Mikestrathdee’s Blog


Mango time

 

Mango Time

Kenya vegetable packer helps small farmers expand into fruit production

By Mike Strathdee

As Printed in The Marketplace – March/April 2018

Jane answers questions best

NAIROBI, KENYA – Jane Maina has a plan to increase the incomes of thousands of Kenyan farmers, and diversify her own business in the process.

Maina, managing director and co-owner of Vert, aims to reduce her vegetable processing firm’s dependence on European markets, and replace some of her nation’s imports of one of its favorite juices.

Through a partnership with MEDA’s M-SAWA project, (M-SAWA stands for Maendeleo- Sawa, or Equitable Prosperity) –Vert aims to train subsistence farmers how to grow mangos and passion fruit that meet international standards.

Vert has focused on shipping and packaging green vegetables since it started 18 years ago. French (green) beans and peas are picked at farms one day, packaged at Vert’s plant the next afternoon, then put on a plane to Amsterdam that evening.

It started small with one or two shipments a week of one tonne at a time. In 2017, Vert shipped 1,300 metric tonnes of beans and peas.

The firm currently has 71 staff. Its entire production is exported to the UK, Netherlands, Denmark,

Germany and Belgium.

In 2013, the European Union brought in new regulations regarding the import of vegetables from Kenya to increase tests for pesticide residues. Because Kenya doesn’t have national regulations on this matter, 10 per cent of all of Vert’s shipments had to be pulled out for physical testing.

The testing adds 24 hours to the time from farm field to store shelf, undermining Vert’s goal of having products on shelves within three days of receiving them.

MANGO TREE BEST

Many Kenyan mangos don’t make it to market

Maina saw an opportunity to pivot her firm in the face of these rules, and the uncertainty about future access to the UK due to that country’s Brexit plan to leave the European Union.

Farmers producing fruits and vegetables see up to 41 per cent of their mangos being wasted “year in and year out,” because they don’t make their way to market. Of Kenyan mangos that do make it to market, almost all are consumed domestically. The country imports most of its pulp for mango juice, and there are only six pulping plants in the country.

“The need for pulp was very clear,” she said, noting that as consumption of carbonated drinks dips, demand for fresh juices is on the rise.

Fruit pulping, primarily for the domestic market, is the value-added goal of the next phase of Vert’s evolution. “It’s mostly guided by the realization that we are over-relying on the European markets.”

Mango pulp is taken from second-rate fruit that cannot be sold fresh. Unlike the highly perishable raw fruit, mango pulp has a shelf life of up to 18 months.

In April, Vert will move to a new plant in Machakos, about an hour southeast of Nairobi, that is four times the size of the current 10,000-square-foot (932-square-metre) operation. One side of the plant will replicate its existing vegetable packing operation.VERT WOMEN WITH SNOWPEAS BEST

Vert shipped 1,300 metric tonnes of snow peas and beans in 2017.

A larger building will be dedicated to pulping mangos and passion fruit, as well as drying a variety of fruits, including mangos, pineapple and banana. Some of that dried fruit may make its way to North America later this year, once direct flights start from New York City to Nairobi. Vert has landed a private label contract for dried fruit with a major US retailer.

The biggest challenges for mango growers is the middlemen, who want to take the fruit before it reaches maturity, she said “If the farmers take on and sell the fruit (then), it means they will have less than optimal production.”

Middlemen often purchase mangos for five Kenyan shillings, (about five cents US), then turn around and sell them for 15-20 shillings, she said. “We seek to cut out the middleman.”

Doing this will allow Vert to control quality and improve margins both for Vert and its growers.

Matching grants offered by MEDA are very important to this project, as they close gaps that Vert could not do on its own, she said. Training of farmers to attain organic certification and maintain good agricultural practices that allow for full traceability of produce can be an expensive task. Without MEDA’s help, attaining annual renewable certification would cost more than either Vert or the farmers could initially afford.

“The fact the grants take care of this training cost for us is invaluable. We are then able to go in and provide the training with the support of MEDA, and make sure the farmers are using good quality produce, and we are then able to use these products, either for our drying line or our pulping line.”

Over the next three years, Vert hopes to work with 5,000 new farmers in addition to the 1,726 vegetable farmers that they currently have contracts with. They will also hire another 88 workers for their processing plant. Vert has consistently strived to engage women, both by requiring that groups at the farmer level select one female leader and practicing gender equality at all levels in its factory.smiling snow pea packer

Vert practices gender equity throughout its factory

Many of the farmers that supply Vert have plots of land of only one to two acres, including their home and the area where their animals graze. A mango farmers co-op that a group of MEDA supporters visited in January claims almost 470 members, a slight majority of whom are women.

Members of the group admitted that they need help with marketing, caring for trees and financing inputs for production.

Vert has had its own struggles when it came to financing growth. Local banks were not receptive to lending for Vert’s new expansion project, which cost $2.75 million US.

“It isn’t a very easy thing,” Maina said.

The firm needed patient investors for the expansion. Because Vert has earnings in hard currency, it could get equity investments from Belgian and French social investment firms. Equipment for the new plant is being debt-financed from a third European social impact investor. The company hopes to repay those lenders within seven years.

