Using corn as a 'lifeline'
Month Day, Year
by Arvin Donley
After struggling through a difficult period in which its financial condition deteriorated, the arrow is pointing up for LifeLine Foods, St. Joseph, Missouri, U.S.
Since the hiring of Chief Executive Officer (CEO) Robin Venn three years ago, the financial picture for the company has improved dramatically, a new corn milling unit has been installed, and plans are being made to significantly increase capacity for masa flour production.
Matt Gibson, vice-president of sales and technical services for LifeLine, said Venn, who had been an executive at American Italian Pasta Company, in nearby Excelsior Springs, Missouri, for 12 years prior to being hired by LifeLine, deserves credit for changing the culture at the company.
“One of the things that Robin brought on board with him is a code of team behavior,” Gibson told World Grain during an interview at the company headquarters. “It’s nothing fancy, but it works. He came in and said first and foremost we are going to focus on results.”
And the results reflect a company that’s bouncing back. Although LifeLine, a private company, chose not to divulge its recent financial results for this article, progress is being made. In 2013, Lifeline completed an equity drive, which totaled $25 million that paid for the new corn mill installation and paid down outstanding debt. At the same time, LifeLine refinanced its short-term working loan, which totaled $20 million.
“Since then, we have received new financing on both our short-term working loan and our long-term note — with both at improved terms for the business,” Gibson said. “Both of these events provide real, demonstrated confidence in the performance of our business.”
LifeLine, which employs about 150 people, began operations in 2001 when its primary owner, AgraMarke, a cooperative, which at that time consisted of around 300 area corn producers (today it includes about 650 producers spanning the four-state area of Missouri, Kansas, Nebraska and Iowa) purchased a food processing facility in St. Joseph from Quaker Oats. Strategically located on the southwestern edge of the U.S. Corn Belt, the massive 10-story-tall facility, which was originally constructed in 1928, sits on 38 acres of land with 850,000 square feet of manufacturing space.
The location of the plant gives LifeLine easy access to four major highways (Interstate 29, U.S. Highway 36, Interstate 35 and Interstate 70) as well as rail service via the Burlington Northern Santa Fe and Union Pacific. Gibson noted that 90% of the finished products from the LifeLine plant are shipped in bulk via rail and pneumatic trucks to customers throughout the United States while about 10% is shipped in bags and totes by trucks and boxcars.
AgraMarke, which stands for Agricultural Research, Administration, Marketing and Education, was formed in 1996 when 20 producers, land owners and agriculture-related businessmen in the St. Joseph area developed a cooperative with the primary objectives of expanding agricultural markets and providing a viable business that would stabilize the agricultural economy of the community. The concept was to pool the group’s knowledge, production and resources to grow identity-preserved grains, focusing on research and the newest agricultural technologies.
“It started out as a group of guys trying to figure out how to add value for their corn,” said Alycia Nelson, sales analyst for LifeLine. “They realized that getting $2 per bushel (the price of corn at that time) wasn’t going to work.”
Using the motto “Corn is our LifeLine,” LifeLine Foods takes high quality corn harvested by the producer-owners and processes it into nearly a dozen different products including everything from snack meal and masa flour to industrial uses such as binders and ethanol.
Five years after LifeLine was formed, in 2006, its farmer owners decided to team with Wichita, Kansas, U.S.-based ICM, Inc., a leader in ethanol facility design and engineering, to become a corn ethanol producer. Ownership of the business is split with the farmer owners holding a 51% equity position and ICM owning 49%.
In recent months, an agreement was reached in which ICM is leasing the ethanol facility from LifeLine. “They run and operate the facility and pay us rent and profit share every month,” said Gibson, who noted that the plant produced 50 million gallons of ethanol in 2013.
The part of the corn kernel that isn’t used by LifeLine for food ingredients is shipped to the plant’s ethanol production section, assuring there is no waste.
“We pride ourselves on being a zero discharge facility,” Nelson said. “We capture all the discharge and are able to put it back into the ethanol plant and make a finished product out of it whether it is ethanol or DDGS.”
LifeLine also is proud of its SQF (Safe Quality Food) certification. “We were certified in the fall of 2012, which was a really big task,” Gibson said. “Then we were recertified in 2013, which was also the time we were building the new mill, and we’re getting ready for our second recertification this fall.”
The company is also certified as Kosher, gluten free, allergen free and is USDA certified, which means it can participate in the USDA food aid programs.
“We do full microbe testing on all our food products going out,” he said. “Not every pathogen known to man, but certainly total coliforms, salmonella, molds — all kinds of stuff like that. We have a full-time microbiologist.”
New Corn Mill
More than $8 million was invested in the new corn mill, which significantly improved LifeLine’s milling efficiency.
Phil Jilka, director of milling operations for LifeLine, noted that this is the first new corn mill built in the United States in many years. It features corn milling equipment from Bühler Inc., Minneapolis, Minnesota, U.S. The contract with Bühler was signed in December 2012 and the mill began operating in the spring of 2014. The process included a one-week shutdown and a two-week shutdown in which equipment was installed and the tempering process changed.
“When I came here there were discussion about smaller projects that to me were bandages,” he said. “I said, ‘Why don’t we just put some money into it and do it right?’ It snowballed after that. It got to the point where they decided they wanted to redo the whole mill. Improving yield and efficiency and improving food safety were the main drivers behind it.
