Finding value in potatoes: Naturally Potatoes' growth gives hope for Aroostook's farms

On a recent vacation to Walt Disney World in Orlando, Aroostook potato farmer Brent Grass sat down with his family at one of the resort's restaurants and noticed mashed potatoes were on the menu. He sent a message to Pineland Farms Naturally Potatoes, the Mars Hill company that buys roughly one-fifth of the potatoes he and his brother grow on their B.D. Grass & Sons farm in Blaine.

Figuring it would be a great market to tap, Grass made what he hoped would be a helpful suggestion: “You guys need to get your mashed potatoes down here.”

The reply came back: “We're already there.”

Grass, who with his brother Neil took over the family's potato farm when their father died suddenly in 1997, says he relishes telling that story because it illustrates how Pineland Farms Naturally Potatoes' rapid growth — which spurred a $7.5 million expansion in 2014 — is expanding opportunities for Aroostook potato growers as well.

“They've infiltrated markets all across the country,” Grass says of Naturally Potatoes.

Its mashed potatoes are served in Applebee's, Logan's Roadhouse, 99 Restaurant & Pub, O'Charley's, Pizzeria Uno and Famous Dave's. Packaged mashed potatoes bearing the Pineland Farms Naturally Potatoes brand are sold in supermarkets like Publix, Hannaford, Market Basket, Shop Rite and Big Y.

Rodney McCrum, president and chief operating officer of Pineland Farms Naturally Potatoes, says he is dedicated to growing the company he started with a dozen other potato farmers in 1995. But a larger goal is to build a future for Aroostook County's young people, with high wages and diverse job opportunities that will encourage them to stay rather than leave the state for better opportunities elsewhere.

“If we want Maine to succeed, we have to do it ourselves. It's not going to come from outside the state,” he says. “So we should express to these young people, 'It can be fun.' There are all kinds of success stories in Maine like ours, and those that are waiting to happen.”

Farmer to entrepreneur

Since 2010, sales at Naturally Potatoes have grown by 15% annually. To accommodate the growth, the company recently doubled its storage-and-production capacity at a cost of $7.5 million, including a $1 million upgrade to the packaging line. Sales last year totaled $35 million, 25% higher than 2013 and more than double sales in 2010. It has 135 workers, with 30 added since August.

The company expects to purchase 20% more potatoes in 2015, bringing its total to 50 million pounds. Its supply comes entirely from farms within a 30-mile radius of the Mars Hill plant.

For potato growers like Brent Grass, Naturally Potatoes' need for additional potatoes in 2014 eased the impact of McCain Foods USA's decision last spring to buy 20% fewer potatoes for its French fry processing plant in Easton. “It allowed us to maintain our acreage,” Grass says. He sells 60% of his crop to Frito-Lay for chips, 20% to McCain Foods USA for fries and 20% to Naturally Potatoes for mashed or diced potatoes. Potato farmers in Aroostook County produced 90% of the state's 1.54 billion pounds of potatoes harvested in 2013.

For McCrum, a fourth-generation potato farmer, the company's success validates the overriding purpose he and its other co-founders had when they incorporated Naturally Potatoes in 1995 and opened the Mars Hill processing plant two years later: to keep jobs in The County.

“The thought that discourages me the most, even now, is the perception that if you live in northern Maine you can't make a living,” he says.

In his lifetime, McCrum has seen Maine topple from its throne as the top potato-growing state in the country in the early 1950s, when more than 200,000 acres in Aroostook were devoted to growing potatoes. Maine is now ninth in the nation, with roughly 55,000 harvested acres. Idaho leads the nation with 316,000 acres being harvested, followed by Washington, with 160,000 acres.

“We were continuing to lose potato farmers here because we were selling a commodity,” McCrum says.

Growers in western states have gradually taken over much of the potato market with larger farms and by using irrigation, which can create more uniformly sized potatoes — unlike those in Maine, which grow in relation to the amount of rainfall in a season.

