Lufa Farms is expanding. After having successfully negotiated over the last three years the online shift of Quebec consumers, then their about-face caused by galloping inflation, the Montreal company is internationalizing. First stop: New England.
The idea had already been mentioned in 2021, Lufa finally spotted land near the city of Boston where it hopes to build its own building, on the roof of which it will be able to erect an urban farm, as its business model requires. . The building itself would become a warehouse where it will be able to store, or even process, the fruits and vegetables grown on site. The company is awaiting the necessary financing.
“The Boston region is interesting for us because it is a market roughly similar to that of Montreal, with a slightly higher population density,” explains Mohamed Hage, president and founder of Lufa Farms. New England is a place in the United States where consumers already buy a lot of organic food, the entrepreneur adds.
This expansion project in the United States is still in its early stages. It will require “a few tens of millions of dollars” of investment, a sum that Lufa will have to find from financial partners. The company founded in 2011 has only recently been profitable, says its president, which is good news given the circumstances.
Lufa Farms, whose model is strongly inspired by the farmers’ baskets that people can buy from different Quebec farmers, currently has 30,000 customers, but their goal is to triple this number. Initially, the SME predicted that profitability would be reached at a threshold of 100,000 customers. But what was planned before 2020 was kind of put on the back burner with COVID, which greatly transformed the look of the consumer food market.
The closure of restaurants and the rush to online ordering services quickly doubled demand for Lufa’s products, whose particularity is to have installed its farms close to its customers, on the roofs of commercial buildings or industrial which would otherwise be unused.
The sudden and sustained price inflation from 2022 then had the opposite effect: many customers reduced the size of their order with Lufa and purchased their products elsewhere. “People were doing half of their purchases with us and the other half at Walmart, which we didn’t see before,” says Mohamed Hage.
Lufa Farms have therefore reviewed their offering of local and organic products to reduce their prices. Since then, demand has recovered and growth has stabilized.
Europe next
All this considered, the founder of Lufa thinks he will be able to successfully reproduce his model outside of Quebec. Besides Boston, Europe is also in its sights. “There are several large cities in Europe where urban density is quite high. This will be our objective: to demonstrate that our model is applicable everywhere. »
The European market may be particularly welcoming to Lufa farms. The European Union published for the first time last year a report profiling the food waste that occurs every day on its territory. According to this report, each European wastes on average 131 kilograms of food per year, for a total of 60 million tonnes of food lost or unused each year. Which means that a third of food production in the European Union ends up in the trash.
That’s huge, but it’s less than in Canada, where 58% of food is wasted.
The targets for reducing all this waste are more ambitious in Europe than in Canada. By 2030, the European Union wants to halve the food lost by the agri-food industry (particularly in transport) and by 40% the food thrown away by consumers. The Canadian target is 30% in total.
The good news for Lufa is that urban farms like his are seen by authorities as a promising solution. “Fresh foods are not made to be transported long distances,” says Mohamed Hage. That’s half the problem: farmland is often located too far from consumers. On our farms, we can harvest at night and deliver our products to people the same day, without waste. »