The Exchanges

Q Is it true you used to bust in tapes from New Brunswick?

A Yeah. That's a, that's a, I wasn't going to mention that. It was so terrible. We built a tower down at Mount Shamcook on the U.S. border, and we received the Bangor channels there, taped them, put them on the bus, and of course Halifax got them first. By the time we got them in Amherst, they were two weeks old, but the sitcoms were okay, but the Boston Bruins two weeks later were not quite so good. There was not, not a lot of entertainment, so we were selling these, uh, U.S. channels, uh, two weeks old, and then eventually we got a microwave system that brought them in directly, and it's still off Mount Shamco, and now, of course, all this stuff comes by fiber, and so tremendous changes in that business.

AI assessment note: “Yeah. That's a, that's a, I wasn't going to mention that.”

Q What are the input costs to blueberries? I think one of the big ones is bees.

A The biggest single cost are the rental of honeybees for pollination. You know, these berries, they're 1500 blueberries a pound. Every blossom has to be visited by a bee to get a blueberry, so we require a lot of hives, and I was reading an article this morning on, on the Canadian economy, and where Scotiabank had put out a report that said if we would eliminate the borders within our provinces, that it was something like two to seven billion dollars, Of efficiency, so it would come to Canadian. So in our bee business, we're stuck with, with restrictions. We can bring bees from the Okanagan Valley all the way to New Brunswick, and we have to get permission through each province, and we get the permits, and we bring, but when it comes to the Nova Scotia border, no. So Nova Scotia and PEI are the only jurisdictions in North America that have restrictions. It's historically It was about protectionism. Some local beekeepers got together and lobbied the government and said, we don't want others coming in here. This is our market, but that's a small business compared to the blueberry business, so we're held hostage by, by, uh, a lack of pollinators in Nova Scotia.

AI assessment note: “The biggest single cost are the rental of honeybees for pollination.”

Q Imagine having a smart assistant who reads through every transcript, finds just the best parts and serves them up based on whatever topic you're interested in. I use overlap every day to research guests, explore and learn. Give it a try and start discovering the best moments from the best podcasts. Go to joinoverlap.com. That's joinoverlap.com. I want to start with your childhood. Take me back. What was that like?

A Well, I grew up in a village of 300 or 350 people. As I remember it, we had a sports event of some kind going all the time. From the time I was five or six years old, we'd have a Spongebob game, and so a lot of sports activity, and skating on swamps, and hockey games on swamps. In grade eight, we had a new regional school in Oxford, brand new school, with a gymnasium, which was just a wonder for us, because we'd been playing baseball in hayfields, and to get a gymnasium and, and the gymnasium teacher was just fantastic for us, so that became a big part of our life. I was a member of four-h, and had a winning calf, And all those little things that, you know, I guess you build on them through the years.

AI assessment note: “I grew up in a village of 300 or 350 people.”

Q And what difference does the bee make in yield, like the pollination process?

A Four or five times. I think if you had no honeybees imported and relied on, on, uh, local pollinators, you might get a thousand to 1500 pounds. If we use four to five hives, which is considered high, but we can grow 8000 or 9000 pounds. So it's tremendous difference. And with our research, we've been sponsoring research with Dr. Percival at the Agricultural College, and he's really taught us how to, to grow plants that are more productive, and with fungicides and fertilizers, and we do have the basic crop there, but then you have to get it pollinated. It's a real problem, and this year was particularly bad, The farmers lost, in many cases, 50% of their bees over winter. See, we should be taking those bees to Florida, maybe, in the wintertime.

AI assessment note: “Four or five times. I think if you had no honeybees imported”

Q There seems to be a natural entropy in business. As you become successful, you start spending more money, you start doing things that are, are different, or, you know, getting a fancy office, or doing these things, but how do you maintain that low cost over 50 years?

A I'd like to think that we're, we're low cost. Hopefully we are, but we strive every day, and we have a culture of every year trying to do it better. There's always changes we can make in the manufacturing line or on the farm, and so we have a real culture of, uh, being open to doing better tomorrow. I could, could list five or six things that I know we're going to do better next year, And from some of the things we learned this year, and, ah, you know, improving the mechanical harvester, improving how we unload the product, and how we deal with the farmers, and there's, there's always steps that you can do, and you can't be satisfied with the status quo. You know, we could sell forty million pounds of blueberries, wild blueberries, kind of as a specialty item, but when you want to sell three or four hundred million pounds, now you've got to compete with, with cultivated blueberries, and with strawberries, and marmalade, raspberries, and we're always trying to be, to be better, and, and to get our costs down.

AI assessment note: “we strive every day, and we have a culture of every year trying to do it better”

Q So why did you buy more land? The, the AVTU acquisition, the, you bought more land as it's come up around Oxford. Is that to control supply?

