The McNaughton Family farm business spans six generations. Historically, it has been a dairy operation, but it has since developed a small beef cattle program. The farm also has hens, cash crops and cattle feed.
With small family farms trying to stay afloat, farming costs increasing, and land values growing, the McNaughtons felt that a change from a traditional approach was needed.
For Janan and Steven McNaughton, growing their family farm required vertical integration and a retail location to sell their products directly to local consumers. This involves combining different stages of farming, such as production, processing, and marketing, into one business unit or farm. It also requires extensive investigation to increase the chance of success.
Conducting the necessary research, outlining the approach, and committing to the plan took some time.
Exacerbated Challenges
The pandemic exposed the fragility of the supply chain and highlighted the importance of establishing and strengthening the local farming network. As grants became available to farmers to grow local food supply chains, it was a now-or-never moment for the McNaughtons to develop the local food supply and work with other small family farms.
Growing the Family Farm
The business plan for Proof Line Farm Creamery and Market was long in the making and solidified in the summer of 2021. The most significant aspect of the plan was the construction of a large retail building that would allow Proof Line to become the only on-farm dairy facility in the area to make products and sell directly from the farm. The venture carried a considerable risk for the farm to start, but the McNaughtons were all in.
However, the McNaughtons needed further capital for components that were key to their growth and to improve their processes.
That’s when TechAlliance became involved.
The TechAlliance Boost
The family knew TechAlliance through mutual connections. Because of Proof Line’s innovative and sustainable processes, they were advised to apply for the i.d.e.a. Fund™.
After their application was approved, the McNaughtons had the funding to buy a dump trailer that enabled them to install a robust composting system and make it more efficient. As a result, they could invest in fully compostable containers for their gelato packaging. This sustainability component is critical to the business.
After obtaining the necessary permits and securing financing, the ground for the new building was broken in December 2022. When the final permit was granted in December 2023, Proof Line Farm opened in Ilderton, Ontario, just north of London.
Dairy Reimagined
To make an impact and drive customers to their new location, the McNaughtons knew they had to find a gap in the market. With plenty of farmers making cheese in the surrounding area, they looked at the market and thought the best option was to do something further in dairy processing. They looked at ice cream.
Proof Line uses the milk in its entirety.
To make ice cream, you must separate the cream on the top of the milk and churn it, but there is no separation of that cream for gelato making. Additionally, there is zero resulting waste by pouring the whole milk into the churn and churning all of it. This makes gelato a better fit because it is easier to make, and it eliminates the need to buy a separator and go through the extra step of separating the cream. It also creates less waste because no skim milk by-product is created, compared to making ice cream.
The gelato also showcases the quality of the dairy product. Berries and fruit from local farms are added to create different gelato flavours, including raspberry, blueberry, and haskap. Lavender and honey are two other locally sourced ingredients.
Investment Needed
Proof Line’s gelato and non-dairy sorbet became the farm’s big early successes, but there was still room for growth and increased efficiency.
Andrew Leest, TechAlliance Manager, Venture Growth, has been the McNaughtons’ key advisor throughout the launch of the retail location and the i.d.e.a. Fund™ application process. With his guidance and that of the TechAlliance team, Proof Line has navigated the many regulatory, financial, and industry obstacles.
Ongoing Challenges
Farming is a capital-intensive pursuit with many up-front costs, instability, and high crop prices. Traditional financial forecasting has been challenging, and construction costs have increased. Government grants made it feasible, but the food system is structured to accommodate more extensive operations. To mitigate these challenges, Proof Line is seeking a provincial licence through OMAFRA (Ministry of Agriculture, Food and Rural Affairs) for a wholesale permit. The company is also selling eggs, beef, and other products from area farms at the retail location in Ilderton.
“Proof Line has faced many challenges, but their resilience and determination to build a strong business model that highlights sustainability and the advantages of local farming has been inspirational. Their early success is a prime example of farming communities working together to benefit collectively,” said Leest.
Proof Line is a recent i.d.e.a. Fund™ recipient. Supported by a $10-million Government of Canada investment, through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), the i.d.e.a Fund is led by Boundless Accelerator (previously Innovation Guelph) in partnership with five Regional Innovation Centres (RICs): WEtech Alliance, Haltech, Innovate Niagara, Innovation Factory and TechAlliance of Southwestern Ontario. The program helps high-potential ventures access the tools they need to succeed by providing financial and business advisory supports to develop or redesign products, services, processes and technologies that reduce impacts on the environment and create made-in-Canada solutions.
To learn more about Proof Line Farm visit https://www.prooflinefarm.ca/
To learn more about i.d.e.a Fund™ go to https://www.techalliance.ca/i-d-e-a-fund/
To learn more about FedDev Ontario, go to https://feddev-ontario.canada.ca/en