Crop Markets for Creative Farmers. Indiana Small Farms Conference March 7, 2015 Lynn Clarkson

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1 Crop Markets for Creative Farmers Indiana Small Farms Conference March 7, 2015 Lynn Clarkson

2 Farmer/Landowner Perspective Table stakes Land Markets Skill/knowledge Land Involvement level Infrastructure Market perspective? Max returns Max security Easy standard, lower $ Higher standard, more $ Compromise personal comfort balance 2

3 Perspective Merchant goal, role Serve clients in North and South America, Asia and Europe Supply corn & soy segregated by varieties and market distinctions - Identity Preserved (IP) Contract with farmers before planting to secure necessary supplies. Ship by container, truck, rail, barge, ship hold, airplanes; in bulk, bags and boxes; prepared and ready to cook or bin run. Secure growers by paying premiums that justify continuing participation in IP programs 3

4 Distinctions make opportunities Food, feed, industrial want something better than commodity, better than the open market provides. They offer premiums to get what they want when they want it. What merits a premium? Distinctions in value Efficiency/yield per $$ Access to preferred markets Market admission growing import of social distinctions Kosher Halal Non-GMO Organic Local Fair traded Yet unknown Product advantages Process advantages Market advantages CONSISTENCY Processor survey Texas A&M expert Miller experience Non-GMO Certified Organic 4

5 Current and emerging markets Corn premium markets White, yellow, blue, waxy Soy premium markets Variety specific for soy foods, sauces, oils Emerging social distinctions demand v supply Certified organic (define) Verified non-gmo (define) 5

6 Premium Indications $$/bu Corns / price Delivered Non-GMO YC +$0.30/bu Beardstown Non-GMO White corn +$ /bu Cerro Gordo Amylase GMO Syn +$0.40/bu Ethanol * Blue corn $8/bu Cerro Gordo Org YC Food $13/bu Cerro Gordo Org YC Feed $12/bu Cerro Gordo Org WC $14-15/bu Cerro Gordo Org Blue $17/bu Cerro Gordo Soy Premium Delivered NGMO feed $2/bu M* or B* NGMO food $2-2.50/bu M* or B* Org clear hila $25-30/bu M* or B* Org dark hila $22-26/bu M* or B* M means Mattoon B means Beardstown Please call for updated prices and delivery points. Convenience or income? What s your balance? 6

7 Organic crop rotation to consider Alfalfa for transition Corn blue Cover crop Soybeans Wheat Black beans (or reds, pintos), black-eyed peas (aka cowpeas) Cover crop 7

8 Trend Boosters for IP Seed diversity Seed development path Genetic engineering Traditional breeding Increasingly affluent consumers willing to pay for social values as well as function Improved ability to measure and segregate Segregated logistics systems FSMA: new food safety rules Farmer Pro & Con + Higher net $$/acre + Pride of product - Less convenience 8

9 Challenge Purity &Tolerances GMO Cultural traits Emerging standard 0.9% NACG position 5.0% Functional traits Hypothetical 1: 0.04% Hypothetical 2: 0.01% Example: Amylase corn Other: Contract standards 9

10 Emerging challenges Whose right trumps the neighbors? Whose right do we protect? Neighbor 1 Neighbor 2 What policies does the ag community want to buffer conflict? Consequence of current situation: Private land use zoning Suggestions? 10

11 Suggestions Identify premium client and understand his needs Follow your product through the chain Develop infrastructure for food purity, optimal segregation, reliability Physical Administrative Document it Food supply chain Old - push Today pull 11

12 Questions Comments - Perspectives Thank You Lynn Clarkson President, Clarkson Grain Member USDA AC21 Advisory Committee on Coexistence Member USSEC Member Illinois Farm Bureau Member National Grain and Feed Assn Member Grain & Feed Assn of Illinois Member Organic Trade Association (OTA) Former member UIUC Crop Sciences Advisory Committee Former member USDA GIPSA Advisory Committee Former member UIUC ACES Advisory Committee Former member OTA Board of Directors Nov 13,