3 December 2001

50% OF US GRAIN HANDLERS PLAN TO SEGREGATE GE & NON-GE GRAINS

By Michael L Howie
Feedstuffs, October 23, 2001

IP (Identity Preservation) a must as industry moves to grains developed for users; identity preserved

ROSARIO, ARGENTINA -- For centuries, handling and storing grain has been a routine and simple process, even though there have been technologies developed that alter how it is done, according to Jim Voight, vice president of operations for Archer Daniels Midland Co.

Speaking at a grains conference here last week, Voight said this "routine and simple" task has changed in just the last few years, that the global marketplace has changed and "how we market and use grain must change" as well. Voight said like grain producers, consumers have more choices in where their food comes from and how that food is produced. Because of this, he said, more and more buyers are looking for specific qualities in their grain and not just "bulk grains" anymore. New seed genetics have been developed for specific end users or for agro-nomic purposes, he said, such as high-oil corn, hard-endosperm corn, Bt corn and herbicide-resistant corn and soybeans. These specialty grains have different markets driving their use and demand, Voight said, and therefore how they are handled must be different, too.

Voight said no matter where grain is produced -- the U.S., Brazil or  Argentina -- such specialty driven markets require smaller capacity storage and movement, higher quality grains and more efficient clean-out procedures. "Grain handlers must understand their place in the marketplace," said Voight. Voight acknowledged that what he planned to speak about a couple of months ago changed just a few weeks ago when a variety of corn that was not approved for use in food was found in taco shells. As a result, he said, the entire industry must find a way to handle the situation. He said genetically modified (GM) grain is not a bad thing, and that there are advantages for its use, but that a "defined protocol" must be established to handle certain grains, to keep their identity preserved (IP) throughout the entire system.

 Voight said everyone, from producers to processors, must understand what the market is for their products -- such as feed, food, processing or exports -- because each market requires different things. "You must know your customers," he said, because "ultimately it comes down to what the consumer -- the customer -- wants on the table." That, he said, will "make the decision for us."

 As a result of this, he said, handlers must be able to segregate grains by specific attributes. Of course this relies on the purity of the seed planted in the first place, he said, but in order to discuss such a protocol, it must be assumed this is not an issue. In addition, Voight said, each step in the protocol is critical for any program to be a success. Traditionally, Voight said, you could get away with having some foreign seed mixed in with the bulk grain. Now, howevever, "just one foreign seed" could cause an entire load to be rejected and cost thousands of dollars.

IP protocol

An IP protocol begins with the producer, Voight said. Producers must clean planter boxes thoroughly because crossing seed from cross pollination could effect the entire marketing chain. In addition, he said, farmers must be educated by seed suppliers and their local elevator in an IP system, whether he or she is producing non-GM grain, high-oil corn or other specialty crops.
 
Again, at harvest, the producer must completely clean the combine, wagons, trucks, bins and anything else used for grain movement and/or storage. Records -- from planting through harvest -- and samples of grain should be kept, Voight said, adding that communication with the elevator on when to deliver specialty crops is important because the elevator also must have a clean space for such grain.

 "There is a much greater demand on the producer for specialty crops," Voight said, "but premiums are there."

In reality, he said, producers must form partnerships with elevators and suppliers, with agreements -- contracts -- covering what varieties should be grown, quality of the final product, delivery time and premium and discount issues.

In many cases, he said, grower certification may be needed. Meanwhile, grain elevators must follow a similar protocol when one elevator is selling to another.

Elevators will need to be certified and trained, he said, and have the facility inspected for potential contamination points. In addition, Voight said, elevators will need to have written instructions on clean-out, inspection and transportation procedures. This extra work will take time, he said, but elevators like producers, who can get a 25-30 cent/bu. premium depending on the grain involved, can get a premium of approximately 50 cents/bu. to cover additional costs and procedures and paying a premium to the producer.

Some facilities will be better suited for speciality grains, he said, and that could influence which facilities participate in various programs. For example, Voight said, an ideal IP facility would have grain testing capabilities, multiple places to dump grain and "numerous small bins," but would also be large enough to handle some bulk commodities as well. Although some of the design options would add an initial expense, he said, it can be justified "if you're a food company" that handles significant amounts of specialty grains.

 Elevators must take accurate and representative samples of loads of grain, he said, and because in some cases there is not a quick and inexpensive test for the grain, the protocol system must be relied on. "It's a partnership," Voight said. "The elevator must have a relationship with the producer and make the commitment to train personnel." Extra inspection and cleaning time, specific handling equipment and other investments will need to be made by everyone in the system, said Voight. Each grain facility must be looked at individually, he said, and be analyzed for what niche it is going to fit into because every facility and market is different.

 Last year in the U.S., he said, a survey showed 8% of grain elevators segregated grains. This year, Voight said, 25% said they plan to and next year, 50%. "This is a real opportunity for the industry," he said, because each member of the production chain -- from producer to end user -- can receive a premium and provide a product that consumers want. Voight was speaking at the third annual "SAC" conference, a meeting held for post-harvest grain handlers in South America. Voight is also first vice president for the Grain Elevator & Processing Society in the U.S.