Advertise in Print | Subscriptions
Published August 13, 2012, 10:04 AM

Growing roots

Gregg Halverson and his company, Black Gold Farms, are evolving — again.

By: Mikkel Pates, Agweek

Gregg Halverson and his company, Black Gold Farms, are evolving — again.

The operation is one of a handful of potato production companies of its size and scope in the U.S. The family-led farms raise potatoes in 11 locations across the country — largely for the potato chip market — but increasingly are expanding into reds for the table stock trade, as well as fingerlings, yellows and even some sweet potatoes.

In the past 15 years, Halverson, 62, has quadrupled his farming and processing interests and has brought all three of his children into the Black Gold Farms operation.

It is a “fun story of agriculture,” says John Halverson, 36, vice president of operations.

John works from one of the company’s southern farming and processing locations near Arbyrd, Mo. Eric Halverson, 35, recently was named executive vice president. Their sister Leah (Halverson) Brakke, 33, is director of marketing. The Halversons have built a staff of some 36 people in Grand Forks, N.D., and another 100 or so nationwide.

It is particularly fun now because the Halversons are busy planting themselves into a gleaming $2.5 million headquarters building, along Interstate 29 in Grand Forks, just south of the Alerus Center. From this high-tech and “green” nerve center, the company helps direct all its farm efforts across the country.

“We’re farmers. We’re proud of what we’re doing. We’ve been at it for 85 years,” Gregg Halverson says.

Growing spud sense

One of Gregg’s earliest farming memories is grading potatoes with his grandfather, Alfred Eric “Hallie” Halverson.

Hallie’s parents immigrated from Norway and settled near Felton, Minn. As the family fable goes, Hallie had $17 in his pocket when he took a job as a teller at Forest River (N.D.) State Bank, but he eventually became president of that bank. It survived the Dirty 30s and went on to merge and form Walsh County Bank and later Bremer Bank.

“Grandpa was mainly a banker, but he was a farmer, too,” Gregg says. “I think he loved farming more than banking.”

Hallie started a farm in 1928 and seed potatoes were one of his first crops. Gregg’s father, Jack, was born in 1924 and was an only child. For several years during the late 1930s and early 1940s, Hallie migrated the family seasonally to produce potatoes in Florida. Jack went to school in Dade County, Fla., during the winters.

“They loaded an F-20 Farmall and a two-row planter on a truck,” Gregg says.

He has a picture of his grandfather and father, standing at about age 15, with an old truck, at Coral Gables, Fla.

“Dad would talk about Grandpa grumping about how many sets of tires it took to get to Florida,” Gregg says.

Jack Halverson went into the Army Air Corps and came out of the service to manage the farm in 1948. Gregg was born in 1949, the oldest of three children. His younger sister and brother took careers primarily in the arts. Hallie and Jack together shifted to table stock potatoes in the 1950s. They ran a wash plant for table stock potatoes and in the 1960s, shifted into Kennebecs for the chip market.

Gregg says he knew he wanted to go into farming when he was in junior high school. In 1965, the Halversons had a registered herd of Black Angus cattle, starting with Gregg’s 4-H and FFA projects. They called the whole farm Black Gold Farms, initially referring to the cattle.

Gregg went to North Dakota State University where he majored in animal science, but also in music.

“Every weekend I went home to the farm, working cattle,” he says. “I loved it.”

Gregg married Linda, who played trumpet next to him in the NDSU marching band. Gregg and Linda came back to the farm at Forest River in 1971.

“I was the low man on the totem pole, except that I had some responsibility for marketing on the cattle side,” Gregg remembers.

Linda, an organist and pianist, taught music in Alvarado, Minn.

Soon, the young couple was raising a family — John, born in 1976, Eric, in 1977, and Leah, 1978. And Gregg took the lead on running a farm that was expanding in livestock in the 1970s.

“Dad was more conservative than I am,” Gregg says. “I think he was influenced by his banker father, telling him, ‘if you don’t have cash for something, you shouldn’t buy it.’ I operated a little more on credit.”

Cattle business exit

By the early 1980s, the family was showing cattle from coast to coast, but Halverson determined that the future was limited in eastern North Dakota. So the Halversons held a dispersion sale for the cattle in Mandan, N.D., in 1985. Shortly thereafter, they sold a ranch near Grand Forks they’d bought as a home for that operation.

Out of cattle, farming focus turned to crops — especially potatoes.

In 1985, Gregg and a partner started a chip potato brokerage business in Forest River. About that time, Gregg made a trip to six or eight growing regions in the eastern half of the U.S., looking for places to expand to raise high-quality chipping potatoes in the summer.

Black Gold Farms grew its first chipping potato crop of 250 acres in southeast Missouri in 1986.

“I remember a banker friend of mine — fairly well-known — putting his finger right in my chest, saying, ‘If you can’t see your crop from your porch, it’s too far.’ It won’t work,” Gregg says. “I thought this was interesting. I said, ‘I don’t think so.’ I was confident

potatoes would grow in southeast Missouri.”

Asset utilization play

Black Gold was now into chip and french fry potatoes. At the time, there were a lot of brokers, aggregating potatoes for buyers. Sometimes, they’d play one producer against another to see who would sell potatoes at the cheapest price.

“I vowed that the only way we’d do the long-distance farming is if we’d get a direct contract with Frito-Lay” and not deal with brokers, Gregg says. “It’s the result of getting your nose burned once or twice.”

In those days, Gregg had about 1,000 acres of potatoes in the Red River Valley.

“Missouri was an asset utilization play,” he says.

