Iowa Public Television

 

Sowing, growing and doughing

posted on May 5, 2000


FOR THE FIRST TIME IN RECENT HISTORY, DOMESTIC USE OF WHEAT FOR FOOD WILL NEARLY EQUAL EXPORTS. SINCE 1972, DOMESTIC USE HAS RISEN FROM 360 MILLION BUSHELS ANNUALLY TO 900 MILLION BUSHELS.

PART OF THE TREND MAY BE ATTRIBUTABLE TO FLAGGING EXPORT DEMAND. AND THAT HAS PUSHED PRICES LOW ENOUGH IN SOME REGIONS TO MAKE WHEAT COMPETITIVE WITH CORN AS A FEED GRAIN. BUT EVEN IN A CLIMATE OF ANEMIC PRICES, SOME FARMERS ARE FINDING PROFIT IN WHEAT, PROVIDED THEY ARE WILLING TO INVEST IN IT AFTER IT LEAVES THE FARM. INDEED, THE FIRST DECADE OF THE CENTURY MAY BE KNOWN AS THE DECADE OF FARMER- OWNED VALUE-ADDED VENTURES.

IN THE PAST, MARKET TO MARKET HAS PROFILED SUCH SUCCESSFUL FARMER-OWNED ENTERPRISES AS BREWING AND PASTA-MAKING. THIS WEEK, PRODUCER NANCY CROWFOOT REVISITS ANOTHER WHEAT-BASED VENTURE THAT HAS SEEN ITS SALES TRIPLE FROM FIVE YEARS AGO.

"WHEAT MONTANA FARMS" IS A FAMILY RUN OPERATION, PRODUCING 280,000 BUSHELS OF WHEAT ON 7,000 ACRES.

THE FARMS SUPPLY THE GRAIN FOR WHEAT MONTANA PRODUCTS ... WHICH INCLUDE BREADS AND FLOUR DISTRIBUTED TO GROCERY STORES IN 37 STATES ... AND BULK FLOUR AND SPECIALTY GRAINS SHIPPED TO NINETY MICRO-BAKERIES AROUND THE COUNTRY.

AT ITS HEADQUARTERS JUST WEST OF BOZEMAN, IN THREE FORKS, MONTANA ... THERE IS A COMMERCIAL BAKERY AND A DELI.

IT IS A TEN YEAR OLD COMPANY THAT BOASTS THE MOTTO: "WE SOW IT ... GROW IT ... AND DOUGH IT." WHEN MARKET TO MARKET FIRST VISITED HERE IN 1995, COMPANY SALES WERE $3.5 (m) MILLION DOLLARS ANNUALLY. TODAY, IT'S SALES TOTAL NEARLY $10 (m) MILLION DOLLARS A YEAR.

DEAN FOLKVORD IS A FARMER, AND CEO AND GENERAL MANAGER, OF THE BAKERY.

DEAN FOLKVORD, "we've come a long way with our operations and it certainly is evident now that we've got a lot of opportunity before us. Really, the sky is the limit for this business."

THE SKY MAY BE THE LIMIT TODAY ... BUT JUST OVER A DECADE AGO, WHEN THEIR PRIMARY INCOME WAS FROM FARMING, THE SKY MAY HAVE SEEMED MORE OVERCAST.

IN THE LATE 1980S, FOLKVORD AND HIS FATHER DALE WERE BEMOANING THE LOW COMMODITY PRICES.

Dale: "He and I were in the field planting wheat and the subject came up about $3.00 wheat. And we said those guys in town must be making a killing. We're not getting paid at all. We need to do something to value add."

USING $20,000 OF THEIR OWN MONEY, THEY STARTED THEIR VALUE ADDED VENTURE BY WORKING WITH A PLANT GENETICIST WHO DEVELOPED TWO WHEAT VARIETIES THAT NOT ONLY GREW WELL ON HIGH ELEVATION CROPLAND, BUT ALSO CONTAINED HIGH PROTEIN CONTENT WITH EXCELLENT MILLING AND BAKING QUALITIES.

IN 1987, THEY INVESTED $100,000 IN A PARTNERSHIP WITH A BAKERY TO DEVELOP UNIQUE BREADS WITH NO PRESERVATIVES ADDED.

BUT THE TWO RELATIONSHIPS WERE NOT ALTOGETHER HAPPY EXPERIENCES, AS FOLKVORD RELAYED TO US FIVE YEARS AGO.

Dean" "And from thence, we became partners with both of those individuals that had some really, really good ideas. Before long, we got all their ideas and they got all of our money. But a, that's just the way business partnerships go and that' the learning process."

