Growing a business from sunflower crops

Tom Smude may see himself as just a "little farm boy from Pierz," but the enterprising Morrison County farmer has high hopes for his homegrown Smude's Sunflower Oil.

Smude was simply looking for a drought-tolerant crop when he began planting sunflowers in 2009, after two dry years had throttled his corn and soybean crops.

He planned to use his first sunflowers to produce biofuel, but then that market tanked. Soon after, however, struck by the buttery flavor of some potatoes he and his wife fried in the oil, he hit upon the idea of making cold-pressed, food-grade sunflower oil to sell to restaurants, grocery stores and food co-ops.

With a combination of federal, county, private and other financing, Smude has invested more than $500,000 to build the plant where automated equipment cleans, hulls and presses the seeds and filters the oil. The resulting product, a virgin, premium oil with a golden hue, is bottled and labeled by hand, for now.

Less than three years after pressing his first crop in early 2010, Smude is selling his oil to online customers in 48 states and to more than 100 grocery stores and food co-ops. It's also popular with chefs at restaurants such as the Birchwood Cafe and Spoonriver, both in Minneapolis.

Now, what began as a way to diversify his farming operation has become a push by Smude to go from being Minnesota's first small-scale processor of food-grade, cold-pressed sunflower oil to becoming the country's first national distributor of the product.

"If you can diversify, you can survive," said Smude, 37, who further exemplifies that philosophy by also raising black Angus beef, working for a John Deere dealership and owning a gravel pit and a company that builds steel grain bins.

Sales of Smude's Sunflower Oil last year reached $250,000, a figure he said the company already had topped by July. This year's sales could approach $400,000 to $450,000. Smude Enterprises, which includes the farm and its sunflower operation, the grain bin and gravel pit ventures, has 14 employees. Smude's wife, Janelle, vice president and chief financial officer, joined full-time earlier this year while childhood friend Scott Saehr serves as director of sales and marketing.

Aspiring to be a farmer after growing up on a farm, Smude bought 120 acres in 1998, a few years after getting a degree in sales and marketing at Central Lakes College in Brainerd and starting at the John Deere dealership.

Using his own land and nearby contracted acres, Smude planted 100 acres of sunflowers his first year, 400 last year and 1,200 this year. He expects to plant up to 2,000 next year. Overall, Minnesota is the nation's sixth-largest sunflower-producing state, according to the U.S. Department of Agriculture. The state, however, is far behind South Dakota and North Dakota, which rank first and second.

Smude is working to develop new branded products that incorporate the sunflower oil, including granola, bagged popcorn, croutons and infused oils. He has a building in Pierz and equipment lined up to automate the bottling as demand grows.

Finding the right marketing approach to drive sales is the challenge now, Smude said. He's bought hundreds of spots for one-minute commercials on national cable TV channels, was featured in an "American Milestones" segment on public television and set up a Facebook page. He has the oil sampled at farmers markets and in stores.

"As soon as [consumers] try it, they love it," Smude said. "I've never had anybody say, 'Take this product back, I don't want it.' We have reorders. They're not all new customers. Word-of-mouth is the best but it takes the longest."

Smude's marketing materials position the oil as healthy alternative to other oils and butter, describing it as low in saturated fat, high in oleic acids (monounsaturated fats), rich in antioxidants and vitamin E and not genetically modified. The company, he said, uses sustainable practices such as using seed hulls for livestock bedding and converting seed mash into fat-and protein-rich pellets for animal feed.

Birchwood Cafe chef Marshall Paulsen said he goes through 10 gallons of Smude Sunflower oil a week in making granola, vinaigrettes and baked goods.

"We use the best-quality ingredients we can get and the best oil we can get is Smude's Sunflower Oil," Paulsen said. "It adds a nice nutty, sunflowery-tasting depth and its got a lot of character."

The expert says: Anita Nelson, president and owner of IN Food Marketing & Design in Minneapolis, recommended that Smude focus on defining who his customer is and clearly expressing the benefits that Smude's Sunflower Oil offers to that customer.

"My first recommendation would be to focus his efforts on one channel, whether that be retail or food service," Nelson said. "They're very different channels, so the more focused he can be, the better."

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com.