In Business, Creating Sustainable Enterprises & Communities

ALASKAN TRIBAL COMMUNITY INVESTS IN LOCAL ENTERPRISES

In Business, March/April, 2004, Vol. 26, No. 2, p. 26

“A lot of communities have a brain drain. We're trying to reverse that by investing in our community,” says the CEO of the Kake Tribal Corporation.

Mark Musick

COMPOSTING fish and forest wastes has become a major enterprise for the small Tlingit tribal village of Kake, Alaska on Kupreanof Island. The village - with only about 800 year-round residents - is the “urban center” of the island located in the heart of the Alaskan panhandle about halfway between Juneau and Ketchikan. Kupreanof lies in the Tongass, the world's largest temperate rain forest. In addition to its once-abundant timber and seafood harvests, Kake is famous for having the world's largest totem pole, standing 132 feet.
Inspired by their community's ancient tradition of utilizing fish remnants and leaves to mulch native gardens, in 2002 Kake tribal members initiated a major composting operation to recycle their community's forest and fishery wastes. In the fall
of 2003, they introduced “Totem Soil,” an “all organic” container mix sold through retail markets in the Pacific Northwest.
Entry into the compost business was a natural for the Kake community. As Sam Jackson, Tribal Corporation President and CEO, told the Alaska Journal of Commerce, “our business plan is 10,000 years old.”
In the early 1970s, the community formed the Kake Tribal Corporation to provide economic opportunities for the tribe's 704 shareholders. For many years, the corporation's primary enterprises were logging, fishing, and seafood processing. Kake Foods, Inc., a wholly owned subsidiary of the Tribal Corporation, was established in 1997 to process and market value-added seafood products. The tribe's fishing operation includes a fleet of six seiners and a plant that processes eight million to ten million pounds of salmon, halibut and Dungeness crab per year. The tribal corporation also manages a fish hatchery that produces two million pounds of chum salmon per year.
To compete in the increasingly challenging seafood industry, Kake Foods chose to focus on producing unique lines of quality fresh and smoked seafood products. In addition to marketing their fresh salmon, halibut and crab in the Pacific Northwest, the company smokes and packages salmon for shipment throughout the “Lower 48.” The company's expansion into value-added products was motivated in large part by a desire to provide increased employment opportunities for the young people of the village. The corporation is actively working to expand its peak season workforce of 150. “A lot of communities have a brain drain,” says Duff Mitchell, Kake's chief operating officer. “We're trying to reverse that by investing in our community.”
Like other communities dependent on timber and fisheries for its livelihood, Kake is confronted by environmental restrictions and declining natural resources. Seeking a way to transform their community's waste products into an asset, in 2001 Jackson and Mitchell began to research composting. Their goal was to recycle 100 percent of the company's waste materials-wood chips and gurry (crab and fish carcasses, bones and guts left from processing)-into high-value composts. As an additional benefit, composting was seen as a way to expand the tribe's harvest of salmon roe by providing an opportunity to utilize the otherwise unmarketable fish carcasses.
In addition to recycling their own residuals, Kake Foods' management saw the opportunity to negotiate tipping fees with other companies to compost their processing wastes. The pollution of Alaska's waterways has prompted the U.S. EPA to increase enforcement of anti-dumping regulations on all of the state's seafood operations. Individual processors have been hit with fines of up to a half million dollars. Three canneries shipped their wastes to Kake in 2003, with shipments from more seafood processors anticipated this year. In addition, Juneau's Alaskan Brewing Company is now shipping 20 tons of dried spent barley per month to the composting facility via an Alaska Marine Lines barge.
Last year Kake Foods composted 1,500 to 2,000 tons of fish and crab wastes, with up to 10,000 tons potentially available from additional processors. Entering its third season of commercial production, Kake Foods' Totem Soil composting operation currently employs five to six people. With expanded production, at peak season the company hopes to employ 20 to 25.
“STAGGERING AMOUNTS” OF WOOD AND SEAFOOD FEEDSTOCKS
The quantity of organic residuals available for composting in Alaska is staggering. Approximately half of the timber run through the state's sawmills remains as waste material, while facilities that process fish, crab and shrimp are even less efficient, with up to 85 percent of the harvest disposed of as waste.
Forestry specialists with Alaska's Wood Utilization Center have partnered with researchers from Iowa State University to evaluate the potential for composting the waste products of Alaska's forest and seafood industries (see “Wood and Fish Residuals Composting in Alaska,” April 2002). In particular, they evaluated the effects of moisture, chip size, porosity, and pile volume on the composting process in Alaska's varied regimes of rainfall and temperature.
While Southeast Alaska has massive quantities of wood and fish residuals, the primary challenge for composting operations is coping with the region's abundant winter rain and snow. In contrast to the Alaskan interior, Kupreanof Island has a mild, maritime climate characterized by cool, dry summers and wet winters. Temperatures range from 22º to 43º F in winter and from 44º to 62º F in summer, with rare highs in the 80s. Protected from Pacific storms by leeward islands, Kake receives about half the rainfall typical of the Alaskan panhandle. Annual precipitation averages 54 inches per year primarily between October and January, with 44 inches of that falling as snow. With winter rain and snow come fierce winds that can gust to 70 mph and more.
By drawing on the research of the Alaskan Wood Utilization Center and enlisting help from outside consultants, in 2002 Kake Foods began to develop a composting strategy suited to its site, including experiments with different materials, moisture levels and pile configurations. The following season, the company was ready to commit to a commercial-scale composting operation.
