Some producers grow organics and non-GMO crops because there’s a local market for them. Others do so in the belief the supply chain of the future will demand it.
Chief Executive Eric Jackson of Minneapolis-based Pipeline Foods thinks farmers should consider adding these crops for a far more practical reason: Producers will make more money in the long run, and they’ll be better diversified, too.
Infrastructure Overhaul. That view has led Jackson and his founding partners to buy up existing grain facilities and revamp them to handle grain varieties that consumers are increasingly demanding and for which producers of meat, milk and eggs will pay a premium. The organization seeks to build grain-handling capacity in key geographic locations in the U.S. and Canada.
“We are investing in infrastructure projects that are dedicated to organic and non-GMO oilseed and grains and their derivative ingredients and are mid-stream assets—grain elevators, grain processing, oilseed processing, vegetable oil refining, feed milling and transportation,” explains Jackson, who began developing the business in April 2016. “We may not be shipping directly to food companies, but we’re contracting with food companies to help them create upstream solutions.”
The organization’s efforts underscore growing interest in farm country to find new revenue streams amid depressed prices for conventional corn and soybeans. At the same time, it highlights gaps that must be filled to ensure producers that invest years adhering to USDA’s standards have a ready market.
Building Momentum. Pioneers in the non-GMO and organics space include La Farge, Wis.-based Organic Valley, the largest U.S. cooperative for organic dairy farmers. The company manages and purchases organic dairy feed.
“Why is it that the U.S. is now a net importer of organic grains yet a net exporter of conventional grains?” asks Miranda Leis, feed program operations manager with Organic Valley. “It’s an interesting challenge because in order to justify some domestic infrastructure development, there has to be stronger pull on the consumer and the end-use side.”
The federal government has ramped up its own efforts to document and normalize production of grains for markets once considered niche. USDA introduced its first price report for non-GMO corn and soybeans in the summer of 2015.
In recent years, non-GMO feed-grade soybeans have fetched up to 14% more per bushel for farmers compared to all soybeans, while non-GMO food-grade soybeans have earned farmers a premium of up to 9%, according to USDA data.
“The bar is low right now because in conventional agriculture, it’s tough to make a buck,” Jackson explains. “We need to create a more durable program so when conventional prices spike, we don’t lose acres as in 2008 to 2010.” Pipeline Foods intends to help farmers transition 500,000 acres to organic row crops in the next three to five years.