“The USA is far from self-sufficieny in organic grains. Over the next ten years, we will need several million acres of additional production to support the anticipated growth in the sector. The anticipated CAGR of this sector is ~15% for the next ten years. If that comes to pass, that means the market is 300% larger than today in 2027. I can’t think of another existing $50 billion sector that is forecasting that kind of growth.”
Pipeline Foods - CEO
In the United States, demand for organic and non-GMO products has increased rapidly in recent years. To meet this increasing demand the USA, where domestic production is inadequate, has imported organic grains from India, Black Sea origins, South America and China. Minneapolis based Pipeline Foods, founded by American entrepreneur Eric Jackson, who predicted the trend will continue to increase, is attracting attention with its investments in that industry. Pipeline Foods, the first supply chain solutions company focused on non-GMO and organic grains for food and feed, is bridging the gap between the farmer and the end product producer. The company anticipates more than 20 facilities such as grain processing, storage, feed milling, and terminals. Pipeline Foods, which has established facilities in Argentina and Canada along with the US, also pursues investment and trading opportunities in different regions. In this context, the CEO of Pipeline Foods was in Ukraine with his team in December.
Jackson, a strategic visionary manager, evaluated both his company’s operations and the US organic grain market to the Miller Magazine. Noting that the organic grains industry could absorb $ 300-$ 500 million investment over the next five years, Jackson says they want to be the “gold standard” for assurance of organic grain imports. Pointing out that the overall organic food industry volume has reached 50 billion dollars in the US, Jackson explained that the market is predicted to grow 300 percent over the next 10 years based on a CAGR of 15%.
Here is the CEO of Pipeline Foods Eric Jackson’s answers to Miller Magazine:
Pipeline Foods is the first supply chain solutions company focused on non-GMO and organic grains for food and feed in the USA. Although Pipeline Foods is a new company, it has grown via acquisition in a short time. Could you please introduce your company?
Pipeline Foods is a unique business that is developing sustainable supply chains in agriculture. We have assembled a truly amazing team of industry veterans and have partnered with a smart and experienced financial team to quickly stand up an operating platform in 3 countries. Pipeline Foods today consists of 50+ people in 5 offices and 4 operations. We are building the missing link between organic farmers and the food companies who have tremendous demand for all things organic.
What are the crops you’re especially interested in?
Our primary interest is in grains and oilseeds, and their derivative ingredients, both for human food as well as animal feeds. Over time I expect our customer base will ask us to manage other parts of their supply chains, but I do not foresee Pipeline Foods getting engaged in perishable commodities.
Can you give us some information about your facilities and production capacity?
Our mandate covers the full range of what is termed “mid-stream assets”. This includes, but is not limited to, grain elevators, grain processing, oilseed crushing, vegetable oil refining, feed milling and port infrastructure. Some of our filters included location, capacity, and specific equipment installations.
What are the services you provide to establish a sustainable supply chain for organic grains?
The core of our business is very familiar: owning and operating assets and managing the trade flows around those assets. The primary differentiators are 1) exclusive focus on organic and non-GMO, 2) our consultative approach with the food brands through our Procurement Solutions initiative, and 3) our dedication to accelerating the conversion of farmland from conventional to organic through our Farm Profit Program.
Pipeline Foods is planning huge investments to support growth in organic and non-GMO grains. Could you explain your investments and vision?
We anticipate that this segment could reasonably absorb $300-500 MM of capital over the next 5 years. While that is not a goal, it gives you a sense for the size of the business opportunity. Raising that capital is not as daunting as putting the investment pieces together because the market is currently very fragmented. Assembling a fleet of relatively small assets is a little bit like watch-making compared to the large-scale Big Ben of conventional agriculture.
What is the number of acres in the US for growing organic grain? Is domestic production self-sufficient? If not, where do you import?
The USA is far from self-sufficieny in organic grains. Over the next ten years, we will need several million acres of additional production to support the anticipated growth in the sector. Pipeline Foods will be an importer, but only from regions where we have boots on the ground – for example, Argentina. The current wave of fraudulent import activity needs to be cleaned up by removing the bad actors from the business and we intend to do what we can to hasten their prosecution. We intend to be the gold standard for assurance of imports even while we work as hard as we can to increase the organic acreage here at home.
Do you have any plan or program for farmers cultivating organic grain?
Our Farm Profit Program is specifically geared towards increasing the production of organic grains and oilseeds in North America. We have agronomic, financial and marketing programs that can be customized to different growing areas to assist farmers in getting through the transition period and creating a successful organic program.
Pipeline Foods’ focus area is North America. But demand for non-GMO and organic food and feed is increasing all over the world. Do you have any plan to invest in other regions, such as Europe or Asia? The acquisition is a key factor in your growth. Do you have any acquisition plan on the other continents?
The reason our primary focus is North America is demand coupled with the underinvestment that currently exists in the region. We are certainly going to explore opportunities in other regions, but the great majority of our investments will be in North America. That being said, we have customers around the world, so our book of business is global.
What are the differences between handling organic grain and non-organic grain? What are the difficulties you face in your business?
On the one hand, there is no new technology required to execute our business model. That being said, there is a tremendous amount of process and recordkeeping coupled with regulations and protocols. This market requires a different set of disciplines than the conventional business. We view these challenges as barriers to entry for the casual player and we embrace the complexity of execution.
Could you shortly tell us about changing demand for the organic food in the US?
We haven’t done any of our own research because the food industry has done it for us. The anticipated CAGR of this sector is ~15% for the next ten years. If that comes to pass, that means the market is 300% larger than today in 2027. I can’t think of another existing $50 Billion sector that is forecasting that kind of growth.