Marketing Organic Grains
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Marketing Organic Grains

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    Marketing Organic Grains Marketing Organic Grains Document Transcript

    • 1-800-346-9140 MARKETING ORGANIC GRAINS ATTRA National Sustainable Agriculture Information Service www.attra.ncat.org MARKETING, BUSINESS, AND RISK MANAGEMENTAbstract: Organic grain and oilseed markets are growing, and organic grains can be successfully marketedat premium prices. This publication focuses on food grains, oilseeds, and pulses. A brief overview of feedgrain markets and marketing is included. Organic grain marketing differs from conventional grain marketingin several key ways. Producers generally benefit from contracting a large portion of their acreage beforeplanting the crop. Relationships with buyers should be cultivated early on and be maintained by meetingexpectations consistently. Premium prices are generally for delivered products, and, depending on the marketand the specific buyer, they may need to be cleaned and even bagged. Generally, meeting quality standardsis essential. To achieve the best prices, growers need to understand and build relationships with buyers, findmarkets for most of the crops in the rotation, meet quality standards, be able to store the crop if necessary,and be able to contract most of their crop to reliable buyers.By Holly Born Organic FoodNCAT Agriculture Specialist Grain, Oilseeds,January 2005©2005 NCAT and Pulses Market Situation Organic markets can be volatile, with periods of high demand and short supply for certain crops and periods of high sup- ply and sluggish demand for others. However, some grain markets are quite stable. The demand for or- Contents ganic grains varies widely, Organic Food Grain, depending on the type of Oilseeds, and Pulses Market Situation ........................ 1 grain. Prices for organic Food Grains................................ 2 grains and oilseeds were Oilseeds ...................................... 4 about double the conven- tional prices from 1995 Organic Feed Grain Market Situation ........................ 4 to 2003, and occasionally Marketing Organic Grains, three times as high as con- Oilseeds, and Pulses.................. 5 ventional. A 2004 study Finding Buyers ........................... 6 of organic grain and food- Preserving Organic Integrity .... 8 grade soybean prices from References ............................... 10 1995 to 2003 (1) found that 2003 average organic pric- Further Resources .................... 11 es were greater than 2002 photo courtesy USDA NRCS prices for major grains andATTRA is the national sustainable agriculture information service operated by the National Center for AppropriateTechnology, through a grant from the Rural Business-Cooperative Service, U.S. Department of Agriculture.These organizations do not recommend or endorse products, companies, or individuals. NCAT has offices inFayetteville, Arkansas (P.O. Box 3657, Fayetteville, AR 72702), Butte, Montana, and Davis, California. ����
    • oilseeds. Corn, soybeans, andspring wheat had highs in 1996-98 Organic Wheat Prices 2000 - July 2004 source: Organic Business News Price Fax Serviceand again in 2003. $6Lynn Clarkson of Clarkson Grain $6Company (2) in Illinois says thatprices in the organic marketplace Ave. Farmgate per bu.can be difficult to determine be- $5cause of nondisclosure practices.He suggests that farmers make $5four or five phone calls to get afeel for appropriate prices before $4selling their grain. Pricing inthe organic grain market is veryspecific to the grain crop variety. $4Choosing varieties with distincttraits, including top quality, is $3one way to create market advan- 00 01 02 03 04tage.(3) 20 20 20 20 20 Wheat, Hard Red Winter Wheat, Soft RedPremiums for some crops arefalling, as more farmers get into than prices for conventional wheat, and premi-organic production, but farmers who can ride ums for organic wheat have remained steady forout the transitional years still have opportuni- several years, at about 50% more than conven-ties to increase their incomes. Increased demand tional. Good export markets exist for many ofby food and feed manufacturers has helped to the wheats, along with domestic markets, if themaintain organic prices for many crops, even as quality and variety meet market criteria. Theorganic acreage increases. Clarkson says that market for organic hard-white wheat is nowforeign competition is creeping into the organic well developed and stable. While the marketgrain market. Several grain legumes are already has grown, it is still a much smaller market thancoming into the U.S. at lower than domestic the market for the hard red wheats. Demandprices. Some buyers still prefer to buy domestic for organic hard-white wheat should parallelgrain, however, and price premiums may hold up conventional demand.