Maina’s life and business partner in Vert is her husband Maina Inderito. “We tend to stay as far away (from each other) as possible,” she said with a smile when asked about how they divide responsibilities at the company. He focuses on construction and getting increased production from farmers. She does finance, administration, operations and contracts with retail customers.

In the past four years, the number of women-led food processing firms has increased greatly. About 40 per cent of company heads in her industry are women, particularly among medium-sized firms.

She is quick to respond when asked what motivates her desire to work with more farmers. “Being able to put products out that are safe, that I know where they have come from, and by who they were touched,” she said. ◆

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For a greener future
June 26, 2018, 7:59 pm
Filed under: Business, Environment, Recycling, stewardship, Theology, Uncategorized

 

For a greener future

As printed in The Marketplace – May/June 2018

Kitchener group helps build more sustainable communities

By Mike Strathdee

Kitchener, ON — Mary Jane Patterson takes a long-term view when she describes the work of the environmental charity that she heads.

“It grows out of caring,” says Patterson, executive director of REEP Green Solutions. “Caring is in our vision. We believe by acting today we can leave our children a community that is more sustainable, vibrant, caring and resilient.”

A Catholic who is active in her local parish, she sees her work as being grounded in an expression of her faith. “There’s a sense of social justice in environmentalism, and recognizing that we have an impact on others in the way we live our lives. That is also faith-based for me.”

Patterson left a career in television production to enrol in a master’s degree in Environment Studies at the University of Waterloo in 1999. The environment faculty was using home energy evaluation software to do residential audits. Patterson was one of two people hired for the Residential Energy Efficiency Project (REEP). Audits cost only $25 back then, but drumming up business wasn’t easy in the early days, even with on-campus acquaintances. “People started ducking when they saw us coming down the hall,” she recalls.

Two years later, she became REEP’s manager, part-time at first. As the organization grew, it moved off campus, incorporated as a non-profit, and a few years later, became a registered charity.

Brendan and water tanksBrendan Schaefer, REEP House Facility manager, talks to a group about harvesting rainwater.REEP Green Solutions now provides services in many communities adjacent to the region where it was founded. It is one of a score of environmental organizations that are part of Green Communities Canada, a national association of community-based groups working with homeowners, businesses, governments, and communities for a sustainable future.

A nimble, highly entrepreneurial organization, REEP Green Solutions is often exploring new areas to provide service and generate funding for that work. About half of its budget comes from fee-for-service work and contracts with municipalities to provide services such as domestic water-use audits.

In addition to home energy efficiency audits and providing advice about worthwhile improvements, REEP Green Solutions advises homeowners on water conservation, RAIN Smart landscaping to manage runoff, waste reduction and related education around environment issues.

Storm water management is increasingly a concern for cities across North America. U.S. organizations working to educate people about best practices in this area include Blue Thumb in Minnesota, Riversmart Homes in Washington D.C.- Maryland, RainReady in Chicago, and the Watershed Management Group in Phoenix.

REEP Green Solutions operates and maintains the REEP House for Sustainable Living, a century-old property in a Kitchener residential neighborhood that has been upgraded to top level (LEED) energy efficiency. The site is a demonstration property where people can view several types of insulation, ground source heat pumps and other energy efficiency measures. Patterson is pleased with “all the things we show in the house that you can do in your own house (to reduce energy consumption).”

Solar panels, two large rain water cisterns that are used to flush toilets and irrigate plants around the house, and permeable paving are features of the property.

REEP House is also home to tours of school and university groups, as well as lecture series dealing with home energy use, upgrades and a variety of topics related to sustainable living, including green burials and electric vehicles.

The latter speaker series was “the beginning of opening our mind up to a broader vision of what we offer to the community.”

Wanting to reach people who aren’t homeowners, REEP launched a Zero Waste Challenge in 2016. This annual event asks people to try to send less waste to landfill. For five days, participants use a mason jar to hold all home garbage that would be destined for the trash. Refusing or reducing packaging, recycling and composting are all steps toward that goal.

RainGarden 33“The more we make requests of our vendors, the closer we will get to zero waste.”“The more we make requests of our vendors, the closer we will get to zero waste.”

REEP Green Solutions partners with Sustainable Waterloo Region (a group that helps businesses become more energy efficient) and the cities of Kitchener, Waterloo and Cambridge in Ontario in a collaboration known as Climate Action WR. That group will present a plan to area governments this spring on ways to achieve an 80 per cent reduction in greenhouse gas emissions from 2010 levels by 2050. Several other Ontario communities, including Toronto, Hamilton and London, have already set similar targets.

Patterson has seen her organization change and expand in reacting to what people say they need, or what municipalities or utilities are doing that they can support. Some programs have come and gone, including solar assessments, audits of church buildings, and helping rural landowners ensure their wells were being safely maintained (in response to a water contamination crisis in Walkerton, a rural Ontario community.)

New areas of emphasis include green infrastructure, helping people to put native plants in their yards and plant trees. She hopes the program will help people know what species to plant, where to put them and how to keep the trees thriving on their property.

