The path to commercial success is rarely linear. Instead, it’s often chock full of twists, turns and unexpected challenges, something to which Tom and Jenni Smude can likely attest. The Smudes, who own Smude Enterprises, makers of Smude’s Sunflower Oil, have turned necessity into a thriving business that is being recognized as AURI’s 2018 Ag Innovator of the Year.
The Smudes operate a crop and cattle farm near Pierz, Minnesota. A drought in the late 2000’s forced them to look for an alternative protein source for their cattle feed. Trucking in corn and soybean meal was expensive. The Smudes also wanted a crop that could perform well in the region’s sandy soils.
“We looked at the trucking costs for bringing protein in and thought ‘why not make it ourselves,’” Tom Smude says.
Fluid Plans
The Smudes began processing sunflowers to get the meal for their cattle and planned to sell the oil into the biofuels industry. Soon after they began processing, the price for oil dropped.
“The long-range plan was to bottle and sell the oil,” Smude says. “Instead of doing it in three to five years, we were at it in a matter of months.”
The Smudes raise and process high-oleic sunflowers. The seeds are higher in unsaturated and polyunsaturated fats and vitamin E than typical sunflower varieties. Those heart-healthy traits are desirable for baking, cooking and as food ingredients. The Smudes shifted gears and began bottling and selling food-grade oil through retail outlets.
“My mom and a friend went to the farmers market in Onamia and came back with $77,” Smude recalls. “Then I went to one in Isle on a Saturday and came back with about $400. That’s when I thought this might work.”
Because they utilize a cold press process that uses no chemicals, the all-natural oil became a hit. Smude’s Premium Sunflower Oil, including flavored and infused oils, can now be found at hundreds of retail locations across the Midwest and can be purchased from their website.
“Their products are spot on with consumer trends,” says Jennifer Wagner-Lahr, AURI Senior Director of Innovation and Commercialization. “They produce what many consumers are asking for and they’re about as close as you can get to getting it directly from the field.”
Opportunity Pops
Several years ago, Smude’s added microwave popcorn to their product offering. Their oil is already used to pop popcorn by some movie chains. Adding their own product line was a natural progression.
“Most microwave popcorn on the market has a lot of different ingredients that are difficult to pronounce,” Wagner-Lahr says. “The Smudes use popcorn, sunflower oil and salt. That clean label matches what consumers want.”
While it may be what consumers want, coming up with packaging that could contain the liquid sunflower oil without leaking was a challenge. Eventually the Smude’s discovered a highly refined paper that could hold in the oil for up to a year and a half without the need for wax, chemicals or preservatives. That opened the door for Smude’s microwave snack.
“I feel like all we’ve done for the last eight years was the footprint to start the popcorn business,” Smude says.
Business Expansion
The Smudes began their operation on their 160-acre farm, but quickly out grew the production space and moved it into Pierz. To meet the growing demand for their high oleic sunflower oil and popcorn, Smude Enterprises recently acquired a facility near their existing location and are working to expand the oil production.
The new Pierz plant will help the Smudes grow from producing about 800,000 pounds of oil per year to 6 million pounds annually. The expansion includes three presses, but the facility will be built to accommodate up to 10 presses. The Smudes currently have 23 employees working for them but expect to grow that number to 33 in the next year.
In addition to the bottled oil and popcorn, Smude says the bulk oil they produce will be used in the pet food market.
Smude’s expansion is not only good news for the company and the Pierz community, it’s also providing an opportunity for other local farmers. Smude expects to contract between 800 and 1,000 acres of sunflower production in 2019. The following year he estimates they will need 6,000 acres of production, and 10,000 to 15,000 acres by 2021. For now, some of that production will have to occur outside of Minnesota.
“It’s hard to find enough acres locally, so we’ll have farmers from other states growing for us. Within the next year we’ll try to get more local acres because our products are Minnesota made and we want them to be Minnesota grown,” Smude adds.
Innovation Runs Deep
In addition to Smude Oil, the Smude’s also own and operate a grain handling equipment business and recently acquired Rich Prairie Custom Woods. Sawdust from that operation will be mixed with dust and hulls from the sunflower seed cleaning process to heat the processing facility.
Smude says the company is looking at new sunflower seed varieties and new oils to enhance their products and open new opportunities. The future could include providing ingredients for skin care, makeup and cosmetics.
“We’re always looking for the next thing,” Smude says. “We look at what’s not on the shelf and think, let’s do that.”
AURI has worked with the Smudes on multiple projects including nutrition labeling for their products, shelf-life testing and technical assistance on product development. The Smudes focus on innovation, commercial success and product utilization made them a clear choice to receive AURI’s annual Ag Innovator of the Year award.
“They’re the poster child of innovation,” Michael Sparby, AURI senior project strategist contends. “They’ve identified new markets for the oil and meal coproducts. They’re continuing to innovate and they’re doing that by identifying and growing new markets where they can differentiate themselves. They’re doing this even though they’re already thriving.”
“Ten years ago, the Smudes were your everyday farm growing crops and livestock, facing adversity and challenges, but also innovative enough to know that opportunities arise out of challenges,” says AURI Executive Director Shannon Schlecht. “That vision started with trying a new crop, to marketing a new crop, to cold pressing seeds for oils, to creating new oil flavors, to creating a secondary tier of products that use the oil such as microwave popcorn. The fortitude to move into a new area in adverse times, then to work hard, foster the ingenuity, and take a can-do attitude in their journey, truly raises them up as a success story in the vibrant Minnesota food and agriculture innovation arena.”
The Smude’s road to success has included a steep learning curve and plenty of risk. It’s also
taken a leap of faith as both Tom and Jenni Smude quit full-time jobs along the way to run the growing business.
“My wife can see the future now,” Smude admits. “At first, I think she thought I was crazy, but she sees the potential now.”
To learn more about the Smudes or their products, visit www.smudeoil.com.
Ag Innovator of the Year:
For the past 16 years, AURI has recognized Minnesota companies that utilize Minnesota-grown agricultural products, have utilized AURI programs and assistance, have an innovative product or process and have achieved commercial success through the Ag Innovator of the Year award. Smude Enterprises of Pierz joins a decorated list of innovative companies who have received the award.
“They are true innovators and have seen success over a roughly 10-year period,” says AURI Executive Director Shannon Schlecht. “The difficult farm and price environment Minnesota agriculture faces today is reminiscent of the Smude’s start, and is a great inspiration in how an idea, and the embracing of innovation, can create an alternative reality.”
“They’re farmers who took a big risk and it’s paying off,” adds AURI Senior Director of Innovation and Commercialization Jennifer Wagner-Lahr.
Wagner-Lahr says the Smude products match what consumers want, including healthier products with clean labels.
“I didn’t expect the award,” Tom Smude says. “There are a lot of other companies out there that are deserving.”
The Smudes are frequent presenters at events where their story resonates with other entrepreneurial companies and consumers alike.
“They’re very well received when they speak,” Wagner-Lahr says. “People are impressed with their products and their plans.”
“AURI does things for us and we do things for them,” Smude says. “We have a good relationship.”
While there is never a bad time for innovation, Schlecht says with depressed commodity prices and trade issues facing the state’s farmers, value-added enterprises are as necessary as ever.
“This is the right time to be thinking about value-added agriculture and how it can match up with local and regional market opportunities,” Schlecht says. “Challenges create opportunities and I’d love to see more producers take the Smude approach and explore a value-added idea with AURI.”