VALUE-ADDED CORNER
Sweet smell of success
Oklahoma wheat producers use USDA financing to launch frozen-dough bakery
By Sally Vielma,
USDA Rural Development,
Oklahoma
raveling in northwestern
Oklahoma, it is evident
that the waves of wheat
are a major contributor
to the economic base of
the region. As the state song, “Oklahoma,”
says, when the wind
comes sweeping down the
plain, the waving wheat can
sure smell sweet. “Sweet”
not only describes the smell
at the Value Added Products
Inc. cooperative’s frozen
dough processing plant, but
also the aroma of several
other aspects of the cooperative’s
bakery operations.
Adding value to hard-red wheat
A core group of wheat producers in
the Woods County area of northwestern
Oklahoma held initial meetings to discuss
value-added processing alternatives
for their hard-red winter wheat. This
variety is the region’s major crop, preferred
by producers as a consistent
source of clean, high-quality wheat that
has above-average test weights and protein
levels. Wheat producers, cooperative
groups, economic development
partners and agricultural business leaders
all shared the vision and desire to
add more value to the crop in the region
where it is grown.
After careful study of information
and research from the Oklahoma
Department of Agriculture, Oklahoma
State University and a professional
consulting firm, the value-added group
opted to pursue production of frozen,
self-rising dough products plant.
Co-op launched
The group initially organized as a
Limited Liability Company (LLC) as it
planned for the processing of area producers’
hard-red winter wheat into value-added food products. The organization,
called Value Added Partners LLC,
assessed the feasibility of a frozen-dough
processing plant. Several associations
with international expertise in the field
of bakery facilities, equipment and supplies
greatly assisted the producer group
as it examined value-added alternatives.
Value Added Partners evolved into a
closed cooperative, and the name
changed to Value Added Partners Inc.
(VAP) in 1999. The co-op, as originally
designed, was to provide wheat producers
the opportunity to expand their
customer base through vertically integrated
processing. It also would allow
producers to capture a larger share of
the profit margins through the further
processing of their wheat.
The project “just felt right to all of us
from the beginning,” says Mike Dunker,
plant manager. Producer response to the
initial equity drive in 1999 was "fantastic,”
board members say. Project backers
held 34 producer meetings across
Oklahoma, which resulted in more
than 900 separate producer/investors
joining.
About $7.5 million in member equity
was raised in just three months. A
second equity drive in 2000 brought in
an additional $2 million in one month.
The great response to the second equity
drive was accomplished by mailing a
single letter to producer/investors. The
response was indicative of the strong
level of commitment and belief the producers
had in the VAP co-op.
VAP also used a 70-percent Business
and Industry Guaranteed Loan, for
$7.5 million, from USDA Rural Development
for some of the capital expense
for the project.
Perfect site located
With organization structure and
management services in place, VAP
selected a site it felt was perfect for the
dough processing facility: a 48,000-
square-foot building with eight acres of
grounds in Alva, Okla. The facility had
previously housed a Wal-Mart store
and had several features that fit the
needs of VAP. These included climate
control, open span sanitary design,
loading docks and adequate utilities
and services.
The property around the facility
would allow for plant, warehouse and
freezer expansion. The state-of-the-art,
“high speed” baking equipment purchased
for the plant is very specialized
and incorporates the latest European
bakery technology for frozen, self-rising
dough. It is used in manufacturing
flat and artisan bread products, which
includes frozen, self-rising pizza
crust currently VAP’s main product.
The decision to focus on pizza crust
production has proven to be a good
choice for the co-op. VAP is currently
selling pizza crust to some of the
nation’s largest retailers of frozen pizza.
In 2001, the co-op was awarded a
$500,000 Value-Added Producer Grant
from USDA Rural Development. This
grant was a working-capital grant that
assisted them in branching out with
other dough products and in processing
and marketing some additional
dough and bread products.
Expanding product line
VAP has produced and sold several
different types of bread and dough
products since that time. These
include four varieties of baguettes,
three flavors of Danish rolls and the
dough for a puffed pastry. Two sizes
of “crazy bread” (a bread that is used
for dipping) are being produced
and sold.
VAP’s dough and bread product
markets continue to grow, and it has
the capability to produce almost any
imaginable type of bread product. The
newest addition to VAP’s product line
is a unique frozen cinnamon roll that
can be microwaved. “Good” does not
even come close to describing the
product. It is incredible, and sweet!
The plant has its main line running
at full capacity with pizza crust, while
a pilot line (for orders of less than
1,000 pounds) is running full time for
cinnamon rolls. They use this smaller
production line also to develop new
products. The main line has the capability
to process 10,000 pounds of
dough per hour.
VAP has 80 full-time employees,
about 15 percent of whom are also producers
in the cooperative. The amount
of freight transportation has grown so
much that a trucking company was
launched to handle it. It owns 12 trucks
and 20 trailers and employs 15 fulltime
drivers. All this activity supports
the vision of the cooperative in creating
job opportunities in the area and
supporting the small farmer.
Adapting to various situations in the
marketplace has provided valuable
experience for VAP. The co-op has
successfully made necessary adjustments
in labor, products and marketing
efforts. The co-op is effectively
managed and will continue to benefit
producers while having a positive
impact on the entire area.
The producers who launched the
co-op say they made a very good initial
choice in seeking out experts in the
kind of food processing they wanted to
do. Dunker, who served as a consultant
to the project in the very early stages of
the project, and his brother Harry, the
co-op’s operations manager, together
have 60 years of experience in the baking
industry and plant set up.
With accomplishments and strides
achieved so far by the co-op, who
knows what could happen next? Some
co-op members say a pizza-topping
plant and toppings-producer venture
would be sweet! Stay tuned.
