Huitlacoche at Saville Labs at Trent University A ...barrysaville/reports/huitlacoche-report.pdf ·...

Huitlacoche at Saville Labs at Trent University

A Marketing/Trade Report by

Ted Gerry, Brian Fowler, Taylor Winhold, Kathryn Pomerleau

Fleming Applied Agency

Spring Semester, 2013

TABLE OF CONTENTS

1. Abstract

2. Markets

• International Markets

• Local Markets

• Toronto Restaurants That Serve Huitlacoche

• Farmers Markets

• Health Food Stores

• Food Co-ops

3. Transportation

4. Preservation

5. HS Tariff

6. B13A

7. Restrictions

8. PPQ 587

9. Pricing

10. Nutritional Value

11. Seller/Buyer Emails

12. Final Marketing Conclusions

13. References

Abstract

Huitlacoche is a Mexican delicacy which occurs naturally on corn. It is known to North American farmers as corn smut and is commonly viewed as a blight. However, it is good to eat and, if fresh, can sell for $20-$30 dollars per pound. By acre, a farmer can make 500%-1000% more than simply growing corn.

Barry Saville of Saville Labs at Trent has developed a process for injecting young corn cobs with an Inoculum which causes the fungus to grow. The process should be perfected over the next few years and the highest yielding strain of corn determined.

There is an existing market in Ontario for Huitlacoche, both fresh and canned. Traditional Mexican restaurants are willing to pay a premium to obtain it. A farmer growing Huitlacoche should use a grassroots approach to marketing. It should be sold directly to restaurants or at farmers markets in urban centres with a large Mexican population. Pricing should be done based on the freshness of the product and the quantity produced.

The farmers who would be most likely to succeed in growing Huitlacoche would be those that regularly produce small batches of goods and who have pre-existing contacts in the restaurant industry. They should be aware that it must be harvested by hand and sold before it gets overripe.

Markets

Huitlacoche has definite markets, particularly in urban centres where there is a high Mexican population. Most Canadians are unaware of what Huitlacoche is so without further education and promotion it should be marketed to people who have product awareness.

International Markets:

We recommend exporting to countries that have high Mexican immigrant populations. To do this, a farmer would have to have pre-existing contacts in that country that were interested in importing Huitlacoche or know of a distributor with similar contacts. The industry would have to be much larger in order to support or justify either of these options.

Immigration Statistics: Mexican immigration to country, by year:

2010 2009USA 139,120 164,920Spain 4,789 4,869Canada 3,870 3,104Germany 3,008 3,008From: OECD (Organization for economic cooperation and development).1

Local Markets:

Places you can get Huitlacoche in Canada:

• Amazon.com - Angelina’s Gourmet (Canned)

• Oregonmushrooms.com - (Frozen in bags)

• Gourmetsleuth.com - (Goya Can).

• Burns Farms - (Frozen in bags)

• Canned: Herdez, Goya, San Miguel, La Carolina, found in Mexican Grocery Stores.

Toronto Restaurants which serve Huitlacoche:2

Restaurant Name Address Phone Email AddressCava 1560 Yonge St. 416-979-9918 info@cavarestaurant.caAtlantic 1597 Dundas St.W. 416-219-3819 nathan.isberg@gmail.com Pachuco 99 Danforth Ave. 416-466-8006 info@pachuco.caMomofuku Daishō 190 University Ave. 647.253.8000 toronto@momofuku.comEl Trompo 277 Augusta Ave. 416-260-0097 info@eltrompo.caMaizal Quesadilla Café

133 Jefferson Ave. 647-351-0133

Nota bene 180 Queen St. W. 416-977-6400 info@notabenerestaurant.com

Farmers Markets

There are 166 farmers markets in Ontario. We recommend targeting those in cities that have a high Mexican immigrant population – namely Toronto, Montreal and around Essex county. Within Toronto we recommend Kensington Market for the high number of Mexican Grocery stores and the St. Lawrence Market for the high variety of foodstuffs and unique clientele.

Mexican Grocery Stores in Toronto:

Perola Supermarket 247 Augusta Ave (416) 593-9728

Mexi-Can Market 1232 College Street (416) 534-8489

La Tortilleria 1009 Dufferin St. (416) 901-7842

Emporium Latino 243 Augusta Ave (416) 351-9646

Latin World 1229 Bloor St. West (416) 603-3311

Mexican Grocery stores would likely carry bagged, frozen Huitlacoche if it was provided to them. Frozen Huitlacoche should be sold at a lower price point than fresh.

Health Food Stores:

Pending future success of Huitlacoche, it could be sold to health food stores. Unless there was a proven market for it and a higher level of product education, health food stores would likely not be interested in carrying it (unless they were in an area with a high Mexican immigrant population).

Food Co-ops3

Food co-ops may be interested in growing or buying Huitlacoche. Since they have experience with small-batch crops, they would be ideal. For example: the Ontario Natural Food Co-op (http://www.onfc.ca/).

Preservation:

Unless the Huitlacoche is going to be consumed within the allotted time period, it should be frozen. This will cause it to lose some flavor but not as much as if it were to be canned. It can be shipped more easily frozen. We recommend sealing it in bags before freezing to avoid contaminating the container that it’s shipped in.

Transportation:

Domestic: Refrigerated trucks should be used for large shipments, couriers could be used to ship frozen bags of 1-2 lbs. For short distances it could be shipped loose and fresh in boxes but farmers and carriers should be aware of the fungus’ tendency to release spores.

International: When shipping in North America, refrigerated trucks should be used, unless a restaurant is willing to pay a premium for air freight. The Huitlacoche should be shipped frozen to avoid issues if there are delays unless a request is specifically made to ship it fresh and a quick delivery is guaranteed.

When shipping to places other than North America, it should be frozen, sealed in bags and shipped by air freight. All precautions should be made to ensure that the Huitlacoche does not burst and contaminate the cargo hold.

HS Tariff:

The Harmonized Commodity Description and Coding System (HS) is a method for the classification of goods published by the World Customs Organization (WCO) for ease of the application of customs duties in international trade. The WCO is an independent intergovernmental organization representing 160 member countries. All existing goods are organized in this system and are assigned ten digit codes based on the complexity of the goods. The HS system categorizes products into 97 chapters and is updated annually. The proper HS codes must be used on all import/export documentation and determine applicable duties and taxes as well as for statistical collection purposes. The HS system is used by nearly 200 countries world-wide, representing approximately 98% of international trade.

These codes should be used on Export Declaration forms to indicate what is being transported.

• The HS Tariff code for Edible Vegetables and Certain Roots and Tubers; Other Vegetables, Fresh or Chilled; Other is 0709.59.90.00

• The HS Tariff code for Edible Vegetables and Certain Roots and Tubers; Other Vegetables, Fresh or Chilled; Mushrooms, For Processing is 0709.59.10.00

• The HS Tariff code for Vegetables (uncooked or cooked by steaming or boiling in water), Frozen; Other Vegetables; Brussels Sprouts & Mushrooms; Mushrooms is 0710.80.30.20

Export Declaration Form: In order to export Huitlacoche, a farmer would need to use this form: http://www.cbsa-asfc.gc.ca/publications/forms-formulaires/b13a.pdf

See B13A form and instructions below

Restrictions4 5

According to the Department of Foreign Affairs and International Trade (DFAIT), there are no restrictions on importing or exporting Huitlacoche to or from Canada. For specific country restrictions, we referred to Migra’s Canadian Export Guide.

The main countries that Mexicans immigrate to are the USA, Spain, Canada and Germany, with US migration being massive compared to the others (See Table Below). According to Migra, there are no restrictions on Corn Smut or Huitlacoche importation to any of those countries.

