Source:  Agweek, January 9, 2006

Author: Mikkel Pates, Agweek Staff Writer

Jay Schuler of Breckenridge, MN, one of the region?s foremost entrepreneurs in the sunflower business, keeps a gallery of photos on his office wall, chronicling three generations of business high and low points.

Jay Schuler doesn't just remember the history of the sunflower industry in North Dakota and Minnesota. He and his family have lived it and he's still living it.

Schuler, 53, works from an office on Minnesota Avenue in Breckenridge, Minn., a street that has been important for his family and the industry. Something of an enigma, even to his friends, Schuler has been a key player in a dizzying array of loosely connected start-up companies during the past 30 years. Many of the region's most successful agricultural entrepreneurs have worked with him.

On one wall in his office are numerous black-and-white photos - family heirlooms that chronicle several generations of successes - and failures.

"The reason I have these pictures on the wall is that you don't know what tomorrow's going to bring. You should never be too self-assured," Schuler says. "Weather can change. The market can change. Or you can make a poor decision."

These old photographs

Schuler points to a fuzzy photo on the wall that shows Schuler's grandfather, George Schuler, surrounded by his family and flanked by an elevator in Hettinger, N.D.

George actually grew up on a farm near Munich, N.D. After surviving tank warfare in World War I, George Schuler returned home and married Dorothy, a schoolteacher. They moved to Hettinger, N.D., where they started an elevator. The Schulers had two sons - George II and Robert "Bob" (Jay's dad) - who was named for one of his dad's fallen war buddies.

Schuler points to another picture of a family, posing with a car and a camper trailer.

"It didn't rain in the 1930s - the Dirty'30s in western North Dakota and the (elevator) business didn't make it," Schuler explains. "This is from when they went to the state of Washington and ran a bar and restaurant. Everything they had was in that trailer."

Eventually, the Schulers moved to Minneapolis and then to Breckenridge, Minn., where George was offered a fourth in an elevator that he would eventually own.

Young George and Bob graduated from high school in 1944 and 1946, respectively. They would take over the elevator management in the 1950s and would add a coal, fuel oil and seed enterprises in surrounding communities.

"I can remember as a small boy, going to the hospital to unload coal," Schuler says. "It was a dirty job."

In 1958, Bob Schuler started a confection sunflower business that he would call Sigco Sun Products (Sigco - named for Schuler Inc. Grain Co.) Clark Dahlgren of Crookston, Minn., was getting into it at about the same time.

"I was 6 years old," Schuler says. "Dad got planting seed from Canada - Arrowhead and Mingren and a late variety called Commander - out of Minnesota. North Dakota didn't have any sunflower research program at the time."

The bird food business was the initial market. The family also sold in-shell sunflower to David's Sunflower Co. of Fresno, Calif., which was the largest sunflower snack company at the time. (Still is, but under the ConAgra umbrella today, Jay notes.)

Jay was the oldest of Bob and Mavis' eight children. His father is his hero and Jay inherited some his entrepreneurial spirit.

"I was always thinking of business, of creating a better mousetrap," Schuler says.

A goofy story: When Jay and a friend were in the fifth grade, they noticed parakeets were selling for $5 each.

"We trapped some English sparrows, painted them and used big fans to dry them off. Of course, they ended up dying."

Schuler graduated high school in 1970. He went on to North Dakota State University in Fargo, where he pursued bachelor's degrees in agricultural economics and minors in agronomy and genetics. He started graduate school. The Vietnam War was under way. Schuler had a low draft number, but a student deferment.

While Schuler was in college, a key world event occurred. A Frenchman discovered cytoplasmic sterility in sunflowers. "You could get a sterile female, which is needed for crossing," Schuler says. "Then scientists in North Dakota and Texas found the 'restorer' of the fertility, and that opened the gate for hybrid sunflowers."

Flower power

After college, Schuler didn't come home to the grain business.

Instead, he partnered with Gerhardt "Gary" Fick, an NDSU professor and a sunflower geneticist and 10 years his senior. The two started a hybrid seed business and called it Sigco Research.

That was 1975. The hybridization, which Fick had helped develop, allowed yields to increase by 20 percent to 50 percent. Breeding became much more effective.

"It was a great ride - lot of fun."

Schuler's father was an investor in the business and allowed Jay to use the Sigco name.

At the time, Cargill and Interstate Seed - the two major players in the sunflower business - were promoting their seed through elevators. Schuler saw how Pioneer Hybrid and other companies were promoting hybrids in corn and soybeans in southern Minnesota and Iowa and tried to develop farmer-dealer networks as they had.

"We were able to sign up some good farmer-dealers," Schuler says. "We got aggressive and got orders early and picked up market share - went from zero to 35 (percent) to 40 percent. With Fick's research and some great genetics, we were able to grow the business and became No. 1 in sunflowers."

Sigco Research scored with its Sigco 954 confection hybrid, which once covered about 75 percent of all confection acres in the United States and Canada. Fick also developed high-yielding high-oil hybrids at a time when oil premiums were starting. Sigco promoted its high-oil varieties as producing more income from the oil premium alone than the farmer was spending for seed.

"Your seed is free," was the slogan. Sigco 448, which was another winner, had 4 percentage points of higher oil content than standard varieties of the time.

In the late 1970s and through the mid-1980s, the industry grew. Sunflowers became the most profitable crop for farmers - except for sugar beets. Acres mushroomed.

Crushing plants were built Enderlin, Velva and Fargo, N.D. - even overbuilt - to handle what some predicted would be a 10 million-acre crop. Those businesses faltered when the crop faltered, limited in part because overzealous farmers planted rotations too tightly.

"Also, the domestic market didn't develop like it has today," Schuler says.

End of the bloom boom

In the early 1980s, Schuler and Fick began to think the bloom might be coming off the sunflower business. Palm oil production was taking off in Malaysia. Soybean oil was expanding.

Schuler recalls several offers from companies that wanted to buy Sigco Research, which he co-owned with Fick and others.

In 1982, they sold to Lubrizol of Wickliffe, Ohio, near Cleveland. At the time, Lubrizol was a powerhouse in specialty oils for machine lubricants.

"Actually, they were ahead of their time, modifying and growing special oils for rather than using petroleum. They ended up bringing in Agro genetics, which is now part of Dow. The company was later called Micogen."

 As part of the sale, Jay had a five-year employment contract with Lubrizol. He lasted four. Fick had a five-year contract and lasted seven. Schuler was about to go through some trying times.

Rising, rising again

In the mid-1980s, George and Bob's Schuler Grain Co. went through trying times. There were accusations the grain company had added urea nitrogen to stored wheat, fraudulently adding to the protein premiums. Bob's health faltered. Jay and his cousin, Jody (George III), helped their fathers settle the issue with the federal government.

In 1985, Jody stepped up and restructured the businesses as Minn-Kota Ag Products, which today is a successful elevator, fertilizer and multiloading facility. Among other things, Min-Kota was the first 110-car shuttle loader on the Red River Valley and Western Railroad - one of the first independent shuttle loaders in the nation.

Jody Schuler is the head of Minn-Kota Ag Products in Breckenridge, MN.  He is a cousin of Jay Schuler.  The two have survived through numerous business associations.

In 2004, they set up joint venture with Farmers Union of the Southern Valley at Fairmount,