September 2008

Breakthrough Products Define Spirit of Iowa Organic Dairy

Doing something others haven’t done before . . . . It’s the nature of Bill Horner and the basis for Naturally Iowa LLC, a Clarinda, Iowa organic and all natural dairy, and Naturally Iowa, Inc., its parent company. Horner is CEO and President.

“We did not believe we could be successful as a ‘me, too’ dairy. What we really enjoy is producing products that can make a difference.”

That’s exactly what the dairy operation, begun in 2002, has done. Products include:

• Fluid milk
• Drinkable yogurt
• Ice cream
• Use of bottles made of corn, know as PLA (Ingeo) bottles

Horner and a partner, Steve Williams, farmers in the area, began with the idea of adding value to their farms’ organic products. In 2002, theirs were the only two organic farms in Montgomery County. While neither were then operating dairies, they thought dairy processing was a way to encourage a shift toward organic dairies.

The pair hooked up with Iowa State University and its Value Added Agriculture wing in 2004 to do initial research. “What we found was that consumers in large numbers in the Midwest were not as eager for organic as they were for all natural products,” said Horner.  However, organic  dairy consumption in 2005 rose dramatically, and Naturally Iowa was ready with both versions.

The first organic product flowed into the Hy-Vee stores in 2005.

They began by processing fluid milk. “But our goal was to produce a drinkable yogurt,” Horner explained.  The business formulated the yogurt, tested it, reformulated and retested. “We wanted to develop a product with live probiotics that tasted great. Yogurt in a Bottle 7.0 is available now,” he said.

Raw milk comes into the company from two sources – Farmers’ All Natural Dairy in Kalona for organic milk and Prairie Land Dairy in Furth, Nebraska, for all natural milk.

Another highly publicized product of Naturally Iowa has been the bottles that carry out the processed milk and yogurt. The company wished to put its high quality milk and yogurt products into containers that would not harm the environment and were made from renewable Iowa crops. Thus the PLA (Ingeo) bottles that came as a result of a partnership with NatureWorks LLC.   The marketing  phrase, “We milk the cows . . . and grow the bottles”™ can be seen (and heard) on the company’s website www.naturallyiowa.com

“No one else had been able to convert the resin to preforms to bottles for the dairy industry,” explained Horner. “We’ve always wanted to give the consumer something better. We decided that clogging waterways and landfills with petroleum-based plastic is not something we wanted to be a part of.”

Larger dairies have been in a financial squeeze for a long time.  Smaller ones have been disappearing, like so many other segments in agriculture.  Consumers are asking more from food processors – and they are getting it. 

“Our real goal is to supply institutions – schools, hospitals, hotels, and convention centers. There is growing interest because of the combination of providing those consumers with health and environmental factors combined into one product.  When people find that our bottles won’t harm the environment and clog up landfills and waterways for 500 years, they are interested.”

Turning out innovative products, finding market niches and implementing new-technology packaging takes time – and money, according to Horner.

Naturally Iowa received a $246,150 USDA Value Added Producer Grant in 2003, with which they took their idea, flushed it out, put it on paper and went into the start-up phase within the first year. It was a “hybrid” grant that gave them flexibility, said Horner. The co-founders made a conscious decision not to let salaries “soak up” the grant funds, but rather invested in those on their own.

“I can say with absolute certainty that Naturally Iowa would never have gotten off the ground without the grant,” he added.

Now, with products on the market and new product launches in the very near future, the dairy has gone from one employee in the beginning to 15; it has gone public to raise investment dollars (OTC NLIA); and it still operates out of it’s same 28,500 sq. ft. facility in Clarinda. The success definition is, “We’re still in operation and didn’t quit when the going was tough” Horner explained.

He said success comes with finding your customers, and meeting their needs.  “Production levels are tied directly to your co-packers. You have a client that wants you to process milk or ice cream under their label. That client markets and works the product.” And, it is nearly impossible to maintain an even production flow.

Probably the greatest hurdle for Naturally Iowa has been up-front money and investment. Dairy processing is a capital intensive business with high front-end capital needed to purchase processing equipment, storage, packaging equipment and inventory, Horner explained. “We did not have a big corporation behind us to do the R&D necessary to get started.” 

Throughout the development of company and products, a broad range of expertise from Iowa State University, Michigan State University, NatureWorks LLC, Norland International, Bill Lambert, and other industry experts have made great contributions of knowledge. Especially with new market or break-through products,  Horner said he relies on the experience of the various related industries for information. Naturally Iowa shares its expertise with others as well. Horner said the company recently worked with a Georgia dairy to help it get started using Ingeo bottles for their milk products and in the development of an ice cream line of products.

He also is quick to point out that there is a need for expansion of government assistance programs, like the VAPG funds that helped to launch Naturally Iowa. “Even with talented and dedicated people, it is money that makes the wheels go round.”  In addition to the start-up support, Horner said it would be a good idea to help start-ups with profiles or analysis of chances for success along with programs that would offer loans to those who qualify through their first three to five years of operation.

“There are so many people with good ideas . . . and so many good ideas (and products) that fail because the money runs out.”

More information about Naturally Iowa, Inc., its products, processes and facilities can be found on the company’s website, www.naturallyiowa.com.