Food-grade beans can add to bottom line

SALEM, Ohio – Right about the time high-tech genetically modified soybeans became mainstream, the Schwartz brothers in Trumbull County decided to take a gamble with food-grade soybeans.
The hype surrounding the modified beans, commonly called GMO beans, was understandable. The genetics had been manipulated so weed killers could be sprayed in the field without damaging the crop.
Perhaps this was fine for commodity soybeans heading into livestock feed, but it wasn’t satisfying customers who wanted soybeans for human consumption.
So a decade ago, Dan Schwartz and his brother, Tom, came up with a plan. They would contract acres with farmers and sell them the seed. Then, at harvest, Schwartz would buy the beans back at a premium and sell them to buyers.
It was slow-going. The first few years, Schwartz lost money, and he didn’t see his first profit until five years ago.
By last year, though, he had 23 farmers growing 6,500 acres of food-grade beans and that didn’t even come close to filling his buyers’ demand.

Opportunity, incentive

Nearly 90 percent of Ohio’s soybean crop is genetically modified, according to Ohio State agronomist Jim Beuerlein. This leaves plenty of opportunity for farmers to take advantage of the increasing demand for food-grade beans.
The overseas market has been strong for a while, but it’s also increasing in the U.S. as more people become health conscious, Schwartz said.
Soy nuts, soy milk and tofu are all big users of food-grade beans, and buyers are willing to pay more for better taste and color characteristics.
And these higher prices trickle down to the farmers who are paid an incentive to grow the beans.
Schwartz says the majority of his contract farmers receive a $1-$1.25 a bushel premium.

Extra steps

It’s not as easy as simply buying a new seed, planting it and taking it to the elevator at harvest.
“First, weed control is critical,” Schwartz said. “These beans have to be clean.”
Even though the seed for non-GMO beans is up to three times cheaper, farmers will pay more in herbicides than with genetically modified beans, commonly known as Roundup Ready beans, Beuerlein said.
Overall, though, the seed costs and weed control costs even out, he said.
The key then is whether a farmer wants to put in the effort required to harvest food-grade beans for the dollar or two premium.
It takes a lot of planning, Schwartz said, because GMO and non-GMO beans cannot be commingled. Is the combine completely cleaned? The auger? The conveyors? The bins? The hauling truck? It’s easier to harvest the non-GMO beans first so there isn’t as much of a risk of cross contamination, but are the GMO beans ready earlier? How should the crop rotation be altered to make it work?
There’s a lot of thought needed, but Schwartz said it can be a great way for good farm managers to find their niche and add to their bottom line.

Get the details

* Ohio Soybean Association
614-476-3100
www.soyohio.org

* Schwartz Farms
Dan Schwartz
330-637-3388

* For information about other contract opportunities, contact your local grain elevator.

(Reporter Kristy Hebert welcomes feedback by phone at 800-837-3419, ext. 23 or by e-mail at khebert@farmanddairy.com.)