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Non-transgenic corn gains share of value-added market

Corn certified as genetically unmodified is becoming an important component of the value-enhanced grain market, according to a survey of farmers and elevator operators by the U.S. Grains Council.

Total production of the main types of value-enhanced corn remained fairly stable in 2000 at 6.7 percent of total corn production. However, when segregated non-GMO corn and low-temperature dried corn are included as value-enhanced products, that figure climbs to 10.5 percent in 2000. Production of nutritionally enhanced (high-protein or high-lysine) corn was up from last year, but after several years of steady growth, production of other types of value-enhanced corn has declined slightly. Nearly one-fifth of value-enhanced corn (18.4 percent) was certified non-GMO in the first of the U.S. Grains Council`s annual value-enhanced grains reports that tracked the production of segregated non-GMO grain. Farmers responding to the survey indicated that 2.6 percent of their total corn crop was marketed as non-GMO.

According to the elevator survey respondents, the portion of their total corn volume devoted to the main types of value-enhanced corn dropped from an average of 9 percent in 1999 to 5 percent in 2000. However, when segregated non-GMO corn is included as a value-enhanced corn product, that figure climbs to 12 percent in 2000. On the other hand, an average of 27 percent of farmers surveyed planted genetically modified corn last year and that figure is expected to remain the same in 2001.

The volume of low-temperature dried corn was also estimated from the survey for the first time. A relatively high portion of the total crop (1.6 percent) is being marketed with this management/handling trait. Low- temperature dried corn has characteristics making it desirable for some of the same uses as hard-endosperm corn, such as dry milling. Export demand for hard-endosperm corn is being adversely affected by the biotechnology debate.

Area of nutritionally enhanced corn is expected to grow by 25,000 acres in 2001. Grower premiums are expected to be $0.15 to $0.35 per bushel. Some nutritionally enhanced hybrids showed poor agronomic performance in 2000, but average protein content of nutritionally enhanced corn samples has remained at least 1 percentage point above commodity corn for six years. Production declines in white corn were mainly a result of large carryover stocks from 1999 that put pressure on premiums. Despite the production declines, demand for white corn has remained strong. White corn exports have increased nearly threefold since the 1996/1997 marketing year, climbing from roughly 21 million bushels then to 62 million bushels in 1999/ 2000.

Yellow corn is being replaced with white corn in some foods due to a lower perceived risk of StarLink contamination in white corn. White-corn acreage in 2001 is expected to be 925,000 acres, unchanged from 2000. White corn hybrids are starting to yield much more competitively with standard yellow dent corn due to more research and development. High-oil corn production declined as a result of lower premiums and reduced demand. Low feed fat prices are putting downward pressure on high-oil corn demand. Adjustment of high-oil corn premium structures combined with the demand softening mentioned above are projected to reduce high-oil corn acres in 2001 by 20 percent to 600,000 acres.

Producer premiums in 2001 are expected to be essentially unchanged at $0.15 to $0.25 per bushel, depending on oil content. Production of waxy and high- amylose corn types was stable in 2000, but demand for waxy corn is expected to decline slightly in 2001. Projected 2001 acreage is expected to decline to 500,000 acres as a result of decreased demand. However, waxy corn exports increased by 14 percent in 1999/2000. An estimated 30 percent of waxy corn production is used in livestock feed with the remaining used in wet-milling applications.

Grower premiums are expected to be between $0.15 to $0.20 per bushel in 2001. Large supplies and strong producer interest in value-enhanced corn production are expected to put downward pressure on producer premiums in 2001. Premium levels are expected to be similar to 2000.

Actual premiums paid to producers will vary, especially for value-enhanced corn not grown under contract. In years of short supply caused by weather or disease problems, premiums on these products can increase dramatically as the marketing year progresses. Users should further expect a merchandising cost to be added to these premiums, which will vary with the volume and amount of segregation required.

Despite some of the setbacks in value-enhanced corn premiums and demand, producer interest in value-enhanced corn remains high, with 46 percent of producers surveyed believing the market for value-enhanced corn will continue to grow over the next five years. Producers continue to improve their grain-handling systems and their ability to segregate corn products. Nine percent of producers plan on building new storage bins in the year 2001. Of all the producers responding to the survey, 14.2 percent grew some type of value-enhanced crop in 2000 compared to 14.8 percent in 1999. A relatively high level of producer turnover continues to characterize the value-enhanced corn marketplace. Thirty percent of the growers who raised value-enhanced corn in 2000 are not planning on raising any in 2001. The growers who are exiting value-enhanced corn production are expected to be replaced by other growers who did not grow value-enhanced corn in 2000, keeping the overall number of growers similar in 2001.

White sorghum.

Corn continues to be the predominant value-enhanced grain, but there is increased interest in value-enhanced sorghum - especially identity- preserved, white food-grade sorghum, according to the U.S. Grains Council report. Food sorghums have been developed by private and public agencies and are grown more extensively in areas of the sorghum belt, especially in Texas. The preferred food-type hybrids are white with tan plant color and light-colored glumes. Food sorghums have significantly improved processing properties and produce a light-colored flour with a bland flavor that can be used in foods, companion animal foods and feeds for livestock.

Production of food sorghum probably will continue to increase in the future. However, white sorghums are not always segregated from red sorghums as they are stored after harvest until the producer decides to sell. If a company wants to obtain a supply of food sorghums, forward contracting is highly desirable and usually necessary.

For more on the U.S. Grains Council report, see this Value-Enhanced Grains Web site. For pictures of white sorghum, see this Web site set up by Chris Cogburn, vice chairman of the Texas Sorghum Producers Board.

Source: AgNet