Farmer-entrepreneur Jeremy Zobrist discusses the highs and lows of creating an on-farm CPG brand
Acres U.S.A. Can you talk a little bit about your background? You grew up on the farm in central Illinois, but you made the decision to go this atypical route.
Jeremy Zobrist. Sure. I grew up on the farm, and I really enjoyed planting a crop, taking care of it, and harvesting it. From a young age, I always had this crazy thought that I wanted to grow crops that people around here weren’t growing. I remember at 16 or 17 talking to the local Libby’s plant that contracts pumpkins in our area, thinking maybe I could do that kind of farming.
But my path took a little different twist. I went to college and studied accounting. I thought I could do taxes in the winter and farm the rest of the year, but I hated doing taxes. I’m not really an accountant — I’m more of an entrepreneur. But doing accounting was very affirming. I would say that was a second formative piece in my career — really understanding balance sheets and income statements, making buy decisions, learning how to look at the numbers in a dynamic situation — not just what your costs used to be or what they are today, but what will they be in the future.
I spent about five years in public accounting. I did some consulting work and enjoyed that, and then I had a chance to work for an ag tech company. That was the third really formative piece. The founder of that company was a great marketer. He was a great problem solver. I found myself working closely with engineers, helping to troubleshoot some of the technical problems and then finding suppliers and getting a product from point A to the end zone. I realized, “This is what I’m wired to do.” So I decided I was going to move on, although I wasn’t sure what I would do next.
I ended up buying part of a food business called Watershed Foods. Food was one of the verticals that I was intrigued with because it could tie into farming. I bought a piece of it with sweat equity, and we were supplying freeze-dried strawberries to Kellogg. We were hemorrhaging cash, though, and early on I realized that we could never have the marketing muscle that Kellogg had, but I felt like we could do two things that the industry valued and would pay for. One was the ability to solve problems creatively, and the other was to move very fast. So that’s how we built our culture at Watershed.
We didn’t turn it around overnight, but eventually we were able to create a freeze-dried toddler snack that was better tasting and better for kids. That product exploded in growth and helped us turn the business around and then thrive. That’s when I realized, “Hey, I want to do that again!”
A fourth formative thing was that I got married, and my wife has Crohn’s disease. We were challenged to eat better, and then we realized that when we eat better, we feel better, and we can do life better.
I have a real passion for food innovation and how it intersects with farming. We’ve got a whole bunch of specialty crops. Pumpkin is our biggest one. We’re exploring herbs, and we’re exploring edamame and popcorn. I think you have to look for that unique dynamic the market is really looking for. What can you do that’s innovative, and then how do you tie that back to the actual farm?
Acres U.S.A. What does your home farm look like? How many acres are you growing pumpkins on, and what does that production look like?
Zobrist. The home farm my wife and I own is about 200 acres, half tillable. We have some ground with irrigation, which gives us a little more flexibility to do different kinds of crops. We get enough rain, and the soil is heavy enough that you probably don’t need irrigation for corn or soybeans, but for some of the other specialty crops it’s a nice tool to have.
We own another 100 acres, and in total our team farms about 800 acres, all organic. The balance is long-term cash rent. A lot of people in our community think I’m crazy, but there’s a few that are like, “Wow, that’s fun. I want to be part of that. I like growing stuff that ends up on a grocery store shelf” or “I like that my farm is being used for that.”
We have three or four people on our farm team, including the farm manager.
Acres U.S.A. Does that mean that some of your neighbors are starting to grow some specialty crops; do you contract with them for anything?
Zobrist. Our contracted acres have ranged from 300 acres to 1,500 a year. It just depends on the ebb and flow of supply. We use our farm to get something going — that’s where we take the risk, and if we decide it’s scalable and profitable, we contract with others to grow the crop. My goal — I’ve not achieved this yet — is that farmers in my area can make a couple hundred an acre more than they could with commodity crops. We have tried to mitigate their risk by guaranteeing a minimum income.
