Meadowfoam co-op weathers international firm’s presence

of Ron Cooper A combine harvests meadowfoam seed on the Alan McKee farm in Polk County, Ore. A farmers' cooperative, OMG, and a North Carolina-based company contract for the oil seed in the Willamette Valley. The unusual perspective was taken by Salem photographer Ron Cooper using a photo drone camera piloted by Devin Fadenrecht.

SALEM — Growers of meadowfoam, a niche oilseed, say they have weathered a multinational corporation’s entrance into their market, forcing the larger company to slash contracted acreage. But a market observer believes both sides now face the specter of overproduction.

The oil extracted from meadowfoam seeds has special value to the Asian cosmetics industry due to its distinctive tactile feel and long shelf life. The oil is odorless and resistant to heat, oxidation and other manufacturing processes.

“There’s a lot of mythology around meadowfoam,” explained Oregon State University crop scientist Jennifer Kling. “Everybody wants to grow meadowfoam, but finding buyers is a real challenge.”

In search of that market, publicly traded specialty plant and seed corporation Technology Crops International began contracting with Willamette Valley farmers in 2010, asking them to add meadowfoam to their rotation of grass seed crops.

That move forced OMG, an open-enrollment cooperative formerly known as the Oregon Meadowfoam Growers Association, to sharply decrease their meadowfoam acreage. In 2012, the co-op’s production fell roughly 42 percent, to 2,200 acres from 3,800, according to a Capital Press report published at that time.

Membership rolls correspondingly fell to 50, down from a peak of about 100 growers. Mike Martinez, OMG’s chief executive officer, said the drop mostly represented infrequent growers of meadowfoam.

“We’ve definitely experienced some price pressure on an account-by-account basis,” Martinez said. “There’s always concern when any competitive entity wants to start a price war. That never bodes well for any industry.”

But TCI apparently overestimated the market, and subsequently scaled back its production from a high of 5,000 acres. The North Carolina-based corporation now produces “considerably less acreage than OMG,” which produces approximately 3,000 acres annually, according to Kling.

“I got put out of business,” she said, speaking metaphorically. OSU has shuttered her meadowfoam breeding program due to the lack of industry demand.

“There’s no reason for me to breed meadowfoam … because (TCI and OMG) can’t grow as many acres as they might like to,” Kling said. “So there’s really no urgent need for a higher-yielding variety.”

TCI and the farmers’ co-op declined to release detailed acreage information.

TCI General Manager Kathy Flores said from her office in Winston-Salem, N.C., that the company typically begins production of a new crop after someone expresses a need for it, but declined to provide specifics.

OMG’s Martinez declined to disclose the cooperative’s total contracted acreage for 2015. Charles Ortiz, an OMG agronomist, compared that information to a newspaper’s circulation numbers.

“I’m not trying to be all ‘Spy vs. Spy,’ but I’m just not comfortable giving out that information,” he said, referencing the comic strip published in Mad magazine.

Martinez also did not comment on the amount of meadowfoam production ordered by TCI, or if the company was undercutting the cooperative’s prices.

Martinez said the co-op has paid its members dividends every year since 2008. In separate conversations, board members repeatedly stressed the crop’s continued status as a moneymaker, but warned that it could easily be overproduced.

Farmer and OMG board member Bruce Ruddenklau said his 40 acres of meadowfoam has brought anywhere from $900 to $1,800 per acre.

“I wouldn’t raise the crop if it weren’t profitable,” he said. “We’re seeing good prices and good stability in being paid on schedule, and everything’s been steady as she goes for a long time.”

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