The farm had lots of equipment and could move it into service. Southeast Missouri had some potatoes initially, but Gregg brought Red River Valley expertise and management. During the first year, he learned that not all of his North Dakota methods were adaptable. Chiefly, fertilizer operated differently in the coarse sandy soils.

“We learned what leaching was all about,” he says, adding that the “tuition” was fairly high priced.

But after a couple of good years, Black Gold Farms added potatoes in south Texas. Armed with experience in center-pivot potato irrigation, the company came back to North Dakota and raised potatoes in the Page area for Simplot in Grand Forks, and near Tappen for Aviko L.L.C. at Jamestown, which later was sold to Cavendish Farms. Black Gold Farms sold the Tappen site in 2008.

Sophisticated checklist

All 11 farm locations were created in succession over the course of 12 years.

“It isn’t just putting a pin in the U.S. map,” Gregg says. “Each expansion is the result of providing a solution to a customer.”

Each of the sites starts with the physical location of a customer’s plant and is determined based on the region and optimal potato farming locations.

“This was before the term ‘food miles’ became sexy,” Gregg says. “We were talking about gallons of fuel.”

Black Gold Farms rents 80 percent of the land it farms. Each farm has a troika composed of a manager, equipment specialist and agronomist. Farming like this requires a fairly sophisticated questionnaire form before renting a piece of land, Gregg says.

Before selecting a location, a crop history check is conducted for as far as three years back to determine risk of nematodes or verticillium wilt, among other threats to potato crops. Pivot and water distribution are also checked for efficiency of operation.

And competition from other potato producers can be a factor. Or — today — $13 per bushel soybeans or $8 per bushel corn can affect the economics of farming.

A system of standard operating procedures is the backbone of the management system, Gregg says.

“We like to call it a systems-based operation,” he says. “Nearly everything we do has an SOP and is written down.”

But not all of the new locations work.

“You remember the lessons that cost you the most money, and I’ve had some that have taken us to the woodshed,” Gregg says, adding that Black Gold Farms once tried to grow potatoes in northern Mississippi.

“That was not successful,” he says. “I didn’t know what a Gulf (of Mexico) weather pattern was until I tried to plant potatoes at Clarksdale, Miss. The ground was right, temperatures were right, averages were right. But the rain comes off the Gulf in waves, and that’s something we underestimated.”

Similarly, New Roads, La., was another one-year deal.

“The only good thing that came out of that was an appreciation for Cajun food,” he says.

Local, transparent

The potato business often is private, perhaps even secretive. Gregg says he’s found increasing success in being transparent, a philosophy his children share.

“We include our customer or customers from an informational standpoint, when we’re doing well and not doing so well,” Gregg says. “So many times, it’s an ‘us-against-them’ thing, and we turned that around. Philosophically, it’s important for us to have our customers do well. You get down to the bottom of the relationship and they’re interested in us doing well, too.”

In 2008, Black Gold stepped into a new, old area — table stock potatoes. About 7 percent of its total acreage is in table stock, versus chip stock.

“We figured the chip industry is only so big, and we were already a reasonably large player in that,” Gregg says. “If we’re going to continue as a growth company, we maybe could use our expertise in another area. It’s kind of crazy that we wound up back in the table stock business. Many of the same principles apply, but it’s a completely different market.”

He’s a promoter of red potatoes.

“I believe red potatoes taste better, because of the way they’re bred,” Gregg says. “I thought, if we can raise good-quality red potatoes in the middle of the summer, the market will accept those readily. And that’s exactly what’s happened.”

The company raises them in four locations and also is producing a few fingerlings for specialty markets. It also produces sweet potatoes for the process market in Louisiana and southeast Missouri, accounting for about 8 percent of acreage.

Black Gold Farms is finding its success in selling its table stock potatoes directly to the grocery chains, as opposed to selling to a re-packer or broker.

“I see what’s happening in table stock happened in the chip market about 20 years ago,” Gregg says.

Looking ahead, he thinks potatoes can be made much more sustainable if they are allowed to include biotech breeding. Environmentalists are saying genetically modified potatoes would be a better alternative than cutting down rainforests to increase production needed to feed a population expected to hit 9 billion mouths by 2050.

“We need to open the door,” Gregg says, adding that technologies are on the shelf now that reduce acrylamid, a browning of potatoes when fried, cooked or baked. He says consumers seem willing to accept genetic modifications in products such as sweet corn, so he’s hopeful they will for potatoes.

A new home office

On July 24, Black Gold Farms staff started moving into its new headquarters. There’ll be an open house Sept. 27 from 4:30 to 7 p.m.

The $2.5 million structure is both a statement and a useful business tool. It was designed by JLG Architects Ltd. and built by Peterson Construction, both of Grand Forks. The main reception area is paneled with weathered wood from an old granary at the Forest River farm. Plenty of display area exists for Gregg’s historic chip cans, and a bison mount overlooks it all.

“Representing our North Dakota heritage,” Gregg says, smiling, not elaborating on any NDSU leanings.

The Halversons are building with hopes they’ll become Gold-certified in the Leadership in Energy and Environmental Design program, developed by the U.S. Green Building Council to recognize environmental conscientiousness and energy efficiency.

The conference rooms will include high-resolution video monitors and improved internet capabilities to help interpret remote sensing, soil moisture and irrigation pivot sensor data at all of the organization’s farms. Eventually, the company’s potato grading lines may be on screen, as well.

“We can’t manage from here, but we can help to manage,” Gregg Halverson says. “The building is just an extension of the shop, or the granary, or the potato house, or tractor cab. Our feet are planted in the ground, in the soil. The same thought processes and concepts apply here.”

Tags: