Virtically integrated in two directions The vegetable-growing Teixeira family of Santa Maria, Calif., has taken vertical integration in two different directions. A boatload of family members is involved in all aspects of the diversified desert and coastal vegetable operation. And, there is plenty for them to do because the family controls virtually every aspect of their farming operation - even to pallet making.
They try to control as much of the their world of vegetable growing as possible and are quick to innovate. Those factors are especially important for survival in today's vegetable business.
Five brothers own and operate Teixeira Farms and collectively they and the rest of the family clan have embraced drip irrigation, a transplant nursery and a bold move into a new marketing scheme among other things to stay profitable.
"That's how you get better: innovate," says Allan Teixeira, the brother responsible for crop production spread out across much of the Santa Maria Valley and into the Imperial Valley in the winter.
"Right now we farm 19 different ranches, 3,800 acres here in Santa Maria and 2,400 in the Imperial Valley," he explained.
The Teixeiras are known for their self-reliance as well as vertical integration. And, that is all a matter of creating profit centers within their own operation rather than for others. They are fortunate to have an extended family interested in farming to take that stance.
Self-reliant "Everything we can do, we do ourselves," Teixeira says. Brother Glenn is in charge of marketing, Marvin has responsibility for equipment and land preparation, and Dean handles the harvest. The oldest brother, Norman, just retired, and his responsibilities for the cooling and shop temporarily now rest with other brothers, but two of the next generation of Teixeiras are being groomed for those jobs.
"We have our own cooler; our own fertilizer company, and we do all our own pesticide work ourselves. We make our own pallets," Allan said.
Though Teixeira Farms as structured today started in 1970, there are five California farming generations of Teixeiras.
"Our main crop is head lettuce," Teixeira says, They are also heavily into broccoli, cabbage, celery and romaine.
The instinct to vertically integrate is not derived simply from the desire of all the brothers to be involved, Teixeira says. It makes good business sense.
"Every time you have to have someone do something for you, they have to make a profit," he notes. That is a `profit center' you could be taking yourself. The only thing we don't have is a source of seed."
Glenn also points out that by doing the job themselves they can ensure the quality of their produce. That is very important in the goal of getting top dollar for their crops.
"It all now has to be No. 1 quality," Glenn says.
The company is set up as a C corporation with each subsidiary such as Frontier Cooling being an S corporation within that. Frontier Cooling is the farm's subsidiary in Santa Maria, and it is a partner in Highline Cooling in Holtville, Calif., for desert vegetables. "Each brother owns a part of the company," Allan says. All are partners in all the corporations.
Crop management is Allan's responsibility, but he has foremen to handle areas such as equipment and irrigation. Yet, he is still in the fields every day.
"There's still no substitute for walking the fields," he says.
Teixeira says that drip irrigation is probably the biggest and most recent innovation in vegetable production in Santa Maria. It has allowed the farm to grow vegetables in all soil types and terrain, as well as in all seasons. Produce has become a year-round business in this valley because of drip irrigation.
The company has installed all drip systems since it was introduced on the farm about five years ago. "Now 100 percent of our lettuce and celery is on drip. We put some cole crops on drip. Drip is field-specific."
Transplants have become so prevalent in the industry that Teixeira Farms set up its own nursery in Guadalupe five years ago. With an automated planting line and a 10-man crew, the 10-acre facility can turn out trays of transplants for any crop they grow.
"It does save us a little money, and it gives us the ability to plant when conditions aren't good for direct seeding in the winter," Teixeira says.
Another example of Teixeira's vertical integration is its pallet plant. They have been building their own pallets for eight years, buying truckloads of lumber and utilizing the company's 800-employee labor force.
"We build a lot of pallets in the winter when we have extra people," Teixeira says. "And we save a few cents on each pallet by making rather than buying them."
Year-round crews The company also does something that not many companies do - maintain its own year-round harvest crews and field packing machinery.
The Teixeiras have the luxury of many family members who want to stay on the farm. Norm may be retired, but his children Gary, Pam and Mark all work on the farm - as agronomist, office manager and harvesting boss respectively. Allan's son John is sharing agronomist tasks with Gary, and they are being primed to take over Allan's duties someday. Allan's son Steve is in charge of purchasing; Marvin's daughter Stacey is the soil test and lab expert; and son-in-law Vince Ferrante works in sales.
Family meetings The Teixeiras meet as a family every Tuesday morning at 6 a.m. where all company issues are discussed and resolved.
"There isn't one captain," Teixeira says of the family structure. This family gets along well, and the decision-making is democratic and businesslike. "It works real well.
