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State farmers study: Profit or herbicides?

Nongenetically modified label offers growing appeal by Glen Chase | May 24, 2015 at 2:05 a.m.
Soybean breeder Pengyin Chen (right) peels edamame soybeans with program technician David Moseley for display at a 2013 field day at the vegetable research station near Kibler.

A growing number of Arkansas row crop farmers are taking a fresh look at conventional varieties of corn and soybeans rather than genetically modified seeds able to resist herbicides used to combat weeds.

In return for risking lower yields and added management costs, growers can command premium prices for crops that escape being labeled a "genetically modified organism," commonly known as GMO.

"I think it's just the way of the world right now with lower prices and if they think they can make a little premium, they're going to try it," said Jim Carroll of Brinkley, who farms about 3,200 acres of soybeans, rice and corn with his brother.

Carroll, who sits on the Arkansas Soybean Promotion Board and the United Soybean Board, said that even as genetically modified seeds, also known as bio-tech seeds, came to dominate the market, he never stopped planting conventional varieties because he wants flexibility in his crop rotations and chemical use.

But, faced with low commodity prices and rising costs, growers are taking a hard look at conventional varieties because of the potential to earn an extra $1 more per bushel, he said.

"Yes. I think the driver behind that is just that the prices have depressed so far that they're all putting pencil to it," Carroll said.

Even with the interest generated by the potential premium pricing, only about 5 percent of the more than 3 million acres of soybeans planted in Arkansas this year will be in conventional varieties, said Jeremy Ross, a soybean agronomist with the University of Arkansas System Division of Agriculture.

While genetically modified soybeans sold under brand names such as "Roundup Ready" or "Liberty Link" dominate the crop, Ross agreed that tight finances are causing growers to consider conventional varieties -- including those developed by the University of Arkansas researchers.

Conventional seeds cost less, from $30 to $35 per bag compared to $60 to $75 per bag for genetically modified varieties, Ross said. But that savings can be offset by the need to spend more on the herbicides needed to kill weeds that can reduce yields.

Soybeans aren't the only row crop seeing an increase in interest in planting nongenetically modified seeds.

UA Agriculture Division agronomist Jason Kelley said that from 1 percent to 2 percent of the state's corn acreage will be planted with conventional seed. Overall, growers are expected to plant about 530,000 acres of corn in Arkansas this year.

The non-GMO planting, Kelley said, is being driven by consumer interest in livestock and poultry fed with conventional grain, something that an Arkansas poultry processor, Ozark Mountain Poultry in Rogers, is developing as a niche market.

"A lot of guys that take advantage of that premium already have it booked with an end user or the elevator, particularly for use in poultry feed," Kelley said.

David Hundley, general manager of the company's grain elevator in Bay, southeast of Jonesboro, said Ozark Mountain began exploring the availability of non-GMO corn and soybeans about 18 months ago and was pleasantly surprised to find growers had thousands of acres already planted with conventional grains across Arkansas and southern Missouri.

Hundley said the company expects to use about 7 million bushels of corn in 2015, of which about 10 percent will be non-GMO. He said the company has contracted for another 20,000 acres of non-GMO soybeans.

"Really, it's not us driving it, it's consumers," Hundley said about the demand for non-GMO foods. "It's obvious consumers are willing to pay more for a particular type of raised food." That premium results from added costs starting with growers and then to processors.

Pengyin Chen, a soybean breeder at the UA System Division of Agriculture, said while soybeans with genetically modified traits might be easier for growers to work with, such as by making weed management easier, non-GMO varieties offer lower seed costs without sacrificing yield.

"Conventional seeds are very competitive with any variety out there, yieldwise," Chen said.

Earlier this year, the university released a new high-protein non-GMO soybean variety specifically for the animal feed market. The variety, called UA 5814HP, averaged nearly 60 bushels per acre over years of testing. It is being released through private companies that have licensing agreements with the Division of Agriculture.

Conventional seeds such as 5814HP offer farmers savings over GMO varieties, he said, since growers can save seeds for future use without paying a technology fee.

Interest in nongenetically modified food is getting a boost from consumers trying to identify where their food is coming from and how it's grown.

At least one large restaurant chain, Chipotle Mexican Grill, announced earlier this year it will drop foods containing genetically modified ingredients. And, large food processing companies such as Post Holdings Inc. and General Mills Inc. are starting to include "Non-GMO" labeling on some products such as cereals and baked goods.

Carroll and fellow Soybean Board member Gary Sitzer of Weiner said ongoing discussions over genetically modified foods isn't behind their decision to add conventional acreage.

"I just look at GM and non-GM as a choice. I'm not an advocate of 'one's bad, one's good,'" Sitzer said. "They're just options that are on the table. We need them all out there to make it work in the marketplace."

Sitzer said growers must figure out the cost and potential return when deciding whether to plant conventional or genetically modified seeds.

"The economics are making a little extra push in there now to get some people to look at it who haven't before," said Sitzer, who farms about 2,100 acres, of which about half is rice and half is soybean. This year, about half of his soybean acreage was planted in conventional seed.

Carroll acknowledged the public is looking carefully at the issue.

As a member of the United Soybean Board, "I'm getting emails every day on something about non-GMO. Two years ago, I bet I didn't get one a week," he said.

"Personally, I don't have any problem with GMO or non-GMO," Carroll added, saying consumers are driving the debate.

Given growing interest in conventional grains, farmers have an opportunity, said Matt King, an economist with the Arkansas Farm Bureau.

Getting premium prices for non-GMO crops isn't easy, he said. Growers planting conventional seed must closely monitor their fields and market conditions, King said.

"Your biggest challenge if growing non-GMO products is going to be the weed pressure that we have here in the state of Arkansas," King said, which can add to production costs.

Currently, corn for December delivery is going for $3.82 per bushel, while soybeans are at $9.18 per bushel for November delivery. However, nongenetically modified corn can command an extra 75 cents to $1 per bushel, he said, while conventional soybeans can get an extra $1 to $2 per bushel.

And to get that premium price, farmers must have the ability to store a conventional crop, King said. Because most of the corn and soybeans being grown in Arkansas and the rest of the country are genetically modified varieties, farmers and elevator operators must take steps to keep conventional varieties segregated at harvest time.

Sitzer said the bottom line boils down to crop management and logistics.

As weeds in recent years have become more resistant to herbicides such as glyphosate, marketed as Roundup by Monsanto Co., which developed the Roundup Ready line of biotech seeds, growers are looking at planting options since they are finding the need to apply different herbicides more frequently even with genetically modified seeds, he said.

During the fall harvest rush, farm storage is needed because it's difficult to keep nongenetically modified crops segregated from bio-tech crops, he said. And buyers want a steady, year-round supply, meaning most contracts require growers to store the crop and then deliver a specified number of bushels per month to a dedicated delivery point.

But Sitzer said that growers can take advantage of varieties bred in Arkansas and designed for the state's climate.

"If we get good varieties that can do well and then also get a premium for them from an Arkansas company, then that's a good deal," he said.

SundayMonday Business on 05/24/2015

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