Transportation is key ingredient for Fornazor International, an exporter of food products.
By Chris Dupin
Close attention to transportation and logistics has been one of the keys to the success of Fornazor International’s agricultural export business whether it is for animal feed bound for dairy farms in Saudi Arabia and fish farms in Chile, feed ingredients like corn gluten meal to Egypt, food aid to Africa, or high-end consumer products like Mrs. Fields Cookies.
John Fornazor is president and owner of the Hillsdale, N.J.-based company and six affiliated firms that specialize in the manufacture, sale, packaging, and transportation of both animal feeds and agricultural products for human consumption.
Fornazor’s companies export about 25,000 containers of product annually to customers worldwide and he expects to have total sales between $150 million and $200 million in 2012, with the vast majority of the business destined for export markets.
It’s a business that Fornazor says is growing—both as his company expands into new overseas markets, and adds new products.
There is an increasing middle class throughout the world, and they are looking to buy better quality food and eat more animal protein, he explained. A 2009 OECD paper estimated the size of the global middle class will grow from 1.8 billion in 2009 to 3.3 billion in 2020 and 4.9 billion in 2030.
The finished feeds Fornazor sells, as well as the ingredients that it supplies to companies blending their own, can boost the quality and productivity of livestock and poultry.
To locate and win business, Fornazor has a staff of 11 traders located in Hillsdale; Tampa, Fla.; Houston; and Stafford, Kan., who are constantly looking for opportunities to supply buyers with products from the United States.
Traditionally Asia had been the company’s largest market, but the company has diversified. Today about 30 percent of its sales are to countries in Southeast Asia, such as Indonesia, the Philippines, Thailand and Vietnam, and 10 percent to North Asia which includes China, Hong Kong, Taiwan, and Korea.
The Middle East and South America, where the company had virtually no sales a decade ago, now account for 30 and 25 percent of sales, respectively. And Fornazor sees good potential for growth in Africa.
While the company has some sales in Europe, he noted cracking that market is difficult since Europe itself is a large producer of feed and feed ingredients.
Each trader handles a different region for the company, and Fornazor said having employees with specialized knowledge and contacts is key on both the trading and transportation side of his business. For example, his trader in the Tampa office spent 25 years with Cargill and knows the Latin America business.
For the transportation side, he has hired two former Maersk executives, Kevin Sinnott, now a vice president at Fornazor, and Carl Varner, vice president who runs the company’s non-vessel-operating common carrier affiliate, Tradewinds International.
“We have a lot of relationships with freight people through these guys,” he said. “The freight contracts we have are a lot of our strength.”
Fornazor has contracts with about 13 carriers and deals with several others in smaller markets.
The company sells grain and soybeans, and feed ingredients, some of which are agricultural by-products — for example corn gluten meal from the manufacture of high fructose corn sweeteners and distiller’s dried grains with soluble from the manufacture of ethanol.
The company also sells protein products that are made by rendering firms that turn waste products from poultry, hog, and cattle slaughterhouses into feed ingredients. However, because of concerns about “mad cow disease” and religious restrictions on eating pork, the export of rendered products is restricted by many countries.
Fornazor said much of the strength of his company comes from the relationships it has built with various suppliers of feeds or feed ingredients.
These include American Proteins, a Georgia-based poultry renderer, and AGP, the largest farmer-owned cooperative soybean processing company in the United States.
Fornazor also owns a company called Kansas Forage Products, which makes alfalfa pellets and operates a large hay press in Stafford.
Much of the hay goes to the Middle East where he noted some of the largest dairies in the world are located.
Usually Fornazor buys commodities, takes possession of them and sells on its own account, though it also ships products for companies like AGP.
Fornazor explained that transportation is often a make-or-break element to the sales that his company makes.
In fact, he said one of the reasons the company has contracts with 13 different shipping lines is because of the unpredictability of equipment availability.
“There are pockets of equipment in Chicago, Kansas City, Minneapolis, but you have to be in the market all the time. The first thing we ask people when they have a potential trade out of Kansas City is: ‘Is there equipment?’ You can have a rate, but if you don’t have equipment, it doesn’t do you any good. You don’t want to sell and book 50 containers and then find out there are only two available.”
Having a large number of contracts has also proven useful when ship capacity was tight, as was the case in late 2009 and early 2010 when many carriers limited the allocation of containers they would give to each shipper.
Generally, the company would rather rail ingredients to its facilities in Norfolk, Va., and Savannah, Ga., because it knows there will be both containers available and it has the necessary equipment to grind and blend, bag, store, or bulk load product.
In addition to the Stafford plant, the company has four other transloading and production facilities. The company’s ARREFF Terminals has two facilities located just outside the Port of Virginia’s facilities in Norfolk; another affiliate Global Commodities does similar work just outside the Port of Savannah. The company also has arrangements with another firm to do similar work in Charleston, S.C.
But the company will also load product in the Midwest or at other ports around the country. “We are not going to miss the trade by forcing everything through our own facilities,” Fornazor said.
Other Fornazor affiliates include its NVO Tradewinds and a truck brokerage firm called Dominion Freight.
The company has a nutritionist who can help prepare a finished feed or determine the proper ingredients that an overseas customer needs to add to its feed to make sure it meets correct specifications. It will also treat products to prevent spoilage—for example, corn gluten must be treated with a chemical to prevent mold from growing, while animal proteins need to be treated with an antioxidant.
Fornazor was started in 1964 by Alan Roemer, and Fornazor joined the company in 1979, became a partner in 1987, and eventually purchased the firm.
Based in offices built from a renovated church (Fornazor’s wife Peggy planned the renovation of the building, which was the church she had attended as a child), the Fornazor companies now have about 100 employees.
Going forward, Fornazor would like his firm to produce and sell more value-added products rather than just trade raw agricultural ingredients. He is also looking at establishing facilities in other countries. His latest venture is a company called Gulf Equine Feeds, which supplies feed for racehorses in several international markets.
He also represents Hallway Feeds, a premier manufacturer of racehorse feed in Dubai and more recently in Hong Kong. “We buy the food from Hallway, export it, warehouse it and supply the race tracks,” Fornazor said.
Not all the food Fornazor sells is aimed at animal consumers.
Over the years, the company has been approached by manufacturers of specialty foods, and Fornazor now has a diverse portfolio of specialty foods it ships. These include Grade A table eggs that are shipped in refrigerated containers to customers in the Middle East, bakery ingredients manufactured by J&K ingredients, Crider Canned Chicken, Peter Rabbit Organics fruit and vegetable purees, MV’s Best Virginia Cocktail Peanuts, Mediterranean Snack Foods and Mrs. Fields Cookies. It also sells a line of ready-to-eat Halal meals, called My Own Meals, which can be used by international militaries and government relief agencies, for example, during recoveries from natural disasters.
Fornazor is also an approved vendor of food aid, and ARREFF operates as a transload facility for the U.S. Agency for International Development.