(5)for some buyers, as long as the price differencebetween domestic and imported grain does notgrow too large.Food GrainsRising consumer demand for organic pasta, All charts are based on data compiled from thecereal, and bread products signals a need for Organic Business News Price Fax Service (Januarymore organic flours and oils. Although smaller 5, 2000-June 28, 2004). The Organic Business Newsmanufacturers historically dominated the organic offers current prices for organic crops (fresh fruits,foods industry, several leading grain-based food vegetables, herbs, dairy, grains, beans, and oilseeds)corporations have entered the organic market re- on a weekly basis through its Organic Commoditycently. ConAgra Foods, for example, has seen an- Price Bulletin. Annual subscriptions (50 issues) arenual sales of its organic bread flour increase 10 to $205 by fax, $110 by U.S. mail. Visit the Web site for15%. While this category has not grown as fast as information on subscription discounts. Contact:other categories, slow and steady growth (about Organic Business News28% annually) is expected to continue.(4) P.O. Box 161132 Altamonte Springs, FL 32716Wheat 407-628-1377 407-628-9935 FAXAccording to Nancy Matheson, NCAT specialist DnnsBlnk@cs.comand producer and handler of organic grains in www.hotlineprinting.com/obn/ofax.htmlMontana, organic wheat prices are less volatilePAGE 2 //MARKETING ORGANIC GRAINS
    • Organic Corn Prices 2000 - July 2004 Corn source: Organic Business News Price Fax Service Organic food-grade corn and $11 corn products such as corn $10 syrup are seeing an increase in $9 demand from food processors. Ave. Farmgate per bu. Prices range from $4.50 to $8.00 $8 a bushel.(6) $7 $6 Oats $5 Prices for organic oats are about double those for conventional $4 oats.(4) Oat prices began to rise $3 in 2002 and 2003 and appear $2 to have leveled off in a higher price range than before. Food 00 01 02 03 04 20 20 20 20 20 Corn, Blue Corn, Yellow grade oats have a small but sig- nificant niche, and with larger companies such as ConAgra Organic Oat Prices 2000 - July 2004 getting into the organic oats market, new opportunities for source: Organic Business News Price Fax Service $5.00 oats producers may exist. $4.50 $4.00 OtherAve. Farmgate per bu. Organic rice has seen a very $3.50 steady, slow increase in de- $3.00 mand. Markets for other food $2.50 grains tend to be limited. While crop diversity is an important $2.00 part of organic farming sys- $1.50 tems, it can be difficult to find markets for the grains that are $1.00 less in demand. Establishing a relatively stable rotation al- 00 01 02 03 04 20 20 20 20 20 lows farmers to plan marketing far ahead of time, rather than Organic Soybeans (Vinton) Prices 2000 - July 2004 facing the question of what to source: Organic Business News Price Fax Service plant every year. Crops such as $23 buckwheat, rye, peas, and oats $21 are important in crop rotations $19 and as cover crops, but they may be difficult to sell in some Ave. Farmgate per bu. areas, even without an organic $17 $15 premium. Some soybean buy- $13 ers, recognizing this problem, are beginning to contract for $11 some of the “other” crops in $9 the rotation. Feed markets are $7 another option for marketing $5 these types of grains. 00 01 02 03 04 20 20 20 20 20 //MARKETING ORGANIC GRAINS PAGE 3
    • Oilseeds Organic Flax Prices 2000 - July 2004 source: Organic Business News Price Fax ServiceSoybean $0.70Due to high demand based onthe perceived health benefits $0.60of soy, both organic and non-organic soy foods have seen $0.50an average annual increase in Price/lb.sales of 14.3% over the past $0.4010 years.(7) Once only usedfor tofu, soy is now found in $0.30hundreds of food products,and demand for organic soy $0.20is strong in both domesticand export markets. Organic $0.10soy prices tend to be quite 00 01 02 03 04variable. 20 20 20 20 20Flax, sunflower,safflower Organic Pinto Bean Prices, 2000 - July 2004 source: Organic Business News Price Fax ServiceOther important organic oil-seeds include flax, sunflower, $0.45and safflower, which are $0.40seeing increased demand asconsumers learn more about $0.35the health benefits of theseoils. Flax prices increased sig- $0.30 Price/lb.nificantly beginning in 2003.Canola is in demand, but it $0.25can be risky to grow due tothe prevalence of genetically $0.20modified canola in canola- $0.15producing regions. $0.10Pulses 00 01 02 03 04 20 20 20 20 20Organic dry bean prices tendto be volatile. There is a been one of the fastest growing organic catego-strong export market for organic dry beans. ries for the past several years, and its successfulPinto beans are the most important type of dry introduction to mass markets means the categorybean produced in the U.S.(8) There are small but will only continue to grow. Because agriculturalsteady markets for other organic pulses, such as feed ingredients in the diets of certified livestocklentils, green peas, and field peas. must be organically produced, continued growth in the retail market should increase demand forOrganic Feed Grain organic feed grains. It also provides a marketMarket Situation for lower quality organic grains that fail to meet the quality standards demanded in other organicIncreasing interest in organic production of live- market segments.stock has led to an increase in demand for organicfeedstuffs. Organic meat and poultry represented You may be able to sell organic feed-grade grainthe fastest growing organic category in 2003, with directly to local organic livestock producers ora 78% sales increase in 2004 from 2003.(9) Manu- to organic feed manufacturers, as well as to bro-facturers expect that category to grow at 30% kers and merchandisers. If you do sell directlyover the next four years.(9) Organic dairy has to farmers or small companies, you do risk notPAGE 4 //MARKETING ORGANIC GRAINS
