Not all areas are well-positioned to take advantage of the specialty market, but if you find yourself in one of those, you might be looking at beautiful opportunities to earn more by investing in specialty products. In this episode, Todd Steinacher brings in AgriGold’s Specialty Products Manager, Chuck Hill to talk about the rising trends in specialty corns like waxy, white and non-GMO, as well as parallel developments in soybean. Chuck explains premium from a product management standpoint. He also explains what PCR testing means and why it matters in the non-GMO space. Join in and pick up some essential information that you can use should you find your way into opportunities in the specialty product niche.
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What’s So Special About Specialty Products? Feat. Chuck Hill
My goal is to bring insight from industry agronomic specialists and yield master farmers. Through these insights, we can challenge our thinking for future crops. With that, I would like to introduce Chuck Hill, AgriGold’s Specialty Products Manager. Chuck is a CCA and a sustainability specialist endorsement. Chuck, welcome to the show.
Todd, glad to be on.
Chuck, why don’t you take a little bit of time and tell us about yourself, your family and the overarching territory that you cover with AgriGold.
Thanks, Todd. I have been an ag all my life. I grew up on a grain farm in Central Illinois. I went to Illinois State University and had an Ag Business degree. Out of college, I worked five years for a major chemical company as a rep and ever since then the last many years I’ve been with AgriGold. I started in sales in West Central Illinois. I still live in Jacksonville, Illinois but many years ago, I transitioned into the role that I do now as Specialty Products Manager for AgriGold.
Chuck, you’ve been at AgriGold almost as long as I’ve been alive. I can almost imagine that you’ve seen a lot of change in the ag industry not only from a production standpoint and technology but from the types of crops grown and the demand. What we want to hone in on are the specialty crops. As it relates to specialty crops, can you describe and tell us what that looks like from your standpoint for AgriGold?
As a Specialty Product Manager, probably the first place to start is, what is a specialty product manager? What do I do and why do I even have this role? Why did AgriGold create this role? It started back in the late ‘90s. AgriGold was one of the key companies in the Ohio corn market for those of you that remember that. AgriGold decided, “We need somebody within the company that focuses on managing this type of market and those types of products.”
We define a specialty corn product that is something that a grower is getting a premium for would describe the beans the same way. That’s where this roll started. For those who are familiar, Ohio corn did go away eventually but there’s still plenty of specialty markets out there. I deal with hard endo corn markets which some people call food-grade white mark white corn, waxy, course and non-GMO markets as well, basically, across all those different things.
It’s important because AgriGold started this role because they feel it is important to help our growers. My job is to add value to our products for our customers so they can gain more from them. Todd, you’ve talked to some people on here about increasing yields and that adds value as well. This is a little different way of adding value but it’s an important role to many growers that AgriGold works with across our whole footprint. You asked about that where my territory is. My territory is wherever AgriGold is and corn or soybeans are grown or wherever. It’s pretty much all across the corn belt and wherever there are processors and markets out there.
As new products come on the market that get tagged or deemed a specialty, from your standpoint, what’s the process look like to bring something to commercial?
It’ll vary by product. Let’s start with yellow. I call it hard endosperm corn like a lot of people do in the industry. You might refer to it as food grade. In that particular case, these are hybrids that you’re growing anyway. Some of our best sellers and best performers have that characteristic. Once we name a hybrid, the agronomy team at AgriGold selects hybrids that we’re going to sell. I’ve already started the process of evaluating those hybrids for their characteristics and I find the ones that I feel will fit what the end-user wants and I’ve found that out.
Over these years, I work with the end-users to determine what they are looking for. Frito-Lay for instance or might be an export market, those that are buying food-grade corn, hard endo corn. What are they looking for? I look for that in our hybrids and I will even quarterback to the research level and work with our research teams, “Here are the characteristics that these buyers are looking for.” As they are breeding corn, they can look for those characteristics as well. However, the yield is still number one, two and three as we go and agronomics are extremely important. That’s on the food grades. Whites and waxy are a little bit different. You have a little more limited play there but they’re still looking for sound hybrids that we want to put in an AgriGold bag.
As we dive in a little bit deeper, specifically on some of the hard endo, what specifically in the kernel that you look for or the end-user is looking for and maybe why is that important to them?
Even within that industry, what will vary a little bit on what they’re looking for depends on what process they use in how they make the product. Like a Frito-Lay or an Azteca Milling, they’re an alkaline cooker. It’s what’s called Masa Maker. They’re definitely picky. They want hardness, not only test weight but hardness and we measure that by density. I use the Illinois Crop Improvement lab over Champaign, Illinois, which is basically a standard in the industry.
We look for density. We look for the horniest endosperm percentage, things that by the naked eye, if you look at that kernel and you can see some nice translucence around that germ, that’s a characteristic somewhat of a hard endo hybrid. If it’s cloudy in there, then that indicates a little bit more softness but there are instruments they can use to measure that. How much cap yellow dent, cap and crown on a kernel also come into play. Those buyers want it as little as possible on there because that could break off in the process and it would cause the cook not to be as good.
