Organto Foods Inc., an integrated provider of organic and value-added organic fruits and vegetables announced it has entered into a 5-year exclusive supply agreement with a Mexican based supplier of organic avocados. The agreement provides for supply beginning in 2021 and through the end of calendar 2025 with an estimated revenue potential over the contract period of approximately CDN $65.01 million.
“We are extremely pleased to enter into this strategic long-term Supply Agreement, significantly expanding our supply of organic avocado from Mexico, a key growing region with a significant presence in the organic fruits and vegetables industry. Organic avocado is a key product in our expanding portfolio, supported by a
year-round supply chain comprised of strategic supply partners from around the globe.” commented Rients van der Wal, Co-CEO of Organto and CEO of Organto Europe B.V.
“We are seeing demand for avocados continuing to grow, driven by its nutrient dense nutritional profile and a consumer focus on health and
wellness. This strategic Supply Agreement significantly increases our capabilities and will play a key role as we scale our business to meet the demands of our customers.”
Under the terms of the exclusive Supply Agreement, Organto will have the right to market all production from the supplier for the next five years running through December 31, 2025. The supplier currently has
approximately 100 hectares under production in the Nayarit region of Mexico, with harvests expected to increase as the existing orchards mature and additional capacity is added in the coming years. Products are currently Global GAP, SMETA and European Union organic certified, and the supplier has undertaken to work with Organto to obtain Fairtrade certification by the start of the 2021 season and Bio Suisse certification by the start of the 2022 season. Supply over the contract period is estimated to be in the range of 12.5 million
to 14.0 million kgs. In order to obtain exclusive distribution rights,
Organto has agreed to issue up to 1 million common shares to the supplier over the term of the agreement based on the delivery of minimum annual volume targets. The issue of these shares under the Supply Agreement is subject to the acceptance of the TSX-V.
Organto’s year-round supply chain for organic avocado includes supply from four continents including sources in Morocco, Spain, Columbia, Peru, Mexico, South Africa, Tanzania and Kenya. Mexican supply is key in the August to November time periods. The Company is continually working to develop additional sources of supply in order to meet the increasing demand from its customer base located throughout Europe.
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