FARGO - While much of the local ag news of late has been about the fallout from low corn and soybean prices, a Fargo-based startup is proving to be an exception to the trend.
Anchor Ingredients, a supplier of raw ingredients such as flaxseed, barley, oats, peas and grains to human and pet food manufacturers, has experienced substantial growth since launching in March 2015.
The first expansion came last fall when the company acquired Identity Preserved Ingredients in Hillsboro, N.D.
Co-founder Al Yablonski explained that buyers of the speciality crops they sell want to know where their ingredients come from and value transparency in the supply chain.
"We saw the opportunity to vertically integrate that supply chain and have our own processing capabilities while still being able to offer the benefits of distribution, quality control and customer service," he said.
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The company partners with Arthur Companies, which purchases grains from farmers. Anchor then processes those ingredients in Hillsboro and handles distribution from its Fargo headquarters.
Last month, Anchor Ingredients announced plans to purchase another facility in Buffalo, N.D.
It has applied for tax increment financing from the city of West Fargo for a food manufacturing facility at 2521 3rd Ave. N., as well, according to legal notices published in The Forum.
Co-founder Seth Novak said it's premature to comment on the West Fargo project because a deal has not yet been finalized. Yablonski added, however, that their ultimate goal is to own as many processing facilities as necessary to support the continued growth of the business.
Imports and exports
Yablonski explained that the ingredients they sell fall into one of two categories. The first are commodities grown in North Dakota, Montana, South Dakota and Canada that are processed in Anchor facilities. The second are crops not grown in the U.S. that are imported from Asia, South America and Europe.
"We scoured the globe, literally the globe, to procure ingredients for the same customer set. We don't manufacture all of those items. So, instead of us being able to keep our finger on the pulse of the manufacturing, that's where our quality control department comes in because they thoroughly vet those suppliers," he said.
Anchor Ingredients has also launched an export division.
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"We treat our end customer and our growers pretty much exactly the same," he said. "They're equally important to each other. Without one, we can't have the other. So, by having the export markets, it allows us to offer a better resource to our growers and give them better liquidity for their speciality crops."
Keys to success
Novak credits some of their success to timing.
"We were fortunate to start Anchor in 2015, which was sort of the tail end of some of those high corn, soybean and wheat prices," he said.
Dealing in specialty crops has also helped.
"A lot of the commodities we deal in, which are the specialty crops, have seen increased utilization by farmers. The acres of those crops are growing, and they're looking for additional outlets for them," he said.
Yablonski added that their continued success depends on staying ahead of the trends. Once something becomes popular in the human food market, such as quinoa, he said they can expect it to eventually hit the pet food industry as well.
"A lot of the trends are the same," he said. "This may sound absurd, but somebody who pampers their dog and buys super premium dog food, there is organic chia or there's quinoa in them. Those ingredients you first see being sold in natural or organic supply chain are making their way into pet food. ... That's what we call the humanization of pet food."
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Yablonski describes Anchor Ingredients as a strong middle-market player.
"We want to be small and nimble and flexible to be able to react quickly, yet, we are big enough to be able to throw a heavy punch when we need to," he said. "That's our motto. We are a strong middle-market player and that offers a benefit to the grower and a significant benefit to the customer."
BUSINESS PROFILE
What: Anchor Ingredients
Where: 5181 38th St. S. suite B, Fargo
Contact: (701) 499-1480
Online: www.anchoringredients.com
