How Pickles Are Preserving the Skagit Valley

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August 31, 2009

Craig Staffanson in front of some brine tanks at Pleasant Valley Farms

By Terri Spath

The RSF Mezzanine Fund recently provided $1 million in a combination of debt and revenue participation to Pleasant Valley Farms, a social enterprise that was established in 1996 to market western Washington pickles and sauerkraut.  Located in a fertile river valley between the Puget Sound and the Cascade Mountains in the state of Washington, the Skagit Valley is home to about 70 different crops.  Third, fourth, and fifth generation farmers there use a four-year crop rotation method to harvest potatoes, cucumbers, and cabbage, melons, corn, and sweet potatoes.  With a year-round cool marine climate, the valley is perfectly suited to producing some of the finest quality cucumbers and cabbage in the world.

Until 2001, the Skagit Valley produced several thousand acres of top-quality cucumbers for big name regional producers.  Over the next few years, those well known family-owned Northwest companies were bought up by a large food conglomerate.   Unexpectedly, the big pickling producers began leaving the Skagit Valley and turning to Sri Lanka and India for cheaper product and processing.  Craig Staffanson and his fellow farmers saw an opportunity in the U.S. market for a top-quality, local, old-fashioned, and fair-value product.

In 2001-2002, Craig and his business partner launched a plan to turn the Staffansons’ small family farm and processing facility into a regional facility to process product locally, including the production for all of Skagit Valley.  Pleasant Valley turned to fellow cucumber and cabbage growers, who invested capital into the operations.  Growing market share was challenging as the major food player in the region sold its acquired brands aggressively on price, something Pleasant Valley Farms was unable to match.  Instead, their pickles and sauerkraut are positioned on quality, and this has been successful in landing customized product accounts at restaurants and food service establishments that care about the quality of the food they serve.  The mission of the Enterprise is stated as follows:

“Pleasant Valley Farms is dedicated to providing the highest quality food product to the market with cornerstones of old-fashioned production, a healthy and affordable line of products, a sustainable legacy for its employees and the community at large, and a quality product with a commitment to its customers.”

Despite flat industry sales, Pleasant Valley’s wholesale sales of pickles, relish, and sauerkraut have grown sharply while a focus on costs has driven solid margins.  Today, Pleasant Valley Farms is a community of farmers dedicated to being a vibrant part of the 100-year plan to keep the Skagit Valley sustainable.   The Valley’s 100-year plan refers to the “Cascade Agenda,” adopted by a coalition of 750 community leaders and 100 businesses, organizations, and government agencies.  The Agenda advances two goals: conservation of 1.3 million acres of farmland, forests, shoreline, parks, and natural areas; and promoting its communities in the King, Kittatas, Pierce, and Snohomish counties in Washington State.  Supporters range from farmers, foresters, and tribes, to housing, arts, and cultural interests.

The effects that Pleasant Valley’s efforts have had in the region are remarkable.  In 2008, their ten farmers in the Skagit Valley grew 1,000 acres of cucumbers and 50 acres of cabbage for pickle and sauerkraut production, producing 20 million pounds of cucumbers and 4 million pounds of cabbage that would have been eliminated without the efforts of Craig Staffanson and his team.

Upon hearing that the RSF loan had closed, Rich Weight, Head of Sales at Pleasant Valley, expressed his gratitude by saying, “I can’t thank you and your organization enough for the tremendous confidence you have shown in our project. We will continue to work hard every day to make the best products, and service our new and old customers alike, to make Pleasant Valley Farms a success for our people, the community, and the land we farm.”

It’s this kind of commitment that makes RSF proud to have provided $1 million in capital to Pleasant Valley Farms, to help them deepen their impact in the Skagit Valley.

For more information on the innovative loan structure of debt and revenue participation designed exclusively for mission driven enterprises like Pleasant Valley, click here to read a blog post that I wrote on the topic earlier this summer.

Terri Spath is the Managing Director of RSF Capital Management at RSF Social Finance.

• Published by Terri Spath
• Categories: Deals, Food & Agriculture, Investing, Lending, Local economies, Mezzanine Fund Borrowers, Money
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