REEP Green Solutions is as much part of a broader movement as it is a purveyor of individual services. Patterson acknowledges that staff efforts are multiplied by the support of a network of engaged volunteers, including the organization’s board, local students and community members. Even REEP’s volunteer co-ordinator is a volunteer. “This is work that is really meaningful to all of us working on it.”

Patterson is encouraged to see senior levels of government paying attention to climate change, “looking it in the eye and figuring out what we have to do.”

At the same time, while senior governments come and go, “the municipal level is where it’s at. This is where the work continues. That is really inspiring to be part of, and to see.



Growing vanilla in Tanzania
June 26, 2018, 7:43 pm
Filed under: Business, Environment, gardening, Uncategorized, Work

Growing vanilla in Tanzania

2 Rehema and Martha KisangaRehema and Martha Kisanga grow over a dozen different crops on their three-acre farm.

MEDA partnership helps with irrigation, training

2 polinating by handVanilla flowers must be pollinated by hand.As printed in The Marketplace – May/June 2018

Like many Tanzanian farmers, Martha Kisanga has a lot on the go.

She grows a dozen crops on her three-acre property in Lyamungo Village in the Machame area of Tanzania.

Squash, corn, yams, coffee and bananas have been among the mainstays until the last few years, when she began growing half an acre of vanilla.

She has three dairy cows that supply milk for her household plus a bit more to sell to neighbors. The primary value of her cows is in the by- product. Cow dung provides a free source of fertilizer to promote the growth of various crops. She needs to buy more cows to have enough fertilizer on hand.

Kisanga is also a lead farmer who has received training from MEDA partner NEI (story on previous page). She works with other farmers in quarterly training sessions that include best practices in planting, use of mulching and bio-pesticides, reducing harvest losses, and where to take beans after harvest. She is paid for her time, which includes recruiting new producers, and has an incentive to ensure farmers she works with do well, receiving a percentage from their production.

She harvests between 15-20 kilograms (33-44 pounds) of vanilla pods annually. Vanilla is by far the most lucrative crop of the many she grows. Top quality beans, 17 centimetres (almost seven inches) or larger, fetch $30 a kilogram. Smaller pods sell for $20 a kg. Martha earned about $400 US from the vanilla she sold to NEI in 2017.

2 Neil Ashworth deputy supply chain manager for NEINEI staffer Neil Ashworth works with farmers.Vanilla has to be pollinated by hand, producing one bean per flower, a labor-intensive process. The plant flowers for three months. Six months later, the harvest starts, continuing between July and October. Vanilla vines are not terribly thirsty. But they do need a regular drink, about a litre of water per week. That’s increasingly a problem in some parts of Tanzania. There is a short rainy season of a month or two from the end of November to early January, followed by a couple of months without rain. A longer rainy season begins in April. Then it gets really dry again in September and October. Many crops can’t wait that long for water.

2 IMG 9426Harvesting rainwater for dry season irrigationClimate change is leading to more erratic weather patterns. Some years the short rainy season hardly comes at all. “Every year it’s different,” says Neil Ashworth, NEI’s deputy supply chain manager. “Some years you have heavy long rains, and other years, you miss the short rains completely.”

Getting water from a nearby river is neither practical nor sustainable.

That’s where MEDA and NEI come in, by helping farmers like the Kisangas harvest rainwater from the roofs of their homes into large plastic collection tanks.

The project will supply 300 farmers with tanks, giving them a dependable water source during the dry months. “The more that we can supply (with barrels), that have no access, or very little access to water on the farm, it makes a big difference for them, not only in terms of vanilla, but other crops,” Ashworth said. “They are able to water in the dry season. It helps them with their income.”

MEDA also does training to promote capacity-building. NEI provides vanilla cuttings to farmers, covering 80 per cent of the cost. Farmers pay the other 20 per cent. A two-metre vine takes four years to reach a harvest. ◆



Climate and Coffee – Kenyan firm helps farmers grow beans amidst changing weather patterns
June 26, 2018, 7:39 pm
Filed under: Business, Environment, gardening, Generosity, Uncategorized, Work

Climate and coffee

CDD WORKER WITH SEEDLINGS 3 Women make up most of the workforce at Caffe Del Duca’s seedling nursery. Photos by Mike Strathdee

Kenyan firm helps farmers grow beans amidst changing weather patterns

By Mike Strathdee

As printed in The Marketplace – May/June 2018THIKA, KENYA — Arabica is the most popular coffee variety in the world, accounting for three-quarter of worldwide production by some estimates.

It’s also something that future generations will have to do without due to climate change, a Kenyan coffee expert suggests.

“Eventually, this type of coffee will disappear,” Elio Lolli predicted while giving a tour of his coffee plantation to MEDA supporters earlier this year. “It’s not (going to be) economically viable.”

Lolli, director of Caffe Del Duca, is looking for ways to develop new coffee varieties that will be able to thrive in the changing weather conditions.

A woman mixes coffee beans that are drying on long tables in the sun.Caffe Del Duca, located in Maboromoko- Thika, 26 miles north-east of Nairobi, works with thousands of farmers in Kenya, Tanzania and Uganda to source quality coffee, roasting the collected product for local and export markets.

