Gone Global

November 6, 2008 06:00 PM

Visit Flowers Brothers' office in little Ty Ty, Ga., about halfway between Albany and Tifton in the fertile southwestern part of the state, and, right away, you hear some surprising things.

Sales reps, all on phones at the same time with different people, talk shipping with chain stores as far away as New York and Boston. Chip Flowers, meanwhile, talks on another phone with his brother and partner, Beau, who is working on their business in the Dominican Republic. Matt Tays, Chip and Beau's lifelong friend and the other partner, walks in the door talking about irrigation pump problems in a field a few miles away.

Life moves fast for these young entrepreneurs. Beau just turned 30; Chip and Matt are a year younger. They've been in business since graduating from college in 2002 and 2003 with degrees in history, computer science and business administration.

Located in an area where peanuts, cotton and tobacco were long the big crops, they opted for vegetables. Just as they were getting established, the U.S. vegetable industry, beset by labor and fuel problems, turned topsy-turvy. They responded by growing offshore.

In the past year, they built a large packing shed in the Dominican Republic (DR). They also established a distribution center in Lake Worth, Fla., to truck vegetables across the eastern U.S. In addition, they still grow snap beans, cabbage and cotton in southwest Georgia, and likely will add corn and wheat next season.

Expansion. Mind-boggling? Maybe, but they don't have much time to think about that. "Everything dictates that the market is global now,” Chip says. "We looked at the DR investment carefully and decided that we could pay it off relatively quickly and be profitable.”

Their DR operation, centered on a new 33,000-sq.ft. facility in Bonao, turns out both organic and conventional vegetables like bell peppers and tomatoes from more than 150 acres of greenhouses under contract, along with some field production. "We're able to save on labor and other costs. Things we've implemented in the DR facility couldn't be done in the U.S. because it would be costprohibitive,” Beau says. "One thing is our sanitary procedures there, which are modeled after confinement hog facilities in the U.S. Employees shower in and are handed pathogen-free clothes. When they leave, they change back into their own clothes. We control the whole environment there to ensure a quality product.”

It also brings other satisfaction. "We employ 300 to 400 people in Bonao. There are four times that many working in the greenhouse operations,” Beau says. "We pay very competitive wages. We helped them remodel the school and hospital. We have a direct impact on the economy.”

With a stable government, efficient transportation and a good climate, the DR is an attractive investment, Beau says. "People wonder about hurricanes, but the country has high mountains that shield those hurricane winds. Temperatures are 80° during the day and 60° at night in the mountainous areas. That helps us get year-round production.”

Getting the vegetables to market is its own world of decisions. "A lot of our time is spent on logistics," Beau says. "We're dealing with a perishable product. We work with three really good shipping companies and we go down a list of trucking companies. We can exercise five or six options within 30 minutes.

"The product comes in on a container ship or jet from the DR and is delivered to our Lake Worth, Fla., distribution center,” he says. "It's trucked from there to where it needs to go.”

It takes four or five days to get product from the facility in the DR to the store in the U.S. "Each day is critical,” says Beau. "We're constantly looking at the supply chain, figuring out how to be a little more efficient.”

When U.S. diesel price topped $4, East Coast vegetable producers found new market opportunities as shipping costs for California and Mexico vegetables zoomed upward. For Flowers Brothers, the Central American Free Trade Agreement helped, too. Implementation of DR-CAFTA means they pay no duty on their vegetables from the DR entering the U.S.

Early on, the partners saw they needed to control markets. That philosophy drove their expansion to the DR and continues to drive their outlook today. "The farmer can't pass his cost on. He's a dead duck. He gets abused in every way,” Chip says. "That's the biggest problem with being just a farmer. You can lose a lot of money fast with what we're doing, if you're not careful. But we're doing everything we can do to be careful.

"It's a competitive business,” he adds. "We've had ups and downs and headaches. It's been quite a ride. Something like this is very difficult to start. You have to be ready to work long hours. You have to know what buttons you can and can't push with your partners. You've got to mitigate your risk a little and find what commodities you can produce best.

"On this side of the business, the main thing is labor cost,” he says. "With anything mechanically picked, you have a chance for a good profit. If it is handpicked, you'd better be thinking about your other options.”

The Flowers brothers' father, Buck, concentrated on vegetable and tobacco plant production. He was killed in a plane crash while they were still in college. His ethos drives their business, however, and helps keep things in perspective.

"Dad bought a 1980 Ford Bronco when it was new and drove it every day until his death,” Beau says.

"That's pretty much how we look to do things, too.”

To contact Charles Johnson, e-mail Cjohnson@farmjournal.com.

Top Producer, November 2008

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