Sask. cultivates friends in high places

April 29, 2005

Release Date: April 29, 2005
ST. LOUIS, Mo. — Rich Stegmann is the kind of businessperson that every small Canadian company with aspirations of making it big in the U.S. market should know.

Fortunately for Philom Bios Inc. of Saskatoon, the manufacturer of biological-based crop inoculants, the company has been fortunate to have the experience and wisdom of this veteran Missouri business leader on its board of directors.

Stegmann is the chair of Lange-Stegmann Company, a private fertilizer distribution firm located a couple of miles from the famous St. Louis arch in a gritty industrial area where rail lines converge just to the west of the Mississippi River flood levee.

While his company buys commodities such as phosphate and nitrogen fertilizer from a variety of companies and receives much of these products through the river barges system, Lange-Stegmann Company buys its potash exclusively from Potash Corporation of Saskatchewan, Inc. It was through the business relationships that Stegmann has with PotashCorp executives that he was introduced to John Cross, the founder of Philom Bios, who wisely invited the Missouri business leader onto his board.

Stegmann was there a few years back when Philom Bios faced a takeover threat from its major competitor, Iowa-based Becker Underwood. That crisis over with, Stegmann was on the selection committee of the board that oversaw the hiring of Calvin Sonntag as the president and CEO, succeeding Cross in the day-to-day leadership.

More importantly, Stegmann’s connections in fertilizer distribution in the Midwest, but particularly Missouri and Illinois, will likely prove invaluable as Philom Bios hopes to prove to soybean farmers that paying money for another crop input is an investment that will pay off in yield.

One thing was clear to me after a day in which Stegmann kindly took the time to drive me around to meet some of his company’s fertilizer dealers and also champion Missouri corn-grower Jeff Steinhoff, who grows 1,900 acres of corn and soybeans in St. Charles County, north of St. Louis.

Midwest corn belt farmers don’t spare the potash, potassium and nitrogen on their corn crops. But having spent that money, the next year they plant soybeans on last year’s corn and hope the potash and potassium they put on for the corn is sufficient to carry the day for their beans.

If farmers can be shown that application of a biological inoculant such as Philom Bios-branded TagTeam can help soybeans take up more nitrogen and phosphorus left over from the corn crop, the $10 million in revenue that the Saskatoon company has built up by selling inoculants to Canadian pulse crop producers could be dwarfed by the potential revenue that could come out of what Stegmann calls the I-states — Iowa, Illinois and Indiana — where corn and soybeans are the natural rotation.

But there is one more connection that Philom Bios as a company has with Stegmann.

Around 1996, Rich Stegmann took a bit of a risk when he bought a subsidiary business from fertilizer giant IMC.

This company was called Agrotain International, which has multiple patents on a chemical molecule and processes which can stabilize nitrogen fertilizer, particularly urea granular. Stability means that for a period of at least 14 days, it can prevent nitrogen from interacting with the environment and becoming volatile. So the 30 per cent of urea which otherwise would be lost to crop growth through leakage to air or runoff water is instead still available in the soil for release through the growing season.

Where Philom Bios comes into the picture is through the fact that the Saskatoon company is now the Canadian distributor for Agrotain, giving the company a potential large revenue stream in Canada while it develops its revenues in the U.S. corn belt.

In a short phone conversation I had last week with Sonntag before leaving on my trip through the U.S. Midwest, the Philom Bios leader seemed as excited about the potential for Agrotain in Canada as he was with the company’s bid to get U.S. soybean farmers on board with their own manufactured inoculants.

One reason that Stegmann has the time to spend a day with a visiting business writer is that he has turned over the day-to-day operation of Lange-Stegmann and Agrotain International to his son Mike and works on what he calls “special projects.”

After spending a day in the company of this fine Missouri gentleman, I’d say that Philom Bios has done well indeed on the special interest he has shown in the potential of this growing Saskatoon company.

Business editor Murray Lyons is travelling through the U.S. Midwest looking at how Saskatchewan companies, large and small, are making their impact in the U.S. market. His trip has been supported through a travel fellowship award by the Saskatchewan Trade and Export Partnership. His stories on the trip will appear in coming days in The StarPhoenix.

Murray Lyons
The StarPhoenix
April 29, 2005

© The StarPhoenix (Saskatoon) 2005