BUSINESS JOURNAL: The Business Of Agribusiness
Valley Suppliers Keep Area Farmers, Producers Going
Posted: April 28, 2015
By VIC BRADSHAW
Daily News-Record
HARRISONBURG — When Lareth May needs something for his Timberville farm, he often drives no farther than Harrisonburg to get it.
Not all of Virginia’s farmers are so lucky, but ready access to companies that cater to farmers is one of the advantages to living in the state’s No. 1 agriculture county.
“I’d say [local agribusiness suppliers are] very important from the standpoint that we’ve got a number of these businesses here in the county,” said May, the turkey, cattle, sheep and hay farmer who is president of the Rockingham County Farm Bureau. “We’ve got at least three major equipment dealers in the county, and a lot of other places you’ve got to run a considerable distance to just get parts.
“I’m sure a lot of producers are glad to have this kind of convenience and benefit this close by.”
Local agribusiness isn’t limited to what comes out of area fields, poultry houses and barns. Dozens of enterprises support agriculture by providing supplies, fuel and services.
May said he usually visits a general supply store such as the Rockingham Cooperative weekly and drops into a poultry supplier such as Poultry Specialties “at least once or twice a month.” The convenient stores provide him quick access to what he needs.
“Something’s always breaking down,” he said, “or you always need a little bit of this kind of feed or supplement or animal health supplies.”
Golden Business
For half a century, Dairymen Specialty Co. Inc. on John Wayland Highway just south of Harrisonburg has supplied and equipped local dairy operations. It provides almost everything one needs except veterinary services and antibiotics, and its employees occasionally work on beef farms and customer homes.
Its reach now extends well beyond the Shenandoah Valley.
Greg Derrow, the company’s general manager and vice president, said that from its headquarters here and a branch office in Rocky Mount, Dairymen Specialty’s 41 employees serve all of Virginia and parts of West Virginia and North Carolina. His father Lawrence Derrow founded the company in 1965 and is the current president and CEO.
Greg Derrow declined to provide company sales figures, which tend to fluctuate with milk prices, but he said that in a typical year its revenues are divided pretty evenly between new equipment sales, service and hygiene products. It delivers hygiene supplies to farms monthly.
Technological advances are changing the industry, especially for large farms. In fact, Dairymen Specialty’s employees are outfitting a dairy barn for Virginia Tech so it can test new computerized systems made by Afimilk before the software hits the market.
The company also has installed 72-stall rotary milking systems for some clients, including Stony Run Farm in McGaheysville, Derrow said. Cows step into a stall, ride the carousel for about 10 minutes while being milked, and step off when they’ve completed the circuit.
“It takes the parlor setting and turns it into an assembly line,” he said. “It saves on labor costs.”
The cows also like it because the system reduces their stress, and they get more milking time. Derrow said the change has resulted in a production increase of about 20 percent.
The service side of the business is vital to the farms Dairymen Specialty supports. The company provides 24-hour emergency service, and has technicians certified to work on nine equipment brands.
With its clients spread over a wide geographic area, emergency calls are common. Four milking and cooling trucks and four feeding and manure-handling trucks stand ready to respond, and Derrow said the company can receive five calls on a stormy night.
“They’re an operation where they can’t stand still,” he said. “If they sit idle, it’ll damage the cows.”
Avian Enterprise
Poultry Specialties’ business model is similar to its dairy equivalent.
Oren Heatwole said the company, which he and his partners bought 16 years ago, provides replacement parts and other supplies for chicken and turkey farmers at its stores, but most revenue comes from installing and servicing equipment. Though he declined to provide a breakdown, he said the “vast majority” of its revenue comes from remodeling poultry houses and building and equipping new ones.
Poultry Specialties’ income can rise and fall dramatically depending on the economy because so much of the business involves capital projects, he said.
“It’s different than I expected. It’s more of a roller-coaster ride,” said Heatwole, who declined to say how many people the company employs. “You have a lot of work, and then not a lot of work. We’re riding a pretty high wave right now. There’s a lot of building right now that next year might not be.”
To help smooth out the peaks and valleys and provide convenient access for its customers, Poultry Specialties has three locations — the store it bought in Broadway, the Dayton location opened in 2001, and a store in Moorefield, W.Va., launched last year.
“That makes us where we can service just about anywhere fairly quick,” Heatwole said.
Feed To Twine
Not all local agriculture support businesses, however, specialize in one segment of the industry. Rockingham Cooperative provides a range of goods to area farmers. Most of its revenue feed sales for dairy and beef cattle, but its nine retail locations in Rockingham, Shenandoah, August and Highland counties and the city of Harrisonburg also provide everything from seed corn to crop chemicals to twine.
“We stock the basic farm supplies and keep them at every store,” said Keith Turner, the cooperative’s feed division manager and director of purchasing. “We’ve made a commitment to have key supplies that farmers might need at every store but will special order items people need.”
The cooperative serves a larger geographic area than the four counties, and its 4,000 farmer owners aren’t all local. Each receives an annual patronage dividend based on how much they buy from the co-op.
The retail shops might be most people’s idea of the co-op, but it’s the feed mill that is big business.
Feed accounted for about 69 percent of its $99.6 million in sales in 2014, with agronomy sales coming in at 12.7 percent and farm supplies totaling 3.5 percent. Hardware, sporting goods and clothing also are sold at the cooperative or its Ace-brand hardware stores.
Corn and soybeans are purchased from farmers throughout the region to make that feed.
Rockingham Cooperative also sells feed for horses and pets. Sales in 2014 were $9.7 million more than the cooperative collected in 2013. A new store helped with that, but same-store sales were up 6.7 percent.
“Agriculture is a shrinking to flat market, and we’ve been able to have sales growth,” said Norman Wenger, general manager of the co-op, “so we’re pleased with that.”
Rockingham Cooperative also pours money into agriculture-related youth programs in 26 counties. Turner said it projects contributions of $300,000 toward those efforts this year.
“It’s a commitment,” Wenger said, “to the future of agriculture.”
Contact Vic Bradshaw at 574-6279 or [email protected]
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