In recent years, sharp downturns in global corn and wheat prices have forced farmers to re-evaluate their grain marketing strategy. While hundreds of factors have impacted grain prices over the last decade, the ones that generate headlines typically center on broader macroeconomic issues. Two primary factors include: 1) the surge in corn production from Brazil and Argentina, which has increased competitiveness for American farmers, and 2) the rise of wheat production and exports along the Black Sea, which has created new price challenges for producers in the U.S. and Canada.
Naturally, shifting dynamics have driven conversations on grain quality at the local level. High-quality grains that meet rigid buyer specifications can capture a higher price. Most farmers know that higher protein content and less crop damage provides the opportunity to fetch a better price. For farmers to get ahead in the midst of continued grain pricing fluctuations, they need to address buyer concerns and incorporate several small, measurable steps into their best practices.
Global Reputations Start at Home
Most farmers already know where their crops are heading, who their buyer is, and what products will be developed from their harvest. But to understand the food quality challenges, they need to look at the broadest possible supply chain to recognize the impact that a few small mistakes can have on end products around the world.
The U.S. Grain Council (USGC) is responsible for marketing U.S. grain to countries all around the globe. Price and quality remain the two primary factors on which deals are based. In a low-price world, the organization has heard more and more about the importance of grain quality.
Tom Sleight, president and CEO of USGC, recently penned an editorial in which he explained how more buyers have increased their complaints about grains arriving on their soil. The list of complaints ranges from broken kernels and dust, to a diverse roster of foreign materials. This might seem like a standard concern, until you dig deeper and learn that the foreign materials include anything from stainless steel bolts and dead animals, to the “occasional” cell phone. These foreign materials did not magically appear at the final destination, and buyers have grown increasingly frustrated by the problem enough to seek alternative sources of grain.
“These concerns can affect our competitive position,” Sleight wrote on the impact of these concerns. “In this marketplace, many customers look at all options—from South America and the Black Sea region.”
Not all of these quality concerns are the direct result of farming operations, many are the result of multiple transfers into different vessels across a dozen time zones. However, it is important to know that whether you are 10 miles from a mill or the first stop of a trip into another hemisphere, food quality control starts at the farm level.
As the USGC explains, farmers can take a few steps to preserve grain quality. These factors can also play a major role in securing a higher price when they bring their grain to market.
Protecting and Preserving Grain Quality
Ensuring grain quality does not need to be a grueling task. Once harvest is complete, four simple steps can protect and preserve grain for when it is time to bring it to market.
1. Understand speed of harvest. In a conversation with Kurt Shultz, director of global strategies, USGC, he says that farmers don’t have a lot of control over events ahead of the harvest. Weather and other key factors can alter the pace and success of the harvest on a year-to-year basis.
However, the speed of the harvest can certainly affect the quality of the grain as it is gathered. Farmers rushing to gather their grain can increase the accumulation of foreign materials. Shultz says that this begins a chain reaction that leads to the accumulation of foreign materials downstream like dust.
2. Clean the grain and grain storage. Grain sanitation during harvest is the first line of defense against quality problems down the supply chain. Pests do not traditionally invade when crops first arrive in storage. They tend to enter bin openings or have been present in bins before arrival. Thus, sweeping a bin out before new grain is dumped into it is a simple way to manage against insects in the grain.
Another simple thing to do is get the grain tested to understand what good and bad variables are in the grain. The fact is, diseases like aflatoxin in corn or vomitoxin in cereals can cause serious problems for animals who are consuming the grain, and diseases can transfer up through the food value chain towards the consumer.
As all grain companies are now testing for these diseases, farmers need to be more proactive about knowing their grain’s quality. This empowers a farmer to clean and/or separate good grain from bad grain, and ensures a higher quality food chain.
3. Focus on the drying process. Drying grain immediately after it is harvested is also critical as high moisture can create major quality problems. Spoilage and loss due to mold can begin to reduce the quality of grains in less than 24 hours. Farmers are better equipped to dry grains today than they have been at almost any time in the last several decades. Still, drying grain is a time consuming task, and proper drying techniques must be taken into account: utilizing appropriate heat, having correct levels of static air pressure in the drying chamber, cooling grains at a slow rate, and handling wet grains as little and as gently as possible.
Drying grain slowly prevents stress cracks in kernels, a problem that can compound. In fact, buyers from South Korea and Japan have recently raised concerns about dust once they reach the destination abroad, a direct result of cracked kernels in storage. Many farms have invested in chain conveyors or rubber belt conveyors in lieu of the traditional screw-type auger for moving grains. Despite the higher cost of such equipment over augers, the damage done to kernels is far less, and farmers may be rewarded for improved grain quality.
4. Monitor the grain in storage. As farm storage bins have grown in size, the task of monitoring the grain in the bin has become more difficult. Four decades ago, large farm bins were 10,000 bushels in size; today they exceed 100,000 in some cases. The expanding height and diameter of grain storage bins make detecting “hot spots” even more difficult than in the smaller bins of years past. Today, farmers often choose to invest thousands of dollars towards in-bin monitoring systems. These systems are sophisticated such that they detect changes in stored grain’s temperature, humidity and moisture content, and the amount of carbon dioxide in grain bins. Farmers who detect spoilage quickly are often able to “rescue” a grain bin and prevent significant economic loss.
Getting the Best Price for Your Grain
The four processes listed above are critical steps for preservation and delivery of quality. But there is an additional step to the process that can ensure success and improve a farmer’s reputation for quality. For farmers to compete on quality, they need to know what separates their grain from local competitors.
Farmers can take two important steps to ensure that they find buyers who are willing to pay more for their grain.
First, farmers should always have specifications on hand to ensure that they can begin the marketing process with all the information needed to attract buyers. Tight markets like the ones witnessed in the Summer of 2017 in the Dakotas had a shortage of high-quality wheat. With that in mind, many buyers scrambled to find higher protein levels to meet their quotas. Buyers are willing to pay more money for grain with distinct specifications like protein content, falling number and hard vitreous and non-vitreous kernels, and moisture levels.
In today’s agricultural markets, low prices do favor buyers and reduce a seller’s power. However, grain testing gives farmers more power in the market. For example, tools like FarmLead’s GrainTests.com platform give farmers the ability to understand their quality by connecting them to over 50 independent grain testing labs to test their grain.
When buyers are stretched for product, they cite the importance of having all of the data in front of them to make a quick and sensible purchasing decision. “As a buyer, one of the most valuable things that we need to see is those tests,” said Courtney Boryski, a grain trader with Hansen-Mueller, in an interview with FarmLead. “With durum, spring wheat, and hard wheat, we need to see these quality specs.” Boryski admitted that she will pay more money for grain and related specifications that she needs.
However, she also stressed the importance of having all of this data available. “It’s valuable to see if they have grading tests for what they are selling,” she added. “I may pay a higher price because I can get what I want.”
The second way to get a better price in this environment is to consider alternative markets. One of the increasingly popular ways to meet new buyers is to engage them on digital marketplaces that enable farmers to showcase their grain and quality. Farmers who market their grain to more buyers have more opportunities to sell their product to new markets. In some cases, farmers who sell grain through online marketplaces are able to negotiate better crop prices than their local-market average. With access to more buyers, competition for high-quality products increase. In addition, buyers are able to quickly file through a number of offers and new sources that they may not have known existed in specific markets.
Adding a few best practices to farm management and grain marketing efforts will help farmers get a better price and improve their reputation for quality in an increasingly competitive industry. After all, the farmer is catering to the consumer. Getting the most of every dollar that a consumer spends on food is rooted in knowing the quality of grain as soon as it comes off the field.