Thursday, February 29, 2024

St. Anthony: Smudes build business — and community — in Pierz

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Jenni and Tom Smude continue to retool their central Minnesota farm-to-fork operation — which includes their sunflower oil operation plus popcorn, Black Angus beef and wood products.

The Smudes almost lost their 160-acre farm in 2008 and 2009 to drought and hail. At that point, they pivoted and have continually changed to keep it growing.

Since I first visited in 2016, the couple and their family have expanded their on-farm sunflower-processing plant into a 55,000-square-foot facility that was nearly vacant in nearby Pierz. They are now the largest employer in town, behind the school district.

The operation includes a wood-working business they bought with the building in 2019.

“We used to have a banker. Now we have a team of bankers,” quipped Tom Smude, 48, who oversees eight related enterprises that also are a model of sustainability and showcase for how homegrown specialty foods can command premium prices.

Managing double-digit annual sales growth can be challenging.

Jenni Smude, 47, the top financial executive, said: “We’ve gone from flying by the seat of our pants to making equations that make sense for our bank. We’ve got our reporting system down to how much each sunflower press makes in oil by the day and hour. We measure it down to how much sunflower meal is left and fed to the animals.”

The Smudes this year expect positive cash flow from revenue of $12 million generated by up to 30 employees.

“There’s been a learning curve from food-grade products to specialty lumber products,” Jenni Smude said. “Everything we do is still based on commodity prices. When trends aren’t favorable, we have to adjust. “We’re not getting rich. We are paying everybody and building working capital.”

The bankers are pleased.

“Tom and Jenni have used sunflower-oil production to make value-added changes to their retail products and to supplement other businesses,” said Eric Boser, loan officer of Farmers & Merchants State Bank of Pierz. “They also utilize sunflower oil byproducts as a portion of their feed for cattle, creating a natural and healthy feed alternative to improve the quality of the finished product.”

Instead of closing down the struggling wood-working business in their Pierz facility, they fixed it with employees. It’s now a growth business.

“They learned to operate a new business,” Boser said. “They turned that [wood] company into another successful venture.”

The Smudes are proficient at planning, budgeting for each business and monitoring performance, including grain-bin and hoop-barn construction businesses, the banker said. They are innovative and productive. That pays benefits to the community through their investment, employment and related taxes.

Their homestead and farm was a $100,000 annual operation a decade ago. Now, the land, plus 700 acres of rented crop land, yields $1 million-plus in annual revenue from their diversified farm, direct-to-market beef sales, and on-farm oil processing facility.

They also buy sunflowers from eight area farmers. Sunflowers are an excellent, drought-resistant, deep-rooted, soil-enriching crop that replenishes corn-and-soybean fields.

“We’re processing 7,500 gallons [of sunflower oil] a month on our farm,” Tom Smude said. “We’re going to crush [up to] to 5000 acres of sunflowers this year. It was 30 acres in our first year, 2010. All byproducts we use for cattle feed.”

Katlyn Smude, 21, a recent graduate of Minnesota State University Moorhead and a part-timer for years, is now the full-time marketer, specializing in social media. Son Mitchell, 17, is the herdsman who works around his online college classes.

“We show people life on the farm and how we raise your beef,” Katleyn Smude said. “How we feed them. I do all the weekly media posts about keeping things as natural as possible. We show how we produce our sunflower oil and other products.”

Smude Oil produces bulk sunflower oil in huge plastic, reusable containers to enrich pet foods, as well for regional restaurants. It sells retail oils and popcorn to consumers through Cub, Hy-Vee, Kowalski’s, Coburns and elsewhere.

Smude also packages for other consumer product makers.

In the other end of the plant, Smude’s expanding Rich Prairie Custom Woods makes fencepost caps, window casings, picture frames and trim for lumber yards, for Home Depot and online sales.

“We bought that wood-working facility because we didn’t want to cut people,” Tom Smude said “We are expanding … to contractors and homeowners. It now helps drive overall sales.”

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