    • On-Farm Storage Farm storage may not be essential, but it is Always take and keep representative samples of certainly a critical factor for successful mar- every field of grain, and be prepared to provide keting. Mike Pratt (see “Marketing Organic samples to prospective and committed buyers. Grains, Oilseeds, and Pulses,” below) says his High quality-standards are a common feature single best tip for organic farmers is to invest of organic grain markets. Another advantage in storage facilities—“Buy a bin a year.” The of storage is that you can send samples to buy- organic market consists of many buyers with ers in advance of a sale. This avoids showing individual supply needs, from small to very up at the processing plant with a load of grain significant quantities. Sometimes, even the that gets rejected because it failed to meet cer- largest buyers cannot take a whole year’s supply tain standards. You can also have stored grain of a particular crop all at once, but may need a tested at an independent lab for moisture, pro- certain amount every month. If you can store tein, mold, toxins, and foreign matter. Maintain it, you can make money by keeping up with the quality by cleaning storage bins completely, market and selling when shortages occur and vacuuming grain dust, removing spilled or the price rises (as long as you can maintain grain moldy grain, plugging holes and cracks to quality during storage). Remember that every day your grain is in storage costs you money, exclude rodents, and keeping weeds around and try to set a date by which the buyer has to the bins mowed. For more information on accept the grain or begin paying you for storage. organic control of insects in stored grain, An alternative can be to contract with a buyer see the ATTRA publication Stored Grain Pest who has storage set aside for specialty grains. Management.getting paid in a timely fashion—if at all. Try to of alternative sources of protein, such as feedfind out from other producers of organic grains peas. Current research is showing an emergingwhat the reputation of potential small buyers is potential for grain vetch as a substitute source ofregarding prompt payment. Be aware that the protein comparable to soybeans.(12) Along withscreenings also have value as feedstuff and are vetch, grain lupine—with the highest proteinsought after by organic livestock producers as a content of all the pulse crops (12)—is also beinglow-cost ingredient.(10) You may want to contact researched as a protein source for feed.one of your state organic groups to locate organiclivestock producers in your area who need grain, Marketing Organic Grains,if there are no organic feed-milling companies ororganic grain merchandisers in your area. Many Oilseeds, and Pulsescertification agencies publish lists of their certi- Marketing organically produced grains is differ-fied producers and identify producer enterprises. ent from conventional grain marketing. WhileATTRA maintains a list of organic feed suppliers, the conventional grower can deposit a wholeavailable on request or by visiting www.attra. harvest at the elevator, organic production isncat.org. usually contracted with a specific buyer ahead of planting. The marketing skills necessary forTypically, prices for organic feed grains are organic producers are often different from thoseabout 50 to 100% above conventional prices.(11) for conventional producers.(10) ConventionalRecently, increased feed demands across the grain producers can increase their returns by tim-country and unfavorable growing conditions ing sales to take advantage of market fluctuations.have resulted in some shortages and high prices Organic producers tend to get better returns byfor organic grain and soybeans. In summer 2004, taking advantage of knowledge, experience,organic feed-grade soybean prices ranged from and relationships. Experienced producers know$19 to $21 per bushel (up from $18 per bushel in where markets are, know how to negotiate, andApril), and organic soy meal prices ranged from have established themselves as reliable suppliers$700 to $850 per ton.(9) Prices range from $3.25 to through long-term relationships with buyers.$4.00 per bushel for feed-grade organic corn.(6) Mike Pratt, former purchasing manager at the organic grain trading company American HealthThe high cost of organic soybeans and meal and Nutrition, says that the ability to meet qual-provides increased opportunities for producers //MARKETING ORGANIC GRAINS PAGE 5