Acres U.S.A. And how many of those acres are in pumpkins? And then can you talk about the other crops you’re growing?
Zobrist. As a snapshot, last year we contracted about 300 to 400 acres of sunflower and about 700 acres of pumpkin. And then our own farm was split between wheat, corn, soybeans and pumpkin. The edamame and herbs are more in an experimental phase.
I think I’ve learned a really good lesson through this. Almost every farm article on specialty crops starts by telling the farmer, “Make sure you have a market for your product.” I thought I was doing that right with pumpkin, but then you learn, “Oh yeah, my market wasn’t as solid as I thought it was going to be, and I tried to go a little bit too fast.” With edamame, for example, this past year we put in a five-acre plot, and we learned about the different varieties in terms of yield and in disease. We tried to learn 80 percent of what we needed to know with a few acres the first year out of the gate. You’re trying to accelerate a learning curve. With corn and soybeans there’s so much knowledge in our area; the learning curve isn’t the same as when you’re planting a crop that you’re not even sure will grow in the area.
It’s one thing to grow pumpkins and sunflowers on a small scale — and there’s nothing wrong with doing small scale. I want to be clear about that. But I’m just wired to think big. I’m always thinking, “If this really works and I need to do it on several thousand acres, is that going to work?” Scalability is something that I do factor in. It makes me respect even more how hard it is to get a new crop established. For example, every part of the soybean is utilized, from the shell for fiber, the oil, the protein meal — the market has figured out how to maximize its value. But if you have a new crop, and you’re only using the oil, or you’re only using the meal, or if you don’t have everything sold, or if there’s no infrastructure in place, it’s a steep hill to climb.
Early on with pumpkins, we thought our yield per acre would be high enough that we could make the business work by selling the seeds alone, compared to what they cost to import from China. When we realized we actually couldn’t — the yield isn’t good enough — we had to start thinking, “How do we add value to the rest of the pumpkin?” You can watch a video of our pumpkin harvest shooting all the pumpkin flesh out of the back of the combine, and it’s 92 percent water. A number of people have asked me, “Why don’t you sell it for cattle feed?” And we’re talking $10 a ton maybe, because it’s almost all water — the juice just isn’t worth the squeeze. Other people say, “Why don’t you do canned pumpkin?” But you have to understand that a real pumpkin processing plant is probably $100 million.
Then there’s the catch-22 with a new market. If you tell a potential buyer in the food industry, “Hey, I got a product concept,” their response is usually, “Great, send me a spec sheet and a sample.” And if you don’t have a spec sheet and a sample, they’re like, “Well, come back to us when you do.” Or they’re like, “Can I buy three truckloads from you?” and you can’t supply that. Do I spend $2 or $3 million to develop a dried pumpkin line and just hope the market wants it?
Acres U.S.A. Can you talk a little bit more about the pumpkin seed market? You said most of it comes from China. What percentage of the domestic pumpkin seed market are you able to tap into?
Zobrist. The U.S. imports well over 10 million pounds of pumpkin seed from China. It’s such a commodity there that the only money Chinese farmers really make is via an export tax credit that’s pretty sizable. They’re basically selling pumpkin seed at cost, but then they get an export tax credit as their profit. Those 10 million pounds probably cover 20,000-plus acres. We can’t go from zero to 20,000 acres here overnight.
And the American consumer isn’t willing to pay much of a premium for American-grown or organic. That was one of the things I mentioned earlier about the market that I thought was there. I thought we could get 10 or 15 percent more than Chinese seeds. But the reality is that Americans aren’t willing to pay a penny more than they could to buy seed from China. Which is okay — it’s capitalism, and it’s the real world — but with super tight commodity margins, and real advantages at scale, and consumers not being willing to pay any premium, it’s tough to survive.
Domestically, as far as I know, there are three major pumpkin seed operations. When I say major, that’s nothing even close at 10 million pounds. We’re talking less than 500,000 pounds.