Even some of them will get into size. Most of our hybrids now have a good kernel size to them. They don’t like small stuff and you can get too hard. If you’ve ever heard of Argentine flint dents that are almost like BBs, that’s getting too hard, so that is not good. Too small will get cleaned out, so they’re looking for all this combination. Other buyers may not be quite as picky but in general, that’s still what they’re looking for.
You might sit there at the farmer and I say, “I got a heavy test weight,” but that isn’t the only indication that they will look at it. There’s a variety of other ways that we look at too. I split kernels open and take pictures. We split them open as we sit there and talk. They’re looking for those types of things in there because these buyers of Frito-Lay, for instance, want every bag of Frito chips, Doritos, their product, every bag you open needs to look and taste like the last bag. They’re picky about the products that go in there and they’re willing to pay the growers for that as well.
Chuck, you referenced key items that you look for on products going into the hard endo market, as well as what the end-user looks for. I’m sure it’s a process. If the new hybrid comes out and to make it onto a “list.” How long can this process take before an end-user can kick the tires of a particular product before they’re comfortable with it and okay with offering a premium for that particular product?
This will vary. With some buyers that I deal with, simply showing them a sample, showing them some of the data that I’ve had that the labs run on it, that’s good enough and they add it to their list for the next year. A lot of times these lists nowadays are coming out maybe in December into January before those lists get published. Buyers like Frito and Azteca, they’re more of a process. Both of those buyers want to look at the samples first, they may put them through a plot for one year and they want to cook test them.
It varies with Frito-Lay. It takes about 4,000 pounds of grain to cook test. They take it, cook it and they make products. They end up sending it by an expert taste panel. We got the results back from a cook here. Some hybrids made it and some didn’t. A lot of it comes down to, “It didn’t taste quite right,” or, “The texture of the product wasn’t quite what they are looking for.” Azteca needs 4,000 or 5,000-bushel cook tests so can even delay that another year if we don’t have enough seed for that.
They’re going to do a similar thing, they’re going to run it through their plant, they’re going to make the products and they want to see how it works through their whole process and different steps along the way. They’re going to measure that to see they can measure cooking times and the amount of moisture that gets taken up. There are 1 or 2 years to get something approved, so we try to get into that process as early as we possibly can maybe even before we commercialize the hybrid if we have enough seeds.
It amazes me how much time and effort goes into evaluating the kernel. Being on the agronomy team, we spend a lot of time evaluating large sums of plant populations for plant structure, root development, ear types and how it handles nitrogen. In your category, you’re much fine-tuned down to the kernel, which that plant still has to have all the yield components and agronomics to it but it’s amazing to think that much effort and time is spent looking at the physical kernel. At the end of the day, it’s what the end-user wants for their particular ingredients or products. It’s mind-blowing to take the time to think about that whole process.
It is. I used to kid when I first started doing this, I was in sales and stuff. I used to look at the whole plant, how it yields and all the agronomics. I would take a buyer into a field and they focus on the ear. They do but they focus on that ear looking at the kernels. I find myself doing that now because I will spend a lot of time in the fall walking research plots. I want to see the stuff that’s a couple of years away possibly to see what has some possibilities.
I’ve got a building full of samples that I took of hybrids that were research, experimental hybrids and most of them did not make it to commercial. We’ll feed them to somebody’s hogs or something. That focus on that kernel is what I do, it’s my role within AgriGold and the agronomy group that I work with. I’ve trained some of you guys to look for that stuff too. Over the years, I get a kick out of researchers. Researchers will come to me, “What do you think of this, Chuck because you’re proud of it?” If I ding any at all, they walk away with a little sad face but they’re looking. I appreciate that everybody is looking for that to help meet the needs of our growers out there.
The other piece of specialty in a particular product is I want to jump into waxy. You explained to me a waxy hybrid. To me, I’d never given much consideration. If you could walk us through how that plant is made to meet that premium and where does that premium go to.
For waxy corn, pretty much you’re growing waxy corn if you have a contract which means for the most part most of the waxy corn in the US is domestically used ingredient, basically the majority of the buyers and they have plants. There are three plants. There’s one in Indianapolis, Lafayette, Indiana, Hammond Indiana with all three of those. Also, over in Kansas City and around Cedar Rapids so the domestic market.
There is a little bit of market on the waxy side for export that goes out of Mississippi and Illinois Rivers. Waxy is a specialty in a sense. Those buyers are wet millers. They’re going to make starch out of that corn. They make starch out of yellow dent corn as well but the starch that comes from a waxy hybrid from waxy corn is a different starch. It is a more valuable starch. Most of all that starch will go into the food products. Your coating on French fries is probably waxy corn if you eat some type of season-coated French fries and a variety of other things that the market will take.
