Dave Schmidt, Iowa City, IA, has grown specialty crops for about 10 years, but it hasn't always been the same crop.
“Typically, the specialty market tends to move around and eventually becomes a commodity market,” he says. “The price lowers to where there is no incentive to grow it.”
However, Schmidt is learning to pick up on the latest market demand before the current market fades away. He's currently growing waxy corn for Penford Corporation, which uses it as an industrial starch. He also contracts with a large hog producer to grow a specific hybrid as mill corn.
In 2004, his most lucrative crop was to grow a soybean that produces oil with only 1% linolenic acid. Schmidt says the low-linolenic oil is valuable to the consumer, because it's heart healthy and contains no trans fats. (See p. 26 of the August 2004 issue, “Heart Healthy Beans?”)
The oil is also proving valuable for frying because it burns cleaner and lasts 50% longer than other popular frying oils, Schmidt adds. “We can get a premium because it has value to the end user,” he says.
Schmidt markets his specialty soybeans through ASOYIA LLC, Winfield, IA, which sells the oil to wholesale food distributors and food companies. Cargill currently buys the soybeans, uses the protein for bean meal and processes the oil for ASOYIA.
Farmers receive a premium for the non-GMO soybeans and another premium for the low-linolenic oil. The premiums for both oil and meal total close to $1/bu., says Schmidt, who serves on ASOYIA's board of directors and is an owner.
In contrast, growing waxy corn pays about a 30¢/bu. premium over Chicago Board of Trade price, says Schmidt. The hog operation offers a 10¢/bu. premium for the mill corn, he adds.
Schmidt says he enjoys raising crops for the specialty market because he likes to grow things that people want to buy. However, growing specialty crops also has its challenges, he says. They include:
Overcoming agronomic traits that may lack herbicide, disease or insect resistance.
Having adequate time, labor and storage space to keep the product separate and identity-preserved.
Having adequate labor, trucks and equipment to deliver the product as specified, when the processor wants it.
Marketing the product at an acceptable price. Although the price is not always guaranteed, the market and the premiums usually are.
“The processor can call for the product when it's at the lowest price during the year,” cautions Schmidt. “So you need to know how to use marketing tools to protect your investment.”
Farmers interested in growing soybeans to produce low-linolenic oil can contact Vivan Jennings, chief executive officer of ASOYIA LLC at 319-257-3400 or e-mail him at vmjennings@asoyia.com.