    • ity standards and to store their organic crops are grain orders, and they will pool products fromthe main factors for prospective organic farmers several producers. Organic certifying agenciesto consider.(13) are not necessarily a good source of information on buyers. While some agencies, particularlyIn addition to developing relationships with state department of agriculture certifiers, freelybuyers, farmers also need to develop good rela- give out lists of buyers, many private certifiers dotionships with their bankers. The organic market not. Some certifiers will also provide potentialis not as liquid as the conventional market. Or- buyers with lists of the farmers they certify whoganics often do not have a spot market in which produce the crops that the buyer is looking for.farmers and bankers can immediately turn grain A partial list of buyers and other sources of buyerto cash (14), and bankers need to understand information is included in the Further Resourcesthat they may not get proceeds from crops for section of this publication.up to a year or more in some cases. However,if there is an organic handling or processing Sales to Other Producersfacility nearby, there may be a spot market. Forexample, Matheson says, General Mills’ elevators and Smaller Organic Companiesand several smaller independent organic grain Other farmers and ranchers and small organicmerchandisers in Montana offer producers the companies may offer marketing opportunities toability to sell their harvests directly at the eleva- organic grain producers. However, it is impor-tor. While buyers such as General Mills can take tant to make sure that you will be paid after yoularge quantities, Matheson advises diversifying make the sale. Some buyers of organic grain arebuyers if possible. so small that they can’t or don’t always pay the farmers they’re buying from. Fraud is unusual— more often, smaller companies may have too littleFinding Buyers cash-flow to pay their bills. If they get behind,Producers interested in going organic should they simply don’t have the cash to pay the farm-contact several buyers to get a feel for the mar- ers. Also, many do not know they are requiredket and find out more about what crops are in to have a commodity dealer’s license— with thedemand, quality standards, and pricing. Experts accompanying protection for payment. If yourecommend taking the time to understand the are a farmer selling organic grain—to a companybuyer’s viewpoint, learning about the products or an individual—be sure that the buyer has athat the grains go into, quality and other desired commodity dealer’s license in your state. Manyattributes, and so on. It can pay to talk to milling, individuals will not have a commodity dealer’sbaking, and other manufacturing associations, as license, required only of those whose purchaseswell as producer associations, and build a mar- directly from farmers exceed a certain dollarketing network with food industry contacts.(2) amount. For example, in Montana, anyone whoMake sure buyers know that you are focused on buys $30,000 or more of grain per year from farm-food quality and on meeting their needs. For ers must have a commodity dealer’s license. Thefood-grade products, the buyer will want a sam- licensees must post a bond or buy an insuranceple and the assurance that the entire shipment policy that will cover their unpaid bills to theirwill be of equal quality. There is more flexibility sellers if the licensees can’t.on quality in the feed markets. Producers shouldbe familiar with various sampling techniques andknow how they affect the samples sent to the Considerations for Contract Productionbuyers. Many organic certification organizations Contracting with a trader or processor is oftenoffer information on sampling. If you are inter- the only way, and sometimes the best way, toested in targeting export markets, you will need sell organic products or alternative crops thatto check with buyers to find out whether there are lack established markets. Contract productionInternational Federation of Organic Agriculture offers producers a way to manage risk. WhileMovements (IFOAM), European Union, or other producers on contract will not be able to benefitspecific certification requirements. from favorable price changes, they are protected from unfavorable price changes. In many casesThe Internet can be a great place to find buyers, traders will also give growers advice on how toand it is important to get on buyers’ e-mail lists. produce and harvest a top-quality organic crop.Buyers send out frequent requests to bid on filling Clarkson advises growers to contract a signifi-PAGE 6 //MARKETING ORGANIC GRAINS
    • cant portion of their production before planting. price and costs. Contracts may specify the pro-Those contracts should be for acres of ground ducer as responsible for both, either one, or nei-in production, not bushels of crop produced, to ther. For example, some prices are quoted FOBprevent shortfall on delivery at harvest time in a destination point, and the producer must paya bad year. shipping and cleaning. Other buyers may quote a farm-gate price based on quantity after cleaning,Buyers look for farmers who are in the right loca- but the buyer pays for cleaning and shipping.tion with the right equipment and infrastructure. Experienced growers stress that cleaning andBeyond these basics, buyers also prefer to deal shipping are significant costs, and you must readwith farmers who have a good attitude and are the fine print to avoid unpleasant surprises.sensitive to client needs. Farmers benefit bybuilding relationships with buyers as they com- Premium prices for organic grain are sometimespete for contracts. One farmer compares finding on a “cleaned and delivered” basis. Many organicbuyers to going on job interviews.