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Hay company harvests deal with national chain

Rochester Business Journal
July 23, 2010

Top Quality Hay Processors LLC has started doing business with Tractor Supply Co., the largest farm and ranch retail chain in the United States.

The selling arrangement has prompted a facility expansion and additional local jobs.

The Romulus operation now has its nutrient-rich hay in 50 stores in the Northeast, and there are plans to add more products this year.

"There are big opportunities for growth," said Jeff Warren, one of TQHP's project leaders.

TQHP opened in September 2009. It has a 120,000-square-foot facility at the former Seneca Army Depot. The company also has an office at the Cornell Agriculture and Food Technology Park in Geneva.

The company first came into contact with Tractor Supply last June at a buyer's-day event at which firms can show their wares with the idea of getting them into the stores, Warren said.

If a product is accepted by Tractor Supply, there is a trial in random stores across the country, Warren said. His company's alfalfa hay went into 25 stores in April. Within 20 days, the stock sold out.

The store now has the line in locations along the East Coast. Normally that would mean the product would be in roughly 230 stores because of the way Tractor Supply has its distribution centers, but Warren said TQHP limited it to 50 stores because that was the demand the local operation could meet. Terms were not disclosed.

The 15-person company has its lines running around the clock six days a week and is looking to add eight workers, including a night supervisor, drivers, field crew and workers for the drying line.

To help meet the increasing demand, TQHP just secured a $500,000 loan from Seneca Falls Savings Bank, with a letter of support from the U.S. Department of Agriculture, for equipment, which will add another 110 feet to the 60-foot drying line, more than tripling the amount of product daily. The line is expected to be running in mid-September, Warren said.

Warren believes customers realized the quality of the hay TQHP provides. He expects the Tractor Supply deal to boost sales by 100 percent this year. A 23-pound bag of hay sells for roughly $5.99.

Because of the reaction, Tractor Supply met with Warren last week and has since agreed to trial runs for other TQHP products in 25 Tractor Supply stores. Alfalfa accents are alfalfa leaves customers can sprinkle onto their existing non-TQHP hay supply. The other product is nuzzle sprouts, which are flakes of hay with different herbs that target health issues such as general wellness and anti-inflammatory and respiratory needs.

Brentwood, Tenn.-based Tractor Supply operates more than 900 retail stores in 44 states. The company was founded in 1938 as a mail-order catalog business offering tractor parts to America's family farmers. Today Tractor Supply logs annual revenues of more than $3 billion.

TQHP already sells its products online and has an agreement with a Connecticut distributor to sell its products in feed stores in Connecticut, Massachusetts and Rhode Island.

Last year, after its first season of hay cutting, TQHP had to shut down temporarily, but this year it will be able to ship hay in the off-season and make other products, Warren said.

The quality of the hay produced at TQHP has exceeded his and others' expectations, and there is a huge market for its products, Warren said.

To begin the processing, long-strand alfalfa is cut but does not touch the ground as it is loaded into a trailer using the harvester.

The method includes a patent-pending process for drying the hay that is similar to baking a pizza in a convection oven. Traditional hay processing takes nearly five days, but the new method cuts the process to less than four hours.

Warren said TQHP buys alfalfa from area farmers, mainly in Seneca and Ontario counties, but is willing to travel farther for a certain type of alfalfa, called timothy.

The main market for the hay is the equine industry, and TQHP expects to sell mainly in U.S. and Asian markets, he said. In addition, the leaves and bits of hay blown off during the drying process can be used in pet food, chiefly for dogs, gerbils and rabbits.

The firm's methods have received praise. The project was listed as one of Hay and Forage Grower magazine's Top 10 stories of 2008, and others have dubbed the product "Godiva hay."

Susan Noble, executive director of the Cornell Agriculture and Food Technology Park, said she was somewhat surprised but delighted that Tractor Supply recognized the value of the TQHP product line so quickly.

"It is frequently difficult for a large company to respond to a new product in such a timely manner," Noble said, adding she attributes the local firm's success to its product line and management team.

"This new process is beneficial not only to the growers, as there is no waste due to weather, but to the horse owners, with a more nutritional food for their animals. It is also an opportunity for other entrepreneurs, since the drying line needs to be near the fields."

So far, nearly $4 million has been invested in the company, Warren said. The funds have come from state grants and private investment, chiefly by the partners.

The partners in the firm are Warren, who has worked as a registered investment adviser and estate planner; Michael Kunes, president of Castle Harvester Co. Inc. in Seneca Castle; John Davie, owner of J. Edward Davie Farms Inc. in Geneva; Charles Long, president of Long Milk Haulers Inc. in Penn Yan, Yates County; Neil Simmons, owner of Simmons Vineyards in Penn Yan; and Mark Wickham, a human services agency executive.

Its leaders say TQHP will put New York on the map as the premier processor of top-quality hay using a method of harvesting that is faster than traditional methods and yields a higher-quality product. / 585-546-8303


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