“We weren’t going to continue to survive as a company with the old mill, with food safety being the issue it is, and the need for efficiency and being a ‘green’ facility.”
The new mill includes 16 roller mills, including four double highs. Stock then is fed through Bühler Sirius MPAK plansifters, which feature Novapur sieves.
“The temper process is very short so a lot of moisture ends up going through the sifter, but it’s built for that,” Jilka said. “We have had no issue with mold or condensation in the sifters at all.”
He noted that one unique aspect of the new mill is that the mill flow is inverted. “The roller mills are near the top floor and the product is gravity-fed down to the sifters,” Jilka said. “We use pneumatics to take it back up to the roller mills and aspirators. It’s a bit upside down but it works fine.”
The improvement in milling efficiency is perhaps the most impressive aspect of the new mill, he said.
“We’re getting the same amount of product out of 45 tonnes of corn per hour as we were with 65 tonnes per hour,” said Jilka, who also worked at AIPC during Venn’s tenure there. “It wasn’t a volume upgrade it was an efficiency upgrade.”
The corn mill, like all the other food production units at LifeLine, has a quality control lab that can perform a wide variety of tests.
“Phil’s guys have their own lab where they can inspect things such as particle size profiles or moisture,” Gibson said. “Then we have a centralized lab for all our products before they leave the plant. In that lab we can also do specialized research projects for customers. For one of our binder customers we created about a dozen different binders for their evaluation. We usually don’t do a lot of research in there but we do a lot of quality assurance.
“We also have a corn variety program. When different corn varieties are harvested our lab can evaluate them, for milling in particular.”
Gibson said two employees key to LifeLine’s success work in that lab — Raul Ayala, who is in charge of masa, and his wife, Veronica, who is a microbiologist.
One of the advantages of being a farmer-owned facility is that the producers are in direct communication with the company’s merchandisers regarding the quality of the corn needed to make a particular end product, Gibson said.
“If we’re involved with a specialty program we will let them know if we need a certain variety of corn planted,” he said. “We’re in constant communication with them, and they are cooperative because it is an extension of their business. We may say, ‘We need really dry corn so can the next 60,000 bushels you bring in fit that criteria’ and they will help us out. They know we have pretty high quality restrictions. If it doesn’t meet a certain standard, they understand we can’t take it.”
He said producers like bringing corn to LifeLine because it has the “fastest unloading system in the area.” Besides having a large dumping pit, the company uses the fastest mycotoxin testing procedure available, according to Gibson.
“We’ll take a sample from the truck and make them pull over while we’re testing,” he said. “Then we’ll give them a yay or a nay and we can unload about 1,000 bushels in 18 seconds, so it really rolls.”
The fastest growing business unit for LifeLine is masa flour. Gibson noted that in the last two years masa sales have jumped nearly 350%. He attributes that growth in part to the significant increase in the United States’ Hispanic population, a trend that is expected to continue for the foreseeable future.
He said LifeLine is nearing capacity in masa flour production on its current line so an expansion in that area is imminent.
“The focus the last year and a half has been on the corn mill,” Gibson said. “We now have that where it needs to be so our next focus is on masa. We have plans in place to build a new masa flour mill. Not tear out the old one, but to add another one. We have space like crazy in this facility. We’ve already had people come in and do the engineering so it’s just a matter of deciding when do we pull the trigger? When is the market right? When do have the financing? When are the customers ready, etc.?”
He said 80% of the masa it makes comes from white corn, and 20% is made from yellow corn, which is the industry standard.
Challenges and opportunities
Besides deciding when the time is right to build the new masa flour mill, Gibson said the company faces several other challenges/opportunities going forward. One is looking for more opportunities in specialty markets, such as table grits, for instance.
“We need to evaluate the markets, make the right decisions to fill those gaps, have the assets in place, and then execute,” he said. “We will work with customers to get it right.”
The other major challenge LifeLine faces is dealing with an increasingly stringent regulatory environment that includes complying with the Food Safety Modernization Act, but Gibson said the company is well-positioned to address those types of issues.
“We are doing well, because we are SQF certified,” Gibson said. “We haven’t seen anything yet in the promulgated rules that are significantly above and beyond what we currently have in place.”
Standing outside LifeLine Foods’ headquarters in St. Joseph, Missouri, U.S. are, from left: Matt Gibson, vice-president of sales and technical services; Phil Jilka, director of milling operations; Raul Ayala, director of masa, and Alycia Nelson, sales analyst. Photos by Arvin Donley.
Here is a list of products that LifeLine Foods produces at its facility in St. Joseph, Missouri, U.S.
Brewer’s grits for beer manufacturers.
Snack meal, the primary ingredient in processed foods, baked goods and dry mix applications such as corn bread, corn-baked products, cheese puffs and other extruder snacks.
Corn meal, used in the baking industry to make bread and bread ingredients such as hushpuppies and corn dogs.
Masa flour, used in the production of Mexican-style foods such as tortilla chips, tacos, tortillas and tamales.
Corn germ, which is used in animal feeds.
Corn oil, which is further refined for food grade use in products such as cooking oils.
Ethanol, the most widely used renewable biofuel in the world.
Distillers grains, which are primarily used as animal feed.
Binder, which is used in everything from foods and batters to plywood, fertilizer and charcoal briquettes.
Condensed distillers solubles, primarily used as a high quality feed supplement for cattle.