Arkat Nutrition bounces back

Just four months after a devastating February tornado caused $ 19 million in damage to Arkat Nutrition Inc. ’s plant, the southeast Arkansas animal feed manufacturer was back in operation.

“It was a magnificent experience,” said Rick Wohlschlaeger, president and chief executive officer of the company, referring last week to the outpouring of help that Arkat received.

“Some of my most rewarding days came during the rebuilding,” following the Feb. 24 twister that tore through Dumas with winds of more than 150 mph, Wohlschlaeger said.

Today, the dormant hulk of Arkat’s “Plant 1” is the only visible remnant of Mother Nature’s fury that day. The storm either destroyed or damaged 25 businesses and nearly 100 homes in Dumas, according to the National Weather Service. No one was killed in the town, which is about 45 miles southeast of Pine Bluff.

Last week, in the adjacent Plant 2, a 150, 000-square-foot manufacturing building, a handful of employees were controlling highly automated equipment that churned out 8-ton batches of premium Enhance brand “Hunter’s Edge Formula,” a dry, pelletized dog food.

Meanwhile, in nearby Plant 3, a 125, 000-square-foot building, Enhance brand “Puppy Formula” was being bagged and warehoused on shrink-wrapped pallets awaiting sale.

In April, Arkat will begin its seasonal production of catfish feed — the company’s original product line, which still accounts for about 60 percent of total sales — along with commercial feed for baitfish, tilapia and shrimp, Wohlschlaeger said. During the commercial aqua-feed season, which runs until October, Arkat ramps up from two to three shifts per day, expands production from five to seven days a week, and increases the number of employees from about 70 to roughly 100, he said. About 85 percent of Arkat’s raw materials are produced in Arkansas, Wohlschlaeger said. Soybean meal is the major ingredient in commercial fish feed, and chicken meal is the No. 1 component of pet foods. Arkat spends about $ 32 million annually to buy those and other products including rice bran, corn, corn gluten and wheat, he said. The plant constantly tests its raw materials, intermediate goods and final products for everything from toxins to density and protein content. Product samples are retained for 18 months to facilitate product traceability and recalls, Wohlschlaeger said.

PRODUCT EXPANSION Founded as Arkat Feeds in 1989 by Kelly Farmer and nine other area catfish growers, the company was renamed Arkat Nutrition in 2001. Wohlschlaeger, who previously worked for Ralston Purina Co. in St. Louis and Doane Pet Care in Joplin, Mo., became a part owner that same year and began spearheading efforts to diversify production. In addition to catfish feed, Arkat now manufactures animal feed for dogs, cats, horses, deer, koi (a type of carp ) and turtles. The company, which can produce 350, 000 tons of pelletized animal feed each year, currently sells about 135, 000 tons annually. During the past six years, Arkat has branched out of the highly seasonal catfish feed business into other animal-feed markets that offer greater year-round growth opportunities. Between Feb. 24 and June 28 last year, when Arkat had to contract for production with outside manufacturers, it took six pet food manufacturers and three aqua-feed manufacturers to produce the Arkansas company’s broad array of products.

Arkat now competes with some of the world’s largest corporations, including Nestle S. A., which owns the Purina brand of dog and cat food; Colgate-Palmolive Co., which owns Hill’s; Procter & Gamble Co., which owns Eukanuba and IAMS; and Mars Inc., which owns Kal Kan and Whiskas.

“The way we’re successful is by carefully selecting niche markets,” and then hiring expert nutritionists to formulate species-specific diets, Wohlschlaeger said. When Arkat decided to produce and market equine feed, for example, the company turned to Kentucky Equine Research Inc., which formulated rations for the last 11 Kentucky Derby winners, he said. In the near future, the company plans to begin producing trout feed.

Arkat’s greatest expansion has occurred in the booming dog- and cat-food markets.

More than 71 million U. S. homes, or 63 percent of all households, own a pet — 88. 3 million cats and 74. 8 million dogs, according to the American Pet Products Manufacturers Association’s 2007-2008 survey of pet owners.