McCrum admits it took him a long time to realize that “adding value” — by transforming whole potatoes into refrigerated mashed potatoes with a shelf life of 65 days or cut potatoes with a 50-day shelf life — offered a brighter future than continuing to sell potatoes as a commodity in five- and 10-pound bags.

“It's easy to recognize what's wrong, but it's harder to recognize what to do about it,” he says.

First he had to learn the lesson that simply getting bigger wouldn't solve the intrinsic problems of selling potatoes in the commodity marketplace.

In 1978, when a Mars Hill potato warehouse building and 1,600 acres of farmland became available in a foreclosure auction involving a Philadelphia-based supermarket chain, McCrum persuaded his father and older brother to join with him in an ambitious expansion plan. They succeeded in greatly expanding their acreage, but the $700,000 purchase hardly secured their futures as potato farmers.

“I went from the tractor seat to selling potatoes in five-pound and 10-pound bags,” he says. Heading into the 1990s, it became obvious the “bad years” were outnumbering the “good years.” Something had to change.

In a 1995 conversation with Francis Fitzpatrick, an Aroostook potato farmer who sold most of his potatoes to Frito-Lay, McCrum says they both came to the same conclusion: “Nobody is coming to save us, so we better save ourselves.”

Ready-to-eat fresh garden salads were becoming increasingly popular, which got him and Fitzpatrick thinking there might be an opportunity to do the same with fresh-cut potatoes. It wasn't a large market at that time, he says, but it was a different market than French fries and potato chips. It also had the advantage that they wouldn't be going head-to-head with the “big boys” — including Lisle, Ill.-based McCain Foods USA, a subsidiary of the world's largest French fry producer, the Canadian firm McCain Foods Ltd., which has annual sales of $4.74 billion. McCain's Easton plant is 11 miles from Mars Hill.

McCrum and Fitzpatrick toured salad plants on the West Coast and a fresh-cut potato company in Europe. Then they sat down and “scratched out a design, farmer style, on a sheet of paper.”

The plan called for converting the Mars Hill warehouse into a state-of-the-art production facility they figured would cost them $3.5 million. It ended up costing $15 million.

Based on a prospective customer's promise to buy five truckloads of fresh-cut potatoes a week from the new company, they signed contracts with local farmers. When the plant opened in 1997, their major customer backed off. “We had this $15 million plant and no business,” McCrum recalls. “It was brutal. You couldn't get any closer to bankruptcy than I was at that time.”

The word “quit” is not in McCrum's personal dictionary. He hit the road in search of other customers, eventually landing Hannaford as a retail buyer. It kept the company alive — just barely.

“Our business was growing, but not fast enough,” he says. A timely investment from the Portland-based Libra Foundation helped Naturally Potatoes retool its production lines to capitalize on greater consumer demand for its refrigerated mashed potatoes over its diced potatoes.

“There's no question in my mind, if we hadn't bumped into Libra we probably wouldn't have what we have here today,” he says. “We were hemorrhaging. Bringing in Bill Haggett [via Libra as CEO] helped us because he brings in credibility. So there are two miracles: Libra and Bill Haggett. They were the perfect fit for what we needed at precisely that moment in time.”

McCrum says Libra and Haggett essentially told him, “Focus on sales, and don't worry about the money.” Following that game plan, the company grew and soon was posting double-digit increases in yearly sales. It became so attractive it was acquired in 2005 by Walnut Creek, Calif.-based Basic American Foods, which was eager to get into the refrigerated potato business.

“Selling the company allowed everyone to get their money back with interest,” McCrum says.

Five years later, Basic American Foods was losing money at its Mars Hill plant and decided to sell it. McCrum, partnering with Libra's Pineland Farms food group, bought it back in 2010, paying less than the company sold for in 2005. McCrum remembers telling Owen Wells, Libra's president and CEO at the time, “The first time, we didn't know what we were doing. This time, we're going in with our eyes wide open.”

Building a reputation for potatoes

“We turned the company around almost instantly,” McCrum says, noting that he and his management team aggressively went after national accounts and made a point of acting quickly on employees' suggested improvements for the Mars Hill plant.

