Exporting Forage: Barr-Ag Is In Its “Hay Day”

For Barry Schmitt, the disastrous 2011 earthquake and tsunami in Japan hit close to his Olds, Alberta-based business. “We were shipping hay to one of our customers in Japan when the tsunami hit,” says the owner of Barr-Ag, a hay producer and export company. According to Schmitt, he and his staff had been in communication with the customer like normal, then, suddenly, nothing. As news of the catastrophe and its scope began to break—some 16,000 people were killed and it caused a nuclear reactor meltdown—Schmitt feared the worst. “These are friends of ours who we go and see, and talk to. We were worried.”

Barry Schmitt says a factor that’s contributed to the company’s recent success has been use of its “hay cloud” software system that can track hay, down to the individual bale, and match it with customer requirements.

Eventually, Schmitt says, “We talked to one of the managers. He had been awake for 40-some hours straight during this whole tsunami and earthquake, and because his was one of the bigger dairies in the area, [the company] had its own generator. So, they were bringing in all the neighbors’ cows to milk them.”

Relieved to have heard from his customers and friends, Schmitt, however, remained concerned. So soon after the 9.0- magnitude earthquake and devastating tsunami, he understood that the condition of these dairies and their cows would be a low priority during Japan’s recovery. Yet, Schmitt saw how he could help, even in what he calls “a small way.”

His customer, says Schmitt, “was just working for everybody’s greater good, giving of himself, and so we felt that the least we could do was send some forages. So, I called some of my local farmers … and some of them donated hay, and some of them donated cash. The importer paid for the freight. We were able to get it over there and distribute it to the farmers.”

Hay Cloud

For Schmitt, who works with many customers some 5,000 miles away, the distances he exports his goods can, ironically, make the world seem a little smaller. Since he started Barr-Ag in 2004, the company has shipped to customers in the Middle East, Europe and the U.S., but it has focused mainly on an Asian customer base, the predominant clientele being horse owners, dairies and beef operations in Japan, Korea, Taiwan and China.

It’s a demanding business. Freight costs required to reach distant markets necessitate high-quality forages, and it’s that quality that Schmitt says has earned Barr-Ag a reputation for dependability and, in turn, fueled its growth—the company has increased production by almost 10-fold in 11 years.

One of the largest hay exporters in Canada (by some measures the largest), the company shipped some 60,000 metric tons of mostly timothy grass and alfalfa in 2014. Much of that product—about 60%—the company grows itself on 25,000 to 30,000 owned and rented acres each year. While Schmitt says he values his suppliers for the hay and grass they provide, it’s much easier logistically to track the hay Barr-Ag grows.

That’s in part due to what Schmitt calls his company’s “hay cloud system.” It’s a proprietary software suite that allows each bale to be tagged in the field and information about it—date, location of harvest, moisture levels and other quality indicators—to be entered into the system. Each bale can then be tracked, says Schmitt, “and that allows our salespeople based in Vancouver to know what we have here in Olds and match that to our customers’ needs.

“We spent about a year building and testing it,” Schmitt continues, “but what would take us hours and even days to do before—calling back and forth with our sales office, paperwork, hunting in our warehouse for the right bales—now takes minutes [and] the click of a couple of keys on the computer.”

Growth via China

Prospects for future growth seem good. “An upward movement of the poorer class, the middle class, in developing countries will continue to have an effect on protein consumption,” says Neil Blue, a provincial crop market analyst with Alberta Agriculture and Forestry. “That should continue to increase demand for forages,” and according to Blue, bode well for producers, such as Barr-Ag.

Ronan and Tyler Schmitt, Barry’s youngest and oldest sons, respectively, bag a hay sample for moisture testing.

According to numbers from Statistics Canada, Alberta is exporting the most forages of all the country’s provinces. Those exports grew by almost 100% from 2010 to 2014, about the same as in Canada as a whole. In 2015, however, shipments of forages were expected to fall somewhat in both the U.S. and Canada, due to a number of factors, including an economic slowdown in Asian countries. Even so, says Blue, growth is expected to resume, in large part due to China’s wakening hunger for imports of alfalfa and, just recently, timothy grass.

Barr-Ag is poised to take advantage of that new market. “At one time we were 100% timothy and 100% Japan, but we saw some risks in that market as it started to mature,” says Schmitt. So, the company began to diversify, making inroads into Korea and “began to push into China with our alfalfa exports.”

Then, the Chinese market officially opened to Canadian timothy in the summer of 2014, and Barr-Ag was the first Canadian company to ship to China. Schmitt even hired an ag nutritionist “to go and put on seminars [in China], teaching the various dairies about Canadian timothy.

“We see a big opportunity for timothy to get in the market,” continues Schmitt. “It’s good for the rumen. It’s good for the dry cows. It’s good in the milk production … and Canadian timothy—because of warm days and long, cool nights—is considered superior.”

“Looklng Sideways”

Like most producers, Schmitt has plenty of incentives to grow. In his case, five in particular, all of whom, incidentally, have names—Tyler, Taylor, Riley, Ronan and Rayelle—and just so happen to be his children. Ranging in age from 12 to 25, each has expressed interest in joining the family business one day.

Tyler, the oldest, already has, while Taylor is even learning Mandarin, China’s official spoken language. Says Schmitt, “I think he has eyes on going to China to secure that language, and maybe help develop our Chinese business.”

In many ways, says Schmitt, having the kids come on board would be a dream come true for him, as well as his wife, Nancy, to whom he gives much credit for the success of the company. (“I couldn’t have done this without her support,” he says.) The prospect, however, is also a wake-up call.

“When you start a business and you’re trying to make a living, you’re trying to survive. You’re not thinking about the future,” Schmitt says. “You’re not thinking about succession, and really, we just had our head down. But as the kids get a little bit older, you start looking sideways. I have lots of friends who are on 100-year farms, and they’re now fourth generation. We didn’t have that, but I saw this as, maybe, my opportunity to start something that could last more than one generation.

“Growing a business,” he continues, “takes a lot of different factors. You’re going to have to have the right people, and we have many, many terrific employees, and you’ve got to have the right product that people want. There’s access to capital and access to financing.

“And,” he pauses, “it doesn’t hurt to have a growing family and a really wonderful wife. They keep you going.”