Through a recent partnership with MEDA, the company will work with 1,000 new farmers and 100 micro-enterprises in Western Kenya over the next two years, targeting an equal number of female and male entrepreneurs.

cdd OWNER SMILINGElio LolliLolli’s father came to Tanzania from Italy in 1954 to work in coffee, planning to stay for two years. “Since then, we’re still here.”

Throughout his working lifetime, Lolli has been involved in growing coffee and making machinery, including pulpers that reduce water consumption.

Climate change is a concern that forces the development of new coffee blends, including Italian blends. “We are actually seeing the climate change,” he said.

Caffe Del Duca used to get a late crop in November or December. Now they get the crop in May or June “which means the quality is going down, not up. Any good food or fruit, it takes a long time to ripen.”

In addition to declining quality, “it’s getting more difficult to produce because of the climate change.”

Finding the right moisture levels for coffee is challenging. If there is not enough rain, the beans become too light, Lolli said.

If there is too much rain, the coffee berries (also known as cherries) become diseased.

A woman mixes coffee beans that are drying on long tables in the sun.Historically, Kenya has had two distinct coffee crops, Arabica and Robusta, says Leonard Murwayi, a value chain specialist with the firm. Farmers have been marginalized as Kenya imports Robusta, so Caffe Del Duca is working to increase the domestic supply of Robusta.

Robusta coffee has generally been less favored than the Arabica. Robusta is more bitter and less flavorful than Arabica. Espresso in Kenya and Ethiopia has historically been 70 per cent Robusta and 30 per cent Arabica, according to Caffe Del Duca’s web site.

Over the past four years, the company has been working to create a nursery to cross-pollinate and create a Robusta coffee that is water resistant and high production.

Caffe Del Duca has 14 employees, two-thirds of them women. Women have better manual dexterity than men, making them better suited for working with seedlings, Lolli explains.

The partnership with MEDA will help Caffe Del Duca gain improved access to local, regional and international markets and strengthen the business capacity of the 100 entrepreneurs (coffee vendors) it works with.

It  will also train farmers in post-harvest operations for improved quality, using collection points and helping groups to acquire drying tables.  Soil conservation activities such as protecting water catchment areas will be stressed to prevent soil erosion.

A gender consultant will be hired to train both men and women on equity leadership, decision making, business development and financial literacy, including bookkeeping and tracking money. CDD will help entrepreneurs get the public health licences they need to enter the coffee business and assist some of them in buying subsidized coffee-making cans.

Some farmers will receive assistance in purchasing pruning tools, sack sprayers and affordable fertilizer.

Kenyan coffee growers prune their plants, something that is foreign to Ethiopian farmers. (In an unrelated consulting project, Lolli is trying to teach sustainable farming practices to Ethiopian growers.)

One part of the MEDA project targets one of Kenya’s most vulnerable populations — widows who are farmers. Caffe Del Duca will help widows to set up five demonstration farms and nurseries.

CDD SEEDLINGSCaffe Del Duca grows up to 100,000 coffee plants a year to produce disease-resistant varieties.Vulnerable widows have been identified by CDD and MEDA as a specific group that  will be targeted within the overall client population, says Lloyd McCormick, MEDA’s country manager for MEDA’s M-SAWA (equitable prosperity) initiative.

“Western Kenya was hit hard by the HIV and AIDS epidemic of the recent past, thus leaving a significant number of widows,” McCormick said. “The project will help a number of these widows access better livelihood opportunities (including) farming and small-scale vendor retail.”

Each new farmer needs five seedlings and a tree to provide shade to get into coffee production. Coffee bushes are intercropped with both food crops and shade trees. Plants take two years to mature enough to produce and will yield for five years.

A coffee bean (or cherry) is a seed of the coffee plant and the source for coffee. It is the pit inside the red or purple fruit.

CDD’s nursery grows plants from cuttings and seeds, producing up to 100,000 plants a year, focusing on varieties that are resistant to several diseases. “As the climate gets warmer, it (coffee plant) is more susceptible to leaf rust,” Lolli said.

Climate change is also increasing the size of insect pests. As temperatures increase, yields drop. Yields were down by 50 per cent in 2017, he said. “The taste varies from the date of the rainfall.”



Challenges amidst business boom
June 26, 2018, 7:32 pm
Filed under: Business, business incubator, Generosity, stewardship, Uncategorized, Work

Tech innovators, charities need to understand each other to tackle social problems

As Printed in The Marketplace – September/October 2017

Rapidly increasing wealth and inequality in North American high-tech hubs is forcing charities to reach out to technology entrepreneurs for solutions to societal problems as well as donations.

That new, uncomfortable reality means that both sides need to understand each other’s challenges, a forum on technology and inequality in Kitchener, Ont. heard recently.

The event was held at the offices of Vidyard, a fast-growing firm which provides a platform that helps companies analyze the performance of their online sales videos. It was organized by FaithTech, a nascent movement operating in three tech clusters across Canada (Kitchener-Waterloo, Toronto and Vancouver).

