Mendocino Co. is part of Lundberg Family Farms' quinoa diversification

(An earlier version of this story mistakenly appeared on the website before the editing process was completed.)

After 75 years in the rice business, Lundberg Family Farms found itself in 2012 faced with a vexing issue. Rice grown on farms in California and other states was found to absorb arsenic, a naturally occurring element found in soil, water, plants and animals that can cause cancer.

Four years later in April, the Food and Drug Administration set arsenic guidelines of 100 parts per billion for rice eaten by infants. Lundberg rice tests at an average of 93 parts per billion. For adults, the FDA said “it did not find a scientific ... basis to recommend the general population of consumers change its rice consumption.”

Lundberg – a pioneer in organic brown rice – then and today faced the issue straight on, with CEO Grant Lundberg promising that it supports “consumers’ right to know about the food they are eating” and that Lundberg is “committed to transparency on all issues.” For instance, the company says it is one of the few producers to provide its test results publicly.

Now the company is responding to consumers on another front: Producing domestically grown quinoa, a tiny seed consumed like a grain, that has surged into the American natural foods market. Quinoa had been mostly imported from Peru, Bolivia, Ecuador and Argentina. Lundberg Family Farms aims to become the king of domestic quinoa and has has acquired land to grow quinoa in cool growing zones nearby, particularly in Humboldt County.

“We want to become the leading organic quinoa supplier in the U.S.,” CEO Lundberg said. “We have some learning to do. It could be a little bloody on the startup (he lost a couple of crops due to storage mistakes) At the end, we think there’s value there. We will figure it out.”

Lundberg headquarters are located about 17 miles south of Chico. The company, with 369 employees, has annual revenue estimated by the Business Journal of $120 million, mostly from rice or rice products. The family owned company does not disclose revenues and would not confirm the estimate. Lundberg has 16,384 acres under rice cultivation and expects a 2016 crop at 100 million pounds. Rice from Lundberg sells in half the roughly 38,000 supermarkets in the United States, according to Lundberg, the company’s CEO since 1998.

The market for quinoa is expanding fast, and Lundberg’s timing is good. Unlike rice, quinoa does not absorb much arsenic. “It doesn’t have the same plant biology,” said Lundberg.

“When it originally hit,” Lundberg said of the arsenic issue, “that Dartmouth study” and there was “another shaking of the trees about a year later, we really saw impact on our sales.”

Quinoa is actually a goosefoot seed that absorbs very little arsenic. That fact, plus the explosion of quinoa’s popularity as a food in the past few years due in part to its high content of complete protein, could play an increasing role in Lundberg’s future. Packaged quinoa sells for nearly twice the price of packaged organic rice. Quinoa has more and higher quality protein than rice, and cooks in 15 minutes, compared to 45 minutes for long-grain brown rice.

Starting in 2013, a year after the arsenic issue, the multi-generation family owned company began to look into quinoa. “In a few years, imports grew by 300 percent,” Lundberg said. “We had a number of retailers come to us” and ask for domestic production of quinoa. “We got our directors to approve a strategy. We don’t expect to make a return for at least a couple of years. This built on our strengths. We have farming operations, a nursery, seed development for rice and other crops, storage systems, milling systems.”

QUINOA PREFERS COOL

Lundberg Family Farms already cultivates 800 acres of quinoa and seeks to expand production. But quinoa prefers cool, dry growing conditions. If temperatures rise above 95, common during August in Butte County near Chico, quinoa crops fail. Most land under production for rice by Lundberg is unsuitable for quinoa.

Washington State University researches quinoa, which grows well in the western part of the state. “We joined with them and invested in some of their programs,” Lundberg said. “We set up plots all over the West,” including the Olympic peninsula down to the Imperial Valley in southeastern California. He looked for climate zones where quinoa might thrive.

“We found a few growers” who were succeeding with quinoa, including Blake Richard, who dry-farms quinoa in Ferndale, 20 miles south of Eureka in Humboldt County, and sells it to Veritable Vegetables, an organic-produce distributor based in San Francisco. In 2015, Richard began selling quinoa under contract to Lundberg Family Farms.

Lundberg has 567 acres under quinoa cultivation in Humboldt County, 85 acres in Mendocino County, 20 acres near Smith River in Del Norte Co., 35 acres in San Mateo Co. and 31 acres on the Olympic Peninsula.

‘RAW EDGE OF FAILURE’

Foggy, coastal climates work well for quinoa. “We had to earn some credibility to grow this,” Lundberg said. The company bought about 50 acres near Loleta, 13 miles south of Eureka. “We’re learning everything, from seed varietals, how to purify the lines, understand processing, removing the saponin layer. This is the first year we have done large bulk storage” of quinoa, he said. “We are out there on the raw edge of failure and success based on this gamble,” he said. “It’s a great food. The opportunity to grow it here is beneficial to our local community. We can add a stability in supply and quality that we think is very competitive to the market.”

Domestic production could also allow lower prices. Quinoa typically sells for more than twice the price of rice, at nearly $8 or more a pound in Lundberg packages.

“We want to build a stable price. Growers can depend on certain economics, and that builds the crop’s value and local community,” Lundberg said.

Lundberg Family Farms is experimenting with a reasonable level of production for quinoa from an acre of farmland. “We thought it was around 1,000 pounds,” he said. “Now we’re seeing it might be double that. You want crops that have a good gross and net.”

This year Lundberg’s quinoa yield was about 1.5 million pounds off nearly 800 acres, producing an estimated $5 million (estimated by the Business Journal) in revenue.

LUNDBERG DOMINATES RICE

Starting in 1969, Lundberg made its name as a producer of top-quality organic brown rice, a staple in the health-food industry and the macrobiotic diet. The company dominates the market for organic rice, used in many gluten-free products.

In 2015, United States consumers ate nearly 4 million metric tons of rice. People in China, the biggest rice market in the world, consumed close to 150 million metric tons. India devoured nearly 100 metric tons. Those two countries combined account for half the global consumption of rice, which delivers some 20 percent of total calorie input for more than half the world’s population, especially poor people. For nearly half a billion impoverished people in Asia, rice provides half their calories. In Latin America, annual average rice consumption is about 100 pounds.

Lundberg isn’t giving up on rice. Though Lundberg Family Farms has sold rice since 1937 and organic brown rice for some 47 years, there’s plenty of room to expand even if consumers limit their intake of rice in a balanced diet. There are roughly 110 million households in the United States. “We’re in about 4 million,” Lundberg said. “From that point of view, we’ve got market growth. Just add new households.”

Lundberg Family Farms sells its products in half the grocery stores in the U.S. There are about 38,000 supermarkets in the country with gross sales above $2 million a year. The company’s first packaged tri-color quinoa went into Whole Foods stores starting more than a year ago.

“Perception is changing, and we need to stay up with trends,” Lundberg said about his company’s move into quinoa. “Just like with organic brown rice, we were one of the first in 1969. That got us that heritage label that is so valuable. This is another piece of that opportunity. We could be the first.”