IN 1990, HE BOUGHT OUT THE BAKERY PARTNER. BUT WHILE SETBACKS OCCURRED - THE COMPANY HAS NOT ONLY SURVIVED BUT HAS GROWN. OVER THE YEARS, THROUGH SEVERAL LOANS AND THEIR OWN CAPITAL, THE FOLKVORDS BUILT AND EXPANDED THEIR COMMERCIAL BAKERY FACILITY. AND JUST TWO YEARS AGO, THEY ADDED A FLOUR MILL.

SINCE MARKET TO MARKET VISITED IN 1995,THE FOLKVORDS HAVE NEARLY DOUBLED THEIR FARMLAND TO FULFILL THEIR NEED FOR SPECIALTY GRAINS AND FLOUR.

FIVE YEARS AGO, WHEAT MONTANA WAS BAKING 4,000 UNITS OF BAGELS, BREAD AND BUNS A DAY. TODAY, PRODUCTION IS 10,000 UNITS.

THE NUMBER OF EMPLOYEES ONCE REACHED 103, BUT HAS BEEN SCALED BACK TO 70. TWELVE OF THOSE WORKERS ARE IN MARKETING ... A NECESSITY FOLKVORD SAYS, AS AN INCREASING NUMBER OF FARMERS ENTER THE VALUE-ADDED, SO-CALLED NICHE, MARKETPLACE. SOME OF THEM ARE EVEN COMPETING WITH HIS OPERATION.

Dean: "There's definitely a lot more value-added activity out there now than there was five years ago and we're looking to move away from those markets that have become saturated with competitors. Certainly, in the specialty grains market, we've seen a lot of new competitors show up as a result of these low commodity prices that we're faced with. So we're working our way out of it, into more specialized areas."

THE MORE SPECIALIZED MARKEETS INCLUDE GROCERY STORES... WHERE CONSUMERS GRIND THE WHEAT INTO FLOUR. IT IS A NOVELTY MARKETING GIMMICK, BUT A BOZEMAN GROCER LIKES IT.

Blair McGavin, Grocery Manager: "we were very excited about that, we thought our customers would enjoy having fresh ground flour. This time of year is baking season is backing off a little bit, but I would say on an average weekly basis, we sell at least 300 pounds of the flour. We probably sell up to 50 pounds of the fresh ground flour."

WHILE WHEAT MONTANA CONCENTRATED ON PRODUCTION OF FLOUR, SPECIALTY GRAINS AND BREADS, THE FOLKVORDS WERE NOTICING ANOTHER SUCCESS ... THAT OF THEIR SOLE DELI OPERATION AT THEIR THREE FORKS HEADQUARTERS.

HOPE FOLKVORD, DEAN'S WIFE, KEEPS THE BOOKS FOR WHEAT MONTANA AND OVERSEES THE RESTAURANT OPERATION.

HOPE: "I have been out in the deli for the last seven years and I had seen these tours come through and they keep saying, they'd said to me, 'Are you guys going to franchise?'"

THE ANSWER IS, "YES." FOR AN INITIAL $50,000 FRANCHISE FEE AND A PERCENTAGE OF THE SALES, INVESTORS CAN START UP THEIR OWN "WHEAT MONTANA BAKERY AND DELI."

DEAN: "There's a fairly substantial fee up front and then a percentage of sales that, for that, we give them the expertise in being able to bake our products every day. They get our complete product line and our expertise with that. So, really, it's a turn-key business and one that should do very well, not only for the franchisee, but for us as franchisers."

FOLKVORD HOPES TO HAVE THREE FRANCHISES IN MONTANA BY THE SPRING OF 2001. IF SUCCESSFUL, THE OFFER COULD BE EXTENDED NATIONWIDE. BUT EVEN IF THIS NEW VENTURE DOESN'T WORK OUT AS EXPECTED, FOLKVORD SAYS IT WON'T REALLY DO PERMANENT DAMAGE TO THE ECONOMIC POSITION OF WHEAT MONTANA.

Dean: "we're certainly taking on some projects now that ten years ago would have been monumental but right now, they're projects that challenge us. If either one of them flunks or fails, it's probably not going to take the company down."

IT IS AN ENVIABLE POSITION FOR ANY ENTREPENUER. AND THE SENIOR FOLKVORD CREDITS THE SUCCESS OF THE OFF-FARM VENTURE FOR HIS ABILITY TO STAY IN FARMING.

Dale: "between us, we keep the operation running well, otherwise, I think I would just be having a big auction sale today. I think it would be over. I really do. I couldn't make it.

FOR MARKET TO MARKET, I'M NANCY CROWFOOT.


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