Preferred Popcorn Purchases Preston Farms Bulk Popcorn Division

Bulk business: Preferred Popcorn purchases Indiana firm
By Robert Pore, The Grand Island Independent
Published: Saturday, March 13, 2010 10:54 PM CST

CHAPMAN -- Preferred Popcorn of Chapman acquired the bulk-processing business of Preston Farms of Palmyra, Ind., on March 1.

"This is truly great news for our companies," said Preferred Popcorn Chief Executive Officer Norman Krug of Chapman, whose company's strategic focus is on bulk popcorn, both domestic and export.

He said Preston Farms and Preferred Popcorn have been partnering with each other over the past couple of years to grow, clean and ship popcorn from Palmyra.

"This has been a very worthwhile venture and has provided some great opportunities for both parties," Krug said.

 The company, which recently expanded with the purchase of a popcorn company in Indiana, ships its products to countries around the globe.

 He said Preferred Popcorn has laid the groundwork for a solid domestic distribution system.

"While we export, we believe the Preston Farms customers will add a new dimension to our customer portfolio, and we look forward to serving those new markets," Krug said.

As part of the transaction, Preferred will acquire all of the Preston Farms brands, including Spee-Dee Pop!, which has a worldwide reputation.

The Palmyra location will continue bulk operations under the name of Preferred Popcorn. Preston Farms Popcorn will share the location with Preferred to continue providing microwave and ready-to-eat popcorn for private label, fundraising and ad specialty customers.

Krug said the purchase of Preston Farms will help the company by:

-- Increasing export business.

-- Providing a strategic location in the eastern corn belt.

-- Providing a professional staff already in place.

-- Providing an already established grower base.

-- Creating an efficient national shipping network.

-- Adding a functioning facility to the company.

-- Providing the ability to double the company's production capacity.

As the company continues to grow, Krug said, it will help increase efficiency for Preferred Popcorn's national customers.

"We currently ship to 18 distribution centers within the United States," Krug said.

Preferred Popcorn began with the purchase of the Widman Popcorn facility in 1998, Krug said.

"This was a joint venture of four area farmers and the Aurora Co-op," he said. "The intent was to add value to a local ag product as well as provide an alternative crop for local farmers to produce. We now produce over 10,000 acres of popcorn in the state of Nebraska."

The owners of Preferred Popcorn are the Aurora Cooperative, Norm Krug of Chapman, Daryl Hunnicutt of Giltner and Greg Senkbile of Central City.

Despite the global recession, the popcorn business has been popping, Krug said.

"Popcorn is a healthy, great-tasting snack that almost everyone enjoys," he said. "It is classified as a whole grain in the food group, is high in fiber, high in protein and tastes great."

Krug said Nebraska is the No. 1 popcorn-producing state, with Indiana a close second. Also, the United States is the largest supplier of popcorn in the world.

"I would guess Nebraska is one of the largest providers of popcorn in the world," he said.

Most of Nebraska's popcorn production is located in central and western Nebraska, he said.

"Central Nebraska has an ideal climate to raise popcorn with its intense irrigation, high humidity and fertile soils," Krug said. "Therefore, popcorn is a logical choice for Central Nebraska farmers."

With the United States the largest supplier of popcorn in the world, Krug said Preferred Popcorn has been active in the export market, shipping to more than 40 countries.

"With this additional facility, Preferred Popcorn has already increased the list to over 50 countries," Krug said.

Currently, he said, the company exports 65 percent of its popcorn.

"It takes a lot of people to eat the product we can produce in this state," Krug said. "For example, one container of Preferred high-expansion popcorn will produce 900,000, 32-ounce servings after it is popped."

He said the company ships about 20 loads per week.

"So it would take 18 million people to eat one week of production if they all had one 32-ounce serving. That is why we had to think beyond Nebraska when we first started production. U.S. farmers are very productive. Marketing is the real challenge."

Exports are important to Nebraska's agriculture, and Krug said free trade increases exports. That means growers can produce more popcorn and companies such as Preferred Popcorn can continue to grow and add jobs and wealth to the state's economy.

"Nebraska Farmers can compete with anyone in the world if given a level playing field," he said. "We need to encourage our lawmakers to continue to lobby for free trade agreements. We were recently successful in selling high-quality popcorn to Colombia because we have a free trade agreement with that country."

Krug said the company contracts with about 40 area farmers producing popcorn and employs 22 people in Chapman, as well as 10 people at its new Indiana plant.

"Our great growers and hard-working employees play a big role in our success," Krug said. "I believe we have the best farmers in the world right here in Central Nebraska and now southern Indiana."

A key to the success of the company's growth has been its dedication to producing a quality product.

"Along with production efficiencies, the bottom line is the product has to taste good," he said. "Thirty years of raising and eating popcorn has come in handy. Our in-house test plots and research have resulted in a productive, great-tasting product."

That dedication to quality paid big dividends last September when Krug learned Preferred Popcorn won first place in the Popcorn Challenge conducted by Screen Trade Magazine.

"This contest was based solely on taste and texture," he said. "This is the most rewarding part of our business. It is rewarding to market a local product worldwide."

Krug said most times when a farmer does a good job producing a product it just gets blended into a big pile. But with popcorn, one gets the personal satisfaction of a job well done and is rewarded accordingly.

"Last year, many growers were able to gross over $1,000 per acre raising popcorn, making it an economic advantage over normal corn and soybean production," he said. "There is something gratifying about looking in the back of the combine bin and knowing someone will enjoy that snack as far away as India, Thailand, Taiwan, China, Indonesia, Germany or Korea.

"I believe we have achieved our goal of adding value to U.S. agriculture, as well as providing a healthy snack for millions of people around the globe."

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