Scaling Offers Opportunities for Organic Produce Industry

Scaling organic production can be challenging, but several grower-shippers who have achieved success in building their programs shared their stories of becoming leaders in organic production during an educational session at the recent Organic Grower Summit in Monterey, CA.

The session, "Organic Grower Perspectives on the Challenges of Scaling," featured three California growers covering different geographic regions and commodities in a panel discussion moderated by Rod Braga, President of Braga Fresh Family Farms. Panelists included Jessica Hunter, Vice President of Operations of Del Rey Avocado; Scott Mabs, CEO of Homegrown Organic Farms; and Dick Peixoto, Owner of Lakeside Organic Gardens.

Hunter detailed the path her family took to become a significant player in organic avocados in San Diego County, while Mabs relayed the successes the France family has created growing organic fruit in the San Joaquin Valley. Peixoto shared his journey transitioning from a young farmer of conventional crops in the 1970s to celebrating his 25th anniversary as an organic grower this year. While Braga mostly asked the questions, he did share some information about how his family farming operation became a major player in organics over the past two decades after more than a half century as a conventional grower in the Salinas Valley.

Hunter, a third-generation avocado grower, wanted to make her own way when she began farming with her father in the early 2000s. In 2004, she took a 10-acre grove of the family farm and began transitioning to organic production. “I kept it simple in the beginning, focusing on trying to get the NPK [nitrogen, phosphorus, and potassium] right,” she said.

By experimenting, she figured it out and over time has been able to achieve the same yield results as the family operation was getting from its conventionally farmed groves. After Hunter achieved success on her family’s orchard, she began passing these learnings to other growers who wanted to give organic production a try.

There is typically a significant premium for the price paid at farmgate for organic avocados versus what a pound of conventional avocados will bring. Consequently, Hunter had many growers who were willing to learn organics. She said the key to success in transitioning from conventional to organic “is not stumbling for too long.” Reducing that stumbling time for fellow growers is her passion. “The grower’s success is my success,” she said.

Mabs was not with Homegrown when John and Cindy France took their first step into the organic world by certifying France Ranch in 1989. Homegrown was established almost a decade later as a grower-packer-shipper and marketing company, exclusively selling organic crops of growers who farm about 8,000 acres of fruit, mostly in the San Joaquin Valley. The company’s main crops are citrus, blueberries, stone fruit, fall fruit, and grapes.

Mabs has been involved with many growers as they make the transition to organic. “There are no shortcuts,” he said. “A lot of it is learning your soil, learning your ranch, learning your trees.”

Some ranches don’t lend themselves to organic production, Mabs said, and that is a very important lesson to learn as you scale. “A lot of it is ham and egging … trying to figure out what works from year to year. If your acreage doesn’t lend itself to organics, don’t do it.”

Mabs credited produce wholesalers around the country for building demand for organics and allowing growers to increase their production as smaller retailers and co-op markets around the country were the foundation for organic produce sales, with larger retailers eventually following suit.

Today, the Homegrown executive sees a continuing challenge in maintaining shelf space at retail for the organic category. For this to occur, he said distributors need to have consistent supply that the retailer can count on, or the shelf space will disappear.

Having consistent supply could be considered the underlying theme for Peixoto as he scaled his organic fresh vegetable company. Lakeside Organic Gardens farms 2,000 acres in the Pajaro Valley near Watsonville during most of the year and has another 1,000 acres in the Imperial Valley for winter production. The company is also dipping its toe into Mexico with a small amount of acreage that seems destined to increase.

Peixoto began his organic farming journey as a marketing tool. The growers around him were growing conventional crops, and he saw organics as a way to separate himself from the crowd. He started small, and, in fact, the company's name is a tribute to the whole concept of scaling.

Other local growers would look at his small plot of organic vegetables and jokingly ask Peixoto what his little garden of organic crops was producing that week. While his organic acreage eventually increased, Peixoto memorialized his start in the sector by keeping “Gardens” in the company title.

It wasn’t, however, a quick path to success. Peixoto revealed that the “field of dreams concept” didn’t work. “We built it, but they didn’t come,” he quipped. Instead, Lakeside Organic Gardens had to build its demand one customer at a time. The company established a delivery route throughout Northern California, delivering two or three boxes at a time to independent retailers. As another ode to its journey, Lakeside maintains that delivery route today.

One of the main takeaways from the OGS session was that scaling organic production starts with the ground. Peixoto said originally, he would take any vacant land and try to grow organic crops on it to avoid the economic challenge that comes with the three-year transition period. But over time he realized that the land was vacant for a reason—it lacked good soil, which is critical for organic production. Today, he uses only the best land, biting the bullet with soil-building organic cover crops as he waits for it to achieve certification.

While each of the panelists have successfully scaled their organic operations, they are taking different paths as they plan their future. Homegrown Organic Farms has become an ESOP (employee stock ownership plan) to involve all the workers in the company’s success and allow for ownership transition. Del Rey continues to grow its footprint by taking good care of both its people and customers and helping local growers transition to organics.

Peixoto and Lakeside are going their own way. “I’m involved in everything. I have to be,” Peixoto said. About five years ago, he began thinking about the future and asked a management consultant team to study his structure and give suggestions on how to improve it. He noted that after a while, the consultants gave him his money back, stating that they can’t figure out why his system works, but it does.