FaithTech provides a place for Christians working in the technology sector to share their stories and think about ways to apply their talents to pressing social issues.

Speakers at the event came from both the social service and technology sectors. They included:DSC 0082John Neufeld holds a 3D-printed car in his office. His agency partnered with tech employ- ees to provide 3D-printing camps for low-income youth. Photo by Gail Martin

  • John Neufeld, executive director of Kitchener-based House of Friendship, which serves over 42,000 low-income men, women and children throughout Waterloo Region.
  • Christian Snyder, head of community relations at Smile.io, a Kitchener firm that manages corporate rewards programs.
  • Stephanie Rozek, executive director for Hive Waterloo Region, which works to teach digital literacy skills and to build diversity and greater inclusion within the tech sector.
  • Fizsum Areguy, who works with the Toronto Rehabilitation Institute researching the use of tech with health care.

FaithTech founder James Kelly, who moderated the event, recalls being told that in California’s Silicon Valley, home to many of the world’s largest tech firms, “you can taste the difference between the rich and the poor when you are there.”

Waterloo Region, home to one of the fastest-growing tech clusters in the world, could become the Silicon Valley of the North, he said. “The question is, will we like it (if the inequality accompanies the economic growth)?”

Under-representation of women and minorities in tech jobs, sexism and housing affordability as sections of the city undergo gentrification were the most frequently-named issues by an audience of 120 people, most of them young and employed in the tech sector.

Inviting the tech community to be part of community conversations around inequality requires adjustments by both parties, said Neufeld (who is a past president of MEDA’s Waterloo, Ont. chapter). “We don’t know what we are doing. We don’t have a template, we don’t have a formula for this.”

One of the disconnects that must be overcome is the inability of social services organizations to move quickly enough, and the need for tech firms to slow down, Snyder said. He experienced that first-hand in a previous job working at an organization that serves refugees. A large Kitchener tech firm volunteered to help his employer solve a problem, but could only devote resources for a limited time. The refugee organization couldn’t react quickly enough, and “eventually, it came to naught.”

Other conversations have borne fruit. Neufeld was invited last Christmas to the Accelerator Centre, a University of Waterloo-based incubator for tech firms, to thank them for donating to his agency. He challenged tech entrepreneurs to consider running computer coding camps for bright youth in low-income neighborhoods.

After his talk, some people came up to him with a counter-proposal. “We can’t do coding camps, but we can do 3D-printing with you,” employees of a 3D-printing firm told him.

Last summer, the company did a pilot 3D-printing campaign at a community centre in one of the region’s poorest neighborhoods. Neufeld is optimistic the idea will spread.

“I think we’ve got something good here that we can co-create,” he said, while acknowledging that success will require difficult conversations, “hearing things that we don’t want to hear.”

Systemic solutions take time, “which is counter-intuitive to how tech works,” Areguy noted.

Snyder agreed. Community development in the tech sector is difficult work with data-driven engineers, he said. Those professionals typically work in two-month sprints, and are oriented toward objectives and key results (OKRs). But relationships aren’t OKRs. “If you do work in tech, don’t think about relationships as OKRs,” he said. ◆



Look to the U.S. for the next big catalyst for charitable giving

A couple of decades ago, some of the largest Canadian charities were suffering. Federal cuts to transfer payments, seen as necessary to balance the national government books, were a body blow to universities, hospitals and others.

Help for the charitable sector came in the form of a policy change in line with what donors enjoy in the U.S.  After considerable lobbying, Ottawa agreed to “temporarily” reduce in 1997, then permanently eliminate in 2006, the capital gains tax on appreciated securities when donors gifted them in kind to charity.

By some estimates, that single change resulted in charities receiving an extra $1 billion in donations almost every year since 2006.

With the Canadian donor pool aging and reportedly shrinking, maybe it is time for the sector to look to the U.S. once again for a big idea to kick start the next wave of giving.

In December 2015, Congress passed a bill making permanent a charitable gifting option that allows donors aged 70.5 and older to withdraw IRA funds – a tax-deferred retirement account analogous to our Canadian RRSPs –  to donate to their favorite charities. Withdrawals of up to $100,000 each year can be made without these distributions registering as taxable income.

Given the billions of dollars of RRIF (Registered Retirement Income Fund) income that Canadian baby boomers have to begin drawing down as they turn 72, there are massive possibilities here. Not only do some people not need all of the income they are forced to begin drawing, many are not looking forward to the accompanying tax hit.

A significant number of Canadians will move into the top tax bracket when they draw their last breaths, if that occurs before they have depleted their RRIFs.  In Ontario, that top bracket current stands at 53.5%. Charitable tax credits have been adjusted to match.

Getting a cash-strapped federal government to consider a break for retirement funds donated to charity will not come easily. Many leaders in the charitable sector will say their top lobbying priority will be convincing Ottawa to reinstate the proposed capital gains exemption for gifts of real estate and private shares that was accepted, but not enacted, by the former Harper government.

(Donald K. Johnson, who led the successful lobby for favorable treatment of donated securities some years back, is also pushing Ottawa to give exemptions for real estate and private share gifts. A Toronto Star story says such a change would result in additional donations to charities of about $200 million a year. The cost to the federal treasury would be between $50 million and $65 million.)

