We can understand their needs and know the growing conditions here. It allows us more of a personal touch."

Raw oats are brought in by truck and the finished product goes out by rail car to customers in the U.S. or to the port of Vancouver, where it is shipped on to Central and South America.

Mr. Thiessen said Can-Oat is unique in that about 95% of all finished product is exported, with the majority feeding the U.S. market. Other markets include Central and South America, Australia, Taiwan and Malaysia.

The Saskatoon facility can load 70 rail cars in two days, and each car has to be inspected and cleaned before loading.

The plant has 78,000 tonnes storage capacity for raw material in 28 bins, with another 9,000 tonnes in 15 finished product bins and 1,000 tonnes for by-products. (Oat hulls are used as filler in feed.)

Before a delivery of oats is accepted, the producer sends or brings in a sample, which is checked to ensure that it meets the quality specifications. The producer signs a contract and the delivered product is matched against the sample.

Oats are stored by variety, moisture and admixtures. Before processing, raw product is drawn from storage into the plant for cleaning to remove wheat, barley, thin oats, seeds, straw, rock and metal. The mill is equipped with eight magnets and three metal detectors that can detect metal smaller than a pen point.

Oats are separated by size and density, then weighed. Clean oats are stored and hulled as needed.

The milling process includes a dehuller to remove oat hulls, an aspirator to remove loose hulls, a scrubber to remove tricome hairs and a density separator to separate the hulled, raw oats. The raw groats then move into the kiln for conditioning. Using steam that reaches temperatures up to 200°F, this conditioning process deactivates the enzyme that causes oats to spoil within days after hulling. Finally, the oats are cooled and sized, and are left whole or steel-cut, depending on the customer's requirements.

The proprietary kiln design gives Can-Oat more flexibility in meeting customer's needs in terms of functionality and flavor, Mr. Thiessen said.

Equipment for the plant was sourced from several different suppliers rather than one single manufacturer. "It took more work on our part, but we wanted to put together what we feel is the best equipment in the industry," according to Mr. Thiessen.

The entire facility is automated. The plant manager has access to information about each piece of equipment, including how many hours is has been down for maintenance.

Can-Oat also implemented HACCP (Hazard Analysis and Critical Control Point) systems at both its facilities. "In the oat milling process, there are number of key areas to ensure that critical areas are met and that we have a good, safe product, from stabilizing the oats to ensuring they are free of any foreign material," Mr. Thiessen said.

Can-Oat is audited regularly by customers, and the company hires the American Institute of Baking to perform annual audits. Mr. Pizzey proudly displays the "superior" rating certificates his company has earned every year since beginning operations.

Safety is a high priority at Can-Oat, Mr. Thiessen said, and the company has an active safety committee among its 140 employees at both plants. "It's our number one priority, without question," Mr. Thiessen said. "We take safety very seriously and really listen to what our employees are saying."

Cat-Oat implemented a lock-out system, in which a single piece of equipment can be shut down for maintenance and cannot be re-activated by another worker from another control point in the facility. The air handling system circulates air out of the facility to eliminate dust and reduce the risk of explosion.

"People are not numbers," Mr. Thiessen said. "Everyone here is important and no one is more special than anyone else."