Opportunities in plant protein & an acquisiton by Ardent Mills/
Kyle Hinrichs on the future of Hinrichs Trading Co.

How did Hinrichs Trading Company come to be? I assume it was a family business?

That’s right. Hinrichs Trading Company (HTC) used to be a family-owned business. I'm one of the family members and it was my grandfather who got into chickpeas, I think probably in the early 1980s. It was very small acreage then; we were kind of just in pulses and some grains as well. We decided to stay with chickpeas and we supplied what little demand there was in the United States along with doing some exports.

It continued like that for a while until what I like to refer to as the hummus boom. That was when hummus went mainstream in the US and, from there, volume picked up massively and the price was able to support the growers and their needs. Acreage in the US started climbing very rapidly. At that point, we were probably one of the few companies in the US with a focus on chickpeas, so we were able to capture a lot of that rapid growth during the time that hummus really came into fashion in the US. 

You’ve recently been acquired by Ardent Mills, how did that happen?

We were serving the world’s needs and the growing US demand. Ardent Mills is very forward thinking; they were looking to diversify and decided to target pulses. They approached HTC to see if we’d want to become a part of their family. 

Their values really align with ours at HTC; their emphasis on “Trust, Serving, Simplicity, and Safety” really felt like home to us. But even beyond that, the overall values of the two companies just matched. We’re always working to earn trust every day. We’re here to serve our customers with understanding, respect and to take care of our growers’ and customers’ needs. We want to make the process simple by removing barriers and aiding companies so they can do what they do best. And we want to work safely to provide great, safe working environments and high-quality food safety. The fact that Ardent Mills shares all of these ideals means that we’ll continue to have that small-business feel with our growers and customers.

It’s a great company and the United States’s largest flour company. They were seeing a lot of growth in the pulses industry and chickpeas is a really hot market in the US. Acquiring HTC allows Ardent to have a good footprint and access to a large growing region. We’re mainly located in the northwestern US but we go all the way through the states of Washington, Idaho, and Montana. It’s a really good pulse-growing region there, especially, peas, lentils, and chickpeas in the Montana area. That was the biggest growth opportunity for additional acreage to support all the new demand.

It’s really exciting to be a part of Ardent Mills now. They acquired us in June of 2021, so we’re six months in. It’s been amazing to see the resources that they’ve brought online, and I think that they’re going to be a good driver for what’s coming in the future; they’re really future-focused. They’re able to do a lot with their size, they’re able to work with other very large corporations, and they really see the future of pulses that everyone in our industry is talking about.

I suppose that the hummus boom is small-scale compared to the plant-based boom that’s happening now? 

Definitely. The acquisition has allowed us to move more vertically in the supply chain. So, before, we just had our processing capabilities and we had our deep, generational relationships with our  growers and producers. We would just run the product through our processing locations, clean the product, bulk package it and then either export it or send it on for further processing in the United States. But now with them involved: they’re the flour experts! So they flow into that next level of the supply chain and we did not have those capabilities before.

It’s super exciting for us to be able to get that one more step closer to the end user. It opens up a lot of avenues for Ardent Mills and HTC together. And in the grain world, genetics and research are the types of things that are very natural for them to be working on constantly. But, for us, in the pulse industry, which is more of a specialty market, we were very limited in terms of how far we could go down those avenues. But Ardent Mills already have a lot of those capabilities in-house on their grain side. They’re now trying to translate those over into the pulse side and it’s really exciting for the producers in our area. We’ll really be able to talk about quality and technical expertise when it comes to the plant-protein world.

When my family owned the company, it was something we dreamed about. We wished we could develop breeding programs; we wished we could own a lab that could look into the fractionation components of pulses. Ardent Mills fold all of that in pretty naturally so, to me, that’s some of the most exciting work to be done with them.

You mentioned that you have domestic customers and also international, export customers: which is your main market or are you really a mix?

We’re definitely a mix. Exports can make anywhere from 30-50% of your volume depending on the economic situation with US products. It’s a very important part of our portfolio. And we go all around the world. The Mediterranean is very important to us, and we end up on the Asian continent as well: anywhere that demands a high-quality chickpea, like a large-caliber Kabuli. Any market looking for that kind of quality — what the US is known for — is a market we’re probably in.

2021 was a great year for you in terms of the acquisition but how has it been recently for your growers in terms of the weather and the harvests?

We’ve definitely seen the highs and the lows. I would say a lot of it stemmed from back when India put tariffs on every country. That was difficult on the whole supply chain of chickpeas around the world and on pulses in general. That drove prices down pretty hard for the growers. And then right behind that, we had another hit with Covid. That was really hard in terms of volume, because it forced restaurants and other food service businesses to be closed and they weren’t buying any products in the volumes they used to. That slowed down that rebound for the market. And then this past year, there was a very large, severe drought in the US; that, coupled with the dwindling carryover stocks, has allowed prices to rise back to pre-tariff times. That was maybe three or four years ago, so it’s taken us a while to crawl out of that but, now that we are out, there’s a lot of excitement from growers.

A lot of growers stuck with chickpeas for the soil health; it’s great for their rotation, they really believe in regenerative agriculture and they really want to take care of the soil. They’re committed: they see the future and hear everyone talking about pulses and plant protein and they want to be a part of that. 

Chickpeas are a difficult crop to grow and the growing regions in the US are very small relative to a lot of cereal grains. You can’t grow them in every state so that is helpful to growers in certain regions. It keeps a bit of a barrier to entry for other people and it helps support their market.

If you’re exporting or even moving goods around inside the US, has the shipping crisis caused you chaos?

It’s definitely been a struggle. We’re making our way through it for sure but it’s not pleasant. Even domestic shipping rates have gone very high. And then there are the exports. You hear about backed-up steamship lines at all the ports around the US. It's a logistics nightmare to get your containers to the port within their short shipping windows. What’s more, they’re always unsure when their steamship line will be in port being unloaded and loaded, so we’ve got to be ready at a moment’s notice and really agile to make those delivery times.

It’s given people a cause for concern on delivery times, so we’ve just extended communications with our export customers to allow for more time. That way, if a vessel doesn’t get loaded on time, our customers aren’t putting their production behind schedule.

Despite the chaos, what are you really looking forward to over the next couple of years? It sounds like being part of the Ardent Mills family will bring some big opportunities. 

It’s really the innovation that they’re bringing to the table. There hasn’t been a ton of private money put into the innovation space of pulses. There’s a lot of USDA money that goes into research but that’s spread across a lot of different crops. Now that we can focus on a select few pulses, it’s going to be really exciting to see what Ardent Mills brings to the US and to the world and what we can offer.

Whether it's breeding new genetics, whether it's helping innovate and supporting their customers on the innovation side: Ardent Mills can provide them with detailed information. So when they are trying to innovate, they understand all the different cultivars and how each one can be good or not so good for them in their process. I think that the work we do on the Ardent Mills side is going to be valuable to the whole industry. And hopefully, it can help progress this plant-protein world further and faster. That’s the most exciting part about it all.