Stony Creek Colors Is Convincing Tobacco Farmers To Grow Indigo, Building A Business On Natural Dyes

by admin on August 30, 2017

© Stony Creek Colors founder Sarah Bellos has been convincing tobacco farmers to switch to indigo and …

Stony Creek Colors is convincing farmers who used to grow tobacco to switch to indigo plants and selling the natural blue dye to fabric producers, including denim giant Cone Mills. The Goodlettsville, Tennessee-based startup is small, with 16 employees and less than $1 million in revenue, but founder Sarah Bellos has big plans – and is raising venture capital funds to scale up operations. In an interview that has been edited and condensed, Bellos, who is 34 and studied natural resources policy at Cornell, spoke about the economics of indigo and the market for natural dyes.

Popular Searches

Samsung Electronics Co Ltd

SSNLF

=
1,950.00
0.00
0.00%

Amy Feldman: How did you decide to start this company?

Sarah Bellos: I had been running a business, Artisan Natural Dye Works, with my sister, doing dye service for independent designers. We used only natural dyes, dozens of colors. It was all very labor-intensive. We realized there was the potential to modernize the way natural dyes are used, but the dyes themselves weren’t to the consistency, volume or reliability we needed. The formation of Stony Creek came from this experience.

Feldman: When was that?

Bellos: That was the end of 2011. We started working with some other factories, larger dye houses, working with larger fashion brands and some of our customers that wanted to use natural dyes but didn’t need hand-dyed.

Feldman: Is natural dye more expensive?

Bellos: The raw materials are more expensive than petroleum-based dyes. Synthetic indigo is made from toxic and hazardous chemicals, like formaldehyde and cyanide. Those chemicals are very cheap. You can make synthetic indigo, and have a product that costs only pennies to make for a pair of blue jeans. That is a big challenge for bio-based dyes. We are saying that there are all these externalities that are not included in the cost, like fracking and oil spills. We don’t make synthetic indigo in the U.S. anymore because it has been a race to the bottom. Most of it comes from a few factories in China.

Feldman: What’s your sales pitch to someone who’s been using synthetic indigo?

Bellos: Once people hear that they might be wearing organic cotton blue jeans, but the dye is made from cyanide and no longer made in the United States because it is so hazardous they will recognize the importance of natural alternatives. The toxicity of the chemicals in synthetic indigo is really staggering.

Feldman: What made you think you could build a business?

Bellos: As we started building the business case for Stony Creek Colors, we looked at the existing technology in natural dyes. We realized that the modernization that happened across agriculture in plant breeding and agronomics, to grow plants more efficiently, had not been applied to indigo because it had fallen by the wayside as a crop. We had to figure out how to improve the yield of the plants, how to improve the plant genetics through modern plant breeding, and how to improve the extraction method. We didn’t come out of the gate saying we’ll be focused on indigo. It took a lot of time exploring other plants. Farmers want to grow alternative crops if there is a compelling market and customers want to buy it.

Feldman: What was your first step to create the company?

Bellos: When I still had my old company, I was active in volunteer managing an urban farm in Nashville, and I was already involved in the local sustainable agriculture movement. When we started doing natural dying we were buying extracts. I began growing indigo at our community farm and borrowing land from friends. In 2009 and 2010, I started growing it more intensively on my own farm and with other friends who were farmers. By the time I started Stony Creek Colors in 2012, I had experience growing indigo and realized the indigo varieties were doing really well.

Feldman: Do you still have the other company?

Bellos: No, my sister, Alesandra, took it over. She enjoyed the artisan aspect of what we were doing.

Feldman: How did you decide to focus on indigo?

Bellos: Indigo was a compelling plant from a sustainable agriculture perspective. Farmers across Kentucky and Tennessee could benefit from a sustainable crop that doesn’t require nitrogen and can attract beneficial insects. I wanted to be able to contract with farmers already living on the land and give them a viable economic alternative.

Feldman: Do you do all contract farming?

Bellos: Yes. We manage a two-acre research farm.

Feldman: How many different farmers do you have?

Bellos: 16.

Feldman: Are they all in Tennessee?

Bellos: Yes.

Feldman: What were they farming before? And how did you get them to switch over?

Bellos: They were farming tobacco and what we call row crops: corn, soybean and wheat in the winter. A few were a little more diversified with hay or strawberries, but it was mostly tobacco. Tobacco is a very labor-intensive crop and the market is on the decline as fewer people smoke. Growers are losing their tobacco contracts and having to move out of farming. A lot of growers are seeking an alternative.

Feldman: How did the conversations asking them to switch to indigo go?

Bellos: Surprisingly well. I had already been living in Tennessee for several years when I had those conversations so maybe I had a modicum of respect from having grown it myself. Maybe that helped get some of the initial farmers. It’s been word-of-mouth since then. We maintain a long waiting list of farmers that want to grow indigo now. We offer them a viable economic alternative.

