Every time a consumer buys a tortilla platter or bag of corn chips to go with burgers, Larry Nun smiles.

Well, maybe not every time. But the Geneva, NE, grower counts on products made from food-grade corn to help him crunch on a 60¢/bu. or higher premium price for his white corn crop.

Nun and his father Donald have been in the food-corn production business for 20 years. First yellow, then white corn has helped them boost the bottom line on their 1,750-acre corn, soybean and wheat farm in eastern Nebraska.

“About 60% of our corn is irrigated and all of our irrigated corn is white food-grade corn,” says Nun. “White corn has always provided us with a nice premium. That's good for us, especially when we see depressed price for regular corn.”

The food corn is marketed through a regional Farmers Co-op elevator in Dorchester, NE. It is usually delivered between January and July of the following year, depending on contract delivery specifications. Until then it is stored on farm.

Marketing techniques vary. “We sometimes sell futures contracts to lock in that price, then wait to set the basis when it narrows,” says Nun. “White corn usually has a basis (difference between cash and futures prices) that's about 80¢ higher than the regular basis.

“So if the regular basis is 40¢ under for regular yellow corn, it runs about 20¢ over for white corn.”

WITH THAT TYPE of basis, Nun averaged $4.40-4.35/bu. for his 2009 crop. “We sold futures contracts throughout the year and finished them off when we saw the market rally in October (when December 2009 futures prices topped $4.10),” he says.

He also uses put options on occasion to secure a floor price until he is able to establish a basis. The October rally opened the door for some food-corn sales for the 2010 crop.

“I got some December 2010 puts bought (in the $4.25-4.35 range) in late October,” he says, guaranteeing him a floor price in that range. With the 60¢-higher basis, he could blow past $4.40-4.50 when he gets it set, likely after the harvest this fall. And if futures prices take off, he can take advantage of the upside swing and take additional profits.

While there are stout premiums for food corn, there is still very little in production. Markets are often limited. In Iowa, for example, a survey of specialty corn and soybean production in the mid-2000s showed there were about 450,000 acres of specialty corn grown — less than 4% of the state's production. White corn amounted to only 11,000 acres.

Chris Hurt, Purdue University Extension economist, reminds growers that they'll likely face more obligations for white or yellow food-corn contracts. “Generally, there are conditional functions the producer has to provide,” he says. “It may be cleaning out the combine, dedicated storage, deliveryat the call of the buyer and other stipulations.”

Hurt says food-corn varieties may not yield as well as conventional corn.

He encourages growers to “make sure of the financial integrity of the buyer of any specialty crop,” adding that while premiums are usually available for specialty crops, there may also be discounts.

“If for some reason there is a problem on the demand side for white corn or other food-grade corn, then your corn might be discounted instead of receiving a premium.”

Nun plants food corn at the same time he plants conventional corn, in April. He always applies a fungicide to get a jump on disease and insect pressure. “At harvest we dry it down to 14.5%.

“Food corn might take a little extra effort, but it's sure worth it with the types of premiums we receive,” Nun says.