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April 1992

State Roundups
Montana

Montana grains an international hit

Montana-grown grains, seven to be exact, are the stars of a Montana hot cereal that has captured international attention.

For 75 years Cream of the West, commonly known as the cowboy's porridge, has been the staple of many a Montanan's diet. But about two years ago, the Billings company added a seven-grain hot cereal to its original whole wheat product line and introduced a new packaging design.

"We've probably seen a 500 percent growth in sales in the last two years," says Terry Weaver, Cream of the West's marketing and sales manager. The company currently ships its products to 35 states, where the cereal can be found in about 400 specialty shops.

The popularity of the cereal spread to France when Cream of the West was selected by a French import-export company for a food show last September. Out of 200 U.S. products submitted 40 were chosen, and Cream of the West was the only product to represent a seven-state western area—and the only hot cereal in the show. That exhibit prompted French orders for more than 300 cases.

As a result of the cereal's French presence, letters poured into the company from people who tried the cereal during the Winter Olympic Games, Weaver says.

More recently, an article in Bon Appetit magazine brought more than 500 calls in a two-week period. And inquiries have filed in from as far away as Malaysia, Japan and Singapore.

Despite all the attention, the small company employs only 4 full-time staff and at peak packaging times still has fewer than 20 employees. But the cereal's success has meant increased grain orders from the two Montana mills, in Billings and Conrad, that process all the Montana-grown grain for Cream of the West.

And by making that Montana-grown and processed wheat into a finished product before it leaves the state, Cream of the West is considered a good example of a value-added agricultural business. "We're so far away from the main markets that the key to Montana's success is value-added products," Weaver says.

—Kathy Cobb

Living in “the last, best place” becomes costly

For many, Montana has been perceived as a place where dreams could be fulfilled and life could be lived in a simple fashion. But today, those dreams are clashing with the reality that is sending the cost of some Montana real estate sky high.

That reality lies in the discovery of the state's attributes by out- of-state investors who are purchasing large tracts of land with high recreation value. Celebrities such as Ted Turner, Jim Nabors and Liz Claiborne have received the most attention as new landowners, but other, less prominent investors are also grabbing up large chunks of Montana.

A study by Bozeman appraiser N. Clark Wheeler shows that in the most active areas, Park, Gallatin, Madison and Beaverhead counties, over a half million acres have been sold over the past four years. Of that, 82 percent was sold to out-of-state buyers. "While most of the attention is focused on celebrities, many extremely wealthy business people are acquiring large tracts of land. For them, price is not a factor—location is," Wheeler says.

The problem lies in the effect these purchases have had on the surrounding properties owned for years by farmers and ranchers. The demand by out-of-state buyers with ready cash has inflated the value of all the property in an area, leaving some local owners in a bind. Owners who traditionally would sell or bequeath property to their children are finding that increased valuation of the property has created gift and capital gains taxes that make the cost of transferring the land prohibitive.

Another concern of some Montanans is the growing trend by investors to purchase large tracts of existing ranchland and then subdivide it into smaller parcels. Fueled by the publicity surrounding celebrity purchases, developers are creating ranchettes, small acreages that still maintain the feel of the larger spreads. Since Montana zoning laws call for no review of land parcels over 20 acres, developers are free to use the land as they wish. Additionally, as large acreages are subdivided, traditional land usage is often changed; pasture and grazing land is put out of production and hunting land is posted with "No Trespassing" signs.

For the most part, out-of-state buyers have focused on the areas between Big Timber and Bozeman or between Missoula and Whitefish, where land values have increased rapidly. Some have gone up as much as 50 percent to 100 percent over the past few years, but the overall effect on the state has been minor. "While many of these pockets exist, the overall rate of increase across the state has been about the same as the rate of inflation—3 percent to 4 percent per year," says Myles Watts, Montana State University agricultural economics professor.

Although some Montanans view the new landowners with suspicion, many others agree that an influx of new capital can only help. And much of the new capital derives from greater emphasis placed on recreation, viewed as a viable replacement for the declining timber industry in the western part of Montana.

So what's in store for Montana's future? "With 55.6 million acres of agricultural land and the average age of landowners at 57 years old, there's going to be lots of land changing hands in the near future," says Rock Ringling, lands director for the Montana Land Reliance. And Wheeler insists, "It's all cyclical; western Montana sellers who made a good profit from the sale of their land are now buying eastern Montana ranches that typically cost less. And we're also starting to see some interest by potential land buyers from Europe."

—Dean Davis