Feldman: How do you help them make that switch?

Bellos: We have lowered the barriers to entry for those farmers as much as humanly possible. We do our own seed production, and have it commercially pelleted for them. They can get good genetics. Some of the farmers have greenhouses already from growing tobacco, and we pay a premium if the grower produces their own plants in their greenhouses. Greenhouses in this area are idle assets because other crops haven’t been moved in where tobacco was. The planting method is the same as for tobacco, with a couple of tweaks on plants per acre. Also, Stony Creek comes out and does the harvesting with our own machines that we deploy based on whose fields we think are ready. So the farmer doesn’t have to have existing knowledge of when to harvest indigo or buy any additional equipment.

Feldman: How does the arrangement work economically?

Bellos: We contract with them at the beginning of the season so it looks like a tobacco contract, but we take more of the weather-related risk. We pay them on a per-acre basis versus paying per ton. A farmer doesn’t have a good way of projecting crop yields until after several years. We will move towards performance-based pay over time.

© Stony Creek Colors’ pitch to farmers: You can make more growing indigo with less risk.

Feldman: How much per acre?

Bellos: $1,800 per acre if they grow their own transplants. If we provide the transplant, they get paid $1,000 per acre.

Feldman: How does that compare to tobacco prices?

Bellos: We compare to Burley tobacco. The amount of revenue per acre a farmer could get for that is $4,000 to $5,000. It’s a much-higher revenue-per-acre, but their labor costs are much, much higher. Where Stony Creek is providing the transplant and the farmer gets $1,000 per acre, we estimate the return to management is $550 per acre for growing the indigo. For the tobacco, once they take their labor out, they are only grossing $87 per acre.

Feldman: So the potential is a lot more per acre with less risk.

Bellos: Yes. You can really lose money farming if you don’t have really tight control on your budget. With a crop like tobacco, you have a ton of harvesting and labor cost. The variable costs of growing tobacco are very high because it takes a lot of herbicides and fungicides. With indigo, we don’t have that. With a crop like corn or tobacco, you might need 300 pounds of nitrogen fertilizer per acre. With indigo, you might need 70 pounds, and one of our varieties doesn’t need supplemental nitrogen at all.

Feldman: Who do you sell to?

Bellos: Our largest customer is Cone Denim, based in Greensboro, North Carolina.

Feldman: How did you convince Cone?

Bellos: I had the opportunity to meet some folks at Levi’s. The former head of innovation at Levi is this expert, Neil Bell. He said, “Wow, I always heard that natural indigo wasn’t possible, and here it is.” He introduced us to Cone. Our mission is two-fold, bringing alternative crops to farmers in the Southeastern United States and reshoring textile manufacturing. Both parts of that fit with Cone’s vision of authenticity.

Feldman: They still do synthetic, right?

Bellos: They’re definitely doing both, but natural indigo is a permanent part of their collection now.

Feldman: Have you made any progress on reshoring the manufacturing?

Bellos: For textile manufacturing, Cone Denim is one of just four denim mills left in the United States, which is crazy because denim was invented here. While we are still relatively small-scale right now, we want to bring them more customers that want natural indigo fabric. They also have exported the natural indigo fabric. We grow the plants here, the fabric is made here, and it’s shipped to a European brand for the European marketplace.

Feldman: Do you have other customers?

Bellos: There are other dye houses and textile mills. They haven’t launched the product yet, so I cannot talk about them yet. We are also moving into some segments outside of textiles, like printing ink and artisan products. In the long run, that will include a move into the food industry. Right now, there is a huge trend in food to move from artificial colors to natural colors. We have an 80,000-square-foot factory in Springfield, Tenn., in a pretty highly distressed economic zone.

Feldman: Tell me about the factory.

Bellos: We spent two years working with contract manufacturers Anyone who is a contract manufacturer in chemicals is used to getting them in a drum. They’re not used to getting bales of indigo showing up at the front door and processing them. We first built a small pilot facility out at my own farm. Then we designed and built out our factory. It’s a former tobacco factory that was given to the county when the tobacco company left. They were aggressively pursuing us from this idea that we are not just creating chemical manufacturing jobs, but will be a boon to farmers in the area because we are offering a competitive alternative crop.

Feldman: Do you own the whole company?

Bellos: I am the majority owner. We have individual investors and institutional investors.

Feldman: Who are the investors?

Bellos: We had a really early angel investor who came from the natural food industry, Mark Cooley. Last year, we did a seed round with individuals and impact investors, including Serious Change, Village Capital, JumpFund and Sustainable America. We raised $2 million.

Feldman: What will it take for the company to become profitable?

Bellos: It’s about getting the economies of scale, and balancing the agricultural production with the factory capacity. Right now natural indigo for denim is our main focus, but we do have other pilot projects for a wider range of colors and we have a goal beyond just the textile industry.

Original Source

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: