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More End Uses for Your Bushels

April 3, 2013
By: Ed Clark, Top Producer Business and Issues Editor
More End Uses Corn Graph
> Corn has been bred for a few different end-uses such as snack foods and ethanol, but this crop’s adaptations are far from over. Corn by-products are used in sodas, plastics and pharmaceuticals. One might say it’s only the beginning.  
 
 

The future is one of value-added grain and oilseeds that carry premiums

Look for an explosion of trait-specific crops designed for end users. The cards are already beginning to be played with the debut of high-starch corn for the ethanol market and high oleic soybeans for their oil content.

For farmers who can meet sometimes stringent product specifications, there’s money to be made in premiums.

One industry expert believes the future will be one between the haves and the have-nots. For corn, a different price will be paid for No. 2 commodity corn and corn with value-added traits.

Farmers will have to make more of an effort and spend more time managing their crop to ensure it meets specifications. At the very least, farmers will have more options.

Most likely these trait-specific crops will be grown under contract with the end user, explains Mike Boehlje, a Purdue University ag economist. Boehlje says having a contract only removes risk from the value-added market; however, it impacts pricing and marketing.

Looking down the road, what might some of these new products be? "One could be corn, rice or sorghum with improved mineral or vitamin content for developing countries such as Africa," says Russ Sanders, director for DuPont Pioneer’s enhanced oils venture.


"These products require market segmentation or crop segregation in a channel that has been commodity oriented."


"There’s a fair amount of segmentation going on," he says, which is all but guaranteed to increase moving forward. Today, farmers can grow white corn for the snack food industry, and waxy corn. End users will pay nearly $1 per bushel more for white corn.

Ethanol Varieties. A number of seed companies are targeting the ethanol industry. High-starch varieties have been introduced, but farmers can expect more varieties tailored for the ethanol industry to hit the market. New traits might include reduced potential for mold and mycotoxins.

Today, non-GMO corn and soybean programs, which cater to high-value niche export markets, offer a premium.

For soybeans, the emphasis for trait development has been on oil content and nutritional value for soymeal. Future segmentation will likely include varieties with higher protein levels, Sanders says. As soybean yields have increased, the protein levels have decreased. "This is a real issue with our export customers, since key U.S. competitors, Brazil and Argentina, have higher protein levels," he says. This gives their soybeans an edge in export markets. DuPont researchers are working to improve the nutritional value of soymeal and increase oil content without sacrificing overall yield.

It’s one thing to develop new value-added varieties and another to sell them at a profit. BASF, for instance, has put a halt to its nutritionally enhanced corn project.

"We needed the marketplace to compensate us," says Marc Ehrhardt, BASF’s Plant Science business senior vice president. "The higher protein and improved amino acid composition would not add enough value to satisfy everyone in the value chain."

This experience did not sour BASF on other trait-specific projects. They have partnered with Cargill to develop a canola variety that is high in heart-healthy omega-3 oil. Unlike the corn project, the canola venture relies on one partner, not a multitude of partners. This makes it more economically viable, Ehrhardt says.

"It’s a closed system, one partner and one germplasm pool integrated all the way to the finished product," he adds. Syngenta, through a major market segmentation effort, launched Enogen corn, which is the first genetically modified output trait specifically designed for the ethanol industry.

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FEATURED IN: Top Producer - Spring 2013

 

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