Siblings Kim and Matt Davidson didn't anticipate when they left other careers to take over family-owned Davidson Commodities Inc., of Spokane, that changing market conditions would spur them to revamp the 20-year-old grain-trading business almost immediately.
Now that the transformation is well under way, and despite having to implement it during a sales-sapping recession, they're exuberant about the long-term outlook for the company, as well as the short-term prospects for expanding its sales.
"We have no doubt that by next spring it's probably going to blow up on us," says Matt Davidson, citing in particular the potential for explosive sales growth of new products such as a cover-crop seed dubbed Mighty Mustard that the company has begun marketing.
Trading companies such as Davidson Commodities, which occupies a modest-sized office space on the eighth floor of the Northtown Office Building, specialize in the movement of commodities, handling logistics and acting essentially as middlemen between producers and direct sellers.
Davidson's original niche, under a different company name, involved acquiring various types of grains from grain elevators across a sizable part of the U.S. and Canada, and supplying them to birdseed and cereal makers, mostly in California but also in other states and even to customers in Mexico. Cereal-related sales diminished over time, though, as big food producers began bypassing trading companies to buy grains directly, leaving birdseed makers as the Spokane company's main customers, the Davidsons say.
Amid signs of the grain-trading industry shrinking nationally, Davidson Commodities decided to "return to our roots, pardon the pun," Kim Davidson says.
It put a more intense focus on working with growers in this region, particularly those affiliated with the Pacific Northwest Farmers Cooperative (PNW), a Genesee, Idaho-based organization that also has an office in Colfax, Wash., and represents more than 750 growers. Also, it began targeting more aggressively the growing organic and "non-GMO" (genetically modified organisms) market niches and mapping out plans to expand beyond its traditional wholesale realm into retail sales.
"We're really passionate about supporting the farmers," Davidson says. "The fact that they're supplying non-GMO (products) is huge to us. We're really excited to be part of that."
Many more consumers now are striving to buy organic and non-altered produce and, moreover, are interested in knowing how and exactly where it's grown, which dovetails with Davidson Commodities' intensified sustainability and traceability areas of emphasis, she says.
For example, Mighty Mustard, which is grown by PNW members, is a University of Idaho-developed mustard seed variety touted for its natural chemicals that suppress weeds, harmful insects, and soilborne diseases.
While well-suited as a condiment, and studied extensively for its biodiesel potential, it also contains high levels of natural chemicals that suppress weeds, harmful insects, and soilborne diseases. Those qualities make it a great alternative for growers who want to avoid or minimize the use of toxic herbicides or pesticides in their small farms or gardens, the Davidsons assert. By recycling nitrogen from deep in the soil and increasing organic matter, it also helps transform old dirt into rich planting soil, they say.
Davidson Commodities buys the mustard seed in bulk from PNW and, in collaboration with the cooperative, then repackages it in five- and 25-pound bags and ships it to people who order it by phone or via the company's Web site. The packages, sold at retail prices of $8 for the smaller bag, plus shipping, and $75 for the larger one, shipping included, include planting and growing instructions. The company packages the smaller bags at its North Side offices, and has PNW package the 25-pound bags in Genesee and ship them from there.
Though Davidson Commodities is buying the seed from PNW to simplify bookkeeping, "there's a lot of partnering involved" between the two in the marketing and sale of grains produced by PNW members, Matt Davidson says, adding, "They want us to be the face of Mighty Mustard."
Cover crops, such as Mighty Mustard, are crops planted mostly to manage things such as soil fertility, pests, and diseases. They often are used to provide added plant diversity to a cash-crop rotation, or the beneficial practice of planting different types of crops on the same field over sequential growing seasons to help balance soil conditions.
Kim Davidson says she and her brother did extensive research on Mighty Mustard before getting involved in merchandising it, and have gotten feedback from many people who have bought and tried it. "Every single person we've talked to has been absolutely thrilled with the results," which has helped fuel optimism about its retail market potential, she says.
Davidson Commodities has its own Web site, but a couple of months ago launched a separate Mighty Mustard Web site as part of that ramp-up. It's selling the specialty mustard seed through that site, but also using the site as an educational tool for people ranging from novice growers to researchers, she says.
Meanwhile, Davidson now is preparing to venture, for the first time, directly into the retail market at the local level as well. Matt Davidson, who oversees sales and marketing for the business, says he plans shortly to begin a push aimed at getting Mighty Mustard and other PNW products the Spokane company is marketing, such as some specialty varieties of lentils and garbanzo beans, onto the shelves of stores here such as those operated by Northwest Seed & Pet, Big R, and the Aslin-Finch Feed Co.
Zipline Interactive, of Spokane, designed the company's Web sites and packaging, and Justus Bag Co., of Spokane Valley, makes its larger shipping bags, the Davidsons say.
Bill Newbry, PNW's CEO, says, "I really admire their tenacity in pushing this thing forward. We have merchandisers within the company, but this is more of a specialty merchandising area, and they're really dedicated to it."
The Davidson family moved to Spokane in 1983 from northern Minnesota, where it lived on a 40-acre hobby farm, after Matt and Kim Davidson's father, Mike Davidson, was laid off by a grain-trading company he worked for there. He took a job with a grain-trading company here, then together with partner Ron Jess formed R.J. Commodities Inc. here in 1990, his children say.
That company began acquiring grains from grain elevators as far away as the Dakotas and Manitoba, Canada, and providing them to birdseed and cereal makers, and its sales grew substantially during that decade and into the following one. Mike Davidson and his wife, Diane, bought out Ron Jess' interest in the business in March 2005, when Jess decided to retire, and changed the company's name to Davidson Commodities on April 1, they say. At their father's invitation, Matt Davidson, 34, joined the business in June of that year, and Kim Davidson, 44, came onboard in July. They now are majority owners of the business and are in the process of buying out their parents' remaining interest in it.
Kim Davidson previously had been senior writer-producer in KREM-TV's creative-services department, working there for 18 years, and Matt Davidson had been employed as a staff trainer for Bank of America customer call centers, but both say they were ready to move on.
"It was a great opportunity for both of us," but also involved a substantial learning curve, Matt Davidson says. Receiving guidance from his father, he says, "I made a sale the first day. I don't know what I had done to make the sale, but he assured me I had."
Their father retired in 2008, and their mother, who also was working at the business after a long career as a mental health counselor, left the following year.
Not long after taking over, though, Matt Davidson says, "We started to see these little accounts disappearing. We realized we really had to figure out a new strategy" to prosper long term, which led them to where they are now.
The Davidson siblings say that although their father is mostly retired, he's always available to give them advice. "He basically is our Obi-wan (Kenobi)," says Kim Davidson, referring to the fictional wise Star Wars character. "If we have questions, we call him."
Though some people are skeptical at how well a brother and sister can get along in the challenging environment of running a small business, Matt Davidson says, "We balance each other out very well. I'm very much more sales oriented, and she's more research and development oriented. I do more public outreach."
The company's roughly 600-square-foot North Side office is a mix of typical office furnishings and equipment and scattered bags of grain of various sizes, plus empty bags waiting to be filled.
The Davidsons are the company's only employees for now. They decline to talk specifically about the company's annual revenues, other than to say the company's volume is probably no more than a third of what their father's and Ron Jess' company, R.J. Commodities, was doing at its peak.
Matt Davidson adds, though, "If these (new) products do half as well as we expect them to do, we'll blow Mike and Ron out of the water." Adds Kim Davidson, "We see it all going up."