The company posted a 15% increase in sales in the first full year after the return to ownership by Pineland Farms. Last year's sales of $35 million were more than double the $17 million posted in 2010.

“Haley does probably 65% of those sales,” McCrum says of his daughter, Haley McCrum Kelley, a Husson University graduate who is the company's vice president of marketing and sales.

A competitive figure skater when she was growing up, Kelley worked for Basic American Foods during its ownership of Naturally Potatoes. She shares her father's vision for spurring a renaissance of Aroostook County's farming economy.

“I'm happy I have a job here, doing something I'm knowledgeable about,” she says. “I worked on our family farm. Now I'm in a role where I can help the farmers and other industries in Aroostook County.”

Kelley says her current focus is on marketing the company's recent name change from “Naturally Potatoes” to “Pineland Farms Naturally Potatoes” on its packaging, logo and other marketing materials. The change, she says, reflects parent company Pineland Farms Inc.'s interest in making “Pineland Farms” a national brand and makes it easier to cross-sell the New Gloucester-based company's different food products — potatoes, beef and cheese — under a single brand name.

“We have three great companies, let's put them under one umbrella,” she says. “We're using all avenues we have to make that brand recognizable across the board for the three food companies.”

As she travels around the country, Kelley says she finds that although Maine is well known for its lobster, blueberries, lighthouses and L.L.Bean, it's not as well-known for potatoes. Idaho's decades-long marketing campaign has effectively made “Idaho” synonymous with “potato” for many consumers, and put a dent in other states' sales. But Kelley says Pineland Farms Naturally Potatoes is emphasizing more its “family farm” and “local food” connections in the new packaging designs for its refrigerated potato products.

“We're just scratching the surface,” she says, noting that the plant in Mars Hill is far closer to East Coast markets (representing 80% of the population of Canada and 60% of the United States) than its West Coast competitors. “There are definitely some untapped markets we can go out there and get.”

“We're always looking for new opportunities,” her father agrees. “We're not resting on our successes and we're aware that new challenges will come up.”

He's not just talking potatoes, either. The company's 2013 purchase of Pineland Farms Creamery business, McCrum says, offers a potential for creating cheese products that could be made in Mars Hill — refrigerated macaroni-and-cheese, for instance.

With Aroostook County's potato acreage about 25% what it was at its peak in the early 1950s, McCrum says there is plenty of fertile land available — not just for potatoes, but for other crops as well. He cites the success of Smith's Farm, the East Coast's leading broccoli producer, with a broccoli processing and shipping plant in Presque Isle. Nearby, in Fort Fairfield, Pineland Farms has a cattle yard for its line of Pineland Farms Natural Meats.

“Every dollar we create, it flips seven times before it leaves the state,” McCrum says. “If we buy 50 million pounds of potatoes, then the potato farmers have to buy seed potatoes. They have to buy fuel. They have to buy fertilizer. They might have to hire someone to work on their tractor. There's a big ripple effect, and I think that's often under-rated.”

“Maine is the breadbasket of the East,” he adds. “We just don't know it yet.”

'A lighthouse leading the way'

Donald Flannery, executive director of the Maine Potato Board, is cautiously optimistic that Aroostook County's potato industry is on the verge of an upswing.

“The industry is somewhat stable right now,” he says. “What we've seen in the last five or six years is more people coming back to the farm. That's something my generation didn't see … Naturally Potatoes has seen an opportunity in the refrigerated processed potato markets and has taken advantage of it.”

Dana Wright, executive director of the Presque Isle-based Agricultural Bargaining Council, agrees. His organization negotiates produce contracts with companies like Pineland Farms Naturally Potatoes and McCain Foods USA on behalf of 75 to 80 member farmers.

“Naturally Potatoes is almost like a 'lighthouse' right now, showing the way,” he says. “The farming community up here looks at the recent expansion and growth as a breath of fresh air. They've got an excellent product and it's giving some stability to our potato growers.”

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