A waxy hybrid is a converted yellow dent hybrid but it’s not converted being biotechnology. Gene editing is starting to be used to convert waxy however since they are not accepted. Gene editing is not accepted into the non-GMO market. Hopefully, that will change. There are no waxy hybrids out there that gene editing is being used for but it would speed the process up. We have to use the conventional method and that’s breeding. You breed in a waxy donor into the plant and then you start backcrossing it to get everything out and leave yourself with waxy. You have to do that on both inbreds of the corn hybrid. Waxy is a recessive trait. That’s what you referred to, Todd. It is a recessive trait. Both inbreds have to have that, which does slow down the process as well.
If you’re a grower of waxy, you don’t have quite the choices of hybrids that you do in yellow dents. What you’re doing in the process of waxy is amylopectin that’s in the kernel. A normal, yellow dent corn kernel is about 75% amylopectin and 25% amylose from a starch standpoint. All we’re doing is taking that amylopectin up to 97%-plus on it. The amylose then goes much lower and that’s where you get a different starch component that they’re looking for. It’s an important market to AgriGold. We’ve got many of our salesmen that sell a lot of waxy corn in those areas. We try to work to keep good hybrids, elite hybrids as we can in there. It takes a little bit of time to do it.
Going down to the next one would be from a white corn standpoint. There are markets for white corn. When I was in Africa, most of the corn over there was food-grade for white corn. Domestically, tell us about the white corn story.
White corn is similar to yellow, hard endo corns. The only difference is the color of the kernel. The only difference between white corn and yellow corn is the color of the kernel. If you want a white tortilla or a white corn chip or such, you have to use white corn. You can’t take the yellow out of yellow corn to get it down white enough. That’s where that market goes for white corn, it’s going all into food products. Yellow corn will be used in ethanol and livestock feed. You’re not doing that with white, you could if you want to but it’s an expensive product there because growers do get paid more for growing white corn. The white corn is going to have to have that hardness characteristic, which about all of them do, simply because that’s the genetics that’s been chosen over the years.
It’s fun to talk about white corn again, Todd. AgriGold had been in white corn years ago. We ended up getting out of it. We ran out of the product that was competitive. It’s fun to announce with our salesforce here that we are back in the white corn business. We’ve worked hard. We’ve found some genetics that we feel will work well. We’ll be further testing, more widespread testing and a limited launch in 2022 of the new 113-day white corn hybrid. I’m excited to be back in there because it fits well with our hard endosperm yellow corn business. As I talk to the buyers, many of them buy white corn as well.
That’s some exciting news, to have another offering of a strong product for premium customers across the corn belt that we deal with. Stay tuned for evaluations of plot and performance data. Stay tuned with Chuck’s message there. One thing in my area from a specialty standpoint, I tend to do with a lot of growers with non-GMO. You and I had the conversation that there’s some domestic demand for it and a lot of international demand. Can you give us a synopsis of what that non-GMO market looks like?
We’ve talked about hard endosperm corn. We’ve talked about white. We’ve talked about waxy. All three of those markets have a non-GMO component to them. Probably 90% of the waxy market is non-GMO. Non-GMO simply means we’re using conventional hybrids. We don’t want those genetic traits in there. The buyer doesn’t want those traits in there. There are varying levels. Some of the tighter markets domestically have 0.9% tolerance of biotech traits being allowed in there. If you get over that, you’ll get rejected.
Some of the export markets in some domestic markets will go higher, 1.5% for some of the feed markets and 2.5% to 3% for some of the export markets. The corn that’s being used for the same thing on the export side is what it is on the domestic side. It’s not a different use. It’s the same type of hard endosperms going into snacks and different foods like that in Japan and as well as it does here in the US. It’s a good market to be in if you’re in an area that there’s a market for it.
For the export side, the river areas, we’re here, that’s what got me started in this specialty business back in the ‘90s. Everything was non-GMO at that time. I’m over here by the Illinois River and we were able to work with a buyer to do some things on hard endosperm with the hybrid that I was selling that growers liked. Ohio corn came along. I’m working on that, too. Eventually, when biotech traits started coming in the late ‘90s and when we saw more people adapt to the biotech traits, it’s when the non-GMO markets sprung up. What a Japanese buyer was not having to pay extra for to get people to grow it, keep it separate and manage it, he was going to have to start to pay extra for it. That’s the birth of the non-GMO market. It’s a good market.
AgriGold feels strongly about supplying that market. AgReliant Genetics, our parent company, is a germplasm company. We create germplasm. We’re not a trait provider. We believe in the traits and we have a lot of trait offerings out there and it’s still the vast majority of what we sell. There’s a high enough percent of what we sell that is in that conventional market. Some for people that don’t use the traits but many others are people that are looking for a non-GMO premium as well. Our conventional corn lineup on the yellow dent side is larger probably than anybody else’s in the business. It’s got new stuff in it.