Then you have to have the processing, and you have to have the equipment. That’s another good example of the challenge of a specialty operation. You can’t just go to your John Deere dealer and buy a pumpkin seed harvester. We imported ours from Turkey because it was a lot more cost effective than the one from Europe, and we didn’t know what we didn’t know. Our pumpkins are much smaller than Turkish pumpkins, so we modified this and that, and we finally turned it from a three-four person operation, which is not scalable, to one where one person can hop in the tractor and harvest by themselves. That doesn’t sound like a big deal, but it is — we went from maybe 10 acres a day with four people to a hundred acres a day with one person.
Acres U.S.A. How have the tariffs affected you? And it’s not just our government weighing in and putting their thumb on the scales — you’d feel nervous if you were one of those Chinese pumpkin seed growers whose only profit was from export fees. That could go away in a flash if their government decides to take it away.
Zobrist. I can’t tell you how many conversations I’ve had in the last year about this. No, we are not going to chase the short-term tariff delta and invest a bunch of money in scaling up our pumpkin seed operation, because in six months of those tariffs could go away. They’ve helped in the short term — they certainly caused the phone to ring with guys saying, “Hey, we would love to partner with you guys!” I love that word “partner.” Sometimes some people really mean it, but others really mean, “I’d like to exploit you now!”
But the tariffs got people thinking. I did wonder to myself, “Man, if we would’ve been two years ahead of schedule, we could’ve really taken advantage of the situation.” But I have to be smart. Do I spend $5 or $10 million and speed up the process and rob that from another enterprise?
There was a Chinese company — a big supplier — and they were thinking about building a plant in Morton, Illinois, which is close to Libby’s. That was interesting. They said all the right things. We had a couple meetings, and then when it looked like tariffs were going off, they weren’t quite so interested anymore. I was like, “Okay, that’s kind of what I thought.”
Acres U.S.A. You started your Top Fox brand of pumpkin seeds; can you talk about how that has gone — and would you advise somebody to start their own CPG brand?
Zobrist. Top Fox is still going. We’re still investing strongly in it. We’re in some major retailers — Publix, Kroger, Sprouts, etc. We do expect to get there, but it’s not an easy road. We went branded because we thought, if other ingredient buyers aren’t going to give us a premium for our seed, and we’re not willing to invest tens of millions of dollars to get to scale and to compete for the slim margin that’s available, maybe what we need to do is start smaller and focus on a brand. We can get a higher price per pound that way.
I’m a Bible-believing guy, and the Bible says to always count the cost, but I’m not sure I counted the cost very well! I thought I did, but trying to get a brand into grocery stores is difficult and expensive. I talked to the right people, and they gave me the right numbers, and the margins looked strong. I looked at my other business, which is a co-manufacturer for brands and for retailers like Walmart. I thought, “Okay, we can make this work.” But the marketing costs are just way more than anybody would think. By marketing costs, I really mean fees at the retail level and for distributors.
So, I wouldn’t tell somebody to never do a brand. There are plenty of success stories — businesses from small beginnings that really grew. But there are way more failures. I think you just want to count the cost really carefully. Do you have something that’s truly unique? Do you have something that’s truly demanded by the market? Can you build a team that can genuinely help get you in the right place at the right time?
All of that is easier said than done. A zillion little firms run around and promise they can help you be the next breakthrough brand, when the reality is that many of them are simply running a sort of Ponzi scheme. If they can get so many brands to sign up for $5,000 a month, one of them is going to hit it big, and that’ll be enough for them.
So yeah, it’s not for the faint of heart. It’s either a very long road — 10-plus years — or it’s a combination of a several-million-dollar investment bet and time, too. You could maybe spend 10 or 15 years building it and think you haven’t spent that much money, but you probably will — it’s just spread out over time.
Acres U.S.A. Where do you think this leaves a farmer in central Illinois or Iowa, or anyplace, really, who wants to diversify — who wants to get at least a little bit out of the commodity game?
