Birch Syrup Production in the Chapleau Crown Game Preserve

Emerging Opportunities

A Feasibility Study

Prepared for the Northeast Superior Regional Chiefs’ Forum By: Ecotrust Canada April 2015

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

This report has been developed to guide the ongoing work of the Northeast Superior Regional Chiefs’ Forum (NSRCF) and the NSRCF Elders Council. The research is intended to deepen understanding of the potential for creating new forestlands business opportunities, adjacent to forestry, in the Chapleau Crown Game Preserve (CCGP). The assumptions and predictions made in this feasibility study will be confirmed during the summer/fall of 2015 – serving as a focus for work done by the region’s emerging Guardians program. It is Ecotrust Canada’s intention that this work contribute to the ongoing dialogue and experimentation that will enable the region to build a more resilient economy into the future.

Ecotrust Canada would like to acknowledge and thank the individuals and organizations who provided guidance, support, and resources that contributed to this project. Particularly, the members and staff with the Northeast Superior Regional Chiefs’ Forum; NSRCF Elders Council; Tembec Inc. in Timmins, ON; Ontario Ministry of Natural Resources and Forestry regional staff and Chapleau District; Land Information Ontario; and Northern Information Technology and Geomatics Cooperative (NITGC). We acknowledge the financial support of Natural Resources Canada in making this project possible.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ...... 3 2. DESCRIPTION OF THE OPPORTUNITY – NON TIMBER FOREST PRODUCTS ...... 4 2.1 Overview - Non-Timber Forest Products (NTFPs) ...... 4 2.2 NTFPs in Rural Canada ...... 5 2.3 First Nations and the NTFP Sector ...... 5 2.4 Birch Sap and Syrup ...... 6 2.5 Birch in the Northeast Superior Region of Ontario ...... 7 2.6 Map of Birch Distribution CCGP ...... 8 3. DESCRIPTION OF THE PRODUCT MARKETPLACE FOR BIRCH SAP AND SYRUP ...... 9 3.1 Market Overview ...... 9 3.2 Potential Competition ...... 11 4. ORGANIZATION AND INFRASTRUCTURE REQUIREMENTS ...... 12 4.1 Harvesting ...... 12 4.2 Production ...... 12 4.3 Marketing ...... 13 4.4 Personnel ...... 13 4.5 Business Structure...... 13 5. SPECIAL CONSIDERATIONS FOR BIRCH SYRUP PRODUCTION IN THE NORTHEAST SUPERIOR REGION ...... 14 6. STARTING POSITION...... 15 7. FINANCIAL PROJECTIONS ...... 16 8. KEY FINDINGS AND RECOMMENDATIONS ...... 17 9. FINANCIAL ANALYSIS ...... 18

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

1. EXECUTIVE SUMMARY

The harvesting, commercialization, and benefits derived from non-timber forest products (NTFPs) cross many aspects of forestry, policy, economics, community, ecological management, history, culture, and politics. Many studies have looked into the future of non-timber forestry, as it is likely to be a key component in the future of forestry and agriculture.

Creating a viable and well recognized NTFP sector in Canada is challenging. It is only in the last ten years, and inconsistently, that Canada has begun to grow a body of information and technical capacity related to the harvesting and processing of various NTFP products. This fact was evidenced by the challenges we experienced finding relevant and consistently accurate information for this feasibility study.

The many decades of sole focus on forestlands as a source of timber has meant very limited investment in a comprehensive inventory of non-timber forest products, no good data on the rates of utilization, and limited technical development in this field. This lack of good data then hampers business planning and negatively impacts capital raising so the opportunities that do exist are hard pressed to realize and grow.

Other concerns cited around the development of the NTFP sector include: socio-economic problems associated with a largely unregulated, cash-based economic activity; a transient workforce; resource-use conflicts over harvesting methods (e.g. raking for mushrooms); the need to protect culturally significant plants for First Nations use; and the lack of designated responsibility for the industry among government agencies.

For this study, the research confirmed that there IS an opportunity for a successful birch sap and syrup enterprise in the Chapleau Crown Game Preserve in the Northeast Superior Region of Ontario. It will create a few seasonal employment opportunities, pay back its start-up capital, and make a modest profit year over year. It is not going to be a game-changer in the world of economic development, but it does hold very interesting potential to: (a) re-engage some of this region’s Aboriginal peoples in activities on the land – something they want; (b) bring the forest industry and communities together around an opportunity that can demonstrate a collaborate approach to resource management; and (c) introduce one NTFP industry to the region in the hopes of adding other complementary industries over time as resources and capacity develop.

Using key assumptions from the research, including a retail value of $90/litre for the finished syrup product, and sales split evenly between retail and wholesale pricing, a business operation with 1000- 2000 taps annually would see revenues of $18,000-$40,000 per year and a net profit of $2,500-$22,000 annually. An operation of this size would utilize about 11 hectares of land in the CCGP and would seasonally employ 5-15 people.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

2. DESCRIPTION OF THE OPPORTUNITY – NON TIMBER FOREST PRODUCTS

2.1 Overview - Non-Timber Forest Products (NTFPs) NTFPs are products of the forest other than timber, pulpwood, firewood or wood products. Most often included in the NTFP category are game animals and fish, fresh water, fruits and nuts, vegetables, floral greens, medicines, craft botanicals, resins and fibers.

NTFPs are increasingly being considered as an option for economic diversification in communities that are impacted by downturns in other resource sector industries around the world. Much of what we know about this sector comes from the developing world where over the past two decades, there has been a growing body of research, business and markets development as a means to boosting income for poor people and encouraging forest conservation.

Across Canada, our shrinking forestry economy coupled with increased consumer demand for alternative, healthy, organic and environmentally sustainable products, and naturopathic medicines, is beginning to shine more business and community light on the economic potential of NTFPs. Although the sector remains largely unregulated and poorly understood in Canada, many of our NTFP products are finding their way into international markets including the USA, Korea, Japan, the Netherlands and China largely through the perseverance of small business entrepreneurs.

Because the sector has not been a significant economic driver to date in Canada, the available and current data on the number, size and types of industries remains limited. The statistics below, many of them no longer current, offer only a whiff of the potential size and scale of this sector, and highlight its importance for more rural, forest-based economies.  Canada produces 85% of the world’s maple syrup.  Maple products represent a $354 million dollar industry in Canada. In 2009 (the last data inventoried), the country produced over 41 million litres of maple products, including maple syrup.  The Christmas tree industry is worth about $39 million annually.  Canada is the world’s largest producer of wild (low-bush) blueberries. It exported $207 million of fresh and frozen berries in 2014. Most wild blueberries are planted commercially in Quebec and the Atlantic provinces as field crops.

In 2005, the Canadian Forest Service published statistics estimating the total value of NTFP trade in Canada at $241 million1. In 2006, a national research report estimated the commercial value of NTFPs at 1.33 billion2. The truth likely lies somewhere in between. A 1999 estimate of NTFPs in British Columbia3

1 Canadian Forest Service, 2005 2 Wetzel, Duchesne, & Laporte, 2006 3 Wills & Lipsey, 1999 4

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

showed the value at $275 million, but with the inclusion of forest services (i.e. ecotourism), that estimate jumped to a value of $680 million.