I call it old school, Todd. Back in the ‘90s, you’d bring out a hybrid first as a conventional and then start adding in the traits. Year after year, you would add traits to it. In the past years, it’s gone the other way. The trait version comes out first because your testing is that way and then the conventional may come out later if the company decides to do that. We’re going to start going back the other way. We’re going to bring out some hybrids as a conventional first and then the traits will follow. We feel it’s strong enough to get out there. It’s a hybrid, we want to put it out there on the market. There’s a good market for those conventional hybrids.
Chuck, you brought it up a few times but it seems like these premium markets dictate geography to a river, rail, process or location. Not every elevator is going to offer a special premium market. How does that influence things?
That’s a major influence, of course. The rivers, you can’t change, they’re there. If you happen to be in an area that you can get to a river or maybe work with a local elevator that goes through a river, you’ll be able to take advantage of some of those markets. The geography, take hard endosperm corn, for instance, there’s a good export market for it. However, over here on the Illinois River, we don’t see too much about Havana, Illinois. South of Peoria is about as far north. A hard endosperm non-GMO market would be on the river. As you get further north, the hybrids aren’t quite as adaptable. You can run into issues with wet corn and have to dry it and end up with stress cracks and things like that.
Frito-Lay has plants all over the country that make a product but they don’t buy the corn at those particular plants where they make the product. They have two buying stations. They have one located in Sydney, Illinois, around Champaign. The other one is out in Gothenburg, Nebraska. They chose many years ago to locate in those places because there’s a lot of corn grown there. Also, they probably didn’t want to get near a river because they didn’t want to compete with that river market. Some of our other processors, especially the wet mills like Ingredion, Tate & Lyle, Cargill, have been located where they’re at for decades. That’s why that market is there.
The rail markets can change a little bit. I’m here in Jacksonville, Illinois. Bartlett Grain built an elevator here years ago for a shuttle loader. Most of the shuttle loaders that many of you are familiar with across the Midwest go to Hereford, Texas and down those areas for feed. This one has a rail line that goes to Mexico. Bartlett has a big business in Mexico. Most of what they’re shipping is straight yellow dent corn but they have done some white corn through here. They did locate here fairly close to a river but they found a rail line. A lot of their stuff comes out of the West, over St. Joseph, Missouri, Kansas City and up into Nebraska. It varies by where you’re at and what you have access to.
As a grower, you may be in an area. From time to time, I get asked a question, “What’s available in my area?” There may not be anything available in your area. If you’re towards the west and you’ve got ethanol plants all around you, probably your best market is going to those plants versus paying trucking to go someplace special. You have to analyze that and see if it’s worth it or not to do it. One of the things you have to do when you jump into a specialty market is analyze, “Is this going to be a good return?” Many people find it to be that way. It is somewhat by area, Todd.
I completely agree. Chuck, you hit on it. I’m understanding your particular geography where you’re located and understanding the market opportunities. Not every area has potential for it. I can remember being at an AgriGold customer event years ago. They were two customers in the non-GMO market, both of them were on polar opposite sides of my territory. The two had never talked before. The moment we had a chance to get them together and start asking questions about different river terminals they use and where they’re selling through, there was some opportunity for both of them because they weren’t quite aware of some other opportunities out there from an elevator standpoint.
There are opportunities talking with neighboring farmers. There are opportunities talking with your AgriGold rep. Ask them what are the specialty markets in your area? Where do your AgriGold specialty customers take their grain? What programs are they going for? Never be afraid to start asking questions. You might be in that market but until you talk to some other people, it can open up a whole other opportunity. To me, that was a huge eye-opener joining those customers together.
Todd, that’s a good point too. Part of my job as I work with these buyers is I keep our salesforce and agronomy people informed of where these markets are at and, if need be, what hybrids of ours are accepted. There are still a lot of country elevators out there, especially on non-GMO. A non-GMO market may take any conventional hybrid and doesn’t get hybrid specific. I don’t necessarily always know about some of the local ones. I always encourage our salesforce, as you’re traveling around, you’ve got an elevator in your area, stop in and introduce yourself and see what they’re doing especially with non-GMO.
On the non-GMO side, we’ve seen increasing use of non-GMO corn for feed here in the US. Whole Foods, Trader Joe’s, those places that sell organic and non-GMO foods also want the meat, dairy and poultry that they have in there to be fed non-GMO. We’re seeing some increase there. You’ll never know. You might have a country elevator out in the middle of nowhere that decides, “I’m going to do non-GMO corn here because I’ve got a rail line to the southeast. There’s a demand for it on the feed side.” It’s always good to talk to some of those local people. You’ll never know. You got to ask some questions and keep talking.
Chuck, let’s take our conversation to a different area. Let’s talk about premium. When I hear premium, I’m going to make more money. A lot of times, in the specialty markets, there is a premium associated with the grain. Give me your take on what the premium means.
