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A market for non-GMO corn

Consumer demand is having a larger impact on what and how farmers may grow

In times with volatile commodity prices, farmers are apt to put more effort into researching opportunities such as identity-preserved markets, particularly for soybeans. After all, as we often hear, a $1 premium looks better if soybeans drop towards $10 per bushel than when they’re above $13.

But what if there could be IP premiums for non-GMO corn?

Marketers are watching two emerging trends. The first is the growing consumer interest in locally produced, “natural” food production, despite how loosely it might be defined, including how it’s grown, processed and even packaged.

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The second is the willingness of growers to meet consumer demands regardless of whether they share the beliefs at the bottom of those demands, such as whether GMO is a potential danger. Sometimes it’s a simple case of recognizing that if you don’t grow it, someone else will. Other times, it’s a more positive belief that consumers ought to be able to buy what they want.

It’s in this environment that Ingredion Canada is hoping to fill its needs in the coming years. The company’s eastern Ontario plant near Cardinal has offered premiums in the immediate area in the past, and added a new program for the 2016 growing season, including paid premiums. It is a unique opportunity for those from that part of the province who are willing to follow specific protocols in return for increased value.

Ingredion Canada has a long history that dates back more than 100 years, with the Cardinal plant starting operations in 1858. It became part of the company now known as Ingredion in 1919. In addition to the Cardinal plant (which also accepts GMO corn hybrids), Ingredion also has a processing plant in London, Ont. Unlike the Cardinal facility, there is no non-GMO market opportunity for the London plant.

“Our non-GMO corn program addresses a small but growing segment of the market that’s driven by consumers,” says Kevin Hachler, Ingredion Canada’s manager of commodity purchasing, who adds that it’s an opportunity for all parts of the supply chain, including the farm level. “We see this as a tremendous opportunity for area growers to generate additional income on their farm by contracting and growing non-GMO corn. It’s not a hybrid-specific program, but we do have IP protocols and best management practices (BMPs) that the growers are going to need to follow, from planting through to drying and transportation of the corn.”

Growers will sign agreements promising to grow corn according to set protocols for non-GMO corn hybrids and to deliver the corn within certain time periods. For the 2016 growing season, the program offered a $25-per-tonne premium over the posted commodity price for corn.

The crop gets bin tested after harvest, and the corn will also be tested for GMO traits as it comes into the plant.

Hachler is quick to say that this market opportunity is not for every farmer, and that for now, it’s being viewed as a limited-size market, at least where Ingredion’s customers are concerned.

Not exactly new, but…

Unlike other premium markets, there’s no rush on the part of Ingredion or other processors to ratchet down their premiums. For now, they see bullish news in the combination of the demand for non-GMO products, which doesn’t seem likely to drop any time soon, plus the ever-growing list of uses for corn.

“I believe that a premium is always going to have to be on that non-GMO corn market if they want to run that plant to full capacity,” says Grant Watson, vice-president of marketing and sales for Country Farm Seeds. “I don’t see it disappearing for the fact that we’re back to what the consumer wants, and once the consumer gets what they want, they’re going to continue to want it, so the premium is going to stay up.”

Watson also believes those premiums could be effect-ive in securing non-GMO acreage for the plant. With bearish market forecasts into 2017 and beyond, he says, growers will be looking for ways to generate additional revenue with their corn, and the non-GMO premiums may be among their most attractive opportunities.

Yet it’s consumer demand that Watson says will really drive non-GMO corn production. Food processors and manufacturers are listening to consumers, more so than 10 or 20 years ago. That increasing demand has far more influence in securing or maintaining premiums.

“Years ago, we would have said the organic market was less than viable, because we knew the market was pretty small and nobody wanted to play in it,” says Watson. “But in today’s world, the IP market has fired up quite well, and the general consumer has become wiser to reading labels in grocery stores and about what they want to put in their bodies, so that changes the marketplace a lot.”

More growers taking notice

Instead of dismissing the lessons from the organic market, more farmers are taking heed of them, and they’re asking more questions of seed dealers as a result. It was at the 2015 edition of Canada’s Outdoor Farm Show that Watson first crossed paths with Ingredion, and the response since then has been remarkable. In early 2016, at winter shows in eastern Ontario and Quebec, Watson and his colleagues were approached by growers wanting to know more about the non-GMO market, with specific questions about Ingredion’s Cardinal plant.

“The main focus area is around the Cardinal plant, and that tends to encompass mostly eastern Ontario,” says Hachler. “The odd time we’ll get into Quebec as well, but the main focus will be the natural draw areas of that plant.”

Again, Hachler emphasizes the relatively small size of the opportunity for growers. It isn’t for everyone, and for now, it’s fairly limited in its location. Among the other stipulations of the agreement, growers must opt out of GMO corn hybrids for a minimum of one year before planting a non-GMO hybrid in the same field, a move that minimizes the risk of contamination from volunteer corn.

From an agronomic perspective, Watson believes the move to non-GMO hybrids is relatively risk free, and that it’s very similar to GMO lines. In addition to the premium on non-GMO hybrids that helps generate higher revenues, he adds, there’s the savings on GMO hybrid seed. He also notes that fertility on a non-GMO or traited hybrid is largely the same.

“I don’t care which it is, if you don’t feed it, you’re not going to get the yield you’re looking for, so that cost is the same,” says Watson, adding that weed management may be different, but more because of the varied tank mixes growers are now using. “The notion that glyphosate is cheap to spray may not be totally true, but a non-GMO hybrid is going to cost you a little more.”

The other factor that’s favouring this market is the development of non-GMO hybrids. Where some of the larger genetics companies have opted out of non-GMO markets, Watson is finding more researchers and breeders are willing to engage in the development of those hybrids. And he believes the demand for those, whether they are for eastern Ontario, or eventually southwestern Ontario, is only going to grow.

“We share the program with Ingredion,” says Watson. “We’ve been making the growers aware of the program and who it’s through and what they’ve offered, and that we can supply them with the non-GMO seed they’re looking for to grow into that market.”

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