The Unlikely Milk Man
Here is a story I wrote that just came out in the Spring 2014 issue of Edible Portland!
Photos by Sam Beebe, Ecotrust
Chuck Eggert of Pacific Natural Foods became a dairy and meat processing mogul in the service of soup and soymilk
It’s a surreal scene. A cow, of its own volition, enters a turnstile and walks down a narrow channel into an enclosure, not unlike the tight quarters of the new full-body scanners at the airport. Machinery surrounds her on all sides. Two red laser beams appear, scanning her udder to locate a nipple. Then, a robotic arm emerges, clutching a hose that bathes each teat in sanitary solution. The arm grabs a new hose, which it suctions around a clean black nipple and then repeats with each udder until this mama cow is fully fastened to the machine. She looks placid, chewing grains that the machine doles out.
A monitor scrolls through stats as the cow’s milk begins to flow. How much milk per teat by the pound? What’s the somatic cell count (an industry measure of milk quality that counts pathogenic bacteria)?
Behind a Plexiglas pane nearby, Chuck Eggert gazes at the numbers flying by with a look of pride. A tall man in his mid-sixties with friendly eyes, often in a sly squint, and white puffs of hair above each ear, he’s recalling a conversation he had with George Siemon, CEO of the farmerowned cooperative Organic Valley.
“I said, ‘George, did you ever think there’d be a time when to milk a cow, you’d just need a book and a chair?’” He laughs.
“This herd produces milk in the range of a conventional dairy, on an organic diet with one of the lower somatic cell counts in the state,” he says. “They choose whether they want to eat. They choose when they want to be milked. Nothing ever touches the cow except the robot.”
This futuristic blending of technology with a bucolic farm scene is one of many experiments in action at Mayfield in Aurora, one of three organic dairies that are part of the Pacific Natural Foods’s solar system.
Pacific has come a long way since its founding in 1987, when Eggert began experimenting with tofu and soymilk. Today, Pacific could legitimately be called the Campbell Soup of the natural foods world. Sixty-seven percent of the company sales are in soups and broths: creamy tomato, roasted pepper, vegetable lentil and chicken. The rest are in nondairy milks, meals, sides, sauces and stocks.
Pacific is one of the top-selling natural foods brands—with double-digit growth for the past ten years. The company now has eleven lines in operation 24 hours a day, seven days a week processing raw ingredients into 75,000 gallons of soft cooked foods a day. A leader in sustainable packaging and energy efficiency, it was one of the first companies to use recyclable aseptic containers, which look like large juice boxes and keep the product fresh without preservatives.
With everyone from WestSoy to Soy Dream to Silk owned by multinationals like Heinz and Hanes, Pacific Natural Foods has been positioned to sell to a multinational for more than a decade. Instead, the company has remained fiercely independent and kept all of its operations in Oregon, even as the majority of its products go outside the state.
“I believe their annual revenues are significantly in excess of $100 million,” Jerry Gardner, Oregon Department of Agriculture’s Business Development Manager, says cagily, since Pacific keeps the info under wraps. “Pacific Natural Foods is one of Oregon’s larger food processors.”
In order to support their growth, Eggert and Pacific have become relentless innovators in building and understanding the whole supply chain and ancillary operations the company needs to put soup in a box. It’s what the industry calls “vertical integration.” While the rest of Oregon has lost one slaughter facility after the next, and distribution and processing for sustainable meat producers has become a logistical nightmare, Eggert has brought most of the operations in house. His farming arm, Eggert Family Farms, holds 4,000 acres across 15 parcels of land, growing mostly organic grains in rotation for its 1,200 organic dairy cows and 100,000 pasture-raised chickens. The Eggert family owns three dairies, several chicken rearing facilities, feed barns and recycling warehouses, as well as an Animal Welfare Approved and Oregon Tilth organic-certified slaughter facility that handles up to 3,000 chickens, 45 cows, and 12 hogs a day—for both Pacific and independent meat producers.
