Risk versus reward in the quest for higher corn yields

More quality criteria are steadily creeping into the conversation on corn

Farming is known for its learning moments, and one key lesson to come out of the 2018 growing season was that the chase for higher yields doesn’t come without risks or hazards.

Or, as is said with maybe equal justification, no good deed goes unpunished.

The past 10 years have seen incredible growth in corn production, both in Eastern and Western Canada. Growers have been planting enhanced corn genetics and they’ve been boosting their adoption of agronomic practices like higher plant densities and optimizing soil fertility while improving their use and timing of fungicides. These and other strategies have combined to drive yields beyond 250 bu./ac. across much of Ontario and Quebec.

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But 2018, with its late-season infection from gibberella ear rot and the resulting higher-than-normal levels of deoxynivalenol (DON), means growers are also reconsidering how some of those practices can hurt them.

Increasingly, this is where the “quality versus quantity” discussion begins, with ever larger implications.

Tight margins in crop production have affected the decision-making process for growers. On a crop-by-crop basis, many decisions can drive yield or quality and sometimes, says Stephen Denys, they do both. But more areas are emerging where quality can suffer due to today’s yield focus.

“Higher populations, more intensive fertility and crop protection programs are all aimed at increasing crop yields,” says Denys, director of business management for Maizex Seeds. “That’s good, but we’re also keeping our plants healthier for longer which can impact the crop from a quality perspective. It’s not about focusing on specific quality criteria but ensuring there is Grade 2 corn to deliver that won’t be impacted by quality discounts related to disease, test weight or insect damage.”

It’s a bit of a paradigm shift for growers who’ve spent years trying to maximize yield, only to find the tools to help do that might actually be hurting their bottom line. Hybrid maturity, tolerances to disease, and plant density were all factors in 2018’s issues with DON. In parts of western Ontario, decisions which might have had a positive impact on yield in previous years, helped create an optimal environment for disease infection, including a wet post-pollination period. Before 2018, hot and dry conditions were more likely to foster quality issues caused by several issues, among them western bean cutworm.

The very practices intended to boost production may actually have provided an ideal environment for quality issues.
photo: File/Supplied

The simple answer would be to accurately and proactively predict the kinds of challenges facing farmers in a growing season before the season begins. But in the real world, and in the midst of certain global (political) influences, growers may have to choose between rolling the dice and pushing for higher yield or taking a safer approach that lessens risk yet boosts profits.

“If growers knew they would be in for a wet pollination and post-pollination period that could lead to disease infection, I believe we would make different choices in our crop production program,” says Denys. “They’d do that versus basing decisions on an ‘average year’ and aiming for the highest yield possible.”

Denys states that agronomic practices combined with the growing environment in southern Ontario have been evolving. Many producers are aiming to intensify their crop strategy in corn and even wheat, including more intensive populations and crop input strategies, from fertilizer to crop protection products.

“Also, one or two years do not make a trend or permanent change in our growing season,” he adds. “But recently, we’ve had areas in southwestern Ontario that have more consistently experienced a wetter start to the year and this has impacted both yield potential and the range of issues facing producers. Plant diseases have been initiated during wet and humid pollination periods that are later than normal, given later planting dates.”

A buyer’s perspective

Yield may still be the most important metric for crop production, but there are signs that the quality-versus-quantity debate may have another driver. From a processing perspective, the drive for higher yield is important and is often reflected in the quality of the crop as well. But Brandon Yott maintains there’s room for the quality-and-quantity discussion and that it has more to do with markets and the buyers the producer works with, perhaps more so than the crop itself. When selling to a buyer like Ingredion or Kellogg’s, quality is more important and there’s a management premium that comes with it. But those opportunities are limited, even if there are farmers who are starting to explore direct market options with premiums for quality.

Like it or not, corn is still a volume-based commodity.

“Many producers talk about what’s needed to bring a high-end, quality production strategy to completion, but they may not be willing to live with the consequences or costs,” says Yott, product development and marketing specialist with the Agronomy Company of Canada. “For example, a farmer increases their seeding rate in corn because they’re told they need to do that for top-end yield. But they won’t increase the fertilizer rate because the price was high. In this case, they just starved their high-end field and would have been better off staying with a smaller seeding rate.”

It’s not as though some buyers and processors haven’t tried to introduce premium opportunities into the corn market. In the past 20 years, growers have heard of the possibilities of high oil corn for livestock and poultry or highly fermentable starch hybrids for the ethanol market, with the possibility of premiums for specific-use qualities. Ultimately, processors were unwilling to pay more for what was and still is accepted as a least-cost commodity.

The answer from Yott’s perspective is shifting the focus from cost per acre to one centred on return on investment (ROI) or cost per unit of production. But that’s also a difficult climb and often requires proof on the farmer’s own field or a guaranteed market contract to remove that concern of change. The rise of direct marketing services such as FarmLead and AgriProcity, which link growers with end-users, is a positive stride but it applies more to the exceptions than the rules.

“We’re now in a world where commodities are commodities and this space is a race to the bottom, so if you’re not a very integrated company with tonnes of volume, it’s hard to compete,” says Yott. He adds that the mid-sized farmer in the U.S. is not much different than one in Canada. “More producers are having to learn to be better marketers and determine their value proposition to their end-user and how they can leverage that information for a premium.”

That’s where direct marketing ventures like AgriProcity can help with niche opportunities, since larger companies are usually slow to adapt and taking advantage of quality specs requires agility and flexibility to respond to changing market demands.

No controlling the uncontrollable

The other factor that plays into the quantity-for-corn arrangement is the impact of global affairs. Producing a quality crop to international standards is a given that gets a broker or a trader to the table, says Denys. What confounds that process is the global trade situation.

“Politics is becoming the bigger issue in terms of our market opportunities or in the case of China, just market access,” notes Denys. “Political decisions that sometimes have nothing to do with agriculture are impacting our returns and profitability. Agriculture is a big industry in this country but unfortunately, our population base is small and those elected to make decisions do not always have agriculture top of mind.”

Canada is a global player caught in a global tug-of-war, and larger importers such as China are in this for long-term gain. The current spat over canola and beef imports for China likely has nothing to do with phytosanitary issues, adds Denys. It’s a chess move in the game China wants to play.

For now, the inescapable fact about corn is that, for the most part, it’s still “quantity No. 2 corn” that matters. Wheat is differentiated by its direct-food usage and quality segments, while soybeans has IP opportunities that set it apart from corn, although that system is more export-based, which can have an impact on its demands and premium potential.

Corn’s usage in so many things — starch, oil, corn syrup, ethanol, plastics and dozens of other processes and products — also lowers the demand for specialized traits.

This article was originally published in the September 2019 issue of the Corn Guide.

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CG Production Editor

Ralph Pearce

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