The fact that there are not any restrictions on Huitlacoche, either importing or exporting, may be due to the fact that no one has imported non-canned Huitlacoche in any volume either to or from Canada. If any exportation begins in earnest there may be some reactionary response from farmers to have the law changed – if this is the case then we recommend having proof prepared demonstrating that there is no danger to crops to ship (probably frozen) Huitlacoche.

The CFIA (The Canadian Food Inspection Agency), given the relatively low profile of Huitlacoche and the fact that it’s already available canned, does not place restrictions on Huitlacoche.

The United States Department of Agriculture/Animal & Plant Health Inspection Service (USDA/APHIS) places no restriction on the importation or sale of Huitlacoche however does require that any fruit or vegetable being imported to the U.S. be accompanied by permit PPQ 587. The application (see below) must be completed by the U.S. importer and approved before importation can begin.

Pricing:6

Cost to grow per Kilogram: $5.92 USD (=$6.02 CAD)

At $20-35 per Kg, and with a minimum volume of 30 Kg per acre, a farmer could make between $419.40 (at 20$/Kg) and $869.40 (at 35$/Kg) per acre.

This is 559% - 1159% more than corn (at an average profit of $75/acre).

According to Mark Trealout, corn smut can be sold directly to restaurants for $40-50/Bushel.

Nutritional Value:7 8 9

Recent studies of Huitlacoche, also known as corn smut, a pathogenic plant fungus, have led to the discovery of many nutritional health benefits. These benefits have come in a variety of different forms such as; unique proteins, minerals and essential branch chained amino acids. One of the main branch chained amino acids found in corn smut is lysine, which is an essential amino acid the body needs however cannot produce itself. This makes corn smut a valuable nutritional food source. Lysine has been known to help fight infections, strengthen bones, keep skin looking young; as well bodybuilders use a significant amount when trying to build muscle. Lysine also coming into play when creating these unique proteins, when the high amounts of lysine in corn smut react with the natural amino acids in corn they create a unique protein which has proven to be a higher quality protein than in regular corn.

Along with lysine, another notable health benefit of Huitlacoche are the Beta-Glucans found in corn smut. Beta-Glucans are sugars found in cell walls of bacteria, fungi, yeasts, algae, lichens, and plants, such as oats and barley. These Beta-Glucans have sometimes been used in medicine formulas.

Known uses for Beta-Glucans; fight high cholesterol, diabetes, cancer, and HIV/AIDS, also can be used to boost the immune system in people whose “body defences have been weakened by conditions such as chronic fatigue syndrome, or physical and emotional stress”.

Overall Huitlacoche or corn smut provides a significant source of multiple health and nutritional benefits. The challenge that remains now is getting people to consume Huitlacoche in order to reap these benefits.

Lysine

One of those "essential amino acids" that the body requires but can't manufacture. We need it to fight infections and strengthen bones. Bodybuilders pound lysine when they want to build muscle, and estheticians

recommend it to keep skin looking young. Cannot be found in animals (only in plants) 600,000 tonnes produced every year as additives

Beta-Glucens

Soluble fibre that gives oatmeal its well-known cholesterol-cutting power. Sugars that are found in the cell walls of bacteria, fungi, yeasts, algae, lichens, and

plants, such as oats and barley. Sometimes used as medicine. Beta glucens are used for high cholesterol, diabetes, cancer, and HIV/AIDS. Also used to boost peoples immune system.

Seller/Buyer Emails

Mark Trealout - mark.tree@hotmail.com

School of Environmental & Natural Resource Sciences

hi Ted. This is Mark Trealout here. I have been selling huitlacoche for 6 or 7 years now. Mostly to Toronto restaurants. I don't corn here though. I usually purchase 'the smut' from my local Amish community, when it comes up. No one is purposely trying to grow this, but I have successfully been able to market all that can be harvested - which is often several bushels worth every year, depending on conditions.

I wrote an article on this several years ago for Edible Toronto - http://edibletoronto.com/fall-2009/huitlacoche.htm

I'll be catching up on office work today, so feel free to contact me by phone/email for any follow up.