Kake Tribal CEO Jackson asked Bob Mills, then manager of the tribe's logging operations, to take over management of the new compost enterprise. Although at the time he knew nothing about how to operate a composting facility, for Mills it was a welcome challenge. “We've been logging for 25 years,” Mills says, “and it doesn't take much to see logging is almost over. If we wanted to stay here we needed other work, and compost is perfect. For centuries, our ancestors put fish and seaweed in their gardens. Everyone composted, but no one knew we could make money at it.”
Because of space limitations, in 2003 the composting operation expanded to two additional sites, one nine and the other 12 miles from town. By the end of their second season in full production, Totem Soils had established 4,000 linear feet of windrows of compost, enough to fill 1.5 million bags.
COMPOST INDUSTRY SUPPORT
Bob Mills is the first to admit that he had lots to learn about the science and art of commercial composting. Early on he attended a compost seminar hosted by the Alaska Wood Utilization Center, and in October, 2002, he flew 1,000 miles south to Seattle to attend a five-day Compost Facility Operator Training sponsored by the Washington Organic Recycling Council (WORC). Held at Washington State University's Puyallup Research Station, the training was a crash course in commercial-scale production, with intensive hands-on experience mixing various feedstocks and site visits to the nearby LRI Organic Recycling Center and the Cedar Grove Composting facility. According to Mills, the Facility Operator Training was extremely challenging. “I'd been logging and fishing for 30 years,” he said, “and this was a whole new world to me.”
At the end of their first season of operations, Silver Bay Logging went bankrupt, cutting off Totem Soils' source of a bulking agent. Kake Foods' composting facilities were surrounded by slash and downed timber from old logging operations, so grinding their own wood wastes was a logical next step.
THE MARKETING CHALLENGE
Producing a high-quality compost was just the first challenge faced by Kake Foods. Their second, and perhaps even greater, challenge is marketing the finished product. Although isolated from urban areas, Kake has excellent access to both Alaskan and “Lower 48” markets via the Alaska Marine Highway. As Mitchell puts it, “Every container ship going between Seattle and Juneau goes right past our door.”
In 2002, Kake Foods was awarded a $47,327 USDA Value-Added Producer Grant to “conduct a feasibility analysis to determine the economic viability and sustainability of producing organic compost from seafood by-products and wood waste.” The funding enabled the company to contract with Aadland Marketing Group in Anchorage to conduct research and develop a long-range strategy for Totem Soil to capture a share of the $5 billion lawn and garden consumables industry in the U.S.
Aadland cofounder Gregory Galik spearheaded the Totem Soil market research. Because the primary market for high-quality compost is in the “Lower 48,” one of the first objectives was to conduct focus groups with potential customers at selected nurseries in Oregon and Washington. Galik interviewed a total of 23 gardeners to gain insight into their habits and preferences. In their evaluation of the Totem Soil container mix, focus group participants expressed an appreciation for the product's rich appearance, moist feel, and forest smell. They liked the fact that it is an all-natural, all-organic product made by recycling what would otherwise be waste products, and they liked the fact that it came from Alaska with its connotations of pristine beauty.
Along with market research, Aadland designed two color sales brochures and a comprehensive website (www. totemsoil.com). In addition to background information about the Kake tribal community and its composting operation, the site also includes the latest product analysis from Woods End Research Laboratory.
Aadland Marketing recommended that Kake Foods target the retail nursery market with a high-quality container mix packed in attractive 12-quart bags. Kake Foods' initial plan was to sell 25 to 50 pound bags of compost under the name “Alaska Thunder Soil,” but over time the idea was refined to marketing a higher-value, certified container mix under the brand name “Totem Soil.” When told that the product is made with composted salmon, crab and kelp, one of the first questions asked is whether it smells like fish. According to Bob Mills, “Our compost is cured a full year before packaging and there's not one trace of fish odor. It's amazing! It smells like the deep forest.” One of Totem Soil's selling points is the moisture-holding capacity of the composted wood chips. The finished container mix is screed to three-eighth inch with a moisture content of 35 percent to 45 percent.
RETAIL OUTLETS, BAGGING OPERATIONS
With an inventory of Totem Soil in stock and colorful brochures in hand, Kake Foods was ready to introduce their new container mix in the winter of 2003-2004. They were disappointed to discover that garden buyers for the major chain stores had already made all of their purchasing decisions for the coming season. They have, however, introduced Totem Soil at a family-owned chain of six stores in the Seattle metropolitan area, and they're working hard to establish additional retail outlets. The chain introduced the product at a retail price of $4.95 for a 12-quart bag. Initial sales have been brisk.
In fall 2003, Kake Foods purchased a Model 170 Bouldin & Lawson bagger which can be set to fill bags ranging from eight-quarts to three-cubic feet.
Up to five people are needed for the bagging operation. A machine operator uses a front loader to fill the bagging machine's four cubic yard hopper with container mix. The bagging operator stationed at the hopper uses a foot pedal to control an automatic chute which fills each bag to the pre-set level. The filled bags are then passed to another person who closes them with a hot air sealer. From there, the bags are moved on a conveyor belt to two stackers who place them on pallets.
In addition to selling bagged container and compost mixes, Mills said they want to ship Totem Soil in large, cardboard totes that can accommodate up to 2.2 yards weighing 1,300 to 1,500 pounds, depending on moisture content. An organic fertilizer dealer and a Seattle-area landscape firm have already expressed interest in the bulk product.