The definition of what we call specialty is if there’s a premium offered, that premium is going to be based on a variety of things. The bottom line, the premium is being paid to the grower for that growth to manage that product that, in this case corn for the buyer and meet the specifications for that buyer. A non-GMO, you got to keep biotech out of there. It means doing some things, making sure that you do some things right. Try to know what’s going on around you. We’ll get into the clean seed part here in a little bit, Todd.
In that case, if it’s a hard endo or white corn buyer or even waxy, one of the key things there is when you’re drying corn, you can’t use high heat. You need to keep the temperatures down. It may or may not fit you. If you’ve got a continuous flow dryer and you’re more about speed in the fall of drying and getting it in then these markets may not fit you. If you’re willing, as the premium is being paid to you, to manage that and deliver a high-quality product, that’s part of it. In the case of waxy some of the premium is to pay waxy corn. In general, it will be a little less yield than yellow dents. The premium is helping make up for that. A lot of people out there have grown waxy year after year and making good money from it. The premium is there for you to manage it, to keep it separated and deliver a good product to the buyer.
Great insight, Chuck. In my part of the world, a lot of non-GMO. In some environments, we do still have the pressure of corn borer, rootworm. There can be a potential yield hit in those environments, those years there is an issue. If we’re in these high rootworm areas and there’s a lot of threat to us, maybe that reward isn’t quite what we think it might be. We got to weigh those options to know if a specialty market fits our soils, farming practices and profitability goals.
That’s true. Keep in mind, markets like Frito-Lay, Aztec and some of these other markets, take traded products. They’re not non-GMO. A grower does not have to weigh that. If you’re in an area and there are non-GMO market opportunities for you, you do have to weigh anybody that’s going to use conventional corn. From time to time, they say, “Chuck, can I use conventional corn?” One of the first things I’ll ask, “Do you have a rootworm problem?” If you have a rootworm problem, the SmartStax, the Duracade 5222s, those are the way to go after your rootworm problem.
The next question is are you worried about the corn borer? If you’re worried about corn borer then you need to use the Double PROs and those types of things. The final question, your herbicide program, are you committed to using Roundup in corn, Liberty? If you answered no to all of those then you’re okay. As long as you have access to elite genetics, which we do give access to that at AgriGold, you should be fine growing conventional corn. Manage that part of that if you want to get your non-GMO premium to manage that beyond growing conventional corn to get that premium. I also tell people on premium, especially with non-GMO, that don’t use the premium as part of your profit calculation to determine whether you should do it or not. Use the premium as a bonus for doing a good job.
If you’re going after especially that 0.9% tolerance market, you’re probably going to get rejected from time to time. You got to figure out how you can deal with that. If you get rejected too much, you’re losing that premium. Conventional corn may have not been the great thing that you thought it was so that’s why don’t figure the premium in there. Decide based on the agronomics and the yield capabilities whether you want to do conventional or trade it or not if you’re trying to decide there between that and for the non-GMO markets. It is something that you got to take a hard look at.
Chuck, you said the premium was there for premium management. I’m glad you brought up one piece from the herbicide standpoint. A couple of years ago, I went on a service call where some non-GMO corn got sprayed. By having traded corn, we have the ability to spray glyphosate and glufosinate overtop our crops. Some of the non-GMO chemistries across the top of our corn crop, if we don’t hit that crop right, we can have some dings in the crop. That service call that I was on, they sprayed it almost two growth stages past the label recommendation.
We go out there and we’re starting to count everything. Honestly, the lowest two leaves had already been blown off or destroyed. When the plant was being determined for growth stages, based on the number of leaves, they were in range. Physiologically, they were two stages off. From a management standpoint, do your homework if you’re going in with a grass herbicide or even a broadleaf to make sure we’re not going to harm the crop. Do your homework. If you got questions, reach out to an AgriGold representative and double-check that piece to make sure we don’t have a problem and the bonus that Chuck was talking about.
When you go into it, you want the same yield that you were getting before. If you don’t have the problem with the insects or the weed issue and you can use elite genetics, you’re not giving up any yield to go to a non-GMO program unless something like that happens. Your herbicide program changes and you aren’t aware of some things you need to do. I don’t know, Todd. We’re talking about identity-preserved corn. When you look at doing identity-preserved grain whether corn, wheat or beans, it’s a mindset that you have to have from the beginning to help ensure that you’re going to have success.
You got to plan your herbicide program. Plan where you’re going to put this, what else is going to be around you and what field you’re going to put it in. You got to make sure you’re going to be able to clean out your planter. To some extent, flush the combine through. A lot of people that grow non-GMO are all conventional. They don’t have some of those issues with contamination within their farm. We got to make sure if you’re hiring trucking that the trucks come clean.
