Many farmers are pushing to find that extra bushel, cut input costs, and make their machinery last a few more years. Other farmers are trying to differentiate themselves by adding different crops or diversifying with livestock. We chose to diversify our farming operation, located in southern Minnesota, with non-GMO, food grade soybeans.
As we looked at an added-value product that would increase our profit while maximizing the yield potential for our location, non-GMO soybeans rose to the top of our list. Although non-GMO soybeans require more management and can be challenging to insure, they can prove to be a winner as part of your crop rotation if you’re looking for a premium to increase cash flows while reducing input costs.
When locking in a contract as a grower for non-GMO soybeans, there are a few things to consider. What kind of guarantee you can provide on the number bushels? Is using alternative chemicals and fertilizer something your operation can manage? Is cleaning bins and trucks something your operation has time for?
Considering the premium often paid with non-GMO soybeans should be the last part of the equation. If your operation isn’t willing or capable of putting in the time or effort with the previous factors; that premium can quickly disappear.
With food grade contracts, you are typically locked in to growing a set number of bushels, as well as delivering them on a specific date. This creates two unique challenges. First, it can add stress to your financials if you are used to getting a check in a timely manner and don’t have enough cash flow to work within the payment and delivery schedule of a specialty crop. Second, it requires that you take a careful look at your soil data and historical averages to really understand what your fields are capable of producing, and what you can comfortably lock in as part of your contract. Luckily, our averages were on par with our area and growers of GMO soybeans, even with hail damage. We will typically contract slightly less than we know we are capable of producing, and then sell any additional bushels on the traditional market. Seeking out a food-grade soybean contract can be as simple as a Google search in your area, or attending a farm trade show and connecting with a company who is specializing in sourcing that crop (SunOpta is one example).
Managing non-GMO soybeans can also be incredibly time-intensive due to the types of chemicals and fertilizer allowed, the requirements of preserving identity, and maintaining the cleanliness of your harvested beans. You have to make sure your fields are weed-free, which can be a challenge, since it requires learning a different set of rules and allowances from traditional crops. You also need to clean out bins and trailers before storage and hauling. But it can also come with big advantages; we were able to spend less on seed and chemical following the new set of application rules, which lowered our input costs while preserving our average bushels.
Choosing to grow a specialty crop or value-added crop involves an increase in farm management and a hard look at your financials as well as your operation’s capabilities. However, it can pay off in the end with higher premiums and lower your input costs. If you are looking to add a little more liquidity to your cash flow, and are willing to put in the work, a value-added crop may be the answer for your farming operation.
The views expressed in this article are the author's alone and not those of Farmer's Business Network, Inc., its affiliates or members.