The lack of current and accurate data hampers business planning in this sector and negatively impacts capital raising. Other concerns cited around the development of the NTFP sector include: socio- economic problems associated with a largely unregulated, cash-based economic activity; a transient workforce; resource-use conflicts over harvesting methods (e.g. raking for mushrooms); the need to protect culturally significant plants for First Nations use; and the lack of designated responsibility for the industry among government agencies.

2.2 NTFPs in Rural Canada Most NTFP activity is centered in rural communities which have traditionally been economically dependent on natural resource extraction industries including forestry and mining. Business transactions in the sector are through individuals and/or small to medium sized enterprises. Though a relatively minor player in Canada’s overall economy in comparison to the traditional forestry sector, the importance of NTFP activity to rural livelihoods, cultural survival, and economic diversification, particularly where traditional natural resource industries are shrinking or leaving, should not be ignored.

2.3 First Nations and the NTFP Sector NTFPs have important cultural, spiritual and sustenance values for First Nations, who have demonstrated the use of these products for food, medicine, ceremony, tools, clothing and other uses since time immemorial and, although today to a lesser extent, continue to do so.

Sustainable development of NTFPs potentially offers a wide variety of immediate benefits to First Nations, including:  valuing and protecting traditional, subsistence, spiritual and cultural plant uses;  business and employment opportunities in a wide range of occupations, many linked with traditional First Nations interests, knowledge and occupations;  opportunities to assume leadership in the development of a “new” industry; and  the ability to make informed decisions about the utilization of NTFPs in their territories, emphasizing and protecting intellectual and territorial rights.

Although strategically situated to benefit from commercial developments within the NTFP industry, First Nations seem to be participating largely in only entry-level positions such as seasonal harvesting, where these opportunities provide an important cash contribution to limited incomes, and can be managed intermittently with other part time employment. Limited experience with business development; a lack of available information for business planning; too few people with the skills and experience to develop and implement management plans for NTFPs on traditional territories; and capital raising challenges have been cited as some of the entry barriers.

Nevertheless NTFPs hold increasing economic importance and as one of the only resource sectors for which management and licensing/tenure arrangements (and therefore access restrictions) have not 5

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

already been established. For this reason, many First Nations across Canada are showing keen interest in having a business presence in the sector. Over the next 10-15 years, as a largely new economic frontier, it is expected that Aboriginal peoples will be actively managing NTFPs within their traditional territories under one or more of a variety of possible mechanisms, including interim measures agreements, treaties, or arrangements with government agencies and/or other forestry interests.

Some current examples of Nations active in this sector include:  the Gitxsan Wilp Sa Maa’y Harvesting Cooperative, manufacturing huckleberry jam and other products;  the Ktunaxa Nation’s successful native plant nursery;  Northern Delight teas from Nunavik; and  the Siska Traditional Products company, producing jellies, natural soaps, teas and herbal oils.

2.4 Birch Sap and Syrup Birch syrup is a savory syrup made from the sap of birch trees, and produced in much the same way as maple syrup. With a distinctive and mineral-rich caramel-like taste, the syrup is used as an ingredient paired with pork or salmon dishes in sauces, glazes, and dressings, and as a flavoring in ice cream, beer, wine, and soft drinks. Birch syrup is condensed from sap, which has about 0.5-2% percent sugar content, depending on the species of birch, location, weather, and season. The finished product must be 66% sugar or more to be classified as a syrup. As with all terroir products, different types of birch will produce slightly different flavour profiles; some more copper, others with hints of wildflower honey.

Rather than being processed into syrup, the majority of birch sap collected in the world is used as a beverage. It can be used as an ingredient in beer or wine; as a tea; and as a medicinal product. The sap is rich in minerals, nutrients, enzymes, antioxidants and has only 2% sugar content. In addition to Canada, purveyors of birch sap can be found in Europe, Russia and Asia.

The global production of birch sap and syrup appears to be relatively small. In 2004, one Alaskan producer reported global production to be only at 1500 gallons (6000 quarts)4 and the Northeastern States Research Cooperative5 estimates <5000 gallons (20,000 quarts) per year. Neither estimate could be confirmed by available data. We do know that the bulk of product is produced in Alaska and Canada. The economic value of birch sap and syrup is high, at $78.00 US/quart. Because birch sap begins to flow just as the maple syrup season slows, many producers move their existing equipment from maple to birch stands in order to maximize their seasonal production.

4 Kahiltna Birchworks, Alaska Wild Harvest 5 www.nsrcforest.org 6

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

2.5 Birch in the Northeast Superior Region of Ontario6 Different species of birch can be tapped for birch sap and syrup production. White or paper birch (Betula papyrifera) – a good source of sap – is the dominant birch species in the Northeast Superior region. Experts in forest ecology contacted for the report describe white birch as ‘common’ or ‘very common’ in the area. It behaves as both an early and late successional species, and is especially common close to Lake Superior. In the Big Pic forest, there are birch dominated stands in southern areas adjacent to Lake Superior, then mixed with aspen on sites with loamier soils further inland. According to the Forest Resources of Ontario 2006 report, the NSFC region has some of the highest concentrations of white birch in the province.

Yellow birch (Betula alleghaniensis) has much more limited distribution in the region, restricted largely to Wawa and south. Paper birch is classed as a shade-intolerant tree and does not grow well when overtopped by other trees or shrubs when young; it does respond well and quickly once individuals are released by removal or thinning of competing vegetation.

Birch grows well on burned over or logged sites where it can form almost pure stands. Well-stocked stands created by fire may have over 1,000 stems per hectare at year 10. In the natural succession of species, paper birch usually lasts only one generation and then is replaced by more shade tolerant species.

White birch is considered a relatively short-lived tree, reaching maturity by 60-70 years of age, and rarely living beyond 140-200 years. In most cases, sap production is most successful on trees 20 years or older.

Using a modeling methodology, the map (next page), produced by the Ecotrust Canada Knowledge Systems team with data provided by Tembec and the Ontario Ministry of Natural Resources and Forestry (ONMRF), demonstrates the potential abundance and distribution of birch stands of adequate age class in the Chapleau Crown Game Preserve.

6 Excerpt from Opportunities for Non Timber Forest Product Development in the Northeast Superior Forest Community Region, Royal Roads University, 2010 7

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

2.6 Map of Birch Distribution CCGP

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

The geographic modeling exercise completed for this report indicates that there are a number of potentially suitable sites for birch sap in the Chapleau Crown Game Preserve. The potential suitable area for birch sap extraction covers 1343 ha distributed throughout the Preserve. The majority of sites are located within the Martel forest tenure (900 ha), followed by the Magpie tenure (270 ha) and Nagagami tenure (145 ha).

All of the identified sites are crown land sites that contain 70-100 percent mature white birch stands (25 years or older) and are available for timber production. These sites are accessible by road, have a density rate 0.6-1.8, above the 0.7 average rate throughout CCGP, (density rate is a qualitative indicator), and high productivity potential (SC= 0-2. Site Class is a qualitative indicator).

