There's no secret formula for developing a successful niche marketing program, says Jeff Fultz. As he sees it, you start by finding a few buyers who need what you have to sell, then couple a good product with good service.
“It also helps if you're doing something that not a lot of other people want to do,” says Fultz.
With his wife, Lisa, he operates a straw buying and selling service as a companion enterprise to their 750-acre corn and soybean farm near Ohio, IL.
Fultz contracts with farmers in three states to bale straw following the wheat harvest. He typically starts the season in early June south of St. Louis, MO, then works his way north through central and northern Illinois and southern Wisconsin. Depending on weather during the growing season, he usually finishes up in early to mid-August.
Last year he harvested 10,000 acres of straw, baling 20,000 big square bales weighing 1,100-1,200 lbs each.
He markets roughly two-thirds of it to a mushroom plant in nearby Princeton, IL. The plant was Fultz's first customer when he started the straw business in 1999. Most of the rest is sold to large dairies looking to boost roughage content in rations to accommodate feeding distillers grain.
The mushroom plant and dairy customers require different kinds of straw. The plant wants a long-stemmed product for composting, while dairies need short-stemmed straw that will mix well in their TMR mixers.
“They're also a little more particular about quality,” says Fultz. “The mushroom plant doesn't want junk, but the dairies want straw that hasn't been rained on, that's been kept in a building or under a tarp until it's delivered. They also want a bright-colored straw, and they want it to be weed-free.”
Meeting the quality requirements of the two markets requires a fair amount of coordination with the people doing the combining.
“I know what kind of combine is being used on each farm and how each combine operator goes about the job,” he says. “I usually have a pretty good idea of what the straw is going to be like before the wheat goes through the combine.”
Transportation requirements also vary by market. Straw is delivered to the mushroom plant as soon as it's taken off the field. But Fultz stores the straw destined for dairies in buildings or under tarps at his farm throughout the year.
“The dairies contract for a year's supply and then call us for deliveries on an as-needed basis,” he notes.
His equipment inventory now includes three Hesston big square balers and three semi trucks with flatbed trailers. He pays farmers a per-bale price for their straw, and charges customers on a per-ton basis.
“When we started, we were paying farmers by the ton,” Fultz reports. “One of the problems with that was we might load half a trailer at one farm, then finish loading at another place. Getting a weight on the first part of the load required an extra trip to the scales with the truck and it also meant more record-keeping. It was too complicated.”
He also sells straw to construction companies.
“They use it for conservation practices and landscaping,” says the grower. “A few years back, we sold some bales to a windmill farm. They would put three bales together to make a table they could use for assembling the windmill rotors on their site.”
Fultz expects other marketing opportunities to develop as well. Last year, he was contacted by an Iowa company planning to build a plant for converting baled switchgrass into biomass.
“We don't have a lot of the particulars yet, but it sounded interesting,” he says.
The straw business is a good fit with his farming operation, he adds.
“With the size of our farm, we wouldn't be able to justify owning two 200-hp tractors with front-wheel assist. Likewise, we wouldn't have our own trucks for hauling grain. But operating this way, we can spread the cost of equipment ownership over the two businesses. It makes us more efficient.”