But it’s also time to start asking whether the lowest-hanging fruit for growing charitable donations could lie with the ever-increasing wave of RRSP savings that need to be converted to RRIFS and withdrawn.

Lots of good causes sure could use the help.



Where did all the money go? – old stories from the late 90s
September 4, 2014, 2:03 pm
Filed under: Business, Financial Management, Fraud, Investing, Uncategorized

Copy of K-W Record article, March 29, 1999 – front page, A1.

Shareholders left to wonder where money went

Mike Strathdee
RECORD STAFF
Monday 29 March 1999

Former executives of Struthers Inc. admit that they broke Ontario securities laws when they sold shares in a controversial swine-breeding company that is millions of dollars in debt and has left hundreds of area investors with virtually worthless shares.

“There’s clearly infractions,” Jason Struthers, son of company founder Ron Struthers, admitted in an interview with The Record.

Struthers Inc. is one of a handful of companies started by Ron Struthers to commercialize swine breeding and embryo transplant technology. Building on his father Stan’s breeding business, Struthers had offices in Guelph until last fall, until he was evicted for non-payment of rent.

Struthers Inc. is now largely based in South Carolina. Its Canadian presence consists of space in a lawyer’s office in Mississauga.

Jason Struthers, formerly the company’s secretary/director of international business development, and colleague Paul Allcock, who served as director of corporate affairs, say they ran afoul of securities law after receiving bad advice.

Under provincial securities law, a company must clear a prospectus, a detailed offering document, with regulators in order to sell shares to more than 50 shareholders. The Record has obtained a shareholders list which indicates that shares in several Struthers companies were sold or issued to more than 1,200 people, including 300 in Ontario and close to 200 within the Waterloo Region-Wellington and Perth County area.

Investors paid tens and in some cases hundreds of thousands of dollars for Struthers shares, which were sold at various times for $1, $3 and$4.50. Struthers Inc. stock began trading on the U.S. over-the-counter bulletin board at $6.50 a share last June, but quickly fell to only a few cents and never recovered. The shares last traded for 1.5 cents each, earlier this week.

At least two regulatory bodies — the Ontario Securities Commission in this province, and the Securities and Exchange Commission in the U.S. — are investigating the Struthers companies, The Record has learned.

The OSC has sent a five-page questionnaire to investors asking them about their investment knowledge, how they became aware of the Struthers companies, what information “were you provided with that induced you to make your investment,” in which Struthers business the investment was made, and who sold them the investment.

And the RCMP has interviewed a number of people in an effort to determine whether it has grounds to launch a criminal investigation. “I’ve been co-operating with the RCMP on this,” a haggard-looking Ron Struthers told The Record.

Struthers says he has met with RCMP officers a handful of times since an initial, four-hour interview two months ago. He wouldn’t comment on what the RCMP or securities regulators are looking into.

He did confirm when asked, however, that Revenue Canada has been looking at the books of the Struthers companies for the past three months in connection with money owed for employee payroll deductions.

“I don’t have the books, I don’t have access to the books, but I do know Revenue Canada has been in and done the audits.”

The OSC can ask a court to force a company to file financial statements and a prospectus. The agency can also seek an order directing a person to repay any part of the money paid by a security holder for securities.

Struthers raised at least $6.5 million US through the sale of shares over a period of several years. Shareholders have never received financial statements for the company, and only received share certificates early this year.

“You’ve got to understand something,” Jason Struthers said when asked about why the company didn’t comply with regulatory requirements. “When Ron started this company, he had zero knowledge of how a public company functions. We relied on counsel to do this; now it turns out that the information which counsel gave us was dead wrong.”

Allcock also pointed fingers elsewhere when asked about why proper procedures weren’t followed when shares were sold. “We were always advised that we didn’t need it (a prospectus),” he said. Our advice has been the pits. We could’ve gone to the variety store and got better advice.”

Jason and Ron Struthers were removed from the board and management of Struthers Inc. in a December restructuring.

Allcock, who said he and Jason raised the first $500,000 for the company, claims to have left the firm earlier in a dispute over the best way to raise money.

© Copyright Kitchener-Waterloo Record 1998

Copy of K-W Record article, March 29, 1999, business section, page C1.

Guelph contractor sues U of G

Unpaid renovations at SRI office prompt Van-Con’s $130,000-plus claim
By Mike Strathdee
RECORD STAFF

A Guelph contractor is suing the University of Guelph to recover payment for renovations he did at a university research park for swine breeding companies formerly operated by area businessman Ron Struthers.

Van-Con General Contractors is seeking more than $130,000 plus costs for renovations done to an office building at 150 Research Lane between October 1997 and January 1998.

The company, operated by Ike Van Soelen, received a judgment last July against Struthers Research Inc. (SRI), one of several companies started by Ron Struthers, a Cambridge businessman and former Pentecostal minister.

But after being told that SRI has no assets, Van Soelen decided to pursue a claim against the university, which has since rented the research park space he renovated to a Guelph marketing company.

Ironically, that firm has also received a court judgment against a Struthers company for work it never received payment for.