With the exception of one site, all sites are productive forest areas which were regenerated predominantly by seeding and which have been assessed as free-to-grow. Omitted from the final site selection were areas eligible for harvesting within the next 12-20 years in the Martel and Gordon Cosens forests; areas treated with aerial or ground spraying; and areas with Aboriginal cultural value.

3. DESCRIPTION OF THE PRODUCT MARKETPLACE FOR BIRCH SAP AND SYRUP

3.1 Market Overview Creating a viable and well recognized NTFP sector in Canada, and therefore for birch sap and syrup, is challenging. It is only in the last ten years, and inconsistently, that Canada has begun to grow a body of information and technical capacity related to the harvesting and processing of various NTFP products. The many decades of sole focus on forestlands as a source of timber has meant very limited investment in a comprehensive inventory of non-timber forest products, no good data on the rates of utilization, and limited skill development in this alternative economic development field.

At this time we know only that the bulk of this product, between 1500 and 5000 gallons/year being produced, is coming from Alaska, followed by Canada, Finland (primarily for home consumption), and the Northwest USA. Spruce/birch forests – or ‘boreal’ forests, are ideal for sap production. Canada’s production is estimated by some to be 2,000-3,000 litres/year, coming primarily from small producers in Quebec; BC; Ontario, Manitoba and New Brunswick.

The conversion rate from sap to syrup is approximately 100 gallons of sap for 1 gallon of syrup. Maple syrup, by comparison, averages 40:1. The birch sap, containing only 1-1.5% sugar, requires concentrating the sugar to 67% through cooking/evaporation, to give the syrup its colour and distinctive flavor.

Birch sap is most commonly seen in the market as a nutritional or medicinal drink, or as an ingredient in beer, wine or tea. It finds its way primarily to markets in central Europe, Russia and Asia. There are many

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

claims that birch sap drunk regularly helps reduce rheumatic joint problems and combats pollen allergies and headaches. There are also reports about the general rejuvenating effect of the sap and that it reduces hunger pangs caused by stress. Some farmers in the Netherlands give their cows birch sap in spring to build them up quickly after the long winter. Birch syrup, on the other hand, is most commonly used as a flavoring for meat or fish and is becoming a favorite niche product for professional chefs. It should not be mistaken for its sweet and much more successfully marketed cousin, maple syrup, though many producers of birch syrup are also engaged in maple syrup production.

On the business side, the birch sap and syrup industry is comprised primarily of individual producers involved from harvest to market, including export – generally producing from trees on private tenures or farms. Though much less common, there are a few mid-sized aggregator businesses buying raw sap from tappers and managing the production to sales aspects of business. This research was unable to identify any instances of tappers in Canada licensed to access and tap birch stands on Crown Land, which suggests a potentially important new area of development for this industry.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

3.2 Potential Competition An internet search and review of available literature and data suggests that market saturation is not the primary obstacle to be overcome in the birch sap and syrup industry. A more significant challenge is to be able to preserve birch sap for year-round consumption while still maintaining the flavour and health benefits of fresh sap. Another other challenge is trying to supply a market for 52 weeks when the sap is only running for less than a month each spring. This requires warehousing and strategic planning to ensure a steady supply at an affordable price. There is also the need to build public awareness of these products through marketing and outreach. Most people are originally skeptical of drinking tree sap and must be convinced that this ‘forest drink’, in the case of sap, or this new birch syrup condiment, is a sound choice. And finally, there are currently no health guidelines in Canada for producers. Though most now producing on a small industrial scale are using the Alaska Birch Syrup Makers Association guidelines to ensure product safety, this is not required.

The following limited list of producers was identified (and should be revisited during any subsequent business planning exercise). Remembering that less than 5,000 gallons are produced annually, one can assume that each of these production facilities is operating at a very moderate scale on land bases, it seems, ranging from 5-25 hectares.

 Oy Aurinkolehto Ltd, Susanna and Arto Maaranen, Tohmajarvi, Finland

 Rocky Lake Birch Syrup, Johanna and Alan McLauchlan, Manitoba (producing ~ 140 gallons/year)

 Sweet Tree Ventures, Laura Entzminger, Quesnel, BC

 Moose Meadows Farm, Ted Traer, Quesnel, BC (producing Boreal Amber Pure Birch Syrup)

 The Canadian Birch Company, Grand Marias, Manitoba

 True North Community Coop, Thunder Bay, Ontario, (including 12 small local producers each carrying their own labels)

 Kahiltna Birchworks, Talkeetna, Alaska

 Forbes Wild Foods, Jonathan Forbes, Shelbourne, Ontario

 Birch Boy Products, Haines, Alaska (the Chilkat Valley region in Southeast Alaska is estimated to produce about a quarter of the world supply)

 Tage Ronne, Denmark

 Various, Russia: Although this research was unable to identify individual producers, Russia seems to be the only country where birch sap is being produced at an industrial scale, and hence where most of the production technology research and sap properties research is being conducted. Its transformation for various cosmetic, medicinal and edible uses is relevant to the soviet economic system.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

4. ORGANIZATION AND INFRASTRUCTURE REQUIREMENTS (INCLUDING MARKETING)

4.1 Harvesting The harvesting side of the birch sap and syrup business is not capital intensive year over year – requiring only basic shelter, small equipment/tools, weigh scales and heating mechanisms. Some statistics estimate that the average harvesting operation employs from 1 to 10 people and that the average aggregating business employs 5-15 people, after buying raw product from multiple brokers.

Sap runs in the spring for a short period of 2-3 weeks and the timing and quantity of sap flow annually is very weather dependent. Equipment requirements are minimal, including one spile per tree which is inserted into a hole in the tree and directs the sap into a bucket for collection, clear plastic tubing, a drill, hammer, and (optionally) a bucket with a lid.

Trees selected are to be at least 8” in diameter at breast height, and free of scars, lichen and fungi. Because birch sap follows maple sap, the weather is generally warmer and therefore the sap more likely to spoil so it needs to be collected and processed carefully and quickly. In some instances, sap buckets are used at the point of collection and must be emptied every 24 hours to keep sap fresh and avoid microbial activity. If it left for a longer period it will start to ferment from the yeast naturally present. At other sites, each tap is connected to tubing that leads the sap to the production facility.

Harvesting sap does not damage the tree so long as the tapping is done well and scars are closed at the end of each season. Tapping only takes 10-15% of the total sap production of a tree and each tree is given a two year rest between tapping. On the human resources side, harvesters require only a short period of training. Ideally training is done through mentoring to avoid damage to the trees.

4.2 Production As previously noted, birch sap can be used as an additive to other products or converted to syrup. When blended into a drink or medicinal product, birch sap is usually stabilized with sugar and citric acid and/or treated with heat to protect it for year round consumption. The recipes are as varied as the producers.