One of the other key factors here is you’ve got to make sure everybody in your operation is aware of what you’re trying to do, aware of the objective that you have. When Roundup beans first came out, there’s a story going around here, locally, where I’m at that a grower had 300 acres of non-Roundup beans get sprayed with Roundup. It was the future son-in-law that made the mistake. He did end up getting married into the family. There was a mistake made of not even realizing what’s out there in that field. That’s a pretty costly mistake to make. If everybody in the operation isn’t clear on what’s going on, things like that can happen. That’s why when I talk about it being a mindset, it is something that you’re set on, you think about it as you go through.
You can have success if you go out there and use it as a mindset. The guys that are doing these programs year in, year out for any of these buyers, they’ve got it down. They know what they need to do. The buyer knows what they’re going to get and expect from them. The grower knows what to expect what the buyer wants, too. It’s a good partnership there. You can get some of these programs out there. It’s hard to get into them. They have a list of growers that they’re working with and that appeals to their needs. Sometimes, these programs can be a little more difficult to get into. Others are always looking for new people as well. You’ve got to figure out what’s in your area and what you can do.
It’s almost like a grower is their advocate to find these markets. Some elevators might already have their list of people but you need to advocate for yourself and network. That’s where networking comes in aggressively, if you will, in nowadays age.
One of the things I’ll also recommend to a lot of you out there that might be reading and you may not be into a program. As you harvest, if you can segregate by hybrid in a bin or mix a couple of hybrids but both of them have hard endosperm characteristics, the company that you work with should be able to advise you on that. I will get calls, especially in late spring and into the summer from buyers that are looking for corn. If you’ve got something segregated in a bin, I might be able to find you a premium for that.
Don’t sit there and hold on to it. If corn hits $5 and you want to sell, go ahead and sell. Don’t wait for that premium. You can add value to what you have. Even better yet, as you’re filling the bin, if you take a sample out of each load, throw it in a bucket and you got a nice sample of what’s in that bin. That’s good for non-GMO corn to have a good sample of the bin so that could be tested to see what is there. Some of the companies, a requirement of their contract is taking a nice composite sample as you fill the bin and they have that tested for GM content. Things like that can potentially add value to your bins. If you can’t do it, don’t drive out of your way to do that probably because you may not capture that value. If you can, it’s worth something to give a try.
There are always opportunities out there. Look for them and manage towards them. Chuck, as we think about specialty products specifically non-GMO, what are you and your team in AgriGold doing to ensure that we’re offering the highest quality seed out there to a grower?
If you’re going into a non-GMO program, one of the biggest things is you control a lot of things. You can do everything the best you can but you don’t control the seed. We do. We have that. You want to work with a company that is going to provide you the cleanest seed that you can get. None of it’s going to be zero. You might have a test that says zero but it’s probably not zero. Not in the environment that stuff is being grown in. What we do at AgriGold with AgReliant is we have a mindset of growing conventional corn and that starts at the beginning. That starts in the process of selecting the fields that the production will go into. Our conventional seed fields get some of the highest priority in the selection of fields.
White and waxy get the highest because they definitely need more isolation to keep them pure as well. I’m part of a group within AgReliant that we’ve been meeting monthly here. Our production team has done a lot of things over the years to keep our conventional seed as pure as they can but we feel we can do better. We’re looking for ways to do that and how we can do better. We’re looking for different things behind the scenes that we do to do that. Our production group is conscious of that and does a great job and then comes in the quality assurance. We have to check the job that the production did. That’s the important point in there as well.
All of our seed is thoroughly tested for different things like warm and cold germs and those types of things but the conventional seed then is tested for GM content. We’re going to do that twice. We will do it from the field. We have a sheller sample from the field itself or a bulk sample from the sheller. We’ll divide that into grade sizes and we’re going to test each of those grade sizes. There are two things that are important and that’s the sample and then the test. The sample needs to be a good representative sample of the seeds. It’s taken with a random sampler as the seed goes by on the conveyor.
In a non-GMO business, just sticking a probe into a bin and taking a sample like that is not a good sample because the contamination in your field, in our fields, production fields and your bin is not going to be spread out evenly. It’s going to be spotty. By taking a sample, every so often in that stream of seed, we get good representative samples as we can and then that sample is taken. We use PCR testing. PCR is the most sensitive test that you can do for grain. They’re not doing as the elevator when you haul in because PCR testing can cost anywhere from $300 to $500 to $600 to $700 to $800 per test and it takes a couple of days to do.
You don’t want to wait in line that long so they are using the ELISA strip test with a reader. They are good but not quite as accurate as a PCR test. That’s why we use a PCR test and then that test is not one test. That sample split into three samples and then ground and then more samples. We end up doing twelve PCR tests per lot of seed that we test. Those twelve tests are a cross-check against each other. It’s unlikely that we have an errant test. We do that on the sheller sample and then we’re also doing that again on the bag sample that goes into the bag or the box.