“Pacific Foods is stretching the boundary of what’s possible, especially as it relates to incorporating sustainable practices into large-scale food production,” says Amanda Oborne, Food and Farms director at the nonprofit Ecotrust, which publishes Edible Portland. “They are innovating and testing the technology that could ultimately make it possible for independent producers at all scales to be competitive.”
A mix of public-private partnerships and bullheaded self-determination, high technology and gut instinct, unfettered curiosity and calculated risk, Eggert and his team are creating their own universe that operates a lot like an efficient local food system. This means that while most people identify Pacific as a pioneer in nondairy milks, with a loyal army of “special diet” followers, the business may actually be paving the way for local food to become more affordable and available for a lot more people.
The Missing Middle
Look at a package of Pacific Natural Food’s popular tomato soup, and you might be surprised to learn that the first ingredient is milk. The dairies are a surprisingly integral component of all that happens at Pacific. They also provide an example of full utilization, which is to say, using every bit of an animal, from nose to tail to dung.
On a grey day at Mayfield, the rain spitting down, around 450 cows roam between barns and pasture. Around 50 of the cows are milked by the De Laval Robot. The rest visit another parlor where workers milk them in shifts.
In the late 1990s, Pacific was growing at breakneck speed, their creamy soups were top sellers and organics was a major priority. But, Eggert says, “our ability to produce was limited by how much milk we could get.” At that time, there was virtually no organic milk in the Northwest, and Pacific was purchasing it by the truckload from Wisconsin. So Eggert dove into the void.
“With the dairy, I don’t think we understood that [managing] it is not about the milk, it’s about the manure,” he says looking back.
The company struggled with manure management and water-quality violations, as streams and other waterways around Mayfield became contaminated. Then Eggert and team transformed their problem into an opportunity.
The key to turning this around sits near the milking parlor in a building filled with pipes and screens and levers, like some kind of Rube Goldberg cappuccino maker. This contraption transforms cow manure into nitrogen-rich fertilizer and bedding material. Custom built by one of the company’s employees, this massive “reverse-osmosis treatment” was a major investment, even by the scale of their operation, that means that none of the manure leaves the farm and Pacific reduces much of the waste by capturing solids for composting.
The cows produce all the milk Pacific needs. A separate feed operation grows much of the animal feed needed and provides an outlet for okara, a sludgy byproduct of making soymilk that accumulates at Pacific at a rate of eight tons a day. At the end of their lives, the dairy cows become beef broth, going to Dayton Natural Meats, a slaughterhouse owned by the Eggerts, and then back to their food processing campus in Tualatin.
The same drive that led Eggert to found the organic dairies sent him into the chicken business seven years ago. He couldn’t find enough supply. Through a partnership with Petaluma Poultry, Pacific began learning about breed selection and rearing. It invested in infrastructure—helping restart the oldest family-run hatchery west of the Mississippi—and struck out on its own.
Many of Pacific’s organic chickens are raised by other people in small flocks within 30 miles of their Tualatin main campus. It’s part of Pacific’s larger effort to play the role of aggregator more often and to rebuild infrastructure that helps mid-size independent farmers bring their products to market.
“There’s a young kid down here who sells fresh produce. Selling it to one store isn’t too hard. Selling to two stores becomes more difficult. Selling to three stores becomes a problem,” Eggert says, like some new age proverb. “In the case of selling to New Seasons, he’s not a farmer anymore; he’s also a distributor. People need that middle ground which can aggregate things up and get them to the stores.”
“The biggest problem with Oregon agriculture is that we’ve destroyed the infrastructure of getting things from the farm to the market,” says Eggert. “That’s what we’re trying to sort out: How do you recreate some of these things?”
Poultry processing has been such a thorn in the side of small-scale producers that the nonprofit Friends of Family Farmers lobbied for an exception, passed in 2011, allowing operations with 1,000 or fewer birds per year to slaughter chickens outside the strict and expensive USDA-approval system. Will Fargo, an Oregon Department of Agriculture food safety specialist, also notes that nineteen “typically small on-farm operations” have exemptions to process a limited number of birds with occasional USDA inspection, although the finished product cannot enter interstate commerce.
