The Minnesota-based supply chain solutions company announced its acquisition of SunOpta, Inc.’s specialty and organic corn and soybean business on Tuesday (February 26).
The purchase brings new territory, producers and facilities to Pipeline, said Eric Jackson, CEO with Pipeline Foods. “Our intent with getting into the organic and non-GMO oilseeds space was to, at whatever level appears appropriate, to aggregate companies and assets into a network that serves the growers in this space and the customers in this space – this was a unique opportunity to continue to expand our footprint,” he added.
“If you’re in a business and you buy another company that’s also in the business there is often times a great deal of overlap,” he told FeedNavigator. “In this case, it was almost like a zipper … we had little overlap in terms of geography, very little overlap in terms of customers and very little overlap in terms of the farmer network that we both worked with. So we were able to expand on a truly complementary basis the farmers’ network, the customer network and the physical geography.”
The expansion is part of Pipeline’s ongoing effort to increase the availability of regeneratively grown food, with organic being the main market at this point, he said.
“In order to live into that mission, we need a broad footprint and this is all part of the growth strategy of the company,” Jackson said. “We’re not trying to be everything to everybody, but when we see the opportunity to have a zipper effect in some of these markets, we’re going to take a hard look at those opportunities and see if it makes sense.”
“We’re not interested in being in the branded food space ourselves, that’s beyond our mandate, and we’re not interested in being farmers, but everything in between is fair game,” he added.
Integrating facilities and expansion efforts
The facilities included in the arrangement brought Pipeline sites in Hope, Blooming Prairie, Moorhead and Ellendale, Minnesota along with one in Cresco, Iowa.
Previously, the company had locations in Saskatchewan, North Dakota, southwest Iowa and southeast Missouri, said Jackson.
“This gave me my first Minnesota footprint and expanded my Iowa footprint,” he said. “It gives me more optionality on railroads – we’re keen to reduce road miles for products and now I have three more origins that I can ship out on rail.”
In addition to more opportunities with feed, the sites also provide more downstream processing capability than Pipeline had, he said. Previously, the company was able to do cleaning, sorting and soy crush and the new locations add additional food grade processing for corn and soy.
“We’re not yet into the feed manufacturing industry although we’ve looked at it,” he said. “It’s an interest for us we simply haven’t found the right opportunity to plug in.”
The acquisition may also bring several new employees, said Jackson. The company plans to hire all of SunOpta’s employees that had worked in the specialty grains business – a team similar in size to Pipeline’s staff.
Supporting organic sector growth
Pipeline started its efforts working with grains and oilseeds in the organic and non-GMO space about two years ago, said Jackson. At the time, the market was fairly “fragmented.”
“Despite the growth in the demand side, there hadn’t been much investment in the supply side so the market was, and still is, although it’s getting less so, highly inefficient in terms of how it operates,” he said. “We’re trying to bring a little sanity to a business that hasn’t been well organized.”
The lack of focus on the supply side meant that farmers were not always as well paid as they might be and that companies using organic grains could have been overpaying because of the inefficiencies, he said.
“We’re trying to rationalize that so it’s a little more professional,” he added.
The company also provides resources, contacts and educational opportunities to producers who are seeking to expand organic acreage or start work in the sector because more support infrastructure was needed, said Jackson.