The university, in its statement of defence, denies any liability or responsibility for work done by Van-Con. In a cross-claim, however, it seeks to hold SRI and Struthers International Research Corp., another associated firm, responsible for any amount it is found to be liable to Van-Con.

It also seeks a judgment for $100,000 against Struthers “as damages for breach of contract regarding the agreement to lease between the university and Struthers IRC.”

Van Soelen says the university is benefiting from work he did in the building. He has also placed a lien against the property.

In its statement of claim, Van-Con alleges that a university official approved drawings and specifications for work done at the building, but at one point, expressed concerns about the financial viability of Struthers and instructed Van-Con to cease work.

The statement of claim goes on to allege that, subsequently, the official said the university “no longer had any financial concerns about Struthers,” and that Van-Con could proceed with its renovations “since everything was now in order.”

Van-Con also alleges that university officials “inspected the quality of work from time to time during the course of its progress,” and that Struthers was indebted to the university “for the rent of facilities elsewhere, in the amount of $148,946.00.”

A letter sent by a university lawyer to a former Van-Con lawyer indicates that Struthers’ tenancy in the research park “was terminated on March 4, 1998, as a result of arrears in the payment of rent.”

Earlier this month, a few days after the university filed its statement of defence in connection with the Van-Con lawsuit, the office of research issued a brief press release distancing itself from Struthers.

“In 1994, Struthers Research began investing in swine embryo research at the University of Guelph,” the announcement stated. “The University of Guelph no longer has a research contract nor any research involvement with Struthers Research and parties related in any way to Struthers Research. The University of Guelph does not have a licensing agreement with Struthers Research or any other Struthers entity.”

Larry Milligan, U of G’s vice-president of research, said in an interview that the university is “quite deliberately declaring that there is no linkage, that there is no licence for the technology in place.”

But more than a week after the announcement was made, a share-offering document available by fax from the South Carolina office of Struthers Inc., the U.S. parent firm of the companies named in the lawsuits, still indicated that the company “intends to take full advantage of it’s (sic) strong working relationship with the University of Guelph, a
world-renowned leading animal science institution.”

Doug Beatty, vice-president of operations for Struthers Inc., brushed off the U of G announcement. “They can say whatever they like,” he said.

“There’s things happening behind the scenes here. It’s unfortunate. They pushed Struthers out of Canada.”

Company founder Ron Struthers broke his silence on the events Thursday, and provided the Record with a copy of a 1994 contract between U of G and Struthers Research.

Money owing to U of G is for subsequent, related work, and doesn’t affect Struthers Inc.’s ability to commercialize the embryo-transplant technology, he said in an interview.

“Basically, the technology is basically there for the use of this corporation (Struthers Inc.),” he said.

U of G moved to dissociate itself from the Struthers companies following months of talks because “we’re not getting anywhere in clearing up the back debt” of more than $200,000 owed to it by Struthers, Milligan said.

Milligan said he has received a legal opinion which suggests that the swine- embryo transplant technology “is owned by the university.”

U of G hopes to recoup its losses by commercializing that technology, possibly through a licensing agreement with another firm.

Struthers Inc. has not publicly commented on its view of the millions of dollars in debts run up by Ron Struthers and other firms which bear his name. The company said in December that Ron Struthers no longer holds a management role with the firm.

A November share-offering document for Struthers Inc., which has shares quoted through the U.S. over-the-counter bulletin board, claimed that the firm is “not presently a party to any material litigation,” and that its liabilities totalled $1,510.

The document doesn’t refer to litigation or liabilities involving its subsidiaries. Struthers officials have not responded to written questions submitted earlier this year to Richard Lane, their New York-based lawyer.

Beatty said this week that “Struthers Inc. is a debt-free organization.”

He wouldn’t say whether Struthers Inc. has any responsibility for debts run up by its subsidiaries or Ron Struthers. “You’ve sort of blindsided me. I don’t know.”

Ron Struthers says company officials verbally promised him, when he relinquished control of the firm in the fall, that all of the millions of dollars in debts run up by Struthers corporations and promissory notes to shareholders signed by him would be taken care of. “I’ve been told that they (Struthers Inc. officials) have a block of shares set aside for repayment of debts,” he said.

But he can provide no proof that any such agreement exists, as he didn’t get anything in writing. “No. I didn’t. Just trusted them.

© Copyright Kitchener-Waterloo Record 1998

Copy of K-W Record article, March 29, 1999, business section, page C2.

Newsletter to Struthers investors long on predictions, short on details

By Mike Strathdee
RECORD STAFF

Struthers Inc. has a bright new future ahead, the company’s latest newsletter to investors says.

The pork biotechnology company plans to train a team of surgeons in embryo-transplant techniques at a major United States university and announce contracts with major swine breeders, the newsletter states.

But the four-page document, which can also be seen on the Struthers Web site, is long on predictions and short on specifics.

Titled “the Rooter’s News,” the newsletter refers to several upcoming developments without providing any specific details.

“The commercialization of the embryo-transfer technology, through relationships already formed with leaders in swine genetics in North America, will represent a positive cash flow situation for the company and will allow for future growth and expansion,” the newsletter states.

