Getting the True Profitability Picture of Food-Grade Soybeans
Written for Sevita International by Lilian Schaer
A new tool launched by a Canadian seed company is helping farmers take the guesswork out of profitability when it comes to growing food-grade soybeans.
Although food-grade soybeans offer a premium return for growers, they also need additional commitments of time, money, and management above and beyond what a GM crop needs, says Sandy Hart, Business Manager with Sevita International.
Sevita is a seed company committed to breeding soybean varieties for the Canadian market and making Canadian genetics available to Canadian growers. With a particular focus on food-grade soybean production, they contract directly with farmers across Canada to grow beans for their customers around the world, so farmers have a guaranteed market for their crop before it is even planted.
“The issue we were running into is that although growers are pleased to hear about a premium for growing food-grade soybeans, they also need to consider the additional investment in herbicides for effective weed control and time spent cleaning out equipment to ensure varietal purity,” says Hart. “So, they start wondering how much is actually left at the end of the day and if food grade beans will yield less or more per acre than GM varieties.” That makes the decision about whether or not to grow food-grade soybeans a complex one, and he realized there was a need for a simple, easy tool that can help demonstrate the profitability of such a crop using a grower’s actual farm data.
“When it comes to food grade soybeans, there are other factors beyond simply performance at the end of the day, like the food grade premium, what I’m going to have to invest over and above a GM bean herbicide program, where do I have to deliver, and what is the risk of not being able to realize the production premium,” he adds.
Sevita has developed an ROI calculator for food-grade soybeans that Sevita’s sales team and Sevita dealers can use to provide growers with a free farm-specific analysis on how growing food-grade soybeans would pencil out in their operation relative to commodity GM soybean production.
In a short consultation, growers are asked to provide their yield expectation of GM soybeans on their farm in a normal year and the price they’d be able to get for that crop on a given day.
The tool also asks for an estimate of how much more a grower could expect to spend on weed control on the non-GM crop and freight costs for crop delivery to Sevita at harvest, which Sevita or dealer staff can provide, and then returns a profitability chart and a written summary.
“It’s almost always a positive outcome for the grower in the sense that food-grade soybeans show a higher return potential than their GM counterparts,” notes Hart. “The calculator does the math on the yield, premium, herbicide cost differential, and the freight advantage or disadvantage if applicable, helping the grower make the decision whether the per-acre advantage is worth the investment of time and effort to include non-GM soybean in their rotation.”
His goal during development, he adds, was to keep the tool simple enough to make it easy to understand and yet robust enough so the results are meaningful to the user. And although it can’t take every single production nuance into consideration, it does include the most significant influences on profitability.
Currently, growers of Sevita food-grade beans with advanced genetics using best practices on farm can expect returns from $40 to over $100 per acre higher than with commodity GM soybeans on their farm; this will vary based on yield expectations and other environmental factors in different regions.
That’s an attractive proposition, but unlike a commodity soybean crop where growers can make decisions throughout the year, a Sevita food grade commitment is fully completed before the crop goes into the ground.
“You’re agreeing to a contract, a buyer and a production program upfront, and although you still have to market the crop, the premium is fixed, and your acres are fixed and 100% obligated to Sevita,” says Hart adding this can require a shift in thinking for growers new to food grade soybeans. “It’s a market like anything else but the advantage to food grade is that as long as you meet the quality criteria, you’re guaranteed a significant premium.”
And although that premium is attractive, Sevita is well aware that its food-grade varieties also need to perform when it comes to yield. The company invests heavily and directly into its food-grade breeding program to ensure a steady stream of new varieties are available to growers that are yield-competitive with GM varieties.
And some food grade varieties also have other unique properties, like high protein content, depending on what end users need, so there are additional premium-generating opportunities beyond just yield.
“The degree to which the ROI tool is customized to your farm in light of how long it takes to complete the consultation is quite impressive,” believes Hart. “There’s a certain element of transparency that I’m proud of: we recognize that there is an investment and that you have to be prepared to do more to get the yield and quality you’re targeting, and we come right out and address that.”
Farmers interested in a free analysis of how food-grade soybeans could perform in their operation can contact Sevita or a local Sevita dealer.