The Kirsten name has been intimately tied to California’s dry bean industry since 1958.

By Dario Bard

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Kirsten is a trusted and respected name in California’s dry bean industry. The value of having such a reputation is something Dave Kirsten experienced firsthand when, in 2001, he founded family-owned Kirsten Company LLC.

“Growers are reluctant to extend significant credit to a startup company,” says Dave, recalling his company’s early years. “What we had on our side is that many of the growers in California were familiar with our name. The Kirsten name has been around the industry since the late 1950s.”

In 1958, Roy Kirsten, Dave’s father, accepted an invitation to work with his college buddy, Bud Klein of Klein Brothers, Inc., then one of the largest dry bean companies in the U.S. Dave later followed in his father’s footsteps.

“I started with the Kleins right out of Chico State in 1977,” he recalls.

It was a job he thoroughly enjoyed until ConAgra acquired Klein Brothers and instilled a corporate culture that didn’t agree with his personal style of business. After a brief stint with the Kelley Bean Company, Dave mustered up the courage to start his own company.

“I didn’t really have a lot of support when I started,” he says. His family expressed concerns about giving up the fixed salary and medical benefits of corporate employment. But Dave went forward, putting up some commercial properties he owned as collateral to secure a bank loan.

“When we started, we projected that in the first year, we would have about US$ 3 million to US$ 5 million in sales,” Dave says. But as the Kirsten Company began operations, good fortune struck: ConAgra withdrew from the California market. In so doing, it left a good 60 to 70 growers with no handler, and also cut loose the domestic canners and packagers who were supporting that grower base. That’s when the Kirsten name came into play.

“In those early years, I was encouraged by the level of grower support we received,” says Dave. Based on the reputation of his family name, the Kirsten Company was able to fill the void left by ConAgra. As a result, in its first year, it generated sales of US$ 10 million, double the most optimistic of initial expectations.

The founding of the family-owned business was a life-changing experience not only for Dave, but also for his son, Mark, who initially entered the University of California, Davis with a law career in mind. “When I enrolled at the university, Dad was working for ConAgra and I wasn’t interested in working for a large corporation like that,” says Mark. “But then Dad started Kirsten Company and I liked the idea of being involved in the family business. So I completed the major I was in and added another one with an ag background in it.”

After graduating with a double major in 2005, Mark joined his father at Kirsten Company, where his responsibilities included international sales and purchases. He soon found out that he liked working in agriculture much more than practicing law.

“What I enjoy the most,” he says, “is getting out and visiting the growers here in our area, talking and interacting with them during contracting, harvesting and whenever we are out there with them. That’s my favorite part.”

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Photo: Dave, Jim, and Mark

Thanks to Dave’s bold decision to start his own company, Mark now carries the Kirsten name into the third generation of California dry bean dealers.

IFT: Dave, tell me about your career in the California dry bean industry.

Dave: I started with Klein Brothers in 1977. My Dad had been working there since 1958. He was one of their principal traders. He was in charge of trading to Puerto Rico and handling origination of California varieties.

Klein Brothers was a family-run, California-based operation. It was started in 1917 by Sol and Jack Klein, and my father joined them at the invitation of Bud Klein, a college buddy of his at the University of the Pacific in Stockton.

By the time I came onboard, Klein Brothers had become one of the three largest dry bean companies in the U.S. in terms of volume. Its annual sales were about US$ 250 million per year.

My first job there was to coordinate freight: trucks, rail and ocean freight. In the following years, I created a database written in R-base and ultimately that was the environment the company used for many years to manage their shipments and freight bills.

Around ’82, I started trading beans for the Kleins. There were a lot of really high-powered, high-volume traders in the office, so that made it difficult to expand my customer base. However, no one was focusing on institutional business, like state and federal prisons, hospitals, etc. It meant more work. Sometimes there were several varieties per truckload and the documentation requirements were more demanding. No one else seemed to really want to do it and it was my only opportunity at the time to trade, so I began trading state and federal institutional business.

By the late ’80s, I felt I was a little more experienced and capable trader, and my customer base began to grow. Somewhere in ’88 and ’92, I really got traction within the industry and started trading exclusively and really gained some knowledge of and experience with domestic canners and packagers.

Then, in October 1992, ConAgra acquired Klein Brothers. And in 1999, there was a change in management and philosophy that wasn’t a fit for me. I felt I need to make a change, so in August of 1999, I met with Kelley Bean and put together a deal for me to represent them in California. I was with Kelley Bean for two years, but I soon started to feel I needed to do something on my own. So in 2001, I started the Kirsten Company.

IFT: What were the early years like?

Dave: We were lucky that ConAgra dropped out of California just as we came on the scene. That and the reputation of the Kirsten name and the contacts I had in the industry really helped us get started. Through about 2008, our sales were growing by 25% to 30%. Then the banking environment changed and our ability to secure financing became quite a bit more difficult. At that time, we had to make a decision to cut back on some of the marginal business and focus on what we knew best, and that is domestic canners and packagers.