Birch syrup is expensive to produce and truly a labour of love that uses a similar method as maple syrup production – essentially evaporation designed to reduce the water and retain the sugar content of the sap. The conversion rate of sap to syrup (~100-140 gallons of sap makes 1 gallon of syrup), and the heat costs associated with this transformation are not insignificant. To reduce energy consumption, some producers put their sap through a reverse osmosis machine to remove up to 70% of the water before evaporation begins. The sap is then boiled in an evaporator until the sugar content reaches 32% and then it is transferred to a finishing pan until the syrup has a sugar content of 67%. It is then immediately bottled.

While the equipment used at this stage varies considerably by size and location of operations, the minimum requirement is a small commercial kitchen complete with stainless steel pans and ventilation. 12

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

4.3 Marketing The majority of birch syrup is marketed online or through niche and specialty stores close to the sites of production. While some amount of product does reach export markets, this is by far a smaller piece of the Canadian birch syrup production.

The general trend is to market the product as a local specialty product – often associated with a family or small group of local businesses.

Since Canada does not yet have health and safety standards for birch syrup production, many but not all of the producers follow the Alaskan standards.

The price of product varies according to grade, ranging in Canada from $30-$95/litre. Due to the price and general use as a condiment or seasoning, birch syrup is frequently sold in 125ml bottles.

4.4 Personnel Mentoring and job specific training is the best way to develop a professional crew for this business. Because the season is short and the field work very physical, it is not the job for everyone but is well suited to younger people with an interest in working in the forest. It may prove to be an excellent role for First Nations youth who wish to reconnect with their lands and culture.

Obviously people choosing to work in birch syrup production must also have another line of business to accommodate for seasonal income fluctuations. Personnel working in the field as tappers can expect to earn minimum wage. People working in the production facility or in the marketing end of a birch syrup business, can expect to earn $16-$22/hour.

4.5 Business Structure Most of the businesses reporting in this sector are family owned and operated, and are working on privately owned land. They are most often structured as operations that include tasks from harvest to market, some producing only their own product and others buying from independent tappers to create an amalgamated supply. To provide more income stability, birch syrup is generally produced alongside maple syrup to extend the season, diversify income and ensure a steady supply of product available for the market.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

5. SPECIAL CONSIDERATIONS FOR BIRCH SYRUP PRODUCTION IN THE NORTHEAST SUPERIOR REGION

1. Building a business proposition for birch sap and/or syrup that uses birch trees on crown land or on forest tenures in the Chapleau Crown Game preserve will require special permissions and the development of a business plan, including harvest schedules and transport, negotiated alongside forest harvest planning. The fact that forest units containing significant amounts of birch are quantified for most forest management plans provides a solid source of information for confirming the best sites for this activity.

2. The commercial kitchen required for syrup production will likely have to be in a different location than where the trees are tapped. This is an unusual arrangement in this sector and one that will require careful logistics planning since sap must be processed within 24 hours. It will also result in higher production costs due to transportation requirements.

3. The data available in Canada for supporting business planning and capital raising is limited since this has not been a sector of economic importance to date.

4. Birch production businesses are relatively small in terms of employment numbers and very seasonal. Consideration will have to be given to who benefits from this initiative, and how a business is governed and managed. Whether this is an opportunity for individual entrepreneurs or a cooperative/shared arrangement will need to be determined in consultation with the NSRCF and communities.

5. Other concerns often cited around the development of the NTFP sector include: socio-economic problems associated with a largely unregulated, cash-based economic activity; a transient workforce; resource-use conflicts over harvesting methods; and the need to protect culturally significant plants for First Nations use. In the context of alternative economic development in the NES region, each of these issues raises flags that require further discussion as part of charting a successful forward course.

6. It is clearly recognized that the identification of potential sites is only the first step in negotiating business activity in the CCGP, especially since this geography over time has been overlaid with forest tenures. The absence of clear authority for the management of an emerging NTFP business opportunity in this context (crown land, land use designation as a preserve, and tenured for forestry) is a limiting factor for business planning.

7. The modeling exercise completed by Ecotrust Canada suggests a number of potential sites on the CCGP where birch stands of a suitable age class and distribution exist alongside road access and cutting plans as available. This information needs to be ground truthed as a key part of developing a viable business plan.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

6. STARTING POSITION

The Chiefs in Assembly through the NSRCF have expressed an interest in gaining increased access to the CCGP for alternative economic development activities. They have clearly stated that their intention is NOT to disrupt the forest industry in the process, but rather to determine how best to create new economic opportunities that can sit alongside timber harvesting.

The municipalities in 2013 agreed with this direction – voting unanimously for the development of a conservation economy (benefiting communities first) across their region, using the CCGP as a starting point.

The Ecotrust Canada report in 2014, Building a Forest Based Economy in the NES Region, demonstrated the potential for NTFP business activity on 1% of the forested land base to both de-risk the local economy through diversification, and to increase the opportunities for First Nations to be direct beneficiaries of economic activity.

The North East Superior Forest Communities Program, funded by NRCan for seven years and concluded in 2013, invested considerable funds in exploring NTFPs as an economic generator for the region. Their 2010 report ‘Opportunities for Non Timber Forest Product Development in the Northeast Superior Forest Community Region, by Royal Roads University, suggested birch syrup as a high potential area worthy of development. This assessment was further backed up by research done by the Faculty of Forestry at the University of Toronto in 2013.

So it seems that the ecological and political case is made to explore this alternative economic development option for the CCGP. It must be noted again however that the NTFP sector overall in Canada remains under-documented and (therefore) under-capitalized. It also has no regulatory or legislative conditions in Ontario and hence a lack of clarity around how it might be operationalized on the land base.

This combination makes it necessary to do further work to negotiate access, establish regional operating standards and rules, determine the best governance structure to ensure benefits accrue locally, and build a shared commitment to exploration followed by development.

The proposed eSFL table could provide the necessary foundation for this work.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

7. FINANCIAL PROJECTIONS

The attached spreadsheet, based on interviews with current producers, attests to the fact that a modestly successful birch sap and syrup business is achievable, in terms of capital requirements, and revenue/expense ratios. It is not a business that is going to make a lot of people very rich.

The productivity of the operation depends on two key factors: sap production/tree and the sap to syrup ratio. Assumptions for these figures were taken from two distinct studies for these projections, and the results present a range of production and profitability potential.

Using key assumptions from the research, including a retail value of $90/litre for the finished syrup product, sales split evenly between retail and wholesale pricing, a business operation with 1000-2000 taps annually would have revenues of $18,000-$40,000 per year respectively, and a net profit/loss of $2500-$22,000 annually. To achieve this level of income, the tapping operation would need to use only approximately 11 hectares, a small portion of the 878 hectares previously identified as potential birch syrup production area.

A business of this size/scale would require modest set up costs at between $17,000 and $45,000 to achieve taps of 600 to 2000 trees respectively. Variable costs for a bucket operation involving 600 taps/year would be $5700 in year one and $1400 in subsequent years. For a conventional tap and tube operation of 1000 taps/year, the variable costs in year one are estimated at $5700 and $700 annually thereafter. For an operation involving 2000 taps/year (large by conventional standards), the startup year would see variable costs of $11,000 and subsequent year costs of $800.

Employment numbers are in the range of 8 people for set up; 4 people for 18-25 days during production; and 2 people for 7 days to bottle, each earning $15-$20/hour.