(15) feed buyers and certified organic elevators will buy uncleaned grain. Premium markets mayFarmers are having more difficulty getting demand a shipment to be 99.9% clean. In ordercontracts to grow some of the specialty grains, to separate out that last small percentage of weedsuch as blue corn. Clarkson says, “There is a seeds, stones, and other impurities, up to 10% ofdefinite limit to the ability of niche markets to the grain can be wasted (“dockage”). Producersabsorb all the available supply. Open-market should find out how dockage is handled andfarm production tends to rapidly destroy the whether any grain will be credited back to theprice advantages. Contract production tends to grower. Keep in mind that organic screenings areregulate supply to what the market can absorb in high demand by livestock and feed producers.and thus retains the premiums for longer than If you have your grain custom cleaned, and youopen-market production.” want the screenings, you’ll need to request themCommunication with buyers is critical for pro- ahead of time and reach an agreement on theirducers in determining what to plant, how to fit per-unit value.it into their rotation plan, and how to grow and Both producer and buyer need to carefully con-harvest a crop that meets each buyer’s quality sider all terms of the contract before signing. Itcriteria. Understanding the standards and terms is important to understand what happens if thespecified is vital. Grain cleaning and shipping commodity is below contract quality specifica-charges are important factors when evaluating tions and what the buyer’s rejection policy is. The producer, in particular, should learn aboutGrain silos on the Kansas plains. Photo courtesy Tim the legal aspects of contract production and knowand Annette Gulick, www.sxc.hu. what his or her options for legal recourse are in case a buyer violates the agreement. Information on evaluating contracts is available at http://web. aces.uiuc.edu/value/contracts/contracts.htm. Collaborative/Cooperative Marketing The additional labor and management required to meet quality and delivery specifications, as well as investments in cleaning and storage equip- ment, represent possible marketing costs that could eat into premiums. Transportation costs may be substantial if certified cleaning plants or points of delivery are located far from the farm. The need to invest in storage facilities and the costs of transportation may make cooperative marketing more attractive. Marketing agencies- in-common (MACs) are organized by groups of cooperatives to coordinate marketing and other value-added services for the cooperatives. Each //MARKETING ORGANIC GRAINS PAGE 7
    • individual cooperative retains control and own-ership of its assets and is usually responsible forits own management. The MAC often providesmarketing services that individual coopera-tives cannot afford by themselves. The OrganicFarmers’ Agency for Relationship Marketing(OFARM) is a marketing agency-in-common fororganic grain grower cooperatives in 18 statesand Ontario. OFARM’s target prices for severaltypes of grain, along with conventional prices,can be seen at their Web site or at www.newfarm.org/opx/grains.htm (prices are FOB at the farm, notincluding storage and handling). Contact:John Bobbe, Executive Director Corn harvest in Iowa. Photo by Tim McCabe, USDA NRCS.920-825-1369866-846-5522 (toll-free)jbobbe@itol.com contaminants, and shake out residues from thewww.ofarm.org sieves. Before harvesting your organic crop, run three to five bushels of organic grains through thePreserving Organic Integrity combine to purge leftover conventional grains (this grain cannot be sold as organic).(16)Harvest Considerations for the Split If you own a combine, you can take your timeOperation and pay attention to details. This will ensureThe producer or handler of a certified operation a high quality harvest with minimal damagemanaging organic and non-organic components to the grain. Custom harvesters often cannotof one farm must document the measures taken to take the time necessary to assure such thoroughmaintain organic integrity from seeding through cleanout measures. In addition, they are oftenharvest, transportation, and storage. Buffer not familiar with specialty crops such as spelt,zones, field isolation, adjusted planting dates, food-grade soybeans, buckwheat, or flax. If youand varietal selection are common means of re- do hire custom operators, it may be necessary toducing contamination. To avoid contamination pay them to be meticulous enough to clean theirand preserve organic integrity, you may want to harvesters completely to avoid contamination,plant and harvest organic crops first, if maturity and to set the machine properly.dates allow. Any hauling vehicle that includes augers shouldWhen equipment used for planting, harvesting, be cleaned thoroughly. Grain receiving pits,transporting, and storing conventional crops augers or conveyors, elevator legs, dryers, andis used for organic crops, there is a high risk of bins are all possible sites of mixing. Clean in andcommingling or physical contact between organic around these parts of the system to minimize mix-and conventional crops, if any of the conventional ing. Run some organic grain at maximum capac-crop remains in the equipment. An Iowa State ity through the system to clean out conventionalUniversity study showed that there can be more grain. Cleanout logs should be kept up to datethan 60 pounds of grain, vegetative matter, and for all combines, trucks, and farm and cleaningdirt left in a combine, even after the grain tank equipment that are used for both conventionalappeared to be emptied.