California is a high-cost growing environment compared to other regions. Water costs are high here, particularly this year with the drought we are facing. Plus rents are high because of competing crops. A lot of the crops we compete with in the coastal regions are leafy green vegetables. And also state OSHA, Union and benefit requirements are higher in California than in most states.

So costs are high, but on the flip side, we have a long growing seasons and we overwhelmingly produce top quality crops. So as a growing region, this state is supported by the most demanding canners and packagers in the U.S.; they pay a higher cost for quality because the value is there.

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IFT: Can you tell me about your collaboration with university research?

Dave: In 2009, we started leasing some land to produce some of our own product and had modest success. Then we met researchers at UC Davis through the California Dry Bean Advisory Board and in discussions it occurred to us that we might be of service to the University by doing some of their canning trials. We have a canning system in our office and UC was breeding various new seed varieties aimed at improving canning suitability. So we worked with the university and did hundreds of canning trails here. We put together a taste panel, did quality evaluations, posted photos and provided all the information to the researchers. We didn’t receive any remuneration for it; it was done as a mutual learning experience.

Later, we were introduced to Creighton Miller, a researcher at Texas A&M, through a mutual friend. We worked with him on several new varieties, including a new blackeye they were working on. They also wanted to see if their seed varieties were suitable for growing in California, so we grew some of those on the property we leased.

These have been positive experiences for us and our collaboration with these universities continues.

IFT: What has this growing season been like for the Kirsten Company?

Dave: Our chickpeas have been 100% harvested. We had a problem with alfalfa and mosaic virus that I think ultimately cost us 25% of our yields, and I think that’s generally true across the board in California. On the other side of the coin, though, quality is exceptional this year. I would say it is among the best quality we’ve ever seen. Most of our chickpeas are grown in California, but we also grow some in North Dakota. All told, I’d say we will handle approximately 5,400 MT this year.

Moving on to the rest of the crop, the harvest is still going on. We are seeing good quality on blackeyes, limas and baby limas, but we lost about 30% of our acreage due to the drought and water concerns. So it looks like we’ll harvest nice quality this year, but markets are going to be very tight. Markets are advancing and I think they will continue to advance just based on the scarcity of product.

In terms of volume, at Kirsten Company we have about 2,700 MT of blackeyes out of California and Texas combined. Large lima production stands at about 1,360 MT. Our portion of California baby lima production is really off this year; I think we’ll end up with less than 900 MT.

Typically, we handle about 4,500 MT of pintos, 2,200 MT of navies, and about 680 MT for Great Northerns and another 680 MT of blacks. But this year, I’d say we’re down about 30% across the board.

IFT: What opportunities do you think IYOP offers for the industry?

Dave: I see IYOP as part of the greater industry effort to elevate awareness about the health and nutritional benefits of dry edible beans. Intuitively we know dry beans are healthy and nutritious but there is much more work to be done as we try to educate consumers. We are very encouraged by the efforts of the American Pulse Association and the Pulse Health Initiative. These efforts are beginning to take shape and I believe we will start to see measurable benefits in the coming years.

Video: American Pulse Association, Pulse Health Initiative (PHI) and the Pulse Crops Product Program
 

IFT: How do you see international markets evolving this campaign?

Dave: Less than 10% of our business is export, so we are not a very big factor internationally. However, there are some customers in the European market who will support California prices and quality. We don’t find that to be a large percentage of our business, but at the same time it is something we are comfortable with particularly given the fact that we’ve known many of these international customers for decades from the Klein era.

The crop with the biggest international potential for us this year is chickpeas. India typically has the largest chickpea crop in the world, so when they have problems and setbacks, there is a direct effect on the international market and certainly the potential for markets to firm.

However, I don’t think California’s industry will have the opportunity to take advantage of this situation because we don’t have the ability to increase production here due to water issues. In 2014, production in California was driven more by water availability than by contract prices. So that might be a bigger opportunity for North Dakota and Canada.

Mark: We can’t do much on the supply side in California. Especially this year with the drought. But even in years when there is an abundance of water, there is still a ceiling on how much a bean producer can grow. There are only certain varieties that have gained steam here and that’s because they command a premium versus in places like the Dakotas. Otherwise all the beans would be grown in the states with lower input costs. But there are certain varieties they can’t grow in the Northern Plains, and those are the ones that gain traction here in California.

IFT: With production limited, are you also limited in terms of entering new markets?

Mark: I think there are some opportunities. Most of what I sell is based on our origination here in California, so there aren’t that many new products and varieties that I could be doing in pulses. But there are new renditions of existing varieties such as the new large-size blackeyes we have here in California. It’s called the SH 50 and I get a lot of traction with them internationally. They are specialty products that command a premium price, but customers are willing to pay because they know what a drastically different product it is compared to the standard blackeye. We have buyers in Greece and Cyprus, and more recently in Spain and Italy.

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Dario Bard, IFT Journalist

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