Business Spotlight on North Valley Ag Services
Presented to Chico City Council on October 6, 2015
Tonight, we are pleased to spotlight North Valley Ag Services, a nearly 60-year old business, cooperatively owned by local farmers who are both members and patrons.
Joining us tonight is Taylor Denney, Sales Manager for North Valley Ag Services, who will be happy to answer your questions following this presentation. Also with us is Vicki Doll from Chabin Concepts who will deliver our economic impact analysis, and Katie Simmons with the Chico Chamber who coordinated the presentation. North Valley Ag Services was founded in 1957 as Chico Bean Growers by 15 bean farmers, who were looking to work together to process and market their dried, colored beans. As a cooperative, the business model these farmers sought is unique from traditional business structures that most may be familiar with, but not uncommon in the agriculture industry. Cooperatives are owned by growers and serve their grower-members, and in the case of Chico Bean Growers, allowed the founding farmers to collaboratively pool resources to better their position in the marketplace. In 1979, a peak year for the company, Chico Bean Growers processed, stored, and marketed 22 million pounds of beans.
Yet, over time, the needs of the Chico Bean Grower- members changed, particularly as farmers in the area shifted from growing beans, to walnuts, almonds, and other permanent crops. Today, just 2 million pounds are delivered by local farmers to Chico Bean Growers, a number that represents 10% of the peak production once experienced locally.
Like any business responsive to its customers and its owners – Chico Bean Growers recognized the need to change with its growers. As President Mark Pierce succinctly summarizes, “The fundamentalism of farming is change.”
As such, about 25 years ago, Chico Bean Growers evolved to North Valley Ag Services, transitioning to a farm supply company that serves farmers from Woodland to Redding. Based here in the Chico, on Bell Road, the main focus of the co-op now is to store and distribute soil amendments and crop protection materials to area growers, which help keep soils fertile, healthy, and producing crops that help make California the number one agriculture state in the nation, significantly impacting our economic health.
North Valley Ag Services handles over 300 railcars of soil amendments per year and stores materials for major suppliers. They follow the strictest safety protocols, and are continually focused on educating their employees and their farmer customers on the proper use and handling of these materials. Farmers, like any business owner, are keenly aware of their bottom line, and recognize that spending more than they need to on any inputs, could negatively impact profits. North Valley Ag Services works with its member-owners to ensure that farmers are taking the steps to keep their orchards and fields healthy, and businesses profitable.
In addition, among other services like bean cleaning, and crop protection services, the company provides soil and tissue sampling services – important particularly in a drought year to ensure healthy trees, soil, and quality crops.
The dynamic nature of the business has been one catalyst that has led their longevity in the Chico business community. In 2001, the organization suffered a loss, and saw $3.5 million in sales. In 2015, North Valley Ag Services is poised to hit $55 million in sales, with a growth expectation of 6-7% per year. This allows the Chico business to continue to retain and expand its employment, and continue to meaningfully contribute to the number on industry in the county. Butte County’s agriculture industry is valued at a gross crop revenue of $810 million. One those almonds have chocolate on them, or our rice is made into tasty rice chips, that value can double to quadruple, based on UC Davis estimates.
Despite this growth and success, however, there are challenges that face North Valley Ag Services and its grower members. According to the most recent data from the U.S. Department of Agriculture's Census of Agriculture, over the last 30 years, the average age of U.S. farmers has grown by nearly eight years, from 50.5 years to 58.3 years. Unfortunately, the data also shows that there aren’t enough aspiring farmers coming behind this aging generation, with the potential for a huge loss of family-owned farms. There is a tremendous need for succession planning in the agriculture industry, with other issues such as the Estate Tax, having the potential to harm the transfer of family farms to the next generation. And with 98% of all farms in the United States family-owned, this is a significant battle to overcome to preserve these vital businesses.
As they look to the future as a growing business in this city, North Valley Ag Services is particularly attune to the need for a strong focus on public safety. President Mark Pierce counts public safety as one of the most important factors impacting their business. With their own railyard and sensitive materials on site, North Valley Ag Services has a strong relationship with local public safety agencies, including the Chico Fire Department, and notes the need for public safety in keeping their business healthy.
With that, I am going to turn the presentation over to Vicki Doll with Chabin Concepts to review the economic impact slide. Following Vicki’s presentation, Taylor is here to answer any questions you might have.