Zobrist. I think it has a start with what their goal is. I met up with a young entrepreneur recently who’s a schoolteacher and has a freezer beef side hustle. He makes snack sticks and was wondering whether to get those into retail. I encouraged him to step back for a second and consider what his goal is. If your goal is to be the number one snack stick brand in the world, you’re going to take different steps. He ultimately told me he really loves teaching school — that’s his passion — he just needs to supplement his income so he can take care of his family. That’s obviously a different goal.
Second, don’t just latch onto one solution. “I want my farm to be big enough so the next generation can come back” is a great goal, but specialty crops isn’t the only way to solve that. There might be other ways to add additional businesses.
A third thing I would say is again to count the cost really carefully. If you decide to go this specialty route, understand you’re going to have to take some risk to get the reward. Some people just don’t want to take any risk, which is totally fine, but in business we get paid to take risks. Just make sure you’re getting paid if you’re taking risk. If you’re going to plant a brand-new crop that nobody has ever tried in your area, maybe ask for a minimum revenue guarantee that protects your downside.
I think fourth would be to have the perspective that there is no easy button. If it’s too good to be true, it probably is. Great things take incredibly hard work, incredible perseverance, and incredible tenacity. It’s not going to be rosy every day.
You’re going to need to find a support team and to rally people around you. Build a team. That team could be as little as yourself and your spouse or yourself and a mentor, but nobody can do anything by themselves. It’s just not sustainable.
Acres U.S.A. And as an entrepreneur, you have to have a family — a wife or a husband — who has a similar appetite for this kind of risk, too, right?
Zobrist. I don’t know that it has to be the same, but I think they have to at least be supportive. I’ll give you a real example. Watershed was quite successful when I got married, so my wife never saw those dark times — which really existed! I told her about them, but that’s different. I tried to warn her before we got married, “A lot of people think I’m a big risk taker. I think I’m a calculated risk taker, but I think too much of you to drag you into this without you knowing that.” Part of marriage is obviously submitting to each other. I told her that, and she said, “I think I get you,” and I remember thinking, “I’m not sure she does!” but I loved her and knew she loved me, so I was content.
So, we got married, and we’d been married about a year, and I was starting this pumpkin project. I told her, “We’re trying 40 acres of pumpkin down in Arizona. It’s the perfect climate. It fits the time window. We can grow the crop from February through May, and it’s all drip irrigation, and there’ll be no problems with weeds.” I said, “I think we might make enough money off this 40 acres to make a big dent toward building a new house.” I was so arrogant — or at least naïve!
Everything you can imagine went wrong with this project. We ended up losing about a hundred grand. In the big scheme of things, it wasn’t a loss that changed our lifestyle, but it was just discouraging. I came home from work early one day, and we had a little house we were renting. I went up to the second floor and laid down on the bed. She came up and was like, “Are you okay?” And I said, “No, I made some really dumb decisions. I wasted our money, and we probably need to put the plans to build a house on hold.” And she listened to this, and she said, “Well, if we need to move in with your parents, I’m okay with that.”
And it was such a sweet moment in our marriage because I realized that she did know what she was getting herself into. And because she’s smart — she knew it wasn’t that dire of a situation. That emotion is hard to describe, but if she had not been on board with me being a risk taker, I would’ve dreaded telling her that. I think that’s where the rubber meets the road.
I’m not saying that every spouse of an entrepreneur has to have the same risk tolerance — that’s probably not even healthy — but it is important that they understand the entrepreneur’s mindset. Many times over the years, when I’ve advised other entrepreneurs, I’ve asked “What does your wife think about this?” If they say, “I don’t think she wants me to leave my day job,” I tell them, “Then you don’t want to start this thing the way you’re describing it. Maybe you can adjust it and it’ll be okay. That doesn’t make your wife a bad person.”
Our society glorifies entrepreneurs, and almost anyone can be one, and that’s great. But I’ve had to learn the hard way that not everybody’s wired like me. And that’s okay. I’ve been this close to shutting down a business that had generated over $100 million in sales over the previous 10 years, and I have pulled the plug on other projects. I think that’s a side of entrepreneurship that people have to understand.
