Verity shifts focus to improve bottom line
Jodi Schwan, jschwan@sfbusinessjournal.com 11:07 p.m. CDT June 24, 2014
verity
A Sioux Falls-based company is hoping to capitalize on increasing interest in sustainable farming and nongenetically modified food.
Verity Corp., which went public in late 2012 and trades over the counter, hasn’t made money since then but is starting to cut its losses.
The company sells farmers a mix of products and services that focus on soil and crop health and decrease their dependency on fertilizers, herbicides and pesticides.
Verity reported an operational loss of $532,964 for the first six months of its fiscal year, which ended March 31, compared with a loss of $804,681 for the same time last year.
“I believe GMO to non-GMO is the hottest sector in the marketplace right now because it has such a domino effect in the economy of food,” said Richard Kamolvathin, who became president and CEO last fall. “It’s on the forefront and on the tongue of anybody that’s eating today. It’s an actual movement.”
Kamolvathin assumed leadership of the company after founder Duane Spader retired and became a company director. Verity also restructured its balance sheet and reduced debt by $3.1 million by transferring some land and buildings it had been using back to Spader, who no longer is involved in day-to-day operations.
Spader took over running the company in mid-2011. His brother, Vincent, founded the business in the 1970s after he nearly died from an accidental chemical spill while planting.
Verity has facilities in Georgia, Iowa and in northwest Sioux Falls near Interstate 29 and the Renner exit.
The company has focused on core products to help farmers transition their operations away from genetically modified organisms.
“We take them from soil to plate, how to segregate grains, where to ship them, how to process them,” Kamolvathin said. “Our goal is to become the standard of non-GMO production, and we believe with the interest and the calls we are that company.”
Verity is hearing from major national retailers and commodity companies interested in finding access to non-GMO grain, he said.
“General Mills says it’s going to label all their Cheerios non-GMO,” Kamolvathin said. “Now, you have all these mainstream farmers who are going to be stuck. They’re going to be demanded by their consumer or their buyer to produce non-GMOs.”
Verity reduced its product line from several hundred products to core products for soil nutrition, fertilization, livestock and aquaculture, as well as biological enhancers and water revitalization units.
“The core business is the family farmer and really focusing on the non-GMO products,” chief financial officer Ken Wright said. “In the past, we’ve been a distributor of other products that have small profit margins, and we’re really concentrating now on the Verity products we produce, and they, of course, carry a higher margin.”
Mark Weinheimer, who farms wheat, corn and sunflowers north of Pierre, said he has used some Verity products for years.
“I think we’re making improvements in soil health,” he said. “It’s kind of tough to get raw numbers, but I think we’re raising a more nutritious product for the consumer.”
A group of like-minded farmers in the region meets several times each year to talk about using Verity products and compare their experiences, Weinheimer said.
“We do things a little different than the mainstream,” he said. “The way I look at it, if I’m improving the soil and if I can fit that into the budget, it’s going to pay me back through the normal market change.”
Verity executives believe in that potential return, too. The company has grown to 35 employees and plans to add more while working with farmers to test the products in the field.
“It’s long days, but it’s rewarding because we’re actually getting somewhere,” Kamolvathin said. “For me, this is not about money or company. This is about providing good food for my children and grandchildren, to make sure we leave a legacy behind that someone else can pick up.”
Link:
www.argusleader.com/story/news/...mprove-bottom-line/11326583/