From six guys wanting better corn and soybean markets, to over 70 growers and 100,000 acres committed to identity-preserved (IP) crops, a 10-year-old Missouri grower co-op is catering to customers by the barge-full.
Premium Ag Products LLC (PAP), Clarence, MO, started in 1999 with a handful of sales. But its location about 40 miles west of Hannibal and the Mississippi River was prime for easy shipments to markets around the world. With good management, it was destined for success.
A decade later it's grown to be a major source for non-biotech crops that provide growers with $1.50/bu. or more in premiums for soybeans and close to $1/bu. for corn. They have near-guaranteed markets because their crops are sought in the Pacific Rim and other areas where picky diets provide profits back home.
Phil Saunders of Shelbina, MO, and Scot Shively of Shelbyville were among the PAP charter members. Both farmers had gotten out of the hog business and were looking for new farm profit centers.
“I needed a new enterprise,” says Saunders, who farms non-biotech corn, soybeans, wheat and sorghum and runs cattle with his son Luke.
“We knew there would be more management involved in production and marketing, but knew it would be worth it,” adds Shively, also a non-biotech corn, soybean, wheat and sorghum grower who runs cattle.
The two were among several growers who pooled enough yellow hard-endosperm corn to fill a 58,000-bu. barge that was sent to Japan in mid-summer. A second barge was also being considered for about the same time period. Those followed a 58,000-bu. shipment from PAP to Japan in January.
THE POOLING AND shipping are overseen by G.W. Dimmitt, PAP elevator and processor manager. “He's on the phone every day with someone from China, Japan, South Korea, Taiwan and other Asian countries,” says Shively.
While Americans buy a vast amount of goods made in China, the PAP growers like the opposite approach. The Chinese know what American consumers want. And the Missouri growers have the corn and beans much of the Chinese food processing industry demands.
“For the most part we grow non-biotech food-grade white and yellow hard-endo corn, food-grade soybeans for tofu, low-linolenic soybeans, non-biotech clear and dark hilum soybeans,” says Shively.
“The hard-endo gives us a 70¢-$1/bu. premium, typical for the food-grade corns. We also grow and market some high-extractable-starch corn. It yields well but the premiums aren't as high, about 30-50¢/bu.”
Saunders says the growers have learned to meet the demand. “The Asians like yellow corn,” he says. “The darker the yellow, the more they like it.”
Soybeans in the low-linolenic, non-biotech category bring the $1.50-2 premiums. “We see similar premiums for the clear hilum beans that go into the tofu and soy milk market,” he says.
WHEN THE CHARTER members initially got together they pooled their resources to buy fertilizer and other inputs. Then they did a feasibility study to determine what type of crops would generate added value and fit their farming area.
Roundup Ready and Bt corn and soybeans were taking off in the late 1990s, but there were still numerous foreign markets that wanted the non-biotech grain. The group took to that niche and searched for grants and eventually received tax credits from the state when they bought an old MFA elevator.
They discussed market potential with University of Missouri economists and grain export organizations. In all they spent about $3 million to get the operation in full swing.
“The total non-biotech facility has the capability to clean, color sort and package grain in bags, totes or bulk containers,” says Dimmitt, adding that the co-op sends representatives to major food processors and product trade shows as part of its market development.
Saunders is one who makes the trade show circuit, including the mammoth Food Marketing Institute Supermarket Convention & Education Expo. “We were at McCormick Place in Chicago,” says Saunders, whose group had booth space along with the big boys like General Mills, Coca Cola and Hershey.
“We go out and find new markets,” says Shively. “We get new ideas and may even be processing grain down the road.”
IP crop production and management requires more time. “Our growers are trained to meet the IP standards we have,” says Shively. “That involves cleaning out planters, combines, augers, grain bins and trucks after each procedure. At the plant, grain is tested three times before it can be dumped. A lot of on-farm bin samples are taken to the plant for testing.”
PAP sponsors field trials to make sure it knows which varieties and hybrids have the characteristics needed by its customers and which work best in the region's growing conditions. “We provide our members with continual education on IP protocols and best practices,” says Shively.
PRODUCTION TECHNIQUES for IP crops must include strict prevention of pollen drift during corn pollination, says Peter Thomison, Ohio State University agronomist. “Managing pollen drift has always been a major concern to ensure genetic purity of inbreeds and specialty corn to optimize expression of value-added traits, like high-oil content,” he says.
“Pollen drift has now become an important consideration in the production of non-biotech corn. Producers of IP non-biotech grain are concerned that pollen drift from biotech hybrids will contaminate — by cross-pollination — nearby non-biotech corn,” Thomison says.
Chris Hurt, Purdue University Extension agricultural economist, says, “There are probably going to be more opportunities for value-added programs.
“Clearly there are a lot of consumers around the world and they have a different interest in food and food products. Non-traditional agriculture, such as no-antibiotic or cage-free meat and poultry production, will create more niches for producers.
“As for non-biotech, what was always considered traditional is now non-traditional,” he points out.
Shively concludes that the world economic shortfall has made marketing non-biotech corn and soybeans more difficult because of the premiums involved. “End users want to go the cheapest route,” he says.