One of the biggest challenges facing organic and non-GMO food companies is a shortage of grains and ingredients that has led to reliance on imports of questionable integrity. Demand for organic and non-GMO foods is outstripping the supply.
An ambitious new company aims to provide solutions. Pipeline Foods was launched in February 2016 to address the supply challenges in the organic and non-GMO markets.
“I was surprised to find that despite all the growth in the demand side, there really hadn’t been much investment made in the supply side of the organic and non-GMO space,” says Eric Jackson, Pipeline Foods chief executive. “I thought that if I could put together the right team and find the right financial partners, we could come in and do something pretty exciting in this space.”
With headquarters in Minneapolis, Jackson has assembled a team of more than 40 employees with 200-plus years combined leadership experience. Jackson and many of his employees have worked for conventional, commodity-based companies like Cargill, General Mills, CHS, and Land O’Lakes, among others. While their experience may be in conventional food and farming, Jackson and his team now appreciate the value of organic and non-GMO food production.
“Everybody here through their own means has come to a very similar mission orientation (towards organic and regenerative agriculture),” Jackson says.
Pipeline plans to invest $300 to $500 million in the next three to five years to build sustainable organic and non-GMO supply chains. The company will provide a wide range of services. Projects include helping farmers transition to non-GMO and organic production; building infrastructure; such as processing facilities, to support those crops, and providing supply chain solutions to food companies.
Pipeline is also looking to invest in smaller family-owned or farmer-owned processing businesses valued in the $1-$10 million range.
“The kind of businesses that Cargill isn’t going to be interested in,” Jackson says.
The aim, he says, is to “help support the organic community with the infrastructure necessary to add value to their businesses.”
A lack of infrastructure to support organic and non-GMO farmers is one of the major challenges they face. They often have to drive many costly miles to deliver their crops to grain elevators or processing facilities.
“Agriculture by its nature is dispersed, but particularly in the organic and non-GMO space it is extremely disperse,” Jackson says. “We are going to try and bring some efficiency to those areas and put elevators or processing facilities right in those neighborhoods, so that farmers don’t end up moving product all over the place in order to get it processed or stored.”
As a first step in addressing that problem, Pipeline recently purchased Malden Specialty Soy, an organic and non-GMO soybean processing facility in southeastern Missouri. Kade McBroom, president of Malden Specialty Soy, called the purchase by Pipeline a win-win situation for his company, investors, farmers, and community.
“We’re excited about the opportunities Pipeline is bringing to our region. They will help us on the organic side and bring in resources to help farmers transition to organic. They aim to increase organic acres across the U.S., and I’m excited to help them do that.”
McBroom and his team will continue to run the facility while Pipeline will focus on markets for Malden’s soybean oil and meal and expansion of the facility’s processing capacity and feed production.
Pipeline also recently acquired two grain elevator facilities in Saskatchewan, Canada that will serve as primary collection points for organic grains in the province.
Increasing organic acres
Pipeline plans to help more farmers transition to organic production. The company aims to have 25,000 acres of crops in transition to organic next year and 250,000 in 2019.
“A lot of things have to come together for that, but we’ve got capital at our disposal,” Jackson says. “We think we can provide some financial assistance and possibly agronomic assistance during that transitional period to make it easier.”
Organic farmers grow several crops in their multi-year rotations and it can be challenging to find markets for all those crops. Pipeline aims to work with farmers to find those markets.
“Part of the challenge with row crops is that when you go organic you are going to have to have a more complex rotation with four, five, or six crops. So, General Mills might want your organic wheat, but you need to be able to see where everything else is going to go. It’s important that we find a market for not just a single crop, but for the full rotation,” Jackson says.
Non-GMO crops are a “stairway to organic,” according to Jackson.
“We’d like our customers and our farming partners to think that way. We will try to create premiums for them in that transitional period. (Non-GMO farmers) have taken a baby step, so they are a little bit closer to organic having already made the transition.”
Fraudulent imports of organic grain are a major problem for the organic industry. Pipeline plans to have offices in exporting countries to oversee imports and provide organic assurance. For example, Pipeline has an office in Buenos Aires, Argentina to oversee organic imports from South America.
“If we import from India, we will have a team in India. If we import from the Black Sea, we will have a team in the Black Sea. We are not going to do this remote control,” Jackson says.
Still, Pipeline’s main focus will be on increasing organic crop production in the U.S.
“We are going to do everything we can to grow the acres here at home. At the end of the day it’s absolutely ridiculous that we are importing soybeans, corn and wheat,” Jackson says.
Vision is regenerative agriculture
Pipeline Foods’ stated vision is to “accelerate the availability of healthy and regeneratively grown food and clean label ingredients.”
How do they define regenerative agriculture? “It starts with soil health, and that means different things, but all the other strong outcomes start with soil health. That begets water management, biodiversity, pollinator habitat, and clean food obviously. There’s a good quote: ‘You’ve got to stop treating the soil like dirt,’ ” Jackson says.
Regenerative agriculture goes beyond “sustainable,” a term that has been co-opted by large commodity groups and even by Monsanto.
“Sustainable agriculture—reducing inputs is a good step, but it is not sufficient to be sustainable. I think you’ll see regenerative replace the word ‘sustainable’ as the soil health initiatives take off and you see more and more companies participating,” Jackson says.
Pipeline Foods has ambitious plans and Jackson acknowledges that “there is a ton of work to do” to make sure their plans are no pipe dream.