Asoyia has had a first-rate year. Its name represents “a soybean from Iowa,” and it was started in 2004 by 25 Iowa farmer-investors determined to produce a replacement for trans-fat-laden, hydrogenated soybean oil.
Asoyia Vice President of Operations and Production Brett Maxwell called 2009 “our breakout year.”
Reviewing its five-year history, Maxwell revealed an understandable sense of satisfaction when it came to discussing 2009. Several recent Asoyia milestones support Maxwell's statement:
In 2009, Asoyia paid its highest grower premium to date at $2.75/bu., almost twice its 2008 incentive.
Asoyia contracted more than 100,000 acres in soybean and seed production, four times the 2008 level.
Asoyia's grower numbers jumped from 140 to 350 farms in Iowa, Illinois, Missouri, Nebraska and Wisconsin.
Asoyia ramped up oil operations to prepare for expected 2010 oil sales of 45 million pounds, three times the volume Asoyia sold in recent years.
Hydrogenation increases the stability of conventional soybean oil by mitigating the spoiling effects of linolenic acid. Commodity soybeans are comprised of about 7-8% linolenic acid. Although hydrogenation increases shelf life, it also creates trans fats, which are linked to coronary heart disease.
Drawn to soybean breeder Walter Fehr's work at Iowa State University (ISU), Asoyia obtained licensing agreements for Fehr's ultra-low-linolenic soybean varieties, which contain less than 1.5% linolenic acid.
Asoyia contracted 7,000 acres in seed and soybean production its first year and soon established a processing agreement with Cargill to crush the beans and refine the then-small quantities of resulting oil.
“Cargill was willing to gamble on us because it saw value in what we were doing,” Maxwell says. “Now we are a big proportion of what it does at some of its smaller specialty plants.”
As oil operations took hold, the Iowa City, IA-based firm expanded its grower network by establishing “alliance partners” such as Mershman Seed Company, Horizon Genetics and Schillinger Seed to private-label and sell Asoyia seed. Maxwell hired several field staff to manage contract production.
Asoyia's genetic lineup now includes several non-biotech, ultra-low-linolenic soybean varieties; two non-biotech, mid-oleic, ultra-low-lin varieties; plus a Pioneer-developed Roundup Ready ultra-low-linolenic variety.
Asoyia enjoyed some impressive bites early on from big food manufacturers like Pepperidge Farm, which uses Asoyia's primary product, Ultra-Low-Linolenic Soybean Oil, in its Goldfish crackers. “A pretty significant number of those crackers sold in the U.S. are manufactured with our oil,” says Maxwell.
The Food and Drug Administration also started requiring food manufacturers to include trans fats on labels beginning in 2006. Ultra contains zero trans fat per serving so it was an appealing alternative, “which helped our demand,” says Maxwell.
Asoyia brought in a food consultant early on to help position its oil among food manufacturers, adapt to industry testing protocols and learn how to market in the food industry. However, Maxwell says the company struggled to fully capitalize on its product's good timing until it hired food industry veteran Beth Fulmer-Boyer, now Asoyia's vice president of sales and marketing, to develop a team for selling via the food retailing, manufacturing and food service distribution channels.
Today, Asoyia has 13 full-time employees. It's run by a “management triad” of Maxwell, Fulmer-Boyer and Bob George, who is the chief financial officer. Asoyia's present owners include 25 farmers and two employees.
Asoyia relied on owner investments, guaranteed loans and various grants, including two $300,000 USDA Value-Added Producer grants, to fulfill early financing needs. In 2008, Asoyia secured $4 million in venture capital to expand product marketing, research and development. The investors were St. Louis-based Prolog Ventures and Boston's LSP (Life Science Partners), both venture capital firms that specialize in life science companies.
“It takes money to scale a business, and the timing was just right for them to help us do this,” Maxwell says.
Resources are invested in grower operations and market expansion, vs. brick and mortar, says Maxwell. Asoyia continues to rely on Cargill for processing.
Growers deliver to three Cargill locations: Cedar Rapids and Des Moines, IA, and Bloomington, IL. “Growers can choose any pricing mechanism they would normally use to sell commodity soybeans to Car-gill and then get our $2.75 premium on top of that,” says Maxwell.
Terry Ralfs of Walcott, IA, says growing Asoyia soybeans “is the easiest way to bring in an extra $160 an acre.” In 2007, he switched from planting another company's low-linolenic acid soybeans to Asoyia's ultra-low-lin varieties because Asoyia's premium was 40¢/bu. higher than the other company.
THIS PAST YEAR, Ralfs' 270 acres of Asoyia soybeans yielded an average of 58 bu./acre. Ralfs says he pockets the extra $160/acre income ($2.75 premium x 58 bu.) with almost no extra costs compared to Roundup Ready beans. Granted, he paid $15/acre more in chemical costs to keep the non-biotech beans clean, but seed costs were about $12/acre less.
“My numbers say Roundup Ready beans have to beat me by at least 12 bu./acre,” Ralfs says.
Kelsi Hosch, spokesperson for MBS Family Farms in Plainfield, IA, says profits from growing Asoyia soybeans compare to growing commodity corn. “It makes beans a profitable crop alternative,” she says. Last year, her family harvested 560 acres of Asoyia seed beans after planting 300 acres in Asoyia soybeans the year before.
Asoyia has stringent identity-preserved (IP) protocols which are essential for selling specialty products such as non-biotech food ingredients, says Maxwell.
Growers must document field location, variety number, number of acres and all management inputs. GPS coordinates and field maps are also required for each field and storage bin. At harvest, combines, augers and wagons must be cleaned before use for Asoyia beans.
“We can trace our oil from start to finish,” Maxwell says. “Every single load, every single bin, every single wagon of this product is tested so we know it meets our specification exactly.”
Right after harvest each year, ISU soybean breeder Fehr drives from Ames to Asoyia in Iowa City to present Maxwell with the yield data on his newest ultra-low-linolenic soybean varieties.
“If Brett sees something he thinks has a chance of being better for the farmer than they are currently using, he'll jump on it and send it to Argentina for production,” says Fehr. “He'll decide right at that minute. How many companies can you work with like that? They are very entrepreneurial,” he says.
Skeptics might not have believed a small group of soybean growers could launch a company, develop a zero-trans-fat cooking oil, raise millions of dollars in venture capital and become a major supplier for Pepperidge Farm Goldfish crackers in just five years — all while paying fellow farmers hefty premiums to grow IP specialty soybeans.
Asoyia has proven it can be done.