Hog-producing company says it’s in growth mode

October 23, 2007 09:49 pm

— By Melissa Dunson
mdunson@joplinglobe.com
LAMAR, Mo. — T.J. Onstott is part of the new face of family farming in Barton County.
In 2006, he created the Cayuga Creek Farm on his family’s farm and has contracted with Synergy LLC to raise pigs to fill in some of the blank spots in the family budget. He also is a crop farmer who raises cattle.
“I went to school, but always wanted to find a way to come back to the farm,” Onstott said.
Onstott, who has a business degree from Missouri Southern State University, is raising 2,600 nursery pigs for 45 days at a time. He raises about seven groups of the 3-week-old hogs each year.
Onstott said he is simply trying to make a living and would rather not talk about the controversy associated with the new hog farms in the county that have pitted neighbor against neighbor.
Those opposed to large-scale hog farms, such as the Richland Township zoning board, say that Synergy and another company, Kenoma, have connections with large corporations that use Barton County resources to benefit investors in other states.
Synergy recently opened the doors to several of its contract farms, including the contested Richland Township farm, to community leaders in the area.
Dan Cross, general manager of Synergy, said his company isn’t trying to disguise its corporate connections by giving individual farms separate corporate names, but that decentralization equals better business for Synergy and the company’s contract growers.
The company is in a growth mode. Synergy currently has 6,200 sows and nursery space for 20,700 pigs. In one week, Synergy weans 2,900 pigs, hauls 2,700 pigs from Missouri to Iowa for finishing, and sends 2,600 pigs to market.
Synergy had $2.17 million in gross sales in its first year. Cross said this year the company made about $15 million.
In the future, Cross said Synergy wants to have 25,000 sows, 200,000 finishing spaces, and market 550,000 pigs a year. Eventually, the company will grow to 100 employees and have $65 million in annual sales.
“The biggest difference between us and other companies is that we don’t own the facilities right now in the way we do business,” Cross said. “They (the farmers) build the facilities and raise the pigs for us. It’s like an aggregate company.
“From a business perspective, we only want to own the pigs, we’re not in the business of owning and managing facilities. And it’s good for them, because the farmer gains equity in his buildings and generates family living money.”
Synergy is a farrow to finish hog producing company based in Sully, Iowa, and is the driving force behind four hog breeding sites and seven hog nurseries in Barton County. The four breeding or farrowing sites hold 6,200 sows. The new farrowing farm, called Kenoma LLC, which cost $3 million, is two-thirds complete in Richland Township. It will house 2,400 sows in three barns.
The pending Kenoma project is what spurred the Richland Township board to establish ordinances against such operation, but construction proceeded anyway. That action was then prompted a lawsuit by the board. It remains pending.
Synergy has 14 finishing sites in Iowa and two in Indiana. Rebecca Haskins, controller for Synergy, said the hogs are finished outside of Missouri to be closer to the Swift processing plant in Marshalltown, Iowa. The meat is sold under the brand names Kroger, Myers and Swift.
A cooperative in Sully started Synergy to preserve its feed business by raising hogs. Cross said the Sully cooperative by 1999 was buying and finishing so many Southwest Missouri hogs that it combined with Barton County’s Missouri Sow Center, Inc. to become Synergy.
Both Francis Forst, the owner of the Kenoma farm, and Robert Rice, another Barton County hog farmer, were involved in Missouri Sow Center. They are now part owners of Synergy. Forst is head of Synergy’s Missouri operations.
Synergy is owned by 11 different farmers, including Forst and Rice. Cross said nine of the 11 are involved in raising pigs as well. Synergy has 38 corporate employees, and corporate offices in Lamar and Sully, Iowa.
Synergy has a decentralized business structure. Farmers contract with Synergy for the hogs. Synergy pays the farmer for use of the farm and the labor to care for the pigs. The farmers are responsible for the manure.
Cross said he didn’t know the return on equity for the farmers, but that finishing sites in Iowa and Indiana should provide a 20 percent return. The return doesn’t include the manure, which can be used as a fertilizer.
Cross said Synergy is currently looking at a site in Southwest Missouri for finishing. Synergy owns and employs workers at the Golden City farrowing site. The other farrowing sites are owned by farmers. Forst said the Kenoma farm will mirror the company’s Golden City site.

Hog operations
Synergy has a 2,400-hog farrowing farm near Golden City. It is constructing a second farm for 2,400 hogs in Richland Township. It has a 2,750-hog farrowing unit near Jericho Springs, two smaller farrowing farms of 500 and 600 hogs in Barton County and seven contract growers. Most of the contract nurseries house about 2,600 hogs.

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