Farmers Count on a New Cash Crop: Pasta : Agriculture: Irvine group is marketing foods processed by North Dakota wheat growers. Goal is to cut out middleman.

Gene Nicholas, a third-generation wheat farmer in North Dakota, is betting that the “nice blue boxes” now making their way onto Southern California grocery store shelves can help him to secure his family’s financial future.

The containers, which are being marketed in California by CNA Sales Group in Irvine, are filled with pasta processed from durum wheat grown by Nicholas and more than 1,000 fellow farmers in North Dakota. The wheat is milled and processed in a state-of-the-art plant opened last year by Dakota Growers Pasta Co. in Carrington, N.D., which Nicholas helped to organize.

This farmers cooperative--along with its new line of pasta products in the bright blue boxes--are part of a plan to “get more dollars into the farmer’s pocket,” said Nicholas, a 20-year veteran of the North Dakota Legislature who boasts proudly that his sons recently became wheat farmers--the fourth generation for the Nicholas clan. “Rather than simply providing raw material, we want to ship finished product,” Nicholas said.

For role models, the cooperative’s 1,040 members turn to growers who created the Sunkist Growers Inc. and Ocean Spray Cranberries Inc. cooperatives. “They’ve done extremely well, better than most farmers . . . because they have more control over production and some control over product cost.”

Nicholas, who farms 3,000 acres that his grandfather and his wife’s grandfather once worked, acknowledged that farmers face an uphill battle. Most wheat farmers still ship their grain to large processors, including Archer Daniels Midland and Cargill Inc., that have dominated the business since railroads linked the Dakotas to large Eastern cities in the late 1800s.

The cooperative’s plant, which mills wheat and turns it into pasta products, pits farmers directly against those corporate giants. Said Nicholas: “Those are respected companies that know their business.”

*

Farmers are betting that they can reap profits by bypassing the middlemen and selling their finished pasta products wholesale to food processors, restaurant suppliers and other food companies. They’re also fighting for space on supermarket shelves for their new line of retail pasta products, including ziti, rotini, spaghetti and angel hair, that are packaged in the blue boxes.

With Pasta Growers Pasta, the cooperative is going head-to-head with retail giants such as Borden Inc. and Hershey Foods Inc., who dominate supermarket shelves. The new line faces stiff competition: More than 330 new pasta products were introduced during the first half of 1994 alone, according to New Product News, a Chicago-based trade magazine.

But while there’s intense competition for grocery store shelf space, the cooperative picked a good time to enter the fray, observers said.

Of all the food industry segments, only soft drinks have grown faster than pasta during the past five years, according to the National Pasta Assn. in Arlington, Va.

*

Consumers are gobbling up pasta dishes because they’re easy to prepare, can be eaten as an entree or side dish and, unlike many healthy foods, they actually taste good. According to the National Pasta Assn., pasta production in the United States rose to 3.8 billion pounds in 1989, the most recent figures available, up from 1.4 billion pounds in 1970.

Farmers are aware that they face an uphill fight given the abundance of choices already on the market.

“We’re the new guys, definitely,” said Chet Noblett, founder and president of Irvine-based CNA Sales Group. “And it’s a tough road. In some stores we’re down on the bottom shelf, in others, we’re in the middle. But we think we offer a real value for consumers.”

Better restaurants use homemade pasta for some of their dishes, but for many entrees, chefs turn to packaged pasta. And there’s a decided difference between brands, said Carlito Jocson, a chef at Antonello Ristorante in Santa Ana: “We can get pasta that goes for $10 per case, but most chefs prefer a brand where the average cost is about $20 per case. You get what you pay for.”

Noblett said Pasta Growers Pasta products are aimed a discriminating cooks who are willing to pay 20 cents per package more for better quality. “If you look at the food triangle, pasta is the base,” Noblett said. “There’s no fat, no cholesterol. . . . It’s virtually the perfect food and it sells itself.”

Despite its grand plans, Dakota Growers Pasta Co. remains a decidedly tiny player. Its members can grow and process 3 million bushels of wheat, but, collectively, farmers in North Dakota and surrounding states produce nearly 100 million bushels of durum wheat, most of which is sold to major processors.

Despite the odds, Nicholas said, the timing is right for farmers to challenge the traditional order.

“Previous generations came out and settled the land, the next generation started cooperative elevators,” said Nicholas, who lives in Cando, N.D. “My generation now has a totally integrated plant. We can grow it, mill it and send it through the noodle plant.”

Pasta Popularity

Spaghetti and linguine are America’s favorite pasta products, followed by elbows and twists. Dry pasta retail sales by shape in 1993: Long goods (spaghetti, linguine): 36.2% Short goods (elbows, twists): 34.5% Egg noodles: 17.3% Specialties (lasagna, jumbo shells, manicotti): 12.0%

Eating More

Americans’ pasta consumption increased nearly 25% from 1984 to 1993. Meals per 1,000 individuals every two weeks:

1993: 2,604

Source: NPD Group; Researched by JANICE L. JONES/Los Angeles Times