Essentially, small-scale producers are fighting with moderate success for their livelihoods, but the mid-scale producers, the ones who could raise enough organic pasture-raised chicken to supply, for example, large school districts or a not-so-expensive restaurant chain, are the ones left without.
“The only way we could get an Animal Welfare Approved meat plant is to do it ourselves,” Eggert notes. Dayton Natural Meats is the only poultry slaughtering facility in Oregon under continuous USDA inspection. Along with meeting Pacific’s needs, the facility does “custom-processing” for independent meat producers.
The Question of Scale
Eggert is so prolific that it’s almost impossible to keep track of all his operations and side projects. He is part of a joint venture with Japanese processing giant Morinaga to manufacture GMO-free tofu products for the Japanese market. He own Champoeg Wine Cellars. He even cofounded New Seasons in 1999 and retained a percentage of ownership through 2012, serving twelve years on the board as the grocery grew from one to eleven locations. At New Seasons as at Pacific, Eggert has continued to be a guiding force in the growth of natural foods from an outlier to a main stage player.
All of Eggert’s ventures are much larger than what most people envision as sustainable food. His scale raises questions about how big you can get and still stay true to the spirit of local and organic. It also creates an opportunity to think harder about what it would mean for producers of various scales to complement one another within a regional food economy.
“The trend we’ve seen historically is that when companies scale to large sizes, they tend to see things like labor or animal welfare as cost centers; there’s a desire to be efficient from a business standpoint, and to be profitable they tend to want to cut costs. That’s what every business school teaches you,” says Narendra Varma, founder of Our Table Cooperative in nearby Sherwood, a collective of small-scale farmers and producers that is approaching some of the same questions around processing and distribution as Pacific. “If a company can maintain its internal value system, whatever that might be, and maintain that at scale—if it can take care of people, natural resources and the environment, pay people a living a wage—there’s nothing per se wrong with scale.”
One thing working for Pacific is its status as a private company. There are no shareholders to demand greater profitability at the expense of its environmental and social values.
Pacific’s size and the demands of a growing operation have incentivized other farmers to convert acreage to organic, inspired small poultry producers to raise birds on pasture, and led Eggert to make infrastructure investments like the meat processing facility in Dayton. But it also consolidates a lot of power and influence in his hands. As with the Dayton facility, Eggert’s decisions literally change the landscape of Oregon agriculture.
Another gift of being a private company: Eggert has the ready capital and freedom to do many of the experiments he dreams up, big or small. He is helping Dr. Richard Scheuerman of Seattle Pacific University grow some of Oregon’s original frontier-era grains. “Chuck was among the first to see the significance of reintroducing the first grain ever raised in the Pacific Northwest—the White Hudson’s Bay Lammas, a soft white winter wheat brought out here by Sir George Simpson in 1825,” Scheuerman reflects.
In 2012, Chuck and his wife, Louanna, donated $5 million to their alma mater, Washington State University—the only university in the United States to offer a major in organic agriculture—to build a 30-acre organic farm designed by landscape architect Laurie Mooney, then a graduate student, now a Pacific employee. The organic farm showcases cuttingedge technology and innovations like water sensor technology and alternative energy generation in harmony with principles of permaculture, a teaching kitchen, a sustainable and heirloom seed facility, and more. Mooney is now working to bring Pacific even closer to a closed loop system, in which all waste is fed back as an asset to be maximized by the company’s operations.
WSU students are regular fixtures on Pacific’s sprawling campus, helping improve animal health and processing efficiency, supporting wetlands restoration and learning about how the business operates. It’s one way for Eggert to encourage a younger generation of organic entrepreneurs.
“We’re not organic zealots. We’re not preaching to people. What we believe is organics is another tool to feed people, and happens to be a good tool. There’s so much to learn with it.”
“If you read about chickens in the 1900s, they talk about planting plum trees around the chicken yard. In the summer it provides shade and in the fall they can eat the plums. How do you go back to interrelate these things so that they all flow together?” he asks. You can imagine the wheels are already turning on his next project.