If approved, the deal will bring Organic Ventures’ grain and ingredients business into Pipeline’s supply chain, enhancing its existing organic corn business and supplementing its portfolio with ancient grains.
Great River Organic Milling, an artisan wholegrain miller based in Wisconsin, will also join Pipeline as part of the arrangement. This subsidiary will retain the rights to Organic Ventures’ retail-marketed and wheat flour products.
AMERRA Capital Management and Pipeline Opportunity Partners formed what is now known as Pipeline Foods two years ago, pledging to invest $300m to $500m over five years.
The Minneapolis, Minnesota-based grain and feed company said this move fulfills its vision of ‘dramatically increasing’ the supply of organic and non-GMO grain the US.
“This is a critical next step in our company’s growth. It will add new capabilities and products ot the existing Pipeline Foods portfolio – a benefit to both our farmers and food company customers,” said Eric Jackson, Pipeline's founder and board chairman.
Rick Halverson, currently the president of Organic Ventures, will transition to Pipeline as a commercial business unit manager.
Last month, Pipeline announced that Anthony Sepich – a longtime executive in the grain, oilseed, salt, cocoa and chocolate industries – would become CEO and “play a critical role in helping us grow our business and continue to be a leader in the organic and specialty space,” said Jackson on October 15.
Ascendant Partners, a consulting firm specializing in agribusiness, renewable energy and food, advised Organic Ventures in pursuing the sale. Partner Mark Warren said, “this process brought together two complementary partners truly committed to the organic industry and its success.”
Organic grains in the US
As of 2016, the US produced 46m bushels of organic corn, soybeans, wheat, oats and barley on 765,000 acres of land, according to a February 2019 report from the Organic Trade Association (OTA).
About 40% of these grains are grown in just five states: Montana, Wyoming, Minnesota, Wisconsin and Iowa.
Montana has boasted more than 65,000 acres of organic grain-growing land since 2014, and now devotes nearly 100,000 acres. Iowa and Minnesota have surpassed 50,000, while Wisconsin and Wyoming hover in the 30,000 to 50,000 range.
As expected with premium products, the price premium for organic can pay dividends: it jumped from 1.5 times the price of conventional in 2011 to 2.5 times in 2016.
Global competition also affects price, supply and demand, the report adds. Imported organic grains tend to be cheaper than US-grown varietals.