Doug Beatty, vice-president of operations at Struthers’ Charleston, S.C., office, said the company won’t be able to identify any of its partners nor the university where the surgical training will take place, until after April 2.

Struthers has had to sign non-disclosure agreements with the universities involved, as “they don’t want a slew of people calling,” he said in a telephone interview.

“Unfortunately, we couldn’t (identify partners) in that newsletter,” he said.

”We wanted to, but we couldn’t.”

Contracts will be solidified and signed when company officials visit Iowa, Missouri and Illinois in coming days, he predicted.

Company president Don Bowden, a veterinarian from Iowa, is handling the negotiations, the newsletter stated.

The company also plans to purchase a mobile operating theatre, a surgical trailer, from Alpha Omega, an Indiana company which builds mobile CT and MRI scanners, Beatty said.

Struthers plans to have a six-metre (20-foot) surgical trailer based in Canada as embryo-transplant work progresses, he said.

Company founder Ron Struthers, who has not had a management role with the company since a restructuring last fall, told the Record last week that he is “pretty happy with the guys in the States” and the way efforts to commercialize embryo-transplant technology are proceeding.

He remains interested in working with the company which bears his name.

“My offer to the company is that anything I can do to take the company forward, any knowledge I have, I will give it to them.

“I’d like to help grow the company if it’s possible, if there’s a place for me to be there.”

Struthers said that when he handed over control of the firm late last year, he planned to go to South Carolina and work out of the Struthers office there with current management.

But poor health, including several operations related to kidney problems, have kept Struthers in Cambridge. “At this point, it’s not certain whether they want me there (U.S), ” he added.

© Copyright Kitchener-Waterloo Record 1998

HEADLINE Company ex-president has ‘no idea’ where close to $4 million has gone
BYLINE Mike Strathdee
SOURCE RECORD STAFF
DNOTE Ran with related story “Shareholders left to wonder where money went: Former executives of Struthers Inc. admit they broke securities law” Page A1 “Guelph contractor sues U of G: Unpaid renovations at SRI office prompt Van-Con’s $130,000-plus claim” Page C1 and “Newsletter to Struthers investors long on predictions, short on details” Page C2

There are a number of mysteries surrounding events involving Struthers Inc. over the last year.

Shareholders who have contacted the Record wonder how shares in Struthers Inc., which began trading at $6.50 each last June on the U.S. over-the-counter bulletin board, quickly fell off to only a few cents in value, and never recovered. The shares last traded at 1.5 cents on Friday.

They also wonder why, if the company’s new management wanted to assure investors that Ron and Jason Struthers no longer held any management positions in the company as of early December, the share certificates which were issued to shareholders Dec. 29 were signed by Jason Struthers, secretary, and Ron Struthers, president.

The certificates were printed before the management restructuring occurred, Ron Struthers told the Record this week. “Maybe it’s even prudent,” he said. “Why waste another $15,000 to $20,000 (to print new shares)? Use up the (old certificate) stock.”

It is unclear why Ron Struthers agreed to relinquish control of the company without having a detailed, written agreement as to the royalty stream he is to receive for his past work. Ron Struthers says he trusted his longtime advisers to take care of his interests.

Struthers Inc. documents suggest Ron Struthers will receive royalties, but don’t specify the amount. “It’s never been flushed out,” Ron Struthers asked when questioned on the subject.

“I’m not (financially) in a point where I could go to a lawyer, or even hire one.”

Another unanswered question is the issue of what happened to the millions of dollars raised by the company, given that scores of creditors, large and small, weren’t paid for services rendered.

A Struthers Inc. offering document available to prospective investors through a fax-on-demand service states that the company had total assets of $2,824 as of Nov. 15.

Ron Struthers insists that all of the money raised from investors — at least $6.5 million US, by some accounts more — was used to pay expenses related to research and market development efforts.

But The Record has obtained a copy of a draft, unaudited consolidated balance sheet that states it was prepared for the management of Struthers Inc., dated July 31, 1998, months before Ron Struthers stepped aside from the management of the company.

That document, which investors have never seen, stated that the company had cash of $3,933,191 at the July 31, 1998, end of year.

“I have no idea,” Ron Struthers said Thursday when shown the statement and asked about the discrepancy. “I’ve never seen these documents (before).”

If the company had that much money last summer, “we would not have been in problems,” he insisted.

Companies which have stock quoted through the over-the-counter bulletin board in the U.S. are not required to make the detailed filings of their financial statements with regulators which other publicly traded firms must do.

Struthers Inc. is in the process of having its financial statements examined by auditors, company spokesman Doug Beatty said. “When they’re ready, we’ll post them” on the company’s web site, he said.

One of the reasons that the financial statements are being changed is because the company’s asset base is changing, he said. “There was a lot of stuff that went missing.”

Beatty did not elaborate.

Ron Struthers denied that any assets of real value remain unaccounted for when the company was evicted from a leased research farm south of Guelph in October. “Nothing’s gone missing that would influence those books by more than $5,000 or $10,000,” he said.

“There was no assets you could pick up and walk away with.”