Farmers cut out the middleman to put dollars in their pockets
When southeast Missouri farmer Kade McBroom started growing non-GMO soybeans he was excited to receive a premium for his efforts. That excitement soon faded when he learned the market wasn’t always reliable and in some cases nonexistent. He, along with other farmer-investors, decided to cut out the middleman and put the power back in their own hands.
In 2012, McBroom switched to 100% non-GMO soybeans and started planning and designing a non-GMO crushing plant.
“I designed a smaller facility on my farm first and began brokering non-GMO grain,” he says. “When other farmers heard what I was doing they asked to meet and said they would help raise capital for a bigger facility.”
Seven other farmers, a banker and McBroom came together in 2014 and laid the groundwork for a farmer-owned soybean crushing facility called Malden Specialty Soy. The company sells meal and oil directly to farmer and industry customers.
When the capital came together the group purchased used soybean crushing equipment to occupy about one-third of their 90,000 sq. ft. facility. This year marks the first full year the plant is in operation—and the group anticipates being able to double production next year.
“We’ve done more than we expected in sales,” McBroom says. “We sell to feed mills a lot, and there are a couple customers who are quite a bit bigger calling—we’re doing about four times our projections in soybean meal.”
McBroom manages the supply needs of the plant. “Investors have the first opportunity to sell beans to the plant,” says Kim Mayberry-Holifield, a farmer and investor with Malden Specialty Soy. “Once Kade gets all the beans he can from us he reaches out to other farmers growing non-GMO soybeans in the area.”
The waiting list to sell through Malden Specialty Soy is nearly 100 farmers long. Currently, farmers are receiving 10% more than market.
“It surprised me how many guys in the area are non-GMO,” McBroom says. “Off the bat the number of calls was outstanding—my phone was just blowing up.”
The plant crushes an average of 20,000 bu. each month and sells the soybean meal mostly to poultry producers and feed mills. Malden Specialty Soy’s biggest soybean oil buyer makes candles, but they also sell to others who use it for food products such as vegetable oil.
McBroom anticipates they’ll need to push production to 40,000 bu. per month as he’s getting more calls from feed mills and hog and poultry producers. Compared with most crushing facilities, Malden Specialty Soy is a small processor. Many larger scale crushing plants process more than 1 million bushels daily.
“What we have to do when processing GMO and non-GMO in the same plant is maintain the identity of the non-GMO bean all the way to the consumer—so it becomes more expensive,” says Thomas Hammer, president of the National Oilseed Processors Association—an organization that represents about 95% of soybeans processed in the U.S. “About 95% of the soybeans grown in the U.S., Argentina and Brazil are GMO, but if someone wants non-GMO they will get it.”
Malden Specialty Soy survives despite their small scale because they only accept non-GMO soybeans. The group accepts no more than 0.9% GMO contamination and usually receives less than 0.48%. They don’t need to designate specific days of the week to handle non-GMO grain and don’t have to shut down to clean out GMO soybeans or hassle with special bins like other crushing facilities.
In addition, feed mills and livestock producers continue to reach out to the plant because of meal quality. “We guarantee a minimum of 46% protein but usually end up delivering between 49% and 51%,” McBroom says. “That’s compared to a typical mechanical extrusion plant’s average of 44%.”
Their soybean meal typically contains 5% to 6% fat while most plants average 1%. Higher protein and energy content keep customers coming back and attracts new ones, McBroom adds.
The plant has the demand to double in size in 2017—and investors hope that growth pattern continues. “We’d really like to grow our business in the poultry and pork sectors so we can buy more beans from farmers in the Bootheel and Arkansas,” Mayberry-Holifield says. “The consumers are really driving this.”
McBroom still farms, but he spends the majority of his time managing the office at Malden Specialty Soy. He works with brokers, customers and ultimately oversees day-to-day operations on behalf of investors.
“It’s a constant learning process,” he says. “I can’t say enough about the people around me—the quality of people makes a huge difference.”