"We talk about anything and everything," he says. And on Friday mornings the brothers meet with the company's three CPAs and go over financial matters and sign paychecks. "We check our receivables and payables."
On Monday mornings the brothers meet with all the field foremen and supervisors to line out the week's work.
Allan is constantly in the vegetable trial plots. One of his most important jobs is meeting there with seed company representatives to look over the many new variety trials they conduct on their land.
Teixeira uses a custom computer program devised for the farm to keep track of crop rotation and scheduling.
The family has its own soil and tissue-testing lab, an important element in complex vegetable production.
"We can get tests back in four or five hours," Teixeira says. That can facilitate planting and nutritional decisions, obviously, but it also helps them avoid major soil borne diseases like club root, a virus that strikes when soil pH is low.
"You could lose a whole crop to club root," Teixeira notes, and having a lab on the farm gives him the means of detecting it immediately and raising pH in planted fields with soil additives or rotating unplanted fields to less susceptible crops.
This April a major change took place at Teixeira Farms. It was in sales. Prior to that the company had its own sales force of five, and thought it was doing well.
In April the farm joined a marketing group with five other growers, disbanding its sales office. Fresh Kist Produce became Teixeira's marketing arm (see related story). The move took away some company control, but the family believes the move was a necessary one.
"With the consolidation on the retail side," says Glenn, "we thought it would be wise to join with other entities and get a broader shipping base."
The Fresh Kist marketing venture requires the Teixeiras to share control of their harvested vegetables, but those pooled vegetables also give them a lot more marketing potential.
Larger market share "You've got a larger market share with fewer people marketing," Glenn notes, and it is to the seller's advantage to both increase his clout and decrease the number of competitors. "That gives you strength."
"You've eliminated a broker," Allan says. "You now have the volume to talk straight to the big chains. The reason we did that is to consolidate everyone's produce."
Glenn points out that the move was not undertaken to reduce the farm's workload or to simply increase marketable acres (the farm is not necessarily increasing its acreage to provide more produce for the new company.) It was done to conform to the new vegetable market paradigm of fewer buyers and the same amount of sellers. It also offers a mechanism for delivering the best quality produce possible.
"It's a tradeoff," he says, but loosening the grip on the reins is a small price to pay for a more solid share of the market.
The future is bright for Teixeira Farms. Allan points out that the future feels good when it is firmly in the hands of your family.
"Now we've got all the other kids coming up in all phases," Allan notes. That not only gives them confidence in the orderly succession of management, it also is a personal pleasure to provide a place for your family's children in agriculture.
"I like to see them come to the ranch. I think there's a future in farming," he said.
So far, the effort has paid off.
"We struggled a little in accounting, and with getting the quality control up and going," however, overall there were no daunting hitches. A little longer preparation time before start up would have been helpful, Church says, but they wanted to hit the market with Fresh Kist labels this summer, and that became a reality.
Most grower labels (there were about 30 labels between the different growers) will be folded into the Fresh Kist label, Church Brothers or a Pioneer label, though others will develop with time. "You sort of lose your identity a little bit," Church acknowledged, but with consolidation come small drawbacks and more opportunity.
The season began with all growers basically adhering to cropping patterns already planned for the year. In the future, however, there may be more joint planning, but Teixeira says each year's crop selection will still be the individual grower's.
The tradeoff, Teixeira says, is knowing that you will have a heavy volume of crop that will hit the market not with a whimper but with a bang. Having an office in Salinas will help keep the company abreast of prices from other regions. Those factors may have already helped stabilize prices in Santa Maria, he said.
"At the individual farm levels, sales people now direct a buyer's trucks to one cooler where fields are consolidated into truckloads rather than run customer's trucks around the Santa Maria Valley making a load," he said.
"I really think it has helped the market in Santa Maria," Church says. "I believe the growers are satisfied."
However, Church doesn't think prices of Salinas crops were helped much.
Quality, service He emphasizes, however, that sheer volume won't get marketplace cloud. "You had better have the quality and the service, or you will not be able to hold your price. People will pay more money for doing a better job," Church says.
Church says there are no major changes in store for the future. Better crop planning by growers could help, but that caveat applies to the industry as a whole.
"We're going to make sure that what we plant we can sell," he says, and he and his brother will be on the road to find out what customers want. One benefit of working as a group is that if one grower falls short on a contract, another may be able to fill the gap for him.
"We're going down to the desert as a group," Church says, so the pattern will be carried on through the winter crops.