2016 Mainebiz Large Company Business Leader of the Year: Pineland Farms Potato Co. Inc. President and COO Rodney McCrum
PHOTo / Tim Greenway
Rodney McCrum, president and COO of Pineland Farms Potato Co., in the packaging area of the new facility in Mars Hill.
PHOTo / Tim Greenway
Rodney McCrum, president and COO of Pineland Farms Potato Co., right, meets with his daughter Haley Kelley, VP of Marketing & Sales, and Greg Hallett, the sales and marketing manager, to discuss marketing programs in Mars Hill.
PHOTo / Tim Greenway
Rodney McCrum, president and COO of Pineland Farms Potato Co., in his office in Mars Hill.
Two words sum up the kind of year Pineland Farms Potato Co. in Mars Hill had in 2015: Red hot.
Sales of its refrigerated mashed potato and cut potato products — which had been averaging 15% annual growth since 2010 — skyrocketed by 38%, topping $50 million at year's end. Employment, which stood at 135 employees at the end of 2014, is now more than 200. A $7.5 million expansion completed in the early part of the year, which doubled the company's storage and production capacity and included a $1 million upgrade to the packaging line, already is old news. The company's explosive growth spurred three additional expansions by the year's end.
All told, the company has invested $24 million in capital improvements over the past six years, increasing capacity and improving efficiency at what is now an 113,000-square-foot manufacturing plant running 24/7.
For Rodney McCrum, president and chief operating officer of Pineland Farms Potato Co. and Mainebiz's 2016 Business Leader of the Year in the large company category, the company's success goes far beyond being a personal achievement. It fulfills what he and 12 other potato farmers set out to do in 1995 when they had the idea that adding value to their potatoes — instead of continuing to sell them retail in five-pound and 10-pound bags — was the best way to turn around a decades-long decline in Aroostook County's potato industry and a corresponding flight of its young people.
He readily admits there've been more than a few challenges since then, and more than a few allies gained along the way. “It's with a lot of help,” he says. “It's not by my doing alone that we've reached where we're at now.”
'We've got to save ourselves'
It took a while for the notion of “adding value” to potatoes to take root in McCrum's entrepreneurial mind.
A fourth-generation potato farmer, he'd seen Maine topple from its throne as the top potato-growing state in the early 1950s, when more than 200,000 acres in Aroostook were in potato production. He initially thought getting bigger would be the answer.
So 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, he persuaded his father and older brother to join with him in bidding on the properties. The $700,000 purchase greatly expanded their acreage, but the fundamental problem remained: Selling Maine potatoes as a commodity, more years than not, was a losing money proposition.
By the 1990s, McCrum knew it was time to rethink the problem.
Noticing that ready-to-eat fresh garden salads were becoming increasingly popular with consumers, McCrum and Francis Fitzpatrick, an Aroostook potato farmer who sold most of his potatoes to Frito-Lay, wondered if there might be an opportunity to do the same with fresh-cut potatoes. It was a small market at that point, and wouldn't put them in head-to-head competition with the “big boys” making French fries and potato chips, namely McCain Foods USA, which has a plant in Easton, and Frito-Lay North America Inc., already a major buyer of Aroostook potatoes.
The next big question: Who would process those fresh-cut potatoes for an untested ready-to-eat market?
McCrum says they both came to the same realization: “Nobody is going to save us, so we better save ourselves.”
Joined by several other Aroostook potato farmers, they created Naturally Potatoes in 1995. Two years and $15 million later they opened a state-of-the-art production facility in Mars Hill on the property McCrum had purchased with his father and brother two decades earlier. But just as the business was set for liftoff, it almost failed to get off the ground. The company's first major customer, which had promised to buy five truckloads of fresh-cut potatoes a week, backed out at the last minute.
With bankruptcy a distinct possibility, McCrum immediately hit the road in search of other customers. He eventually landed Hannaford as a buyer, saying it kept the company alive — but just barely.
“Everyone has a plan,” he says, “but things don't always go according to the plan. So you have to be willing to change. We're constantly pivoting in this company. We wouldn't be here today if we hadn't.”
