Despite Dire Outlook, a Small Farm Persists : Agriculture: In the shadow of conglomerates, growers worry about markets, weather and pests.

He has a master’s degree in business from Harvard, a bachelor’s in economics from Stanford and some blunt advice for the farmers at Underwood Ranches.

Liquidate.

If the partners auctioned off their tractors and sold their land, they would no doubt reap a hefty sum. Enough, surely, to invest in a solid mutual fund, kick back and watch the dividends roll in.

At least, that’s how consultant Bill Knoke figures it.

Hired to draft a long-term strategy for Underwood Ranches, Knoke discovered that the most sensible course might be the most radical. Half tongue-in-cheek, he recommended that the farmers abandon farming.

“People in agriculture do it for the love of agriculture and not to make money, and that’s a problem,” Knoke said. “They’d be better off liquidating everything. They could invest the money and earn 10% without even working for it.”

Solid economic students themselves, the three partners who dominate Underwood Ranches understand their consultant’s advice.

But follow it? No way.

Not now.

Not now, when the first, optimistic shoots of corn have begun to stretch their lady-finger leaves on the rich dirt known as Conejo Ranch. Not now, when they see promising new products in the pipeline, crops never before sold in North America.

No, not now. But the idea lingers, tempting.

As spring sags into summer, the three worry about markets and weather and pests. “There’s always a fear of becoming another statistic,” Craig Underwood says, to knowing nods. “When prices are down, you wonder if they’ll ever turn around.”

That fear has grown especially sharp because of the ferocious competition roaring through the produce industry. Agribusiness conglomerates are now eyeing lucrative niche crops, such as baby carrots and esoteric salad greens, which were once the exclusive province of smaller farmers.

The big boys of vegetables--the Doles and Del Montes--are poised for a killing. And on their 60-acre patch outside Camarillo, the Underwood partners feel the threat.

Their specialties, such as the gourmet greens that flourished on Conejo Ranch last season, no longer seem quite so special. Their sure things are undeniably unsure.

So in some ways, the advice to liquidate makes sense. Especially since Conejo Ranch--newly cleared and leveled, commanding majestic mountain views--might fetch a good price from developers.

But the farmers are not yet ready to give up.

They sunk nearly $575,000 into Conejo Ranch last spring, buying the field with borrowed money and borrowing more to prepare it for farming.

It’s the only piece of property the three hold title to. They work other fields in Ventura County, have for years, but those plots are rented from absentee landlords. Conejo Ranch is theirs.

Theirs to farm--and theirs to gamble on.

In buying the field for vegetables, the partners bucked a nationwide trend. Strip malls and golf courses have sprouted everywhere, gobbling up huge swaths of agricultural soil. Nearly 2 million acres of United States farmland vanish each year, paved under to make way for homes and shops and parking lots.

As little guys in the produce industry, the Underwood Ranches partners understand the pressures that prompt farmers to divest. Yet, tugged toward the land, they find agriculture all but irresistible.

“When it’s good,” partner Jim Roberts says, “it’s really sweet.”

So far this year, it’s been just shy of sweet.

The ranchers have plucked a first crop of salad greens from Conejo Ranch, the 60-acre plot that they bought with borrowed money nearly a year ago. They sold about three-quarters of the harvest, at moderate prices, and mashed the rest into the soil to decompose--a colorful, all-organic fertilizer.

The greens, turnips and radishes proved “an average crop,” Roberts said. Roberts hopes for better luck with Conejo Ranch’s next crop.

While the partners will continue to grow mixed greens on the fields they rent from absentee landlords, they’ve already begun planting a summer stand of corn on Conejo Ranch.

Wanly waving two leaves here, three leaves there, the seedlings stretching tentatively skyward scarcely seem capable of nurturing plump yellow and white kernels.

Even at six weeks, the plants’ stalks looked barely as thick as an index finger.

But that was thick enough to please Natividad Zavala, the planting foreman.

As he meandered through the field one recent afternoon, checking up on crews fertilizing and seeding the soil, he nodded with fatherly pride toward the regiment of corn plants.

“It looks beautiful,” Zavala said.

The tiniest sprouts crowd close together--nearly 30,000 of them crammed into a single acre. But after about a month, the farmers pull the weakest shoots to give the strong ones breathing room, thinning each row by a third or more.

“When you understand the plants, they tell you what to do next,” Zavala explained.

A month into their 78-day lifetime, some seedlings began signaling their demands. The baby shoots, stretching tentatively skyward, looked somehow sickly, limp and forlorn.

Francisco Ambriz, a field worker for nearly half a century, noticed the telltale listlessness.

