🔒Third time’s a charm for Madison’s Backyard Farms

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With falling snow and temperatures casting winter's shadow over the state, Backyard Farms almost defiantly planned an early January harvest celebration for its new tomato crop after experiencing six months of troubles.

In July, a whitefly infestation caused the Madison-based company to destroy its entire 42 acres of crops and completely clean out its greenhouses. After a new crop failed to meet quality standards in August, the company had to furlough all of its 200 workers. By late December, after almost six months without selling product, it defied the odds and was back, producing a healthy crop, rehiring all of its employees and restarting shipments to its approximately 30 retail and wholesale customers. This was on top of growing tomatoes in Maine's cold climate and in an area of the state where good jobs are hard to come by.

Still, it's a story Tim Cunniff, executive vice president of sales, prefers to keep in the past tense.

“It was horrible. We've been through things in the past, but the real takeaway from all of this is a lot of the people who work for us have been here since Day One. It's not the first time we've had ups and downs, but this one was pretty significant,” he says.

But Backyard's customers and management had faith in the company. Wilson Farm, a Massachusetts company that resells Backyard's tomatoes and has consulted with the tomato grower since it started, had no doubts the company could recover.

“I wasn't concerned,” says Scott Wilson, owner of the 129-year-old Wilson Farm. “I knew they would get through it.”

He is one of many buyers who stuck with Backyard through its troubles — Hannaford also is among those once again selling the company's tomatoes — and says it's the quality and taste of the tomato that keep him coming back. Cunniff says Backyard's tomatoes carry about a 30% price premium.

“They have a commitment to quality tomatoes rather than to volume or acreage,” says Wilson, who says his company is among Backyard's top three customers. “They put more money into their tomato crop as they are willing to light it and grow during the winter.”

He explains that in the 1950s through 1970s, tomato growers in California and Florida shipped mostly green-colored tomatoes and then used ethylene gas to ripen them, which he says doesn't produce a tasty tomato.

“They couldn't have cared less about the flavor of a tomato,” says Wilson, who recalls attempts to develop a square tomato that would ship better. “Backyard tomatoes ripen on the vine, so they taste good.”

In its website history, Backyard notes that on a cold day in February 2004, its founders realized every tomato in the grocery store was grown elsewhere — that is, Canada, Mexico or Holland — and they ripened in transit. Thus sprouted the idea to grow fresh greenhouse tomatoes that would be available year-round, mostly in the Northeast to keep them fresh during shipping and tasty at a time of year when it's hard to find a tomato with any taste.

Wilson says the lack of Backyard tomatoes during the summer of 2013 wasn't a problem, because Wilson Farm grows its own tomatoes and filled the gap, but in November and December it had to turn to other suppliers in Canada, Mexico and the United States.

But it's now getting the Backyard tomatoes again, which it sells at two retail locations, in Massachusetts and New Hampshire, and to wholesale customers such as chain supermarkets and restaurant suppliers.

“We have hundreds of customers,” he says. “Some take anywhere from 10 to 3,000 cases of tomatoes.” He sells the tomatoes to locations as far south as the Bahamas.

Pesky pests

On average during the course of the year, Backyard produces 400,000 pounds of tomatoes per week. The company didn't produce anything from July 1 till late December, and began shipping in small quantities on Dec. 20, and then in higher amounts the following week.

“We're now starting to get ourselves back into a rhythm,” Backyard's Cunniff explains. “We're picking, packing and shipping. We're in the market, we're selling.”

He says the customer base hasn't changed all that much. “Everybody who was doing business with us before our issues, they have all come back and are anxiously waiting for us to get back into the marketplace. So from a distribution strategy, we're basically where we were in terms of the majority of our customers being in northern New England, with a little bit being in New York City,” Cunniff says, adding that customer orders are a bit higher than expected, because of the high quality of the new crop.

“This time of year there's not a lot of other stuff [fresh tomatoes] to purchase,” he says. “Everything is planted and growing in 42 acres of greenhouses.”

But the impact of six months without sales has had some effect. Earlier plans for the company's research and development center are stalled, as are plans to expand the types of produce it grows.

“Right now we're not doing anything in the R&D center. We're focusing on the main crops and getting ourselves back into business, and then we're evaluating what the next steps are going to be. Right now we're going to focus on the primary business,” says Cunniff, who declined to reveal revenue figures.

He agreed to explain some of what happened to Mainebiz, but he called it “revisionist history.”