(16) and organic grain. Be sure to get a clean-truckWhile some equipment can be adequately cleaned affidavit from custom haulers.by hand, other equipment such as gravity boxes,transportation units, and storage units may need Post-Harvest Handling and Processingto be cleaned with pressurized water or blown If you process or perform significant value-addedout with compressed air. Combines should have operations, you may need to be certified as anall trap doors opened and be run empty for 15 organic handler, in addition to your organic pro-minutes or so. Sweep and use an air compressor duction certification. According to the NOP Finalor vacuum cleaner to remove leftover grain and Rule (205.2) “handle” is defined as follows.PAGE 8 //MARKETING ORGANIC GRAINS
    • To sell, process, or package agricultural crops, organic. Handlers of organic grain and grain except such term shall not include final retailers products must demonstrate that they have proce- of agricultural products that do not process agri- dures in place to ensure the identity and segrega- cultural products. tion of the organic products at all times.A “handling operation” is defined as For more information on documentation needs Any operation or portion of an operation (except and the certification process, see the ATTRA final retailers of agricultural products that do publications Organic Field Crops Documentation not process agricultural products) that receives Forms, NCAT’s Organic Crops Workbook, and the or otherwise acquires agricultural products and National Organic Program Compliance Checklist for processes, packages, or stores such products. Producers.Check with your certifier to find out whether In addition to offering a reliable supply, thereyour post-harvest activities qualify you as a are options to add value to your crop by clean-handler. If you do qualify as a handler, you must ing, packaging, labeling, and/or palletizing yourget an organic handler certificate. Handlers of product and arranging delivery logistics for yourorganic grain must ensure organic identity and buyer. Buyers vary in the degree of cleaning andprevent contamination with prohibited materi- conditioning they require. While many buyersals. Bin tags, labels, scale tickets, and lot control do not want to have to clean the crop, othersdocuments must clearly identify the product as prefer to do their own cleaning, using their own GMO Crop Contamination With the advent of genetically modified or- engineered gene. The two most common meth- ganisms (GMOs), an additional risk to organic ods used to detect GMOs are the enzyme-linked farmers has arisen. Organic standards prohibit immunosorbent assay (ELISA) and polymerase the use of GMOs in production and handling. chain reaction (PCR). ELISA, according to Dean Along with this prohibition comes the risk of Layton of Envirologix, is recommended for raw contamination of the organic crop with GMO corn and soy, while PCR is better for more-pro- pollen from neighboring fields or commingling cessed foods.(17) Very generally, strip testing is during harvest, transportation, or storage. In often used as an initial screen with PCR testing the case of corn, drifting pollen from a field of to verify presence of GMOs, since strip testing GM corn can contaminate organic corn growing is cheap and fast while PCR is expensive. nearby, making the grain test positive for GMO. If a test result is positive, your whole load While there are moves to standardize the may be rejected. Keep samples of everything, testing methods, currently the best advice to including the seed that went in the ground, growers is to choose testing methods and labs samples of what has been harvested, and sam- with care. Buyers must have confidence in your ples of what’s been delivered, until you have all testing program, and most will let you know the documentation you need to know that the what tests are acceptable. Since 100% organic buyer is satisfied, and you won’t be held liable is impossible to guarantee among crop species for GMO contamination found later. that include GM varieties (because of wide- spread GMO contamination and testing limits), There are many ways to test your crops. The buyer allowances for 0.1% to 5% contamination cheapest and simplest are test strips from are typical. However, buyer requirements for companies like Envirologix and Strategic Di- 99% purity will require more stringent testing agnostics. While the strips are inexpensive than 95% purity. at $3 to $5 each, they can only test for a single gene. They are useful if you know what your GMO testing equipment is offered by Genetic neighbor is growing and you’re worried about ID, Inc., Central Testing, and Envirologix, contamination from that source. More compre- among others. Several testing laboratories hensive testing runs about $300 per test, but it are listed in the Resources section of this can detect any type of commercially available publication. //MARKETING ORGANIC GRAINS PAGE 9
