What would you be willing to do for an extra $2-per-bushel premium for soybeans? For some Illinois soybean producers, that premium comes from growing non-GMO (genetically modified organism/biotech) or other identity-preserved (IP) soybeans.
Rob Prather of Huron Commodities in Monticello, Ill., says more growers are showing an interest in non-GMO soybeans, thanks to premium pricing.
For example, early November premiums for average food-grade soybeans ranged from $1.80 to $2.60 per bushel with a $2 average, says Kellee James, CEO and founder of Mercaris, a market data service and online trading platform for organic, non-GMO and certified agricultural commodities. Feed-grade, non-GMO soybeans, which have looser quality specifications, sold for about $1 over the cash price at that time. Organic, non-GMO, food-grade soybeans earned $18 over the Chicago Board of Trade price, as a comparison.
As farmers look at options for increasing farm profitability in 2015, IP soybeans are an option to consider. Many experts expect some softening of premium programs due to this year's record supply. However, international demand for non-GMO soybeans, especially in Southeast Asia, is expected to remain stable, Prather says. Most experts agree that domestic demand will be driven by consumer preferences. James says demand for feed-grade soybeans is growing, too.
Do Your IP Homework
Before signing up for a premium program, farmers should approach this option from a business perspective, especially if the goal is to improve farm profitability.
"Know your costs and pick a price point where you can be profitable," Prather says. "Also, don't forget to read the fine print in your contract."
Because contracts can be negotiated, farmers should draft a contract that works for them, Prather says. One common area to consider is delivery date. For growers without on-farm storage, it may be possible to negotiate a contract that allows you to deliver soybeans at harvest instead of at buyers' call.
Adapted from Non-GMO Soybeans May Pay Dividends for Growers from the December 2014 issue of Illinois Field&Bean magazine. For more information on raising IP beans, visit soybeanpremiums.org.