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Corn+Soybean Digest

FOOD CORN Rescues Profit

Phil Miiller highly recommends white tortilla chips for snacks or nachos. White corn bread is also a favorite.

No, Miiller isn't a food critic or head chef at an ethnic restaurant. He's a farmer who depends on food corn as his bread and butter crop. To him, contracting his 2000 white food corn for $1 above what he believes No. 2 yellow will bring next harvest is a tasty proposition.

"I locked in food corn for $2.61/bu cash," says Miiller. "That's $1 above our cash prices for field corn in '99. And I can't see corn prices $1 higher next fall."

Miiller farms at Beaver Crossing, NE. He grows corn and soybeans under irrigation. For 2000, he will plant 65-70% of his corn acres in white food corn hybrids. Even though he won't harvest it until next October, he marketed the crop with a regional elevator in September '99.

More farmers are growing food corn to garner higher prices in an otherwise dismal corn market. There is high demand for white and yellow food corn due to the popularity of tortilla chips, taco chips and other Mexican foods, not to mention corn flakes and dozens of other food products made from corn.

In states like Texas, with a large Hispanic population, food corn makes up at least 30% of total corn production.

Paul Bertels, director of marketing for the National Corn Growers Association, says the average food corn premium is about 35-45 cents/bu over December futures prices.

"Our average premium is probably about 75 cents over," says Jerry Barber of Valley Grain in Muleshoe, TX, which handles food corn for Azteca, a regional milling company. "Last year, 70% of the corn in our county was food grade."

About 2 million food corn acres are harvested in the U.S., roughly 750,000-800,000 acres of white corn and 800,000-1.2 million of hard endosperm yellow hybrids. That's about 3% of the total corn production of some 70 million acres.

"Most of the food corn is in central Illinois, central Indiana, Nebraska and parts of Texas," says Bertels.

Miiller has grown food corn three years. He had both yellow and white in '98. He skipped last year because of delays in getting a contract locked in. But for 2000, he couldn't wait to get the best contract he could as early as possible.

"The elevator had both food corn basis and food corn cash contracts available," he says. "I don't follow basis that closely all the time. So I looked at the $2.61 cash offer and thought, 'If I can lock that in, I'm going with it.' " He did, and will worry only about making sure the crop meets the quality standards required for food corn.

Companies like Frito Lay, ADM or Cargill often ask growers to produce specific hybrids with the characteristics needed for food processing. Those qualities are a hard endosperm, easy pericarp removal, and large kernels. High starch qualities are also needed. Cracked kernels must be nil.

"Food corn requires more management," says Miiller. "White corn needs to be about 14% moisture when delivered and no more than 2% off color. I start harvesting when it's 19-20%, then dry it in the bin. My corn averages about 14.2% moisture."

Even with the premium, food corn isn't for everyone. "Harvest can't be rushed. You can't harvest when moisture is still high. If a guy is in a hurry at harvest, it may not fit into his program," says Miiller.

With low overall corn prices, Scott Merritt, executive director of the Nebraska Corn Growers Association in Lincoln, says it's understandable why more growers are seeking food corn contracts. However, he agrees that normal production practices likely won't work for food corn.

"It's hard to jump into food corn and think you can capture the entire premium," says Merritt. "There's a lot more management involved. Also, elevators and mills will sometimes limit the percentage of acres a grower may plant to cover their risk of weather damage to an entire farm."

Nonetheless, he expects the food corn trend to continue. "We have a lot of growers researching how to manage a food corn crop," he says. "They want to try something new. ?

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