The anticipated capitalization required for an operation of 1000-2000 taps is $50,000 ($45K equipment and $5K working capital). The simple payback period would be 17 years for the lower productivity assumptions, and two years for the higher assumptions. This reflects a very wide range of return on investment, and further research would be necessary to clarify the actual production potential of the birch stands in question. The accompanying financial analysis, based on interviews with current producers, attests to the fact that a modestly successful birch sap and syrup business is achievable, in terms of capital requirements, and revenue/expense ratios. It is not a business that is going to make a lot of people very rich.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

8. KEY FINDINGS AND RECOMMENDATIONS

Much of the NTFP literature overstates the potential for this industry as a key economic driver for rural communities. This research concludes that to consider establishing a modest birch sap and syrup operation in the Chapleau Crown Game Preserve has to include consideration of factors beyond profit- making/taking.

The political and ecological rationale for starting a birch syrup enterprise in the CCGP has been established. This region has expressed interest in seeking alternative economic development adjacent to forestry, with an eye to opportunities that will be inclusive of the region’s Aboriginal populations. NTFP development in the CCGP, even at a modest scale, seems an important starting point to realize this intention.

The size and scale of an operation given the combined effect of current levels of forest activity in the CCGP; the commitment of the NSRCF to not displace forestry; and the availability of suitable sites for birch syrup production lead us to conclude that the region could establish an operation involving 1000 taps/year, producing 200-500 litres of syrup/year @ a sale price of $75-$90/litre, for a gross revenue of $18,000 - $45,000/year.

The capital costs required to establish a business of this size are not onerous and can be repaid out of cash flows although it may be necessary to consider non-conventional sources of capital since the estimated payback period is closer to 15 years than the usually expected 7 years and the anticipated return on investment is 5% not 7%. Coupled with the fact that this would be a start-up business, in a sector that is not well understood, the identification of working capital may prove challenging.

The next important steps include ground truth potential sites for birch syrup production using the emerging capacity of the NSRCF Guardians Program; and then negotiating with OMNRF and forest tenure holders for permission and access to use those sites deemed suitable for production.

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

9. FINANCIAL ANALYSIS

Attached spreadsheets detail:  Key assumptions  Startup expenses  Production estimate  Production supplies  Production labour  Projected income and cashflow

Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

KEY ASSUMPTIONS

General Assumptions value unit Source Ecotrust Report: "Critical Resources Inventory Mapping in the Chapleau Crown Game Retail Value of Birch Syrup 90 $/L Preserve: Identifying Areas of Potential Opportunity" March 2015 Matched assumption with University of Vermont Proctor Maple Research Center report "Birch Syrup Production to increase the economic sustainability of maple syrup Retail Markup 50 % production in the Northern Forest" Wholseale Value of Birch Syrup 60 $/L Calculated using retail markup assumption Ecotrust Report: "Critical Resources Inventory Mapping in the Chapleau Crown Game Potential production area 878 hectares Preserve: Identifying Areas of Potential Opportunity" March 2015 Forêt modèle du Lac-Saint-Jean, "La transformation de la sève Tap density 90 taps/ha du bouleau blanc en sirop" Maximum tap potential 79020 taps Calculated using tap density assumption Maximum productivity 1 18850.55 L syrup Applying Lac-Saint-Jean Model Forest Assumptions Maximum productivity 2 42828.84 L syrup Applying commercial producer 2012 assumptions Land required for 1000 taps 11.11111 hectares Calculated using tap density assumption

Yield Assumptions Lac-Saint-Jean Model Forest Sugar content of the sap 0.7 oBrix Forêt modèle du Lac-Saint-Jean, "La transformation de la sève Sap:syrup ratio 124.5 du bouleau blanc en sirop" Yield per tap sap 29.7 L/tap Yield per tap syrup 0.238554 L/tap Calculated using sap:syrup ratio assumption

University of Vermont Proctor Study University of Vermont Proctor Maple Research Center report "Birch Syrup Production Sugar content of the sap to increase the economic sustainability of maple syrup production in the Northern 0.74 oBrix Forest" Sap:syrup ratio 116.6421 Calculated using syrup & sap yield figures provided Sap yield per tap 63.22 L/tap University of Vermont Proctor Maple Research Center report "Birch Syrup Production to increase the economic sustainability of maple syrup production in the Northern Syrup yield per tap 0.542 L/tap Forest"

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

Operating Cost Assumptions value unit Source Evaporation rate of evaporator 340.69 L/hr Forêt modèle du Lac-Saint-Jean, "La transformation de la sève Price for a cord of wood 16 inches 75 $ du bouleau blanc en sirop" Burn Rate 0.25 cords/hr Water reverse osmosis rejection rate 70 % Glass container of 250 ml per Unit 1.91 $ Labels per Unit 0.05 $ Overhead- includes retail costs, University of Vermont Proctor Maple Research Center report "Birch Syrup Production website costs, packaging & shipping, to increase the economic sustainability of maple syrup production in the Northern transportation, storage, credit card Forest" charges, & utility use 1 $/tap annually Collector Pipe Replacement Period 10 Years % of Gross Marketing Expenses 3% Sales

Equipment Lifetime 20 Years Personal Communication with CDL Eastern Ontario Agent Loan Payback Period 20 Years Equivalent to Lifetime of Equipment

Limitations Marketing & Overhead costs are based on broad '% of sales' assumptions that need to be further refined. Actual costs may be higher, especially for scenarios with a higher % of retail sales. In the model, retail sales are assumed to be made online and no retail store costs are considered

Additional equipment, such as ATV, Snowmobiles, and other vehicles, may be necessary to operate the birch facility depending on location and geographic circumstances.

Wildlife may cause some issues for vacuum tubing systems. A number of producers mentioned squirrels chewing the lines or larger animials causing a disruption.

Debt Financing is assumed at 5% annual interest with payback over the 20 year equipment life. Actual financing terms may vary.

Assumed labour rates may need to be adjusted for local labour market conditions at time of business launch.

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

STARTUP EXPENSES

Equipment & Materials- 600 taps

Unit Price #Units Total Drill 150 2 $300 Drill Bits 16.5 6 $99 Tubing 63 3 $189 Transportation Tanks 460 1 $460 Storage Tank 650 1 $650 Plumbing Supplies 100 1 $100 Transfer Pump 150 1 $150 Insulation Board 57.5 4 $230 Firebrick 1.95 125 $244 Hightemp Mortar 79.95 2 $160 Diamond Blade 30 1 $30 Evaporator (2'*6') 4320 1 $4,320 Roof Jack 105 1 $105 Reverse Osmosis mini80 gal/hr 5995 1 $5,995 Finisher Stove 850 1 $850 Defoamer 8.7 1 $9 Pan Cleaner 16.85 1 $17 Skimmer 60 1 $60 Scoop 60 1 $60 Brush evaporator 8.4 1 $8 Brush inside of flues 16.5 1 $17 Brush under flues 43 1 $43 Hydrometer 10.75 1 $11 Hydrometer Cup 39.5 1 $40 Refractometer 239 1 $239 Refractometer 239 1 $239 Filters - Syrup 28 1 $28

