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Cooperative to highlight soy markets

When soybean prices fall, basis drops and elevators close, you can worry and complain or you can do something about it. A group of North Carolina farmers has decided to take the proactive approach.

They have formed Grain Growers Cooperative Inc. to identify soybean markets around the world and produce the value-added soybeans these markets demand.

In this their first year of operation, the 15 producers have planted multiple varieties of food-grade soybeans in fields from the Virginia border to the South Carolina line. They have attended a Japanese trade show to promote their new varieties of soybeans suitable for producing Japanese foods, natto and tofu. Several buyers of these specialty soybeans have traveled from Japan to see these soybeans in the field, inspect handling and storage facilities and discuss marketing opportunities. This fledgling group has also begun discussions with a major U.S. grain buyer to sell low palmetic oil soybeans.

"We've been busy and we've learned a lot this first year," says Earl Hendrix, a producer from Raeford, N.C., and chairman of the board of the cooperative.

"We feed more soybeans in North Carolina than any of the states surrounding us, but our basis is lower than the other states. We've watched South America make leaps in their soybean acreage and we're struggling to find someone who will take our soybeans. We knew we had to do something to add value to the commodities we sell, or we're not going to have anyplace left to sell our soybeans. We've got to have someone marketing what we have to sell. That's why we went together and formed the cooperative," Hendrix says.

The group enlisted the help of Jim Wilder, chief executive officer of the North Carolina Soybean Producers Association to put together the cooperative's charter and bylaws. Wilder serves as CEO of the cooperative. North Carolina State University and the North Carolina Department of Agriculture and Consumer Services have helped with business and market development as well as production expertise. Myron Fountain, director of the Foundation Seed Producers and North Carolina Crop Improvement Association, has helped the growers select specialty soybeans the Japanese and U.S. markets are demanding. And USDA/ARS soybean breeders are working with the group to develop soybean varieties that will perform well in North Carolina.

Japanese buyers are already purchasing tons of food-grade soybeans from U.S. growers. But these buyers are constantly searching for new and improved varieties as well as new production areas. The North Carolina producers are growing different maturity groups than already successful growers in Virginia and other states.

"We are working with USDA/ARS soybean breeders at North Carolina State University," Hendrix says. "I have three varieties of natto beans planted this year. One variety looks real good. We're sending samples of these soybeans to Japanese buyers this year. We'll be increasing seed this year so we can plant more acres next year. One of our members planted 80 acres of a low palmetic oil soybean developed at North Carolina State this year. They look real good. We'll sell some of those to a large grain buyer and we'll use the rest for seed. We figure if we can develop markets for some of the new varieties coming out of state, we can start to make a little more profit."

That's the whole idea of the cooperative; to identify specific markets for specific commodities. Hendrix says cooperative bylaws are written so any grower in the state or the country can join. While they are currently concentrating on producing and selling specialty soybeans, they are also evaluating high-value wheat and they are willing to consider other crops.

"We're even taking a look at the organic markets," Hendrix says. "We're talking with a company that markets organic chickens and organic eggs. They have to have a reliable supply of organic grains for feed. That's another value-added opportunity that we hope to help develop. One day we'd like to have every farmer in the state as a member of the cooperative."

While growers in the cooperative have already found buyer interest in soybean varieties already available for planting, they are counting on new and improved varieties coming out of breeding programs in the state.

"With the new genomics lab at North Carolina State, we're counting on new products coming to us faster than they have in the past," Hendrix notes. "We have some top notch breeders in the state, like Tommy Carter and Rich Wilson and Joe Burton. Somebody has to move those new varieties out of the laboratory and into the markets. As soon as we get the samples out of our fields, we'll get them to Myron Fountain. He will get the samples to markets overseas where they can be evaluated. We plan to have our markets developed before we plant a lot of acres. Market development is happening at the same time the new varieties are coming to us."

Fountain seems impressed with the progress the cooperative farmers have made during this first year.

"Low commodity prices these last few years have driven these farmers to actions rather than just words," he says. "One of our goals at Foundation Seed Producers and North Carolina Crop Improvement is to get new soybean varieties to the market with yields equal to what they are now growing, but with a greater profit potential. This cooperative is working with USDA and ARS to arrange the production and marketing rights to these new varieties. That will give them a significant advantage in dealing with overseas buyers."

Purchasers of specialty soybeans for food uses like to have tight controls on the products they produce. One way to assure quality control is to purchase identity preserved soybeans from a cooperative that carefully controls everything from variety selection through processing, storage and shipping. North Carolina Crop Improvement can deliver an "identity preserved" certificate for these soybeans, offering a kind of guarantee of variety and quality to importers.

"All of this information about new varieties as well as market potential has been made available to other groups and individuals across the state," Fountain says. "This group is the only one so far that has jumped on the potential.

Earl Hendrix, Jim Wilder, Wayne Miller(NDA&CS), Britt Cobb (NCDA&CS) and Myron Fountain went to a trade show in Japan earlier in the year to explore tofu and natto soybean markets.

"We worked the show pretty hard," Fountain says. "After the show we set up appointments with nine large trading companies. The Department of Agriculture helped with a Website and promotional materials. We had the services of an interpreter from the North Carolina Department of Commerce Trade Office in Japan. That was a busy trip, but it's already paying off. One company has already come to the U.S. and others are scheduled to be here this fall.

"The work Montague Farms in Virginia has done over the last several years has made the Japanese markets more receptive to U.S. food-grade soybeans. These markets are always looking for new varieties and new maturity groups to spread their risk. Adding these new varieties will make the U.S. a more reliable source of high quality specialty soybeans. That's a major concern of importers," Fountain says.

Fountain praises the efforts of cooperative members this first year of operation. He cites "great leadership with a sincere desire to meet the demands of the market and no opposition to taking a risk" as the reasons he believes the cooperative can be a success.

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