Jack McCarthy, a member of the FHHF Board of Directors, passed this article along with the following comment: “All of the hard work and focus of entities and individuals like Holly Hilly Farm is having an impact!”
Bulk agricultural traders and processors are being forced to adapt to soaring demand for non-GMO and organic produce
GREGORY MEYER — NEW YORK
At Zeeland Farm Services, a grain processor on Michigan’s western flank, trucks arrive with an increasingly familiar load: soyabeans free of bioengineering.
Much of the meal ground from them is fed to chickens, turkeys, pigs and cows whose eggs, meat and milk are sold at grocers including Whole Foods Market, which is pushing farms to label whether their animals ate feed made with genetically modified organisms (GMO).
The new volumes are striking: 94 per cent of Michigan-grown soyabeans are still bioengineered. To meet recent demand from US consumers, Zeeland has been buying other states’ spare beans. Darwin Rader, a Zeeland sales manager, says: “The biggest question when this first started happening a few years ago was, ‘Is this a fad that will soon go away, or a trend?’ We’re seeing it’s becoming a trend.”
Shifting crop flows in the heart of the US grain belt testify to a change on store shelves from Whole Foods to Costco Wholesale. Consumers are increasingly choosing “clean label” foods they perceive to be healthier or free of incomprehensible ingredients, setting off a scramble among big food brands. The bulk agricultural traders that dominate flows of food commodities are being forced to respond.
US organic-food sales have doubled since 2007 to $36bn in 2014, according to the Organic Trade Association. Fruit and vegetables were more than a third of the market, followed by dairy from cows fed organic-feed grain or forage.
US sales of foods verified as non-GMO have tripled since 2013 to $15bn in the year to September, data from the Non-GMO Project show. While these include products that never have been genetically modified, such as non-GMO verified baking soda, they also include those made from corn and soyabeans, among the most widely bioengineered crops in the US.
“Clean label, gluten-free, GMO-free — it is a force to be reckoned with and to pay attention to,” says David MacLennan, chief executive of Cargill, the world’s biggest agricultural commodities trader and processor.
Cargill created a GMO-free corn syrup in response to changes at a confectionery customer, its annual report says. A rival, Archer Daniels Midland, last year spent $170m to acquire Specialty Commodities, which secures organic foods from around the world. Bunge, another large agricultural house, recently purchased Whole Harvest Foods, an expeller-pressed (where raw materials are squeezed under high pressure) cooking-oil producer. “They are niches, but they are growing fast,” Soren Schroder, Bunge chief executive, says of “clean label” foods.
Co-operatively owned CHS in 2011 bought a soyabean processing plant in Iowa, now verified by the Non-GMO Project. Some non-GMO soyabean meal is sold to meat companies in California that demand non-bioengineered feed.
The challenge for the biggest agricultural traders and processors is twofold. One is the risk of making an investment based on a fad. The other is understanding how to generate returns from speciality crops when their sprawling networks of silos, trucks, barges, ships and industrial-scale mills were designed to digest massive volumes of interchangeable commodities. ADM’s North American oilseed plants can crush 85,000 tonnes a day, for example — about the size of the entire 2014 US organic soya-bean harvest.
Surging US demand for organic food, which is not bioengineered and is also free of synthetic pesticides and fertilisers, kept values for organic-feed corn and soyabeans aloft even while prices for conventional crops plummeted. The US, the world’s top corn and soyabean grower, has become an importer of organic corn and soyabeans.
In the organic-food trade, smaller companies are absorbing some of this growth. Scoular, a privately owned US grain merchant, has been meeting a shortfall in domestic supplies by delivering containers packed with certified organic grain and soyabeans from India, Argentina, and eastern Europe. “The US has a $1bn trade deficit in organic products right now,” says Greg Lickteig, a company director.
The squeeze on organic-grain supplies in part reflects stringent US Department of Agriculture rules that require a farm to follow organic practices for three years before it can be certified. For many farmers, the risks of making such a long-term investment offset the appeal of selling organic corn at a current price of $10.50 a bushel instead of $4 or less for benchmark corn.
“The market is telling the farmer, ‘We want more of this,’ ” says Lynn Clarkson, founder of Clarkson Grain, an organic and non-GMO corn and soyabean merchant in Illinois.
Additional reporting by Avantika Chilkoti
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