Scrabbling around in the dirt, he uncovered a clue: a scrawny, squiggly, squishy green-brown worm. Palm outstretched, Ambriz showed the culprit to his boss, Zavala. The portly planting foreman poked at the worm, then tossed it disdainfully into a ditch running alongside the field.

“He’s hungry,” Zavala said of the hapless pest. “But we’ll have a remedy for him.”

The remedy of choice turned out to be Sevin Bait, a granular pest killer formulated to zap cutworms. The mixture contains a potent chemical, but 95% of the stuff is simple bait, designed to lure the worms in for a fatal nibble when they surface at night.

Sprinkling 30 pounds of the pesticide on each acre of Conejo Ranch successfully wiped out the cutworms, which like to gnaw at baby corn plants.

“I walked the field (recently) and saw a few fresh kills, but no new worms,” Roberts said after the mid-May dousing. “I think we knocked ‘em out.”

He certainly hopes so, because his partners at Underwood Ranches are counting on corn in a big way this year.

Not the standard, green-jacketed corn sold for a quarter an ear, with the long silk tassels and the occasional, startling maggot. The corn they’ll sell is an upscale, easy-to-deal-with version--pre-cut, pre-husked, and guaranteed worm-free.

Three years ago, the partners’ first attempt at marketing the ready-to-eat Somis Creek Corn flopped miserably.

The corn itself was good, they said, so sweet and tender that you could eat it raw. But demand was low--very low. Underwood ended up plowing under about half the crop, leaving it to rot in the fields. “That’s not something we like to do,” he said.

Burned once, the partners cut way back on corn production last summer. Now, however, they’re ready to try again, backed by $80,000 worth of equipment that should fully automate the picking, husking, trimming and wrapping.

“Everyone has their fingers crossed,” Underwood said.

Secretive about their sales figures, the partners are reluctant to publicize exactly how many acres of corn they’re planting this year. But all of Conejo Ranch will be covered, plus some rented fields.

It’s an unusual tack for Ventura County, where corn accounts for less than 1% of vegetable crop sales each year. On the agricultural commissioner’s scale of crop value, corn ranks below even obscure vegetables like kale and cilantro.

But at Underwood Ranches, the partners see their corn as an ideal “value added” product--a semi-prepared fresh vegetable that will command higher prices than the husk-it-yourself variety.

The trio has concentrated on marketing value-added products, from bagged salad to peeled carrots.

Problem is, their competitors have the same idea.

Perfect for the harried but health-conscious shopper, ready-to-eat products fly off the shelves. Industry insiders rhapsodize about value-added veggies in sound bites studded with superlatives: Explosive! Exciting! The wave of the future!

“The hottest category in the supermarket,” raves Ken Hodge, editor of Fresh Cut, a magazine focused solely on the value-added industry.

At least 70% of the new produce items introduced in American supermarkets over the past two years have been semi-processed fruits and vegetables, from bagged salads to pre-cracked coconuts, according to a Fresh Cut survey.

Another trade publication, Produce Merchandising, found 43% of shoppers willing to buy more fresh vegetables if they were packaged conveniently or were easy to prepare.

Toss in the statistic that the average American eats about 90 pounds of fresh vegetables a year, and you have agribusiness executives everywhere salivating about the brave new world of ready-to-eat produce.

And when the big guys salivate, the little guys sweat.

With their limited resources--several hundred employees and sales of less than $10 million a year--the Underwood partners cannot begin to compete with the produce behemoths steadily moving into the prepared-veggie market.

One competitor, Ready Pac, boasts the world’s largest vegetable processing plant in Irwindale, along with 1,000 employees and $130 million in annual sales.

Ready Pac’s dazzling line of salads dominates many supermarket produce aisles, the crinkly plastic bags screaming fuchsia and mustard-colored enticements to buyers.

There’s the Farm Fresh Salad, for example: iceberg lettuce tossed with carrot and cabbage strings. There’s the Caeser Salad Kit: romaine lettuce, croutons and a sealed bag of dressing. There’s even a Santa Barbara Salad: mixed greens sprinkled with tangy radicchio.

“We look like geniuses--everything we put on the shelf sells,” said Chris Nelson, Ready Pac’s chief operating officer.

Ready Pac has boomed so quickly that demand sometimes outstrips supply. Ironically, Nelson has been forced, on occasion, to buy salad greens from Underwood Ranches to fill his own bags.

Other competitors also sometimes purchase Underwood lettuce, though they may have to grovel to get it. Sales director Minos Athanassiadis recalls, with glee verging on gloat, how one bitter rival called him Christmas Eve begging for half a truckload of gourmet greens.

Aside from sweet satisfaction, the partners made money off the deal. In fact, they earn up to 10% of their revenue in any given season from selling produce to competitors.