Sugar Shack 3000 1 $3,000 Total $17,651 Source: The Birch Syrup Production Manual, Heloise Dixon-Warren

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

STARTUP EXPENSES

Equipment & Materials- 1000-2000 taps

Total Evaporator (Wood 2.5 * 8) $15,320 Spare flat bottom pan $721 Slive valve 2 in $18 Pipe smoke 11 inches $303 Strain of the flue pipe $224 Hinged cap with spark arrestor $527 Evaporation pipe (12 inches) $362 Hat for evaporation fireplace $163 Reverse osmosis (600 gal/hr) & membrane $12,700 Vacuum pump (5HP) $3,480 Mechanical Transvideur (extractor) $1,450 Vacuum distributor $100 Three-way Valve PVC $76 Of sap storage tank (4*4*14ft) $2,122 Filtrate tank $991 Concentrating tank $893 Standard PVC Valve $9 Fittings & Pipes $100 Support for disc filter ring $29 Refractometer 0 to 32 oBrix $222 Refractometer 45 to 82 oBrix $222 Bimetallic thermometer (3*9 in) $50 Skimmer hole $61 Skimmer (not perforated) $58 Syrup cup (8 inches) $34 Brush radius (1/2*7 in) $22 Sleeveless brush (2*7 in) $19 3 wicks scoring $39 Pressure filter press (10 inches) $1,775 Multifunctional trolley $330 Subtotal excl. shack $42,421

Sugar Shack* $3,000

Total $45,421 Source: Translated from Forêt modèle du Lac-Saint-Jean, "La transformaon de la sèvedu bouleau blanc en sirop" *assume same cost as for 600 taps

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PRODUCTION ESTIMATES

600 Taps Lac-St Jean Avg Vermont Proctor Avg Unit # of Taps 600 600 taps Sap production/tree 29.7 63.22 L Total sap production 17820 37932 L Total syrup production 143.13 325.20 L Amount produced 573 1300.8 250 ml jars

RO Efficiency 70% 70% RO Throughput 300 300 L/hr RO Time 59.4 116.6 hours Amount Remaining 5,346 11379.6 L Evaporation Rate 120 120 L/hr Evaporation Time 44.55 94.83 hours Total Processing Time* 103.95 211.5 hours *Assumes 600 tap system described in the Birch Syrup Production Manual Labour Cost of Processing Time $ 1,559.25 $ 3,172.08

1000 Taps Lac-St Jean Avg Vermont Proctor Avg Unit # of Taps 1000 1000 taps Sap production/tree 29.7 63.22 L Total sap production 29700 63220 L Total syrup production 238.55 542.00 L Amount produced 954.22 2168.00 250 ml jars

RO Efficiency 70% 70% RO Throughput 2271.75 2271.75 L/hr 1st run RO Time 13 27.83 hours Amount Remaining 8910 18966 L 2nd run RO Time 4 8.35 hours Amount Remaining 2673 5689.8

Evaporation Rate 340 340 L/hr Evaporation Time 8 16.7 hours

Total Processing Time 12 25 hours

Comparative Processing Time without RO (hrs) 87.35 185.9 hours Time Saved with RO 76 161 hours Labour Savings with RO $ 1,133.54 $ 2,412.87 $

RO Payback Period (years) 11.2 5.3 Years

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PRODUCTION ESTIMATES

2000 Taps Lac-St Jean Avg Vermont Proctor Avg # of Taps 2000 2000 taps Sap production/tree 29.7 63.22 L Total sap production 59400 126440 L Total syrup production 477.11 1084.00 L Amount produced 1908.43 4336.00 250 ml jars

RO Efficiency 70% 70% RO Throughput 2271.75 2271.75 L/hr 1st run RO Time 26 55.66 hours Amount Remaining 17820 37932 L 2nd run RO Time 8 16.70 hours Amount Remaining 5346 11379.6

Evaporation Rate 340 340 L/hr Evaporation Time 16 33.5 hours

Total Processing Time 24 50 hours

Comparative Processing Time without RO (hrs) 174.71 371.9 hours Time Saved with RO 151 322 hours Labour Savings with RO $ 2,267.07 $ 4,825.74 $

RO Payback Period 5.6 2.6 Years

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PRODUCTION SUPPLIES

Variable Costs for bucket operation # of Taps 600

Supplies Price ($) Startup Year Subsequent Years Cleaning & Maintenance Supplies $ 25.00 $ 25.00 $ 25.00 Prefilter Cartridge $ 4.50 $ 4.50 $ 4.50 Filter Ring $ 6.95 $ 6.95 $ 6.95 Kosher antifoam (200 grams) $ 7.25 $ 7.25 Prefilter cap $ 13.95 $ 20.93 $ 20.93 Wood $75/cord $ 1,412.26 $ 1,412.26 Plastic Boilers (buckets) $ 4.75 $ 2,850.00 Lid $ 0.75 $ 450.00 Torches (Taps) 5/16 in $ 1.60 $ 960.00

Annual Total $ 5,736.89 $ 1,469.64

Containters & Bottling Price 250 ml containers 1.91 $ 1,146.00 $ 1,146.00 Labels 0.05 $ 30.00 $ 30.00 Annual Total 1176 $1,176

Other Costs Price Liability Insurance 175 175 175 Maintenance & Repair of Equipment 2% of sales $ 357.83 $ 357.83 Profesional Fees, contributions, and training 750 750 750 Website & Marketing $2,500

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PRODUCTION SUPPLIES

Variable Costs For Conventional Operation # of Taps 1000

Supplies Unit Price ($) Startup Year Subsequent Years Cleaning & Maintenance Supplies $ 0.10 $ 100.00 $ 100.00 Prefilter Cartridge (5 microns) $ 4.50 $ 4.50 $ 4.50 Prefilter Cartridge (10 units) $ 12.75 $ 12.75 $ 12.75 Filter Ring $ 6.95 $ 6.95 $ 6.95 Kosher antifoam (200 grams) $ 7.25 $ 7.25 Filter paper $ 83.15 $ 83.15 $ 83.15 Filter powder $ 41.95 $ 41.95 $ 41.95 Wood 16' (with reverse osmosis) $75/cord $ 490.37 $ 490.37 Tube Collector Pipes, lateral tubes, torches, etc. $ 5.00 $ 5,000.00 Variable Total

Annual Total $ 5,746.92 $ 739.67

Containters & Bottling Price 250 ml containers 1.91 $ 1,910.00 $ 1,910.00 Labels 0.05 $ 50.00 $ 50.00 Annual Total $ 1,176.00 $ 1,176.00

Other Costs Liability Insurance $ 175.00 $ 175.00 $ 175.00 Maintenance & Repair of Equipment 2% of sales $ 357.83 $ 357.83 Profesional Fees, contributions, and training $ 750.00 $ 750.00 $ 750.00 Website $2,500