A Yeah, I think we have a lot of money invested in the factories. Our ideal position would be to grow half them on our own farms and buy half from farmers. If you took the extreme and bought them all from the farmers, then you could be pretty vulnerable to competition running the price up too much. Sure. The growers ganging up on you. I mean, they're all great guys, but you don't want to be a hundred percent in there when you have all the money tied up in the factories. And the other side is we don't want to have a hundred percent of the industry. That wouldn't be good politics. You know, we need a good farming community, and we enjoy working with the farm community, and we've got friends we've had for 5060 years.

AI assessment note: “Our ideal position would be to grow half them on our own farms”

Q And then you bought your first, was it a television license?

A It was a cable television license, and we didn't really buy it. The licenses were owned by the federal government, and so they accepted applications for different towns, and their philosophy at the time was Was to have local entrepreneurs do local television, but that got taken over by technology with fiber and, and where you could tie 10 small systems together and have a good size one and a lot more capital, and when we started, you know, we had two American channels that we were offering, and, and, ah, I remember when we were upgrading Halifax from six channels to 12, Our engineer at the time said, nobody will ever watch 12 channels, and, and that's all of my time. So we built 12 channels, and of course, within a short time, that was outdated. We had to rebuild. So we didn't pay for the license. The license we applied for, and nobody else applied. This is for Amherst, Nova Scotia. We built a system, and with coax cable, and put up a big master antenna to get the signals out of Halifax, And then we got microwave American channels in. But it was tough. It was really tough. I mean, again, we didn't know what we were doing.

AI assessment note: “It was a cable television license, and we didn't really buy it.”

Q One of the interesting things about Oxford from my point of view is you never got into formulated sort of products, which would be naturally pretty easy in the frozen food market and probably have higher margins. Why not?

A Lots of people have suggested we should have our own brand products. My great friend and mentor, Prudy Crawford, used to say, John, you'll spend ten million dollars on a factory, but nothing on marketing. But our real business is It was business to business, as we call it, to selling to jam manufacturers in Europe and pie manufacturers, and if you're a pie manufacturer, you're gonna go where the apples are, because they're, 50% of the pies are apple, or if you're in the jam business, you, you know, you have to have a whole variety, so Oxford didn't have anything to offer. Blueberry jam in North America would be maybe five or six on the popularity List. We're a provider to manufacturers, and whether it's smoothies or whatever, uh, so there was no economies of scale. I remember, you know, we have this great golf course at Cabot down in Cape Breton, and the Industrial Commission of Inverness, before Ben built Cabot, came to see me, see if I would make blueberry jam in Inverness. Well, you know, their intentions were great, but it made no economic sense to try and lug blueberries to Cape Breton, make jam, and then bring everything else, whether it's raspberries or whatever, strawberries, and from other areas.

AI assessment note: “our real business is It was business to business, as we call it”

Q What's the difference between wild blueberries and cultivated blueberries from a pragmatic state?

A Oh, a tremendous difference. First of all, the, the health benefits, the antioxidants are double in wild blueberries. The flavor is much better. The cultivated blueberries, they're a fine product, but, but if you have them side by each, Anybody will choose the wild for flavor, and that's a big, a big help. We have, like, jam manufacturers that one of the biggest in the world is Andros in France, and they'll only use European blueberries, which are a different species again, or our wild blueberries. And Europeans can't compete with us because they're still a cottage industry, so they're gradually disappearing. But there are lots of people who will, will change the recipe and maybe use 50% cultivated. Uh, so, so it's big competition.

AI assessment note: “the antioxidants are double in wild blueberries. The flavor is much better.”

Q No bonus necessary. How do you manage it all?

A We're recording this in my so-called head office, which is only 200 yards from our food processing plant, but it's an effort for me to get away from the food business and let the professionals run it. We have a very small head office, and we're running several operating companies, and, and a few years ago we started A portfolio which is, I think, quite significant today. I read where so-and-so's running two billion dollars and three billion, and we're doing more than that, and so we've got a big portfolio that's done very well for us, so we try to streamline it and keep it simple and let the operators run the business, and they have to deal with the people problems. We work at it,

AI assessment note: “we try to streamline it and keep it simple and let the operators run the business”

Q How do you think about that when they're so liquid? Like, if they got overvalued, would you sell them, or would you just sort of, like, hold on?

A Basically, we'd just hang on. You know, uh, you wonder whether Berkshire's overvalued today or not. He says he buys the stock when it's, um, 1.2 type book, but he's actually buying it at 1.5 times, and buying it consistently. So he knows something that we don't know. So maybe you should sell the stock, but, uh, they're gonna grow. If you have good stocks, some will be up, some will be down, but, uh, we don't really pretend to be able to pick the high flyers that, that really are objective. We've always had a modest portfolio, but when interest rates were down to where we could borrow money for one or two percent, We said, look, this is an opportunity. We should get at this, and so we did. Borrowed lots of money to buy good stocks, and it's been the right thing to do.

