Pipeline Foods Rapidly Expanding North American Footprint

Pipeline Foods, the first U.S.-based food supply chain company focused solely on establishing sustainable global supply chains for organic and non-GMO food and feed, continues to expand its North American footprint with another acquisition.

GAI News first reported on Pipeline Foods in February of this year, when AMERRA Capital Management and Pipeline Opportunity Partners announced their partnership to launch the company. Then on September 6 of this year, Pipeline announced the official launch of its global operations and its plans to invest between $300 million and $500 million over the next three to five years in assets to support its growth.

“Pipeline Foods is eager to invest in supply chain solutions that bring value to the organic and non-GMO grain and oilseed industry,” said Eric Jackson, CEO of Pipeline Foods, in a company release. “We will put more profits back into the hands of the farmers, create dependability and transparency for food companies, and offer unique investment opportunities for financial partners.”

Within weeks, on September 20, the company announced the acquisition of two grain elevator facilities in Wapella and Gull Lake, Saskatchewan, Canada.

“These investments help Pipeline Foods move quickly toward our vision of building a more sustainable organic supply chain in agriculture,” said Jackson. “The Wapella and Gull Lake grain elevators place us right in the heart of Canadian organic grain production, provide a new channel for farmers to do business, and allow us to connect this grain supply with food companies and manufacturers across the U.S.”

Now the company has announced its third acquisition in as many weeks, this time in the U.S., with the acquisition of a grain elevator in Lignite, North Dakota, from Cenex Harvest States (CHS) for an undisclosed sum. The Lignite facility has a capacity of 3,500 metric tons, and has dual access to the Burlington Northern Santa Fe (BNSF) and Canadian Pacific Railway.

Smaller than elevators used for traditional crops, the second life that Pipeline is giving the facility as an organic and non-GMO location gives a boost to the local economy, while also increasing efficiency in its own operations.

The site will serve in a supplemental capacity to the company’s storage and origination program in Saskatchewan, and once initial capital investments are made, Pipeline expects that its capacity in the region will expand to 25,000 metric tons by 2018.

“The purchase of the Lignite grain elevator by Pipeline Foods is exciting for several reasons,” said Dan Folske, NDSU extension agent for Burke County. “The elevator at Lignite is an old facility which is too small and inefficient for conventional crops in today’s market, and most similar elevators have already been closed and torn down. Transitioning that facility to handling organic grains should mean that it has a viable future for years to come, with corresponding jobs and property taxes for the city of Lignite and Burke County.”

Gaining Pace

Sales of organic and non-GMO foods topped $200 billion in 2014, according to the report, “Non-GMO Foods, U.S. and Global Market Perspective, Second Edition” compiled by Packaged Facts, and are expected to climb to a value of $330 billion by 2019, reports Food Business News.

Indeed, a consumer survey conducted by Packaged Facts in 2015 found that 39 percent of respondents stated that they buy groceries with non-GMO labeling, and 35 percent stated that they bought organic products as a way to avoid GMOs.

In response to consumer demand, major players have been increasing their sourcing of organic and non-GMO ingredients, or have been making changes to their product lines, according to Civil Eats, which reports that Chipotle has eliminated GMOs from its menu items, and Ben & Jerry’s is transitioning to non-GMO ingredients in its ice cream. Others major food companies making the switch include Gerber, which introduced a non-GMO infant formula in May 2016; Sabra Hummus, which has begun shifting GMOs out of its product line; Campbell’s, which has launched multiple organic and non-GMO soups, while also launching goldfish crackers made with organic wheat; Chobani, which has pledged to work toward ensuring organic and non-GMO feed for the dairy cows supplying the milk for its products; and Post, which has removed GMOs from its Grape Nuts cereal, and has secured Non-GMO Project certification.

However, while demand dynamics have been changing, large scale supply chain models have not kept pace. Minneapolis-based Pipeline Foods plans to fill this gap, and provide a complete solution to these and other food companies that are expanding their organic and non-GMO business through a procurement strategy that secures a transparent, long-term, socially responsible, and sustainable supply of ingredients. To achieve this, Pipeline is also focusing on farmers and the role the company can play in increasing production.

Jackson told the Non-GMO Report that the company has set goals in place to see 25,000 acres of farmland being transitioned to organic production next year, and 250,000 acres by 2019.

“A lot of things have to come together for that, but we’ve got capital at our disposal,” Jackson says. “We think we can provide some financial assistance and possibly agronomic assistance during that transitional period to make it easier.”

Pipeline also envisions the company conducting a hands-on business on a global scale, having already established regional headquarters in Winnipeg, Canada, and Buenos Aires, Argentina - giving the company a presence in three of the world’s top grain producing regions, including the U.S., where it can ensure the quality of its organic and non-GMO exports.

“If we import from India, we will have a team in India. If we import from the Black Sea, we will have a team in the Black Sea. We are not going to do this remote control,” Jackson told Non-GMO Report.