JEFFERSONVILLE, Ohio — When customers buy soybeans from Bluegrass Farms of Ohio, they aren’t buying just any soybeans, they’re buying particular varieties with consistent characteristics and identity preserved credentials.
For instance, a buyer might want a proprietary Bluegrass Farms non-GMO variety with a buff-colored hilum and high protein content. In return, that buyer is willing to pay premium prices and those premiums are passed on to the farmers who grow the beans.
Bluegrass Farms, based near Jeffersonville, is one of several companies in Ohio that buy, process and ship identity preserved food grade soybeans. The company contracts with farmers throughout the state to grow specific varieties of non-GMO soybeans.
Criss Calvin, grower representative for Bluegrass Farms, said the company offers contracts for acres of production and then buys the bushels grown on those acres. To sell the bushels, growers can use all the usual marketing tools offered by other grain elevators, such as forward pricing and hedge to arrive contracts.
Then, Bluegrass Farms offers premiums of $1.25 to $3 per bushel above market prices to encourage production of the varieties customers want.
“Our customers are very variety specific,” Calvin said.
Once buyers find a variety they like, they tend to stick with it, Calvin said. If they’re making tofu, for example, using various varieties of soybeans could change the flavor and quality of the finished tofu. Some buyers prefer a certain color hilum (the dot on the seed where it was attached to the pod).
Some also prefer certain varieties based on flavor. However, the most important consideration is protein, Calvin said. The varieties Bluegrass Farms handles typically have 42 to 46% protein compared to protein content of 36 to 38% for commodity soybeans.
Price boost
For farmers like Ryan Lee, growing identity preserved soybeans provides a way to boost prices. He and his family have been growing identity preserved soybeans for many years on their farm, near Marysville, Ohio.
They started by growing soybeans for seed and have diversified by also growing non-GMO IP soybeans. This is their second year contracting acres with Bluegrass Farms.
“It’s a good premium opportunity,” Lee said.
For the Lee family, the record-keeping and clean-out procedures needed to isolate varieties are nothing new. One of Lee’s jobs as a teenager was cleaning out the grain handling equipment between varieties, he said.
Bluegrass Farms began focusing on non-GMO IP soybeans in the mid-1990s, when most seed companies and growers were switching to genetically modified varieties with herbicide resistance.
Joe Hanusik, director of North American production for Bluegrass Farms, said the company has been working with plant breeders to continue developing improved soybean varieties through natural selection to introduce varieties that are competitive in yield and also offer the qualities customers want.
The Lees grow only non-GMO varieties on their own farm, but they do plant some GMO varieties on crop-share acres and on land they custom farm for other landowners.
The yields of the non-GMO varieties hold up well in comparison. Growing the non-GMO varieties does require a different herbicide program than other farmers use for their herbicide resistant GMO varieties, Lee said. It also requires extra care at every stage of production, from planting through delivery, to maintain the identity of each variety.
Planning ahead
To provide what customers want, the company must plan a couple years in advance, Hanusik explained. They’re selling 2021 production now and have acres contracted for 2022 production that will be delivered in 2023.
When the company first started, it was vulnerable to local weather problems that could threaten production. To alleviate that concern, the company now works with growers over a larger area, spread out to the north and south.
“The severe weather doesn’t hit everybody,” Hanusik said.
They contract between 45,000 and 65,000 acres each year and yields generally average about 50 bu. per acre. About 14 to 16% of the soybeans grown in Ohio are non-GMO varieties, Hanusik said. In comparison, about 8% of U.S. production is non-GMO.
One explanation for the difference is the high quality of the soybeans grown in Ohio. The availability of river and rail transportation also helps.
“Ohio’s infrastructure is great for shipping,” he said.
Recently, though, the lack of availability of shipping containers has complicated that. Owners of containers can currently make more money shipping empty containers from the U.S. to China than they can shipping them full to other countries, he said.
Expanding demand
Bluegrass Farms’ first soybean exports in the 1990s went to Japan. Since then, they’ve expanded with exports to other countries including Taiwan, Korea and Thailand.
Japanese buyers remain the most particular about variety and quality, Hanusik said. Buyers in Korea tend to have fewer requirements and are not as willing to pay premium prices. Bluegrass Farms contracts to sell most of the soybeans they handle, but Korea’s spot market gives them an outlet for additional production, he explained.
Over the last seven years, domestic demand for non-GMO soybeans has been expanding. Bluegrass Farms’ sales in the U.S. have gone from nothing to about 15% of sales in that time.