AI assessment note: “Basically, we'd just hang on.”

Q One of my favorite guests of the year, 84 year old blueberry billionaire John Bragg. What are the key indicators you look at for your businesses on a regular basis to gauge how well they're doing?

A Conrad and Buffett were a big EBIT, I believe her. Uh, the cash they generate, uh, if it's through depreciation, that's all right. How much cash are we generating, and, and how can we service the debt, and what can we buy with that cash? And as a private company, that's worked for us. You know, when we were building the cable business, there was lots of depreciation, but the cash flow was good, and still is. The same in the food business as we invest in factories and so on, and we also, you know, try to work the angles on, on the tax situation and use our depreciations. Warner said in the past he's not a believer in EBITDA, but, but we are. We think it's the cash that the business generates that, and so we're always saying, well, what's the multiple on EBITDA? And so we know what cash is coming, because You can, you can usually cut back on your capital if you need to. We're always trying to measure how much free cash the businesses are generating, and what do we have to either pay down debt or to buy, buy more Buffett stock or, or something similar.

AI assessment note: “We're always trying to measure how much free cash the businesses are generating”

Q Like he does lever up some businesses there, like not to the point of a lot of people, but like the railroad business has that, the, especially with the predictable revenues. What are the key indicators you look at for your businesses on a regular basis to gauge how well they're doing?

A Conrad and Buffett were a big EBIT, I believe her. Uh, the cash they generate, uh, if it's through depreciation, that's all right. How much cash are we generating, and, and how can we service the debt, and what can we buy with that cash? And as a private company, that's worked for us. You know, when we were building the cable business, there was lots of depreciation, but the cash flow was good, and still is. It's the same in the food business as we invest in factories and so on, and we also, you know, try to work the angles on, on the tax situation and use our depreciations. Warner said in the past he's not a believer in EBITDA, but, but we are. We think it's the cash that the business generates that, and so we're always saying, well, what's the multiple on EBITDA, and so we know what cash is coming, because You can, you can usually cut back on your capital if you need to. We're always trying to measure how much free cash the businesses are generating, and what do we have to Either pay down debt or to buy, buy more Buffett stock or, or something similar.

AI assessment note: “We're always trying to measure how much free cash the businesses are generating”

Q Who makes the investment decisions for the public companies?

A Uh, we have a very small team here in our head office. I'd say three of us, uh, um, and we're not, we're not traders. We're not trading all the time. We're trying to, we own, like, a lot of Buffett, and we're just hanging on to it, and probably you'll have it 10 years, although I read a An article on the weekend, a contrarian view, but Buffett's maybe, Berkshire's not doing so well, but they compare it with Apple and Microsoft and some high flyers that have done extremely well. We're buying Buffett for a 10 or 11 or 12% return. We're not looking for 20 or 25%. We just like to buy good, solid investments and, ah, and let them grow.

AI assessment note: “we have a very small team here in our head office. I'd say three”

Q Why did the name change from Bragg Communications to Eastlink?

A Well, originally we called it Central Cable in Amherst, and that was to keep our name off it. But then we had a holding company, and somebody named it Bragg Communications, a holding company that was, was not in the public at all. Some way, as we bought companies, the Bragg name became a little more, but in most cases, we still ran under the original name, whether it was in Sydney, or Summerside, or Charlottetown, for finance reasons and so on, had to put them together. The holding company named Bragg Communications sort of got out there. But it was never on, on the walls of any of our buildings, because they were all run as Halifax scale or whatever. It was truly a holding company, and then, and then we moved it on from there, but those were kind of decisions I, I wasn't paying much attention to or didn't care much about. We, we were always, uh, rejigging the financial structure.

AI assessment note: “those were kind of decisions I, I wasn't paying much attention to”

Q Are there any policy changes you would make to encourage more entrepreneurship and business in Canada?

A There's so many roadblocks at every turn, uh, My friend Wallace McCain, one of his sayings, well, don't let the bastards get you down. Well, I don't know who the bastards are, but there's somebody out there trying to slow you down every day, and it's quite a statement. So you have to work through that. Tax policies in Canada aren't bad. Jurisdictional holdups at the border, you know, with all these border deals is terrible. I'm an environmentalist. We have big woodlots, and, and, and I'm really an environmentalist, but, but if you're not careful, they'll take it over. You know, we had a woodlot When you, this particular case, it was a thousand acre woodlot, and we were building roads through it to do silviculture work, great for the future, and I went to see where they put a bridge in, and it wasn't a bridge, but it was half bridge and half rock. It ended up costing 75,000 dollars, and when I was there, there was no water in it, and there was only water in it maybe in the month of April when it came down off the hill. So there's no fish, huh?

AI assessment note: “Jurisdictional holdups at the border, you know, with all these border deals is terrible.”