The Minnesota-based company announced the purchase of the new elevator in Atlantic, Iowa on Friday [August 17].
The facility is set to open in mid-September, said Neil Juhnke, managing director of assets and operations with Pipeline. It has to be cleaned and brought up to the standards of the company’s organic regulatory agency before it can be used for organic grains.
“Through the course of time it was expanded in such a way that it was [grain] segregated and two separate conveyance systems exist,” he told FeedNavigator. “We’re able to modify it so it will be truly segregated – the organic grains will never be at risk of comingling with the conventional.”
Although changing hands for ownership, the facility will continue to maintain some production of conventional soybeans for Archer Daniels Midland Company (ADM) he said. “Along with the purchase agreement, there’s a storage and handling agreement – that we’ll handle conventional soybeans for ADM – part of the facility will be segregated for their use,” he added.
The facility also provides an alternative for organic producers looking to source organic feed grains without importing them, he said. “We offer a transparent supply chain,” he added.
The company tracks its grains from the farm throughout the supply chain, said Juhnke. “We think that’s a hugely important aspect of what we provide – organic farmers have invested a lot and organic customers should have faith that the products are produced to those requirements.”
“Integrity ranks up there with food safety and employee safety,” he said. “It’s at the top of our priority list.”
Market development and expansion
The new facility is part of the company’s second phase of expansion, said Juhnke. Previously, it had three elevators in Canada and one in North Dakota along with another facility in northern North Dakota that is in construction.
The early focus had been on working with organic acreage and grains originating on the northern prairies, he said.
“We do originate feed ingredients nationwide and we have customers nationwide and as we studied the markets and where to establish an origination point for grain and feed ingredients – Iowa is currently the number one surplus producing state for organic corn,” said Juhnke. “The neighboring states populate the top five surplus producing state and markets tend to be in the Northeast, East Coast and West Coast, so the Atlantic elevator provided us the opportunity to repurpose a facility for sale and provide a benefit – lower cost transportation for the market.”
The facility also was well designed to be used for organic feed grains as it has multiple storage bins and the ability to segregate different kinds of grain and conventional and organic ingredients, he said. The organic facility has room for three or four types of organic grain and the entire site can manage about 3.4m bushels, but some of that space will be dedicated to the ongoing work with ADM’s conventional soybeans.
In addition to the beneficial location, the facility also has a rail connection, which is expected to allow for improved market access, he said. “There’s rail access so we have access to Northeastern markets and the eastern seaboard via rail.”
The company also is looking to support organic markets and producers on the West Coast and in the Midwest and the poultry market in the southern Midwest is an area of interest, he said.
The plan is to source most of the grain for the elevator from organic producers in the Midwest, Juhnke said.
However, it will not focus only on work with organic corn and soybeans, he said, adding “[it’s a] full-service market for those organic grains – yellow peas, wheat, other crops that might be in regional organic farmers rotation.”
“It’s an investment in an asset that will enable us to more efficiently supply the market and provide benefits to farmers, producers and buyer of organic grains with the efficiencies of rail transportation versus truck transportation,” he said. “We’ll have reserve stocks in place to fill spot orders or take harvest bushels so the farmer doesn’t need to store as much grain on farm. We’re providing organic farmers with similar market access as they would enjoy in the conventional space.”