Interview with Terry Shamblin, President & CEO of American Peanut Growers Group LLC
The American Peanut Growers Group, LLC, also known as APGG, maintains a medium-sized shelling facility located in Donalsonville, Georgia.
How many different peanut farms supply the shelling facility and how do these peanuts get selected at the APGG Buying Points?
APGG currently represents (79) member entities, consisting of approximately (93) different peanut producers, who deliver peanuts from over (300) different farm numbers. APGG also handles peanuts from about (20) non-member peanut producers each year. Each APGG member is assigned to a buying point location in our system. All (11) buying point locations are owned by producers, or a group of producers, who are all members in APGG. Each APGG member has been approved by APGG's Board of Directors as a quality producer, and with the right character to become an APGG member. Each member is required to bring 100% of his peanut production each and every year to APGG, with some minor exclusions allowed.
Where do the peanuts come from and what types of peanuts do you shell? What is the capacity at the shelling plant?
APGG members have farms in an approximately 75-mile radius from our shelling facility. These farms are located in (13) Georgia counties, (1) Florida county, and (1) Alabama county, all contiguous. APGG only handles Runner peanut varieties and shells approximately 100,000 farmer stock tons of peanuts annually, producing some 155 million pounds of shelled peanuts. Our shelling schedule is normally (24) hours per day, (5) days per week, (11) months per year, shelling at a rate of approximately (20) tons per hour.
Can you explain or describe how APGG is vertically integrated? How does APGG operate from its buying points to shelling and warehouse facilities.
APGG has attempted to concentrate some of its highest yielding, top quality peanut producers, in the heart of the Southeast U.S. peanut production. The sandy loam soil and 85% irrigated production, coupled with a state-of-the-art peanut shelling facility, offers us the formula to be one of the premier shelling facilities in the U.S. Having the same producers each year, and with each of them having a fully vested interest in the reputation of our Company, provides a unique platform for us to operate, different from most peanut shellers. All of the farm production, buying point operations, procedures, shelling and sales are not dictated, but are directed through our (11) Member Board of Directors and our Management Team. All buying points operate under one APGG license with USDA, and APGG leases all warehouses used in our system, to justify proper control of the procedures and product stored. While each buying point is responsible for labor to receive, dry, grade and store the peanuts during harvest, including a shrink tolerance, APGG personnel manages, inspects, fumigates and unloads the warehouses to ensure the quality and quantities needed by the shelling plant.
How is this a strength for your company's growth plans?
Our Company's business model has been very successful since the beginning of 2003. We have grown from processing 60,000 farmer stock tons in 2003, to over 100,000 farmer stock tons today. We are operating at a reasonably full, efficient capacity, which has allowed us to make improvements and achieve other efficiencies during this growth cycle. Unfortunately, with farming production costs the highest they have ever been, and commodity prices low, we do not think there will be much agricultural growth over the next few years. Growth usually takes more commitment of capital, and handling thousands of tons takes infrastructure. As all business leaders know, cash is much easier to spend, than it is to make. So, we will continue to operate safely for APGG Members. There are a few beneficial changes which we will make though, even though prices for our products are depressed at this time.
What are some of the food safety initiatives that APGG follows in order to ensure your customers top quality and safe peanuts?.
The fifth generation shelling facility designed by Lewis M. Carter Manufacturing (LMC) certainly makes food safety easier. The whole plant is (4) feet off the ground level, with all conveying on the floor level, and all operating equipment on a solid 8 foot high mezzanine above it. We have much more room for ease of operation, maintenance and cleaning than most any other shelling facility previously built. As far as the product, each grade of peanuts goes through two cleaning processes, two gravity separation processes, and more sizing than many older plants. Process controls are used to ensure the quality of our products, including an automated sampling system for ensuring low foreign material levels. Foreign material controls are increasingly important for manufacturing customers to lower customer complaints on their finished products. We are certified compliant with Global Food Safety Initiative (GFSI) standards under the British Retail Consortium (BRC) and audited by The American Institute of Baking (AIB) in compliance with their standards. Additionally, we comply with audits from many of our individual customers each year. Our customers and further processors report APGG has become one of the most consistent, quality suppliers of shelled peanuts in the industry. We are proud of the reputation we have achieved, which includes the ethics and service of our employees and Members.
APGG is involved in sustainable business practices, from installing the largest solar rooftop in Georgia to improving energy conservation in the plant. What factors contributed toward moving in this direction?
Sustainability simply makes sense. What makes more sense than making food production, water and natural resources as sustainable as possible? In most cases, sustainable business practices can help your bottom line, even though the largest benefit may come to future generations. We built our plant with programmable logistical controls (PLC) which saves on electrical power by starting motors in sequence and lessens overall power needs. We installed a 400 KW solar system in 2011, and are in the process of clearing about six acres of land now, for a one megawatt solar power system to be installed near the end of this year. We have continued to reduce our waste, and recycle materials. We have partnered with two producer-owned cotton gins, who have some producers who are common within APGG, and constructed a feed mill to produce pelletized calf and cattle feeds from our peanut hull and cotton gin residue by-products. We will continue to find ways to utilize all that is available to us, and if we can't use them, to get these products to someone who can develop a market for them.
When did APGG start getting involved in export markets and do you expect increased export growth opportunities outside of the U.S.? Which countries? What is your percentage domestic vs. export in sales?
We began exporting early in our existence. We have continued to expand our export sales over the past (11) years, and think that global growth opportunities will continue to increase considerably for U.S. peanuts. With U.S. prices down since the 2012 crop, our peanuts are actually more price competitive now than many other origins exporting. Freight is always an issue concerning cost, and it takes a year or two to get some contract commitments completed, but my guess is that our industry will continue to export more peanuts from the U.S. over the next several years. Being a much smaller peanut producing origin than China or India, a small export order in their stead, could result in a huge order for us. We have exported peanuts to Canada, Mexico, United Kingdom, The Netherlands, Spain, Italy, Bulgaria, Ukraine, Russia, Malaysia, Indonesia, Singapore, Thailand, Vietnam, China, Japan, Israel, Jordan, United Arab Emirates (UAE) and Colombia. We usually sell 75-85% of our peanuts domestically and 15-25% export.
As President and CEO, what do you like most about your job at APGG? How has membership with APC enhanced business practices?
The thing I love most about my job at APGG is easily the people. We have some of the best customers, affiliates, owners and employees. We have been able to align ourselves with honest, hard-working people from every segment. Our owners work hard, and they expect us to do the same, and they have treated us fairly because we do. We try to operate by Total Quality Management training many of us had years ago, authored by Philip Crosby, which taught us that a good trade with a customer was one that created mutual trust, mutual respect and mutual benefit. We see ourselves in a true, honest partnership with our customers. Our major customers must appreciate that also, because most of them treat us that same way. The American Peanut Council has provided us the setting to meet many of these customers and assist in building our relationships with them. They have also helped our industry structure and implement goals, such as the eTDE software system for original documents to be shared electronically, and standards for tote bag packaging. They have brought other topics that require industry-wide cooperative efforts, like traceability and sustainability, to the forefront. They have helped identify and secure food safety training for our employees. And they have helped educate us on the product we are processing. The APC staff does a great job, serving as a platform for businesses from all segments of the peanut industry, to come together and share ideas and goals, and work together to reach them, while also helping to increase sales of U.S. peanuts, both domestic and export.
For more information, contact:
Terry L. Shamblin, President & CEO
American Peanut Growers Group, LLC
5212 Highway 39 North
Donalsonville, Georgia 39845
Phone (229) 524-8250
Fax (229) 524-8220