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PRODUCTION SUPPLIES

Variable Costs For Conventional Operation # of Taps 2000

Supplies Unit Price ($) Startup Year Subsequent Years Cleaning & Maintenance Supplies $ 0.10 $ 200.00 $ 200.00 Prefilter Cartridge (5 microns) $ 4.50 $ 4.50 $ 4.50 Prefilter Cartridge (10 units) $ 12.75 $ 12.75 $ 12.75 Filter Ring $ 6.95 $ 6.95 $ 6.95 Kosher antifoam (200 grams) $ 7.25 $ 7.25 Filter paper $ 83.15 $ 83.15 $ 83.15 Filter powder $ 41.95 $ 41.95 $ 41.95 Wood 16' (with reverse osmosis) $75/cord $ 490.37 $ 490.37 Tube Collector Pipes, lateral tubes, torches, etc. $ 5.00 $ 10,000.00 Variable Total

Annual Total $ 10,846.92 $ 839.67

Containters & Bottling Price 250 ml containers 1.91 $ 3,820.00 $ 3,820.00 Labels 0.05 $ 100.00 $ 100.00 Annual Total $ 3,920.00 $ 3,920.00

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PRODUCTION LABOUR

Labour Cost Assumptions Value Unit Production Manager Contract Rate 20 $/h Production Assistant Contract Rate 15 $/hr

Cleaning, Tapping, Production Preparation Foret St Jean Vermont Proctor Days 2 2 Production Staff Required 8 8 Total Hours 128 128 Hours Per Tap* 0.08 0.08

Production Period Days 18 25 Production Staff Required 4 4 Total Hours 576 800 Hours Per Tap 0.288 0.4

Filtering & Bottling Days 7 7 Production Staff Required 2 2 Total Hours 112 112 Hours Per Tap 0.056 0.056

Total Hours Per Tap 0.424 0.54 Producton Assistance Labour Cost Per Tap $ 6.36 8.04

Production Manager Additional Cost $ 1,080.00 $ 1,360.00

Source for Production Labour Information: Personal Communication with Glenda Hart, Co-Owner of Canadian Birch Company Numbers provided were based on experience with their 2000 tap conventional operation with modern Reverse Osmosis and vacuum tubing system

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PROJECTED INCOME & CASHFLOW Conventional Production with Tubing & Reverse Osmosis

# of Taps* 1000 (Equipment Range: 1000-2000 taps) % Retail Sales 50% Scenario 1) Margin Calculation Initial Cash Estimate Lac-Saint-Jean Production Assumptions Marginal Cost/Tap $ 10.99 Startup Equipment Cost* $45,421 Revenue/Tap $ 17.89 Year 1 Working Capital $ 20,490.27 Sap production/tree (L) 29.70 Gross Margin Per Tap $ 6.90 Total $ 65,910.88 Sap:syrup Ratio 124.5 Gross Margin % 39% Simple Payback Period (Years) 17.85

Production Revenues Startup Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Syrup Produced (L) 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 238.55 Retail Sales (L) 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 Retail Price/Unit $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 Retail Revenue $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 Wholesale Sales (L) 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 119.28 Wholesale Price/Unit $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 Wholesale Revenue $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63

Total Revenue $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57

Variable Costs Collector Pipes $ 5,000.00 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 5,000.00 $ - $ 1.00 $ 2.00 $ 3.00 Containers & Labels $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 Wood Fuel for Evaporator $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 Maintenance & Cleaning Supply $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 Production Labour Costs $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 Overhead- packaging & shipping, storage, transportation $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00

Total Variable Costs $ 15,990.37 $ 10,990.37 $ 10,990.37 $ 10,990.37 $ 10,990.37 $ 10,990.37 $ 10,990.37 $ 10,990.37 $ 10,990.37 $ 10,990.37 $ 15,990.37 $ 10,990.37 $ 10,991.37 $ 10,992.37 $ 10,993.37

Gross Income $ 1,901.20 $ 6,901.20 $ 6,901.20 $ 6,901.20 $ 6,901.20 $ 6,901.20 $ 6,901.20 $ 6,901.20 $ 6,901.20 $ 6,901.20 $ 1,901.20 $ 6,901.20 $ 6,900.20 $ 6,899.20 $ 6,898.20

Fixed Costs Fixed Production Expenses $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 Liability Insurance $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 Equipment Maintenance & Repair $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 Professional Fees & Training $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 Website & Marketing $ 3,036.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75

Total Fixed Costs $ 4,499.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90

Financing Expenses Interest- 5% $ 3,295.54 $ 3,130.77 $ 2,965.99 $ 2,801.21 $ 2,636.44 $ 2,471.66 $ 2,306.88 $ 2,142.10 $ 1,977.33 $ 1,812.55 $ 1,647.77 $ 1,482.99 $ 1,318.22 $ 1,153.44 $ 988.66

Net Operating Profit/Loss $ (5,894.24) $ 1,770.53 $ 1,935.31 $ 2,100.09 $ 2,264.86 $ 2,429.64 $ 2,594.42 $ 2,759.20 $ 2,923.97 $ 3,088.75 $ (1,746.47) $ 3,418.30 $ 3,582.08 $ 3,745.86 $ 3,909.64

Loan Principal Payment $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54

Net Cashflow $ (9,189.79) $ (1,525.01) $ (1,360.23) $ (1,195.46) $ (1,030.68) $ (865.90) $ (701.13) $ (536.35) $ (371.57) $ (206.79) $ (5,042.02) $ 122.76 $ 286.54 $ 450.32 $ 614.09 Cumulative Cashflow $ (9,189.79) $ (10,714.80) $ (12,075.03) $ (13,270.49) $ (14,301.17) $ (15,167.07) $ (15,868.20) $ (16,404.55) $ (16,776.12) $ (16,982.91) $ (22,024.93) $ (21,902.17) $ (21,615.63) $ (21,165.31) $ (20,551.22)

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PROJECTED INCOME & CASHFLOW Conventional Production with Tubing & Reverse Osmosis

# of Taps* 1000 % Retail Sales 50% Scenario 1) Margin Calculation Initial Cash Estimate Lac-Saint-Jean Production Assumptions Marginal Cost/Tap $ 10.99 Startup Equipment Cost* $45,421 Revenue/Tap $ 17.89 Year 1 Working Capital $ 20,490.27 Sap production/tree (L) 29.70 Gross Margin Per Tap $ 6.90 Total $ 65,910.88 Sap:syrup Ratio 124.5 Gross Margin % 39% Simple Payback Period (Years) 17.85

Production Revenues Year 16 Year 17 Year 18 Year 19 Year 20 Syrup Produced (L) 238.55 238.55 238.55 238.55 238.55 Retail Sales (L) 119.28 119.28 119.28 119.28 119.28 Retail Price/Unit $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 Retail Revenue $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 $ 10,734.94 Wholesale Sales (L) 119.28 119.28 119.28 119.28 119.28 Wholesale Price/Unit $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 Wholesale Revenue $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63 $ 7,156.63

Total Revenue $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57 $ 17,891.57

Variable Costs Collector Pipes $ 4.00 $ 5.00 $ 6.00 $ 7.00 $ 8.00 Containers & Labels $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 Wood Fuel for Evaporator $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 Maintenance & Cleaning Supply $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 Production Labour Costs $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 $ 7,440.00 Overhead- packaging & shipping, storage, transportation $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00