Arguably the company's most important pivot — switching from cut potatoes to refrigerated mashed potatoes as its chief product — came about with a timely investment from the Portland-based Libra Foundation that enabled Naturally Potatoes to retool its production line to capitalize on the greater consumer demand for mashed potatoes. At roughly the same time, Libra brought in former Bath Iron Works President Bill Haggett as CEO, telling McCrum to focus on sales and let them worry about the money.
Between 2000 and 2005, the company became profitable, posting double-digit increases in yearly sales, largely on the strength of national accounts. That success led to the 2005 acquisition by Basic American Foods. But the California-based new owner soon became impatient with lagging sales and by 2010 sold Naturally Potatoes back to Libra's Pineland Farms food group at a loss.
McCrum chuckles at the memory, saying, “That's almost unheard of.”
Since 2010, the company's growth has been driven by both retail sales in supermarket chains like Hannaford and Market Basket as well as large-volume sales to national restaurant chains like Applebee's, Bob Evans, 99 Restaurant & Pub and Logan's Roadhouse. It also changed its name to emphasize its connection to the Pineland Farms brand, which includes natural beef and artisan cheese products that also are growing rapidly, largely because of consumer demand for farm-to-table foods.
“We're growing very rapidly, which means we're buying a lot more potatoes from our farmers,” McCrum says, noting that since 2010, Pineland Farms Potato's purchases from local potato growers have increased by 260%. “Our need keeps growing and that's good for the potato industry, in general.”
Building the Aroostook economy
Theresa Fowler, executive director of Central Aroostook Chamber of Commerce in Presque Isle, says McCrum and his team at Pineland Farms Potato Co. are having an impact beyond The County's agricultural sector. “It's just good for the morale of The County to see their successes,” she says. “It's exciting to see someone finally reach that pinnacle of success.”
Fowler says Pineland Farms Potato Co. donated $50,000 to Aroostook Aspirations, a scholarship fund created to help Aroostook's high school graduates go to college, and another $50,000 in support of the World Cup biathlon competition hosted by the Nordic Heritage Center in Presque Isle earlier this year. The World Cup, she says, attracted an international television audience and drew tourists to Aroostook County who filled local hotels and restaurants during the event. “This year was the largest attendance we ever had,” she says.
“Rodney is a great example of what it means to have a deep and fundamental knowledge of one's business,” says Craig Denekas, president and CEO of Libra Foundation. “From growing potatoes, transportation, the operation of the production plant, sales and marketing, and building a committed team, he understands every aspect of that company in a very deep way. He's the first to give credit to 'the team.' And that really creates a company where people want to work. He makes it fun.”
McCrum believes that as the company grows and creates new jobs — which carry benefits virtually unheard of in today's world, with the company paying 100% of employees' health premiums, 80% of their deductibles and a 5% matching contribution to their 401(k) retirement programs — the perception that there's no future in Aroostook County for young people is beginning to change.
“We think we're just beginning,” he says. “Our goal is to be a food company, not just a potato company.”
A framed photo of a chestnut colt racing across the Kentucky Derby finish line adorns the wall of his Mars Hill office. At quick glance it seems oddly out of place for a fourth-generation potato farmer to have a photo of a racehorse displayed over his desk — why not a tractor harvesting potatoes? — until McCrum shares the story about why it's hanging there.
“It's the 'horse that wouldn't quit,'” he says, noting his daughter, Haley McCrum Kelley, gave it to him in 2004 when the company was on the verge of being sold to Basic American Foods. Although it meant he and the original investors would recoup their investment with interest, McCrum also knew the new owner planned to bring in its own management team and he'd soon be out of a job.
“I was trying to figure out what would be next,” he recalls, explaining that the photo of Smarty Jones coming from behind to close a four-length gap to win the 2004 Kentucky Derby was his daughter's way of telling him his career as a food entrepreneur and salesman extraordinaire was far from over. It proved prophetic in ways neither of them could have predicted when she gave it to him.
“It's always been our family's motto: Never quit,” he says. “Never quit, ever. Life is interesting. When things get tough, as they do, you don't say 'No, I can't go on' and give up. You say, 'Yes, I can' and keep going.”
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