We feel we have thoroughly tested that seed when we bring it out. We have a standard there at 1%. Working with growers that are going into non-GMO markets, we try to get them the seed as much as possible that is 1% and under to work with you to help ensure. We’re trying to do the things as well as we can, Todd and it’s been successful. That move to that program has been good for us and for our growers. They’ve seen a lot of success in the markets out there in doing non-GMO corn.
Thanks for that, Chuck. I know there’s a lot that goes into providing a pure, as best we can, seed to the grower for the non-GMO markets. You and I know that all these tests and samples are being done. The average grower might not know that layer of effort is going to have as much pureness as we can. I’m glad you referenced the difference between the PCR test and the strip test because a lot of times, we just hear “it was tested” but we don’t know which test it was and the accuracy. There are all these pieces that play into it. I’m glad that you shed some light on that topic.
I do want to emphasize too that when we say PCR testing, it’s a series of twelve tests and not just one to cross-check for errors and stuff. I feel confident in our testing that it is accurate. You could test that grain again, that seed again and you’re going to come up with a different result. Hopefully, not too much different. If you want to test the seed yourself and you grab a sample off the top of the bag, that’s not a good sample. It skews the results. You could do that a number of times and you’ll see a wide range of results from it as compared to using a stream of seed sampling.
When we say the seed has been tested, it has been tested thoroughly for you. I might as well jump into, too, Todd some people say, “What does that mean to my field? What is your test mean to my field?” If your seed is at 1%, let’s just use that, what’s that mean to my field? The answer to that is there are about probably 1,000 or more different possibilities that could happen out there because it is a variable environment. You don’t control it. You’re talking about trillions of grains of pollen out there in that 1 acre or 80 acres of hay. I did the math on 80 acres once. There are trillions a grain of pollen out there.
Competing for those silks which there are a lot less silks there and then you’ve got a lot smaller amount of contaminated pollens or grain just from the contamination that could be in the seed if it sheds pollen and then you could get some blow in as well. There’s not a standard answer. I’ve done some testing and over 80% of the time, the samples I’ve taken from fields have come in less than what the seed tested. I feel confident that you’ve got some margin in there to play with if everything else goes right for you as well.
No doubt, Chuck. There are a lot of efforts going into that and there is no guarantee of 100% of anything in life. As they say, death and taxes are the only two that are guaranteed. We try to fight for the highest return and the highest purity, so that’s definitely important. Chuck, based on this conversation, I can definitely crown you the King of the Kernel. I don’t know if I’ve had this much of a conversation with somebody before just specifically on kernels, so I appreciate that. I do want to dive into one last topic, Chuck. We spent a lot of time talking about the kernel but tell some stuff on what’s going on with the soybean side.
On the soybean side, those of you familiar with the AgriGold brand, it’s been a couple of years ago that agriculture started selling soybeans. A funny story with John Kermicle, our VP, the lead of AgriGold, Brand Manager of AgriGold. Todd, you were there. We were in Chicago at a meeting and John was announcing to the agronomy staff before even announcing it to the salesforce that AgriGold was going to get in the soybean business. He made that announcement to our Agronomy group and he turned right to me but we’re not doing specialties, Chuck. I said, “That’s fine.” The announcement at that time was to all extent.
There are some markets but a lot of the markets around soybeans are for non-GMO soybeans, which AgriGold does not have. However, a couple of years ago, we took the opportunity and started working with the Illinois Soybean Association with some folks there. They’ve got a program called High Yield PLUS Quality. What the gist of this is and when they first sat down and showed us the information is mind-boggling. The amount of soybean market that has been lost in the poultry and swine industry on the feed side to synthetic amino acids is a huge amount of market. Seventy percent of soybeans are being fed to livestock.
There’s a market there and a lot of people don’t realize it because that market has eroded over time. The reason is because the soybean meal doesn’t have quite the feed quality to it that it used to have. Breeders have looked and done a great job with producing high yields in soybeans. It’s not necessarily a lot of crude protein and oils what the measurements been in the past. The Soybean Association has dug into looking a little deeper and they’ve identified seven essential amino acids that have the better way of measuring feed value. The effort here on the HY+Q program is to identify soybean varieties that have higher feed value based on this amino acid analysis and try to get those pinpointed more to the market.
The ultimate goal would be to get more varieties out there that have higher feed value, that raises the value then of soybean meal that would replace synthetic amino acids and capture back some of that market. The end result would be higher soybean prices because we have more market for them at the livestock level. I had some pushback one time from a guy that’s also feeding his hogs. He said, “We’re going to raise my feed prices,” and that’s not true because you’re taking out these synthetic amino acids and it’s just a replacement. You can do it without raising your feed costs.
The key to this thing is they want to point out that you don’t have to sacrifice yield to get this feed quality in that soybean and that’s why they call it the High Yield PLUS Quality program. You had Greg McClure on this show talking about soybeans and stuff. Greg’s done a great job down there raising over 100-bushel beans but we had our G3520RXs go to 148.8 bushels out there in Nebraska and setting a record for dryland soybeans. That variety happens to be an HY+Q variety. It’s got that designation on it because it does have the higher feed value, so you’ve got high yield and the feed quality.
