The Sieve: AgCertain, Maytag Dairy Farms and the re-making of Iowa’s bioeconomy

News arrives from one of the great small towns in America — Newton, Iowa — that Ames-based AgCertain Industries has acquired Maytag Dairy Farms, the manufacturer and marketer of the world-famous Maytag Blue Cheese as well as other specialty artisanal food and beverage products, from Midwest Growth Partners, the private equity fund.

AgCertain, located in Ames and Boone, Iowa, provides Organic, Non-GMO and highly certified, traceable specialty oils as well as USP grade glycerin. 

This year in Newton has offered a peek into the future of job creation and bioeconomy, and a cautionary tale.

If “Maytag” rings a bell, it’s probably because of the Maytag washing machines that were manufactured here for generations, until Whirlpool acquired the company and shuttered the massive manufacturing complex and put 1500 people out of work. The malaise led 60 Minutes to describe Newton as the most-broken city in America about 15 years ago, which shows what they know, but a lot of re-thinking and soul-searching took place in the region as they sought their future.

Good news? In the late 2000s, TPI arrived as a major new economy manufacturer, and eventually it employed more than 750 people in town, making wind turbine components and bus bodies. Bad news? TPI halted bus body production, and then the wind turbine manufacturing operation, blaming policy uncertainty over incentives as a factor.

Newton’s revival is likely to be based around three things, one of which has to do with land and two of which have to do with people like yourself.

First, the land, which is the source of the bioeconomy. What makes it special is that the bioeconomy is rooted in it, tied to the land. Those blue cheeses. Nothing moves down the road to Texas because the rationale for the business location is Iowa itself, the land and what Iowans have done with it.

“In my experience, I have developed a deep appreciation for what makes Maytag Blue Cheese so special. Maytag’s success is rooted in its commitment to quality and I believe the company has tremendous opportunity to grow and provide a broader range of products and services to our customers,” says AgCertain CEO Dan Oh.

Second, the way that people are changing.

“Today’s consumer cares more about where their food comes from”, said Oh. “The ability to control the quality of ingredients in our products and produce them in a highly certified and traceable way, provides the certainty which customers value.”

He added, “the intersection of food, feed, oleochemicals, identity preservation and traceability are increasingly intertwined, evermore important to consumer choices, and driving profitability. How we overall do this without far greater cost, with high integrity throughout our supply chain and agricultural systems, while also growing availability of food and other related outcomes like renewable energy and a better environment is the larger problem AgCertain is pursuing. By combining our two Iowa-based companies, we are able to create deeper branding opportunities and expanded product sales opportunities for both organizations.”

Which brings me to the third thing, the problematic one for the bioeconomy, which is to say the problem of The Sieve. Let me use the example of a box of corn flakes, which has nothing to do with Maytag Dairy Farms but quite a bit to do with Iowa.

In a five-dollar 16 ounce box of corn flakes, there’s about 11 cents of corn, and about five cents goes to the costs. The six cents stays in Iowa only if the loan stays in Iowa, which it probably won’t. The money for the inputs, some of that might stay in Iowa, some will go out of state. It would be pretty good luck if six cents stays in the state of Iowa. More will go to local labor, the lower-paying jobs in retail, trucking and so forth.

Where did the rest go? Logistics, transport firms, manufacturers, taxes. Above all, to the financial industry that provides the capital for land, machinery, biorefining, technology development. Where does all that capital get accumulated from? Places like Iowa, towns like Newton. Where does it end up? Centers of capital like Chicago, New York, London and so forth. That’s where the big-paying jobs are, that’s where the money goes.

That’s The Sieve. That’s why you can visit amazing regions for agriculture like northwestern Nebraska and yet in regional towns like Bayard it’s easy to sense the decline. Little stays.

Which is why it’s important that companies like AgCertain are forming. Maytag Dairy Farms has been making a truly American artisan blue cheese in Newton, and created a legacy of providing high quality, small batch, crafted cheese and other specialty products to the business and consumer marketplace. Would be nice to see more of the stream of money staying closer to Iowa, and Newton. 

So, clusters in the bioeconomy are not just about bringing technologies together, or building a commercial plant. Yes, it starts with the new cheeses, artisanal honey products, and honey-based mead. Yes, it is about carbon capture. But it is about money-capture, too. Bringing money in when product is shipped out, instead of shipping the product out and the money with it.

Yes, quite a lot of that is accumulated in Iowa, not everything goes into the international capital pool, but physical products (and especially commodities) need enormous liquidity, trade credit, development finance and so forth. The risks, if unmitigated and misunderstood, can be enormous. Skilled personnel and companies that study and mitigate that risk, and fund the commerce that stretches far beyond the individual field or plant — that’s what we are seeing emerging in places like Iowa. To regional cities like Ames, in the case of AgCertain. But more decentralization is needed. When wealth spreads, risk spreads, prosperity reaches a wider section of society. Everyone benefits, and rural life revives.

There are reasons to work toward this that are not grounded in social sustainability goals such as a broader base for prosperity. There’s a benefit that comes to the financial world when the study or risk and efficiency leaves the towers of the city and becomes closer to the land. 

Dan Oh explains, “The commodity world is not really setup to do relatively higher throughput identity preserved, traceable, quite specific multi attribute-related products. Tracking carbon intensity is challenging enough, and only a small part of the need called for by growing consumer preferences.”

Which is to say, there’s an efficiency in the market when capital flows through entities that are better suited to the delivering on the highly-specific concerns of customers. Where did my ingredients come from? Do they meet my health requirements? Do they meet my sustainability requirements? What assurances do I have?

Indeed, is there another type of sieve at work here, product transferring from a place where we can know everything about it — for example, at farm-level — to a place where we know almost nothing about it — some faceless warehouse where ingredients are mixed until The information about them is lost.

Risk is information. Health is information. Sustainability is information. Products have more than their functional elements, there is the information. There is a role for communities in understanding and transferring that information and claiming a larger share of the value. That’s a part of what companies like AgCertain are working on, why they have “Certain” in their name, for example.

Yes, we are looking for product, we are looking also for certainty. People don’t want The Sieve any more. There’s so much we want to know about Maytag Blue Cheese besides its flavor profile. With the news this week out of Ames and Newton, we’re closer to that goal.