Coordinator funds

Pipeline Foods experiences organic growth

This is the idea behind Pipeline feeds LLC, a Minneapolis-based company that after just three years is approaching $ 300 million in gross revenue and is among the top five companies handling organic and non-GMO grains and ingredients. The company is 100% focused on developing the non-GMO and organic food supply system. They have 11 facilities across the United States, Canada, and South America.

“Growth appears to be both recession and pandemic resistant so far,” said Neil Juhnke, senior vice president of physical operations.

A saving grace for organic is that 70% of products are sold by retail chains and 30% by foodservices and restaurants.

“There was actually an increase in biological demand during the early stages of the pandemic,” Juhnke said. There was no significant reduction during the 2007-2009 recession.

Pipeline Foods buys grain annually from approximately 1,100 farmers in Canada and 1,800 others in the United States. They come from 18 states, but about 80% are from the Dakotas, Minnesota, and Iowa.

The majority of crops are corn, soybeans, yellow peas, wheat, barley, oats, beans and a variety of legumes. There are specifications within these categories, including variety.

About 80% are long-established organic growers, but they are always on the lookout for new suppliers and have several initiatives to help them get started.

OTA, NOP

The company focuses on the countries of North America and the Pacific, for a non-GMO and organic traceability, with preserved identity. Juhnke said that around 60% of Pipeline Foods’ products sold are for animal feed and 40% for human consumption, but the value is the reverse – around 60% for human consumption and 40% for human consumption. animal feed.

The company was founded in 2017 by Juhnke and two investors / partners. Juhnke, a mechanical engineering graduate from North Dakota State University, was for five years COO of Northstar Agri Industries, a canola processor with a processing plant in Hallock, Minn., And before this a director of operations with American Crystal Sugar Co. in Moorhead, Minnesota.

Initially, Pipeline Foods acquired one of the founding partner’s businesses in the commercialization of organic grains from Canada. They bought two elevators in Saskatchewan, established a facility in Bowbells, North Dakota that has access to organic grain from Canada and North Dakota. They store, mix and ship organic wheat and other small grains, including durum and barley.

In 2019, Pipeline Foods purchased SunOpta’s corn and soybean business, including the Minnesota sites in Hope, Blooming Prairie, Ellendale and Moorhead, as well as Cresco, Iowa. Prior to that, Pipeline already had a footprint in the Canadian Prairie provinces, North Dakota, southwestern Iowa, and Argentina. (SunOpta has conserved sunflower plants especially in North Dakota and Minnesota in Breckenridge and Crookston).

Separately, they also purchased an ADM facility in southwest Iowa, Atlantic, Iowa. They converted half of this facility to organic corn, connecting to the seven Class I railroads in the United States and Canada.

Hope springs forth

The Hope, Minnesota facility had been the centerpiece of former owner SunOpta’s training from Ontario, Canada. It had been converted to organic and non-GMO crops only in 2015.

Hope is one of the largest of its kind in the country, featuring a food grade soybean cleaning process, with two levels of cleaning capabilities, as well as a food grade corn processing plant. The rail-served shipping point is able to sell organic feed grains.

Raquel Hansen, a former SunOpta employee whose family operates farms in the area, is now Hope-based vice president of food ingredients.

Hansen said farmers who switch to organic can focus primarily on corn, soybeans or wheat, but in the end, they will grow multiple types of crops for rotation.

“We are seeing the transition of young and old,” she said, for reasons ranging from profitability to human health or sustainability. They see smaller farms being transferred, to produce more income per acre, to huge farms that transfer part of their farmland.

To be successful, new organic farmers “must have a stable balance sheet to start with,” said Hansen, adding that operations will face declining yields and other growth issues. “The first two years can be quite difficult. ”

Conventional soybeans can cost anywhere from $ 9 to $ 11 per bushel and organic soybeans can cost from $ 18 to $ 24 per bushel, depending on whether it is feed or food grade. Prices for non-irrigated organic crops are generally two to three times higher than conventional prices.

“We have noticed that over the years, if prices drop below ‘2X’ and below, there is usually not enough incentive for organic farmers to overcome some of the other challenges, so the acreage will stagnate and decline, ”Juhnke said. “If the valuation is well above ‘3X’, it has a dampening effect on demand growth.”

Counterfeiting

Pipeline Foods is working to address concerns about organic integrity, especially as counterfeit imported foods have been discovered.

The company works with three organic certification bodies – one in Canada and two in the United States. The company also performs pesticide and GMO residue testing, verifying that organic grains from a particular country match that country’s production levels. Juhnke said the company hopes the farm fraud sanctions in the United States are big enough to “help decent people stay that way.”

The company strongly supports the Organic Trade Association and the National Organic Program, which is part of the US Department of Agriculture. Company officials were part of a working group tasked with drafting organic updates to the 2018 federal farm bill. The company was the first in the country to be certified under the new solutions. of OTA biological fraud prevention. program.

To help new organic producers, Pipeline Foods has formed a division called the Farm Profit Program, which finds resources for farmers who are considering switching from conventional farming to non-GMO and organic farming. The company’s website has links to podcasts on organic production.

“We can present them to insurance companies that provide insurance for organic crops and to lenders with loan products to close the three-year transition gap to go organic,” Juhnke said. “We act as a marketing partner. If a farmer needs long term agreements for their organic crops, we want and provide all the rotation crops in the organic grow plan.

Organic crops require a minimum of three years of rotation.

For farmers in the Midwest, they have to grow something other than corn and soybeans, Juhnke said. It can be winter wheat, yellow peas, or oats.

“Fortunately, there are non-GMO markets where you can benefit from higher prices during those three years,” he said. Some retail companies even pay a premium to a farmer during the transition.

Pipeline Foods serves some of the world’s largest consumer products companies that sell organic, sustainable, or “regenerative” crops, which involve sequestering organic matter and carbon. their business Impact The program pairs growers who practice certain practices with clients who will pay a premium for “crops grown regeneratively”.

“Everything we do is about the supply chain and transparency, down to the farmer,” Juhnke said. Pipeline is 100% focused on what advocates labeling as a ‘clean’ market – organic, regenerative agricultural and other non-GMO markets – promoted for the safety of consumers, many of whom are younger who are wary of government regulators or conventional food systems or worrying about soil health or the economic / physical health of farmers.

“When we load a railcar full of organic wheat into one of our facilities, say in Bowbells, ND, we can tell the customer exactly which farms that wheat is from. It can be five farms, it can be 50 farms, but we trace it throughout our system, ”he said. The company verifies that the crop was produced organically by certified producers, whether it was destined for a tofu maker in Japan or a chicken farmer in California raising organic poultry.

Pipeline Foods also provides “efficiency and scalability” to markets. Canadian farmers trucked organic wheat to Colorado for sale to millers. The company’s elevators can now ship grain by rail, reducing costs and reducing the carbon footprint.