705 439 3372.

mark.

Geoff O'Connor

Chef at Nota Bene Restaurant

geoff@notabenerestaurant.com

Hi Ted,

We source our Huitlacoche as a canned product from some Latin American grocers in Toronto.

I would LOVE to be able to get my hands on some fresh huitlacoche – I have been unable to find a source for it in the city. If you have any leads, a contact would be much appreciated.

Thanks so much! Please don’t hesitate to contact me should you have any further questions.

Geoff O'Connor

Chef de Cuisine

p. 416.977.2457

f. 416.977.6500

"Laughter is brightest, in the place where food is."

-Irish Proverb

www.notabenerestaurant.com

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Eren Fernandez - info@pachuco.ca

Pachuco ModMex

Hi Theodore,

Our huitlacoche is imported from Mexico. (bottled there)

We would definitely buy Huitlacoche from local farmers so long as quality and taste are not compromised of course.

Great project, just to add a bit to this...not everyone in Canada likes Huitlacoche is a 50/50 but certainly a staple ingredient in Mexican cuisine

………Eren FernandezPachuco ModMex

Nathan Isberg - nathan.isberg@gmail.com

Atlantic Restaurant

I get mine from Mark Trealout who sources it from a variety of local farmers. He couldn't keep up with the amount I needed so yes, I would be into another source.

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Cava Restaurant - info@cavarestaurant.ca

We buy it from several farmers. I believe there is an operation in Florida growing it.Definitely a niche product. The stuff from Florida and local isn't quite the same as the stuff you get Mexico.

Final Marketing Conclusions:

With such a niche-market product, farmers selling Huitlacoche should start small. The model that should be followed is the growth of Québec artisan cheeses. The most likely markets to ensure sales would be selling directly to restaurants or at Farmers Markets in highly populated areas (such as the ones listed above). Once the restaurant community and fresh produce buyers are aware that farmers are growing Huitlacoche locally, interest could be generated to move into other markets.

Starting at the grassroots level will leverage word-of-mouth marketing and guarantee profits for farmers. Once Ontario Huitlacoche has been branded well enough to have some name-recognition, farmers could explore other options, such as exportation and processing, and marketing on another level.

References

1. http://stats.oecd.org/Index.aspx?DatasetCode=MIG

2. Trend We Love – Huitlacoche (aka Corn Smut, spotted on Mexican and non-Mexican menus alike. Toronto Life. November 27, 2012 http://www.torontolife.com/tag/huitlacoche/

3. An Unsavory Sight to Behold, A Treasure to eat. Mark Trealout. Edible Toronto. Fall 2009. http://edibletoronto.com/fall-2009/huitlacoche.htm

4. DFAIT. http://www.international.gc.ca/international/index.aspx

5. CFIA. http://www.inspection.gc.ca/eng/1297964599443/1297965645317

6. Production and Marketing of Huitlacoche. W.F. Tracy, C. Vargas, L. Zepeda, J.K. Pataky, and M.A. Chandler. Issues in Crops and New Uses. 2007. http://www.hort.purdue.edu/newcrop/ncnu07/pdfs/tracy233-236.pdf

7. Mendoza, Martha. Corn Smut Delicacy Huitlacoche Is Good For You. N.p., 27 Apr. 2010. Web. 8 Mar. 2013. <http://www.huffingtonpost.com/2010/04/27/huitlacoche-corn-smut-goo_n_553422.html>.

8. Nutritious, Delicious Corn Fungus. N.p., 28 May 2010. Web. 22 Feb. 2013. <http://caloriecount.about.com/nutritious-delicious-corn-fungus-b427331>.

9. Beta Glucans. N.p., n.d. Web. 6 Mar. 2013. <http://www.webmd.com/vitamins-supplements/ingredientmono-1041-BETA%20GLUCANS.aspxactiveIngredientId=1041&activeIngredientName=BETA%20GLUCANS>.

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