Total Variable Costs $ 10,994.37 $ 10,995.37 $ 10,996.37 $ 10,997.37 $ 10,998.37

Gross Income $ 6,897.20 $ 6,896.20 $ 6,895.20 $ 6,894.20 $ 6,893.20

Fixed Costs Fixed Production Expenses $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 Liability Insurance $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 Equipment Maintenance & Repair $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 Professional Fees & Training $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 Website & Marketing $ 536.75 $ 536.75 $ 536.75 $ 536.75 $ 536.75

Total Fixed Costs $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90 $ 1,999.90

Financing Expenses Interest- 5% $ 823.89 $ 659.11 $ 494.33 $ 329.55 $ 164.78

Net Operating Profit/Loss $ 4,073.41 $ 4,237.19 $ 4,400.97 $ 4,564.74 $ 4,728.52

Loan Principal Payment $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54

Net Cashflow $ 777.87 $ 941.65 $ 1,105.42 $ 1,269.20 $ 1,432.98 Cumulative Cashflow $ (19,773.35) $ (18,831.70) $ (17,726.28) $ (16,457.08) $ (15,024.10)

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PROJECTED INCOME & CASHFLOW Conventional Production with Tubing & Reverse Osmosis

# of Taps* 1000 (Equipment Range: 1000-2000 taps) % Retail Sales 50% Scenario 2) Vermont Proctor Study Production Assumptions Margin Calculation Initial Cash Estimate Marginal Cost/Tap $ 12.95 Startup Equipment Cost* $45,421 Revenue/Tap $ 40.65 Year 1 Working Capital $ 23,133.02 Sap production/tree (L) 63.22 Gross Margin Per Tap $ 27.70 Total $ 68,553.63 Sap:syrup Ratio 116.6420664 Gross Margin % 68% Payback Period (Years) 2.12

Production Revenues Startup Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Syrup Produced (L)* 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 542.00 Retail Sales (L) 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 Retail Price/Unit $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 Retail Revenue $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 Wholesale Sales (L) 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 271.00 Wholesale Price/Unit $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 Wholesale Revenue $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00

Total Revenue $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00

Variable Costs Collector Pipes $ 5,000.00 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 5,000.00 $ - $ - $ - $ - Containers & Labels $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 Wood Fuel for Evaporator $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 Maintenance & Cleaning Supply $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 Production Labour Costs $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 Overhead- packaging & shipping, storage, transportation$ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00

Total Variable Costs $ 17,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 17,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37

Gross Income $ 22,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 22,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63

Fixed Costs Fixed Production Expenses $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 $ 156.55 Liability Insurance $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 $ 175.00 Equipment Maintenance & Repair $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 $ 381.60 Professional Fees & Training $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 $ 750.00 Website & Marketing $ 3,719.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50 $ 1,219.50

Total Fixed Costs $ 5,182.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65

Financing Expenses Interest- 5% $ 3,427.68 $ 3,262.90 $ 3,098.13 $ 2,933.35 $ 2,768.57 $ 2,603.80 $ 2,439.02 $ 2,274.24 $ 2,109.46 $ 1,944.69 $ 1,779.91 $ 1,615.13 $ 1,450.36 $ 1,285.58 $ 1,120.80

Net Operating Profit/Loss $ 14,089.30 $ 21,754.08 $ 21,918.85 $ 22,083.63 $ 22,248.41 $ 22,413.18 $ 22,577.96 $ 22,742.74 $ 22,907.52 $ 23,072.29 $ 18,237.07 $ 23,401.85 $ 23,566.62 $ 23,731.40 $ 23,896.18

Loan Principal Payment $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54

Net Cashflow $ 10,793.75 $ 18,458.53 $ 18,623.31 $ 18,788.09 $ 18,952.86 $ 19,117.64 $ 19,282.42 $ 19,447.19 $ 19,611.97 $ 19,776.75 $ 14,941.53 $ 20,106.30 $ 20,271.08 $ 20,435.86 $ 20,600.64 Cumulative Cashflow $ 10,793.75 $ 29,252.29 $ 47,875.60 $ 66,663.68 $ 85,616.55 $ 104,734.19 $ 124,016.60 $ 143,463.80 $ 163,075.77 $ 182,852.52 $ 197,794.05 $ 217,900.35 $ 238,171.43 $ 258,607.29 $ 279,207.92

Prepared by Ecotrust Canada April 2015 Feasibility Study – Birch Syrup Production in the Chapleau Crown Game Preserve

PROJECTED INCOME & CASHFLOW Conventional Production with Tubing & Reverse Osmosis

# of Taps* 1000 % Retail Sales 50% Scenario 2) Vermont Proctor Study Production Assumptions Margin Calculation Initial Cash Estimate Marginal Cost/Tap $ 12.95 Startup Equipment Cost* $45,421 Revenue/Tap $ 40.65 Year 1 Working Capital $ 23,133.02 Sap production/tree (L) 63.22 Gross Margin Per Tap $ 27.70 Total $ 68,553.63 Sap:syrup Ratio 116.6420664 Gross Margin % 68% Payback Period (Years) 2.12

Production Revenues Year 16 Year 17 Year 18 Year 19 Year 20 Syrup Produced (L)* 542.00 542.00 542.00 542.00 542.00 Retail Sales (L) 271.00 271.00 271.00 271.00 271.00 Retail Price/Unit $ 90.00 $ 90.00 $ 90.00 $ 90.00 $ 90.00 Retail Revenue $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 $ 24,390.00 Wholesale Sales (L) 271.00 271.00 271.00 271.00 271.00 Wholesale Price/Unit $ 60.00 $ 60.00 $ 60.00 $ 60.00 $ 60.00 Wholesale Revenue $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00 $ 16,260.00

Total Revenue $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00 $ 40,650.00

Variable Costs Collector Pipes $ - $ - $ - $ - $ - Containers & Labels $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 $ 1,960.00 Wood Fuel for Evaporator $ 490.37 $ 490.37 $ 490.37 $ 490.37 $ 490.37 Maintenance & Cleaning Supply $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 Production Labour Costs $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 $ 9,400.00 Overhead- packaging & shipping, storage, transportation$ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00 $ 1,000.00

Total Variable Costs $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37 $ 12,950.37

Gross Income $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63 $ 27,699.63

Total Fixed Costs $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65 $ 2,682.65

Financing Expenses Interest- 5% $ 956.02 $ 791.25 $ 626.47 $ 461.69 $ 296.91

Net Operating Profit/Loss $ 24,060.96 $ 24,225.73 $ 24,390.51 $ 24,555.29 $ 24,720.07

Loan Principal Payment $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54 $ 3,295.54

Net Cashflow $ 20,765.41 $ 20,930.19 $ 21,094.97 $ 21,259.74 $ 21,424.52 Cumulative Cashflow $ 299,973.34 $ 320,903.53 $ 341,998.49 $ 363,258.24 $ 384,682.76

Prepared by Ecotrust Canada April 2015