Their only rule: “We’re not going to take away from our customers to serve theirs,” Athanassiadis said.

For his part, Nelson praises the partners as “very ethical, excellent people” and calls Underwood Ranches “a quality house.” He uses their salad as a backup for his Spring Mix, he said, adding, “I can’t speak highly enough of them.”

Nor can he compete fast enough with them.

With more and more competitors entering the fray, the Underwood partners realize their salad days could soon end.

They generally expect to get a two- to three-year “ride” out of each product, before bigger companies come along and outpace them. That window of profitability looks precariously close to slamming shut on the gourmet salad mixtures.

“We have some technical advantages that are helping us maintain our position,” Jim Roberts said. “And we have some degree of loyalty (from buyers) because we were the first with the salad. But (competitors) have deep pockets.”

Deep pockets that buy a lot.

“We’ve got armies of people with Ph.D.s working in our technology department,” boasts Ready Pac’s Nelson. ‘We have $2-million washing lines and (small farmers) are using Kenmore washing machines. That’s literally the difference.”

Nelson’s description is right on target.

The Underwood partners actually did start out drying their lettuce in Speed Queen laundry machines, plunking in quarters and revving up the spin cycle.

They also experimented with a low-cost, low-tech method of peeling baby carrots: churning them in a cement mixer with a few handfuls of railroad gravel.

“It worked real well,” Underwood recalled, “but the carrots were kind of gritty.”

Gritty, and ferreous. Traces of iron, possibly from the railroad gravel, stuck to the carrots. The veggies didn’t taste metallic, but they did set off magnets on the packinghouse assembly line.

“It wasn’t objectionable, it wasn’t like there were metal shavings in the carrots, but we couldn’t keep on doing it,” Underwood said. So he developed a new approach, more expensive but also more hygienic, in which the carrots roll through a massive sorting and scraping machine.

Perfecting the production and packaging of baby carrots took nearly three years. Developing the salad mixture, and the corn now growing on Conejo Ranch, each took three years as well.

After so much research, the partners feel confident they have a winning corn product. Yet they’re equally sure that competitors will soon be hot on their trail.

“It’s so easy in this business for people to copy what you’re doing,” Underwood said. “We may spend three years developing a product, and once it’s on the market, within six months someone else can copy it.”

Copying is one way to go about it. Stealing is another.

Agricultural espionage, rare in past decades, has become an irritating worry for modern-day farmers.

In one spectacular case, a carrot grower in Bakersfield publicly accused a competitor of sneaking around at night to sketch and measure a brand-new, unpatented harvesting machine. The alleged spy, Dave Yurosek, admitted to The Times last summer that “we had a lot of ideas and went out and confirmed it on (the rival’s) machine.”

Such incidents help explain why Ready Pac posts round-the-clock security guards at every plant. To prevent leaks, the company also keeps employees away from the most sensitive machines, letting them into the processing rooms only on a “need-to-know basis,” Nelson said.

Secrecy has become such an obsession that the National Assn. of Fresh Produce Processors has a hard time getting an accurate picture of the $4 billion-a-year value-added industry.

Even the trade group’s own members refused to give out sales figures during a survey earlier this year, spokeswoman Shelley Sapone said.

“When you grow broccoli, everyone does it about the same way,” Underwood explained. “You look over at your neighbor’s field, and his process is basically like yours. But now, with specialty products, espionage is becoming more important.”

And safeguards are becoming more common.

An experimental variety of corn hand-planted on a sliver of Conejo Ranch is identified only by white sticks lining the rows. Several beds over, a yellow placard marking a tried-and-true variety notes only, “CORN No. 1.”

Each marker corresponds to a file inside the Underwood Ranches office, which lists information about the seed, the fertilizer, the pesticides and other planting secrets.

“We don’t want to write it all down here (in the field) because our competition could come by,”planting foreman Zavala explained. “If everyone knows, we have no chance to earn money.”

Indeed, successful experimentation is crucial for Underwood Ranches’ long-term survival.

The partners have banked their future on a strategy of innovation--developing new products and getting them to market before anyone else catches wind. To that end, they spend roughly 25% of their profits each year on research and development.

“The key for us, as with all guerrilla operations, is to fight around the edges and be quick and nimble,” Roberts said.

Sometimes, they wind up with spectacular failures--like the case of the poisoned potatoes.

Eager to develop a new super-sweet variety of potato, the partners planted a four-acre test crop back in 1992. They expected the potatoes to turn out tender and fresh, tasting of spring itself.

But, as Underwood sheepishly recalled, “We had a little glitch.”

When the first harvest came in, Athanassiadis zapped a plateful of the potatoes in the office microwave and dug into a tasty lunch. Ten minutes later, he began to notice “a very definite sensation of being poisoned.”