U. S. dog food sales totaled $ 10. 8 billion in 2007, up 24 percent from 2003, and cat food sales totaled $ 5. 0 billion, up 15 percent, according to the Pet Food Institute. Arkat’s pet-food brands range from its super premium VF or Veterinarian Formulated Complete to low-end offerings of “Well Fed Red” for dogs and “Cat Man Blue” for cats. About 18 percent of Arkat’s pet foods are exported, Wohlschlaeger said, with shipments going to Canada, China, Hong Kong, Israel, Mexico, Taiwan, Thailand, Trinidad and Turkey. “We have the No. 1 cat food in Israel, shipping about 10 container loads a month,” he said.

CATFISH NUTRITION Arkat’s cornerstone product continues to be commercial catfish feed, which is delivered directly to catfish farms in 20-ton truckloads. “I buy all of my feed from Arkat,” said Wayne Branton of Mainline Fisheries, a commercial catfish farm near Wilmot in Ashley County. “Their service is second to none.” Branton, who manages about 1, 000 water acres of catfish ponds, said his approximately 3 million head of fish consume about 3, 500 tons of feed annually.

Arkansas, the country’s No. 3 producer of farm-raised catfish, had 137 catfish operations that used 30, 400 water surface acres for production as of Jan. 1, 2007, according to the U. S. Department of Agriculture’s National Agricultural Statistics Service. The state also ranks third in catfish feed deliveries, accounting for 141, 600 tons through the first 11 months of 2007, or more than 16 percent of the 850, 942 tons delivered nationwide.

Arkat is one of just a handful of catfish feed manufacturers, said Roger Barlow, president of The Catfish Institute, a Jackson, Miss.-based trade group. Major competitors include Delta Western Feed Mill Inc. of Indianola, Miss.; Fishbelt Feeds Inc. of Moorehead, Miss.; Land O’Lakes Purina Feed LLC of Macon, Miss.; Alabama Catfish Feed Mill LLC of Uniontown, Ala.; Cargill Animal Nutrition of Lecompte, La.; and Topwater Feed Mill of Wisner, La., Barlow said.

Catfish feed is a highly seasonal business because of the nature of catfish, said Carole Engle, director of the Aquaculture / Fisheries Center at the University of Arkansas at Pine Bluff.

Catfish are “poikilotherms,” Engle said. “What that means is they cannot regulate their own body temperature.” As a result, catfish body temperature and metabolism fluctuate with the temperature of their water. So, catfish in Arkansas tend to be fed from April until October and eat little or nothing during the colder months.

“The optimal temperature window for a catfish is about 85 to 95 degrees Fahrenheit; that’s when they’re eating and growing at the fastest rate,” Engle said.

Rebecca Lochmann, a fish nutritionist at UAPB, has been doing research on optimal feed formulas for cooler water temperatures.

“We’re interested in any way that we can increase the food intake of the catfish when it’s cold,” she said, to speed up the growing process.

Most catfish take about 18 months to reach the average market weight of 1. 5 pounds, when they are filleted and frozen, Engle said. Branton, however, feeds his fish for three years, until they reach an average weight of 3 pounds, and sells them fresh to four Los Angeles distributors who sell them, in turn, to ethnic supermarkets and grocery stores.

Like all catfish farms, Mainline’s No. 1 cost of production is feed.

At the 10-year average price of roughly $ 245 per ton, catfish feed represents about 45 percent of a farm’s total operating costs, Engle said.

Increasing feed costs, fueled by the soaring prices of soybeans, rice, corn and wheat, are a major concern of catfish farmers.

“All my feed last year was booked at $ 214 a ton,” Branton said. “I haven’t booked any for this coming year because feed is $ 330 per ton.” Mainline expects to lose money in 2008, he said, because of increased feed prices.

“If we’re going to stay in this game, we’re going to have to continue to operate and just try to cut our losses as much as we possibly can.”