“I'll talk to you a little bit about it, but I don't want to go through the nightmare that it was,” he says. He credits ownership, which includes a Fidelity Investments-associated group that is majority owner, with believing in the company, its processes and business model. “Without the support of ownership it would have been very difficult for us to do the right things,” he says.

Backyard uses an inner plant strategy, Cunniff explains, where a younger tomato crop is planted under an existing crop to help avoid a gap in production. For example, older plants are six months old and the younger ones under them are six weeks old. All are grown hydroponically, without soil. So there is twice as much material in the greenhouse than if there had been a single crop. “It's difficult to do,” says Cunniff.

Last summer that dual-plant strategy helped enhance the environment for whiteflies, small white moth-like creatures that fly in and out of greenhouse windows. If there are too many whiteflies, they can ruin a crop. Cunniff says Backyard tried to control the whiteflies by pinpointing hot spots where there were a lot of them and applying biological treatments. But the whiteflies were increasing at an exponential rate, and Backyard was unable to contain them.

“We had more than six times the baseline number of whiteflies, so we had to get rid of the crop,” he says. “What happens is at certain times of the year, when we have more plant material, it's green and warm and cozy inside the greenhouse and not as cozy outside, so when we open the windows they come in and then they populate like crazy.”

Since the infestation occurred in July, at the end of a crop cycle when the company had to replant anyway, it decided to pull out the crop, clean the greenhouses fully by scrubbing everything down and then plant a second crop in August.

The second setback came when Backyard purchased seeds, which it sent to a propagating greenhouse that started the seeds and shipped them to Backyard when they were about 9 inches to a foot tall.

“As standard operating procedure, we tested the seeds and started propagating. What we do and a lot of people don't do is we retest the plant material to see if there's any traces of anything we should be concerned about,” Cunniff says. “During that test we found something that we didn't feel was necessary grade for bringing into a greenhouse after we just finished cleaning it all out, so we decided to scrap that crop, and that pushed us back another five to six weeks.” He says it wasn't another bug or infestation, but a quality issue.

He and his colleagues faced another tough decision.

Painful choices

The company had already explained to customers, vendors and employees the first time around that the company was going to recover from the whitefly infestation. That time, there was enough work to avert furloughs, which was important in the tough regional job market. But it wasn't so lucky the second time.

The executive team, which included Cunniff, the head grower, the CFO, the president and CEO, and the vice president of human resources, made the decision to pull the plug on the second crop, he says. The owners also approved the plan.

“The second time we had to furlough people, and it was an extended period of time where we were going to be out of the marketplace,” says Cunniff. “We decided it was the best decision long term for the company to make as opposed to getting off the baseline of what we believe, which is you've got to do things right.”

The furloughs affected all 200 employees, including management. “Everybody got furloughed. I got furloughed,” Cunniff says. “The entire team took some level of furlough for the period we were out of work from after Labor Day till [December].”

As the company tackled its third crop, furloughed employees were brought back in. “First the crop comes in, so you bring people in to unload the trucks and plant the crop. Then later you get the pickers and packers. We brought people back in as the work was needed,” he says.

Though things are humming along now with the employees and crops back in place, Cunniff won't talk about the cost of the shutdown.

“I'm not going to get into it from the financial perspective of what it cost,” he says. “From a reputation standpoint, we didn't lose a customer. And as of this point, we didn't lose any of the employees we had to furlough. The reason we did all this stuff is that we have such a good reputation in the industry. We're the standard for quality.”

While the company lost its head grower, Tim de Kok, in late August over what it said was a planned departure unrelated to the problems with the tomatoes, it now has its original grower, Arie van der Giessen, back. That's something that gives Cunniff great comfort. He says the whitefly problem could have happened with any grower, but he's had a long-standing relationship with Van der Giessen, who was among the original company employees, like Cunniff.

“We've got Arie, and the biggest thing we're doing is going in with a solid strategy from the get-go and sticking to it,” says Cunniff. “When you get into a situation you tend to oversteer and you're not keeping it in balance.” He says the company also is spending a bit more on biological systems. “It may be a bit of overkill, but we'll see how effective it is down the line,” he says. “Right now it's hard to tell because it's wintertime.”

The January new crop celebration served to bring the company full circle.

“We got a lot of support and help during the difficult time we had, so it was just for the celebration of being back in business and telling people and our customers thanks for sticking with us and for the state helping us out during the time with our unemployment office and our employees,” says Cunniff. Among the people invited was Gov. Paul LePage.

“There was a lot of heartfelt support in a difficult time for us, and now it's time to have a celebration.”