Village Farms is a flourishing company that produces premium quality vegetables from Canada. They grow their vegetables successfully in greenhouses using hydroponics. With the growing potential of the Hemp Industry in medicine, recreation, and other fields, they have decided to chip in. Right now, they are expanding their operations to grow hemp using the same techniques. But competition is fierce in this industry, for Canada faces competition with a formidable rival, Latin America. They are also expanding their operations as well.
Accordingly, oil production is the only thing that Canada can bring to compete against Latin America. How? It’s all about branding strategies and keeping costs low.
Village Farm’s operations run effectively. Even if the wholesale prices of marijuana drops to $2 per gram, their processes would still do great. How do they do it? All they have to do is to minimize their costs. They should keep it at a dollar per gram or lower. With the help of partners such as Emerald Health and Pure Sunfarms, they can come head to head against Latin American “rivals” and remain competitive.
How the Colombians see it
According to Pablo Fog, CEO of Colombian Organics, it would be very difficult for Canadians to contend with the whole Latin Americas. Why? First, it’s all about the cost of production. Colombian producers forecast that they can produce the crop at a fraction of the cost of a Canadian company. Canada (and the USA) have high labor and energy costs compared to their competition.
Aside from hemp, one of the commodities that Colombia can supply to the United States is flowers. With these crops, it shows that Colombia can become a leader in this industry in terms of pricing and the quality of the product delivered. Accordingly, 70% of imported flowers in the country came from Colombia. Pablo Fog mentions that production in their company’s flower venture has just started recently.
Penetrating the Vegetable Industry: CBD success
Village Farm has started a network of vegetable growers all over the United States, including Mexico. It includes grocery stores and retailers, which will be crucial for the brand building and marketing of CBD products. It would be a great opportunity for everybody because the market for CBD is still fragmented.
So far, Village Farm has yet to determine the areas to penetrate for the CBD market. By 2024, this market can expand up to $11.3 billion!
Importing stuff from Latin America: Not Today
Village Farms have no plans importing stuff from Colombia or any locations in South America. They plan to produce resin within the limits of North America. CBD is an extractive product, and production costs are controllable there. As mentioned before, it’s all about brand building. Once we have established a brand, and have it produced anywhere in North America, we can differentiate it with products from the outside. Village Farms has also explored the prospects of establishing production posts in Ecuador, and also Colombia. Although importation may seem a viable alternative, it’s not an option, for now. It is still more advantageous for the company to pursue production in North America rather than import stuff from South American countries.
In the United States, future regulations to be imposed are the key to CBD production. They have the final say on where to produce and process the merchandise. The same goes for the pricing of the products. When we’re talking about the wholesale price of Colombian products vs. Canadian products, it would be very difficult for the Canadians to match or exceed their offer.
China is also trying to penetrate this market. So far, the hemp grown by the Chinese hasn’t made a dent into the global CBD market. It hasn’t even made a significant entry. This situation is worrisome for other players in this industry. Once China has decided to operate on a large scale and focus, they could influence the wholesale pricing on a global scale.
So far, Colombia has already made its mark on this industry. Perhaps in the whole Western Hemisphere and the North American markets, Colombia would dominate them. But the competition will always be present.