We, at AgriGold, are looking through the profile book, Todd. Either that’s HY+Q logo on the profile of the soybean varieties that have that, they are in that upper half of feed quality, so they are designated as so. We’ll continue to evaluate varieties as they come out as well to designate that. We don’t have anybody paying a premium for that. There’s been some discussion and if we can find some buyers that are willing to do that, there is a possibility of premiums down the road.
It might be on small scale or it might be on an export scale. The soybean crush plants that we have around are so big that for them to capture the value, they’d have to do everything in HY+Q, which they’re probably not capable of doing but maybe down the road will be. It’s encouraging if you’re using those varieties, you’re helping the soybean market and eventually, possibly could help push that soybean price up a little bit by capturing some of that livestock market back.
Chuck, I appreciate your involvement in that as well as the Soybean Association because as the soybean competes with these synthetic products out there, we don’t think about it every day since there isn’t a premium for it. If there’s a competitor product out there and one of our end users is supplementing it and not buying as many soybeans, eventually that’s going to catch up to us. It’s worth being aware of these areas where you can use one of these premium soybean lines so you’re not giving up yield but yet we’re not giving up this high-end amino acid. To me, it’s a win-win if we all pay attention to it.
That’s the whole point of the thing we’re trying to get that message out there. It’s a bad message when it comes to, “How much market has been lost?” Now there’s a solution to that problem and that solution is emphasizing quality as well as yield. The goal here too is to start to get breeders to look at it that way as well. As they are breeding beans, they’re keeping an eye on that feed value part as well. Yield and agronomics are still going to be king as they should be out there but it doesn’t mean you have to give this up.
Breeders and companies respond to what growers are buying and what they are saying, “I want.” If the grower says, “I want feed quality as well in my beans,” then that’s going to drive that as well. It’s going to take some time to get this message out there. It is a message going beyond Illinois. United Soybean Board is now jumping into it as well, even the Illinois message would tie HY+Q. It’s not just something we talk about in Illinois. We talk about it across our footprint. That doesn’t matter if that soybean is traded or not to get that designation as well. It’s a good program to be involved with. I’m glad to be able to try to do something positive for the industry as we sell soybeans. We’re bringing value to our growers in that and it may take a little bit longer of a route to get there.
You definitely look into the long haul there, Chuck. A little extra time on the front end will benefit us greatly on the backside. Chuck, as we wind down this episode, I’ll give it back to you. Any closing comments that you’d like to make to anybody reading out there as it relates to specialty markets?
One, I enjoy working with these. I get the chance to work with these buyers and end-users and understanding what they need and what they’re looking for and then bring that back to the grower level and work with our sales or agronomy growers and even and our researchers to identify those. It’s an interesting job to do. Corn itself is such an amazing product out there. It’s got so many different uses and many more uses are being looked at. The other thing that’s helping with some specialty markets as we go down the road is we can evaluate and analyze and IR machines can analyze things quickly.
There are other things within that corn kernel that might have value to some buyer down the road. There could be a market developed around that, too. It’s quite an interesting thing. It’s caught up and valuated into the food market, which is a big market. 35% of corn goes into ethanol and the other bunch goes into livestock feed. The specialty market is smaller but if you’re in an area where there’s a buyer of specialty then you’ve got a great market and opportunity there.
At AgriGold, we’re happy to help you with those markets. If you’re already in there and stuff, our agronomists are doing a great job of helping work with people to push yield. I will note that why they’re working to put yield and I keep an eye on what’s that doing for grain quality. I’m trying to make sure that fits in that picture as well. I’m curious, there are some products out there. You never know. A new product or biological or seed treatment or something like that could help with grain quality. Good fertility programs are the mainstay in doing that.
Great takeaways, Chuck. With that, we’ll close this down for this episode. We’ve learned a lot as far as understanding what potential specialty markets are out there. Some of the factors that influence them are based on location or distance from rail and process locations to rivers. Realistically, just understanding what markets are in your area and understanding the agronomics that goes behind supporting it. Also, remember that premium is based on paying for management practice.
It’s not going to be an easy task. There are pieces involved in it, so reach out to fellow AgriGold networks. We’re glad to help you. Chuck, we do appreciate you being on this episode. From here on out, I will be calling you King of the Kernel. If you ever see Chuck out and about, make sure you call him Mr. King of the Corn Kernel. With that, we’ll go ahead and shut down. Thanks for reading. Thank you.
About Chuck Hill
As Specialty Products Manager for AgReliant, Chuck works with the AgriGold and LG Seeds brands to add value to their seed corn and soybean products.
Chuck works with end-users who pay premiums for certain characteristics that are of value to them.
His work spans across research, product development, marketing, and sales.
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