“It felt like someone was gripping and squeezing me from inside,” Athanassiadis said. His assistant, who had also gobbled the potato lunch, experienced the same horrifying sensation.

Somehow, they managed to stay calm. The nasty feeling abated within 20 minutes. They recovered completely.

Yet they weren’t too keen on that particular variety of potato.

The culprit, it later turned out, was a type of alkaloid--a natural organic substance that also shows up, in various mutations, in caffeine, morphine and quinine. Found in tomato and rhubarb leaves and some potato skins, the colorless, crystalline substance can poison animals or humans. And it overpowered the other compounds in the tiny test potatoes.

Skittish about poisoning their customers, the partners had to chuck all four acres of the alkaloid-rich potatoes. They wrote off their $6,000 investment as a loss, then started all over again with a different variety.

The three harvested their second test crop this spring--and sent the baby potatoes to a lab for chemical analysis before anyone dared try them.

Pronounced fit to eat, the potatoes are now being test-marketed at several local groceries. Meanwhile, the partners are perfecting yet another new product: salad-ready bags of Easter Egg radishes in white, red, pink and purple hues.

To help them plan beyond the potatoes and radishes, Craig Underwood and his partners recently spent several thousand dollars to hire two strategists.

The first, Danilo Lopez, has three decades of experience in the produce industry. The other, Bill Knoke, has worked with high-tech firms for years, and knows more about aerospace than carrots.

The farmers have pestered their consultants with questions like: How much should the company grow? How can they speed up research and development? How can they encourage customer loyalty?

And, most basically: How can they thrive in such tumultuous times?

“Most people in the industry still don’t have a clue about strategic planning,” said Al Vangelos, a longtime produce executive. “They’re in a now business--they grow it, sell it and move on to the next crop. What (the Underwood partners) are doing is very bright for a company that small.”

The consultants’ suggestions have already prompted some changes.

On Lopez’s advice, the farmers hired two new sales associates. They’re also continuing to study ways to expand existing product lines. Instead of just selling family-sized bags of carrots, for example, they’re looking at snack packs for lunch boxes. The brainstorming may help Underwood Ranches survive the next decade.

But the grand strategies mean little in the day-to-day grind of this hectic spring planting season. Whether fighting off cutworms or fertilizing the soil, the farmers must plow through the daily tasks that nurture life on Conejo Ranch.

As planting foreman Zavala said: “The only things we have are the weather, the earth and the hours we put in. That’s how we make our living.”

ABOUT THIS SERIES

“60 Acres of Hope,” a series that began in October, follows the first year of a Southern California farm. Three previous articles traced the field’s first crop of gourmet salad greens from planting to harvest to market. This story looks at the field’s second crop--corn--and explores the farmers’ attempts to develop new products to compete in a crowded industry. Future stories will focus on a continuing battle with the U. S. Environmental Protection Agency and will evaluate the economics of the field’s first year.

Crop Pests

The corn planted at Conejo Ranch in March needs to be protected from a variety of pests during its short lifetime. Most varieties of corn take 78 to 95 days to mature, depending on the weather and soil conditions. From seed to stalk, corn is treated with fungicides and pesticides to safeguard it from predators.

Fungus

Problem: Immediately after planting, a corn seed begins sucking moisture from the soil. The seed swells with water and then bursts, leaving its starchy endosperm exposed. A fungus may eat this carbohydrate-rich material and destroy the seed.

Treatment: All seeds are coated with a fungicide and sometimes with an insecticide as well.

Timing: Applied before planting

A Mature Cron Seed: Fungus may attack the endosperm once a seed has burst.

The seed coat protects the endosperm and embryo.

The embryo develops into a new plant.

Cutworm

Problem: Cutworms cut through corn stalks underground. They can even fell a plant that has grown up to six inches tall.

Treatment: A granular insecticide is spread across the field. The insecticide trickles through a large funnel, which is pulled by a tractor along each bed.

Timing: As soon as the worms are spotted, usually within first month after planting.

Cutworm: (Shown curled up as it does during daylight hours)

Earworms and Aphids

Problem: Just as the corn blossom, a moth lays eggs in the ear silk. When the eggs hatch, the worms crawl out and gnaw the corn. Aphids, which appear during earworm treatment, suck juices out of the corn.

Treatment: Insecticides are sprayed by helicopter or using tractors that ride above the corn, misting each ear. Aphids appear during treatment because spraying kills their predators. Amount of insecticide is increased to kill aphids.

Timing: Three to four treatments as the corn blossoms.

Sources: Iowa State University; Cal Poly, Pomona; Jim Roberts, Underwood Ranches.

Research by STEPHANIE SIMON and TREVOR JOHNSTON / Los Angeles Times