    • equipment. Clarkson says that “few if any farm- Referencesers could support the machinery array we think 1) Streff, Nicholas, and Thomas L. Dobbs. 2004.is needed to present excellent material to final ‘Organic’ and ‘Conventional’ Grainprocessors of human foods. Rotary screens or and Soybean Prices in the Northernauger screens may do more seed coat damage Great Plains and Upper Midwest: 1995than we can accept.” If pre-cleaning is required through 2003. Econ. Pamphlet 2004-1.to meet quality standards, weed seeds, green South Dakota State University.material, and other trash must be removed beforestorage. 2) Lynn E. Clarkson. President, Clarkson Grain Company. 2001. Personal communica-Adding value also adds costs. Depending on tion. October 18.the type of activity, the producer may need tomake considerable investments in equipment Clarkson Grain Company, Inc.and time. If interested in doing his or her own 320 East South Streetcleaning and bagging to sell directly to the end P.O. Box 80user, for example, the farmer may need to pur- Cerro Gordo, IL 61818-0080chase equipment such as small cleaners, fanning 800-252-1638mills, and a gravity table. Pratt highly recom- 217-763-2861mends running the grain over a gravity table cgci@novanet1.comto assist in removal of small stones, glass, and www.clarksongrain.comsimilar trash. He emphasizes that the trader (orthe grower, if direct marketing) is liable for any 3) Maulsby, Darcy. 2004. Talking Shop: Wis-claims related to foreign matter in the crop—for consin. Upper Midwest Organic Con-example, milling machinery damaged by stones ference, Feb. 27-Mar. 1 Evaluate Yourin the grain. Product liability insurance will be Organic Grain Marketing Opportuni-a must. On-farm or cooperative grain process- ties. NewFarm.org.ing, either for human or animal consumption, is www.newfarm.org/depts/talking_another marketing option. For more information, shop/0403/marketing_ops.shtmlrequest the ATTRA publication Grain Processing: 4) Gelski, Jeff. 2003. The organic reward. Mill-Adding Value to Farm Products. ing & Baking News. November 18. Baking Business on-line edition. www.bakingbusiness.com/feature_stories.Long grain rice. Photo by Keith Weller, USDA ARS asp?ArticleID=68447 5) Matheson, Nancy. Personal communication with Andre Giles, owner and manager of Montana Flour and Grains, Fort Ben- ton, MT. Oct. 20, 2004. 6) Frerichs, Rita. 2003. Organic Food-Grade Corn. College of Agricultural, Consum- er and Environmental Sciences, Univer- sity of Illinois at Urbana-Champaign. www.aces.uiuc.edu/value/factsheets/ corn/fact-organic-corn.htm 7) Hansen, Ray. 2004. Organic Soybean In- dustry Profile. Agricultural Marketing Resource Center, Iowa State University. www.agmrc.org/soy/profiles/organicsoypro- file.pdf 8) USDA Economic Research Service. No date. Briefing Room: Dry Bean Background. www.ers.usda.gov/Briefing/DryBeans/PAGE 10 //MARKETING ORGANIC GRAINS
    • 9) Organic Business News. 2004. Soybean corn and soybean technology, specialty corn and Feed Costs Rising as Egg Prices Go Up. soybean markets, and more. They have publica- July. p. 7. tions on organic food-grade soybeans and organic corn that include recommended management10) Swenson, Andrew, and Brad Brummond. practices and sample partial budget analyses. 2000. Projected 2000 Organic Crop Bud- They also maintain lists of buyers for the different gets for South Central North Dakota. crops. This information is available at their Web March. North Dakota Cooperative site: www.aces.uiuc.edu/value/ Extension. www.ext.nodak.edu/extpubs/ecguides.htm For those without Internet access, contact:11) Anon. 2003. Organic Feed for Poultry Burton E. Swanson and Livestock: Availability and Prices. Project Director Agricultural Marketing Service, USDA. Department of Agricultural and Consumer www.ams.usda.gov/nop/ProdHandlers/ Economics FeedStudyJune2003.pdf 1301 West Gregory Drive Urbana, IL 6180112) Krall, Jim. 2004. Trader’s Dispatch. Valier, 217-244-6978 MT. October. p. C22. 217-333-5835 FAX13) Pratt, Mike. Former Purchasing Manager, swansonb@uiuc.edu American Health and Nutrition. 1998. North Dakota Cooperative Extension has some Personal communication. April 15. very good budgets and planning information American Health & Nutrition for a variety of organic field crops online at: 3990 Varsity Dr. www.ext.nodak.edu/extpubs/ecguides.htm Ann Arbor, MI 48108 For those without Internet access, contact: 734-677-5570 734-677-5572 or 734-677-5574 FAX Distribution Center, NDSU Extension Service ahn@organictrading.com Morrill Hall, P.O. Box 5655 www.organictrading.com North Dakota State University Fargo, ND 58105-565514) Traub, Jim. Senior Merchandiser, Clarkson 701-231-7882 Grain. 2001. Personal communication. 701-231-7044 FAX October 18. dctr@ndsuext.nodak.edu15) Burchett, Andrew. 2000. Contract quest. NC+ Organics is a supplier of organic row-crop Farm Journal. October. p. 26–28. seed and offers some helpful information on16) Riddle, Jim. 2004. The Inspector’s Note- growing and marketing organic grains in their book: Protecting the integrity of organic newsletter and their online forum at http://ncor- grains during harvest. August 17. ganics.com/index.html. If you don’t have Internet NewFarm.org. access, contact: www.newfarm.org/columns/inspec- NC+ Organics tor/2004/0804/081704.shtml 207 18th Street N.17) Anon. 2001. Choose GMO testing methods Grand Junction, IA 50107 and labs carefully. The Organic Source. 800-370-7979 March. p. 4 Organic Grain DealersFurther Resources Following is a list of some organic grain buyers. This list is by no means complete, but shouldInformation serve as a starting point in locating buyers.The Illinois Specialty Farm Products project Ag Finder has merged into West Plains Grainprovides information on contract evaluation for (listed below).specialty grains, strategic planning, specialty //MARKETING ORGANIC GRAINS PAGE 11
    • American Health & Nutrition Montana Flour and Grains3990 Varsity Dr. 2500 Choteau St.Ann Arbor, MI 48108 Fort Benton, MT 59442734-677-5570 406-622-5436734-677-5572 or 734-677-5574 FAX 406-622-5439 FAXahn@organictrading.comwww.organictrading.com Pacific Soybean and Grain 1 Sutter St., Suite 300Arrowhead Mills San Francisco, CA 94104110 South Lawton Ave. 888-276-9232P.O. Box 2079 415-433-9494 FAXHereford, TX 79045 info@pacific.com806-655-0887806-364-1068 FAX Profiseed-Internationaldholling@hain-celestial.com 1691 Highway 65 Hampton, IA 50441Ciranda, Inc. 800-809-3493221 Vine St. Scoular GrainHudson, WI 54016 2027 Dodge St.715-386-1737 Omaha, NE 68102715-386-3227 FAX 800-488-3500info@ciranda.com 402-342-4493 FAXwww.ciranda.com gleigtag@scoular.comClarkson Grain Company, Inc. www.scoular.com320 East South StreetP.O. Box 80 SK Food InternationalCerro Gordo, IL 61818-0080 4749 Amber Valley Parkway, Suite 1800-252-1638 Fargo, ND 58104217-763-2861 701-356-4106cgci@novanet1.com 701-356-4102 FAXwww.clarksongrain.com skfood@skfood.com www.skfood.comIntegrity Mills, Inc.616 6th Ave. W. Stonebridge Ltd.Cresco, IA 52136 4901 University Ave. Suite F319-547-5827 Cedar Falls, IA 50613319-547-5920 FAX 319-277-4277 319-277-4274 FAXKreamer Feed, Inc. renee@stonebridgeltd.orgP.O. Box 38 www.stonebridgeltd.orgKreamer, PA 17833800-767-4537 Sunrich, Inc.krefeed@ptd.net P.O. Box 128www.kreamerfeed.com Hope, MN 56046 800-342-6976McGeary Organics, Inc. 507-451-2910 FAXP.O. Box 299 lavernek@sunrich.comLancaster, PA 17608 www.sunrich.com800-624-3279717-394-6931 FAX West Plains Grain /Specialty Grains Dept.sales@mcgearyorganics.com 2809 S. 160th St., Suite 309www.mcgearyorganics.com Omaha, NE 68130 Omaha office: 877-558-0797 Kansas City office: 888-625-2595 402-829-5170 FAXPAGE 12 //MARKETING ORGANIC GRAINS
    • Buyers in the Upper Midwest are listed on the CII Laboratory ServicesMinnesota Department of Agriculture’s Web site. 10835 Ambassador Drivewww.mda.state.mn.us/esap/organic/orgbuyers.pdf Kansas City, MO 64153 816-891-7337Buyers for organic corn and soybeans are listed 816-891-7450 FAXat the Illinois Specialty Farm Products Web site. ciisvc@ciilab.comwww.aces.uiuc.edu/value www.ciilab.com (also available in Spanish)More companies and cooperatives dealing in or- Dupont Qualiconganic grains for food and feed can be found in the Bedford BuildingOrganic Trade Association’s Online Directory. 3531 Silverside Roadwww.ota.com Wilmington, DE 19810For more information on finding buyers, includ- 800-863-6842ing print directories for those without Internet 302-695-5301 FAXaccess, request ATTRA’s publication Organic info@qualicon.comMarketing Resources. www.qualicon.com Genetic ID, Inc.GMO Test Kit Manufacturers 1760 Observatory DriveEnvirologix Fairfield, IA 5255655 Industrial Way 515-472-9979Portland, ME 04103 www.genetic-id.com207-797-0300www.envirologix.com Mid-West Seed Services, Inc. 236 32nd AvenueNeogen Corporation Brookings, SD 57006620 Lesher Place 605-692-7611Lansing, MI 48912 605-692-7617 FAX517-372-9200 timg@mwseed.com517-372-0108 FAX www.mwseed.comneogen-info@neogen.comwww.neogen.com GeneScan USA 2315 N. Causeway Blvd., Suite 200Strategic Diagnostics, Inc. Metairie, LA 70001111 Pencader Drive 504-297-4330Newark, DE 19702-3322 866-535-2730 toll-free302-456-6789 504-297-4335 FAXwww.sdix.com http://www.gmotesting.comGMO Testing LaboratoriesBiogenetic Services, Inc.801 32nd Ave.Brookings, SD 57006605-697-8500 / 800-423-4163605-697-8507 FAXinfo@biogeneticservices.comwww.biogeneticservices.comCalifornia Seed & Plant Lab, Inc.7877 Pleasant Grove RdElverta, CA 95626916-655-1581916-655-1582 FAXRandhawa@calspl.comwww.calspl.com //MARKETING ORGANIC GRAINS PAGE 13
    • AcknowledgementsThanks to Nancy Matheson, NCAT TechnicalSpecialist and organic seed and grain producerand handler, and to Lynn Clarkson, Jim Traub,and Curtis Bennett of Clarkson Grain, for theirreview of this publication and their many helpfulcomments and suggestions.Marketing Organic GrainsMarketing, Business, and Risk ManagementBy Holly BornNCAT Agriculture SpecialistJanuary 2005©2005 NCATEdited by Paul WilliamsFormatted by Robyn MetzgerPAGE 14 //MARKETING ORGANIC GRAINS
    • Notes //MARKETING ORGANIC GRAINS PAGE 15
    • The electronic versions of Marketing Organic Grains are located at: HTML http://www.attra.ncat.org/attra-pub/marketingorganicgrains.html PDF http://www.attra.ncat.org/attra-pub/PDF/marketingorganicgrains.pdf CT 154 Slot# 184 Version 021605PAGE 16 //MARKETING ORGANIC GRAINS