Leaders of a corn marketing company say to think of them as matchmakers. “There’s somebody out there that wants a better corn, and you prob-ably produce a better corn,” says ChrisThompson, executive vice president of American Edge Grain. “Let’s match each other up.”
American Edge Grain (AEG) is help-ing farmers test and market corn based on key attributes within the kernel to obtain a premium price, while helping buyers such as dairies find grain that meets their needs. “The very first thing we want farmers to know is that not all corn is created equal, and there are discriminating end users who are willing to pay extra value for an attribute-driven market,” says Thompson.
Under the traditional approach to buy-ing and selling corn, every farmer’s corn is mixed together for a blend of No. 2 corn, making it impossible for farmers to profit from a higher-quality product or for buyers to trace the source of their grain.
Established in 2017, AEG spent the first several years building relationships with growers. Today, it works with 65 producers representing access to 30 million bushels of corn and interacts with 11 end users.
The Benefit of Attribute Buying
Corn from certified producers is tested primarily for starch, oil, and protein levels, and then the company helps farmers market their grain based on these attributes through AEG’s online exchange called Dashboard Plus+. Buyers can purchase bushels that contain whatever attributes they are looking for and trace it to a specific farmer and grain bin on the farm.
“I like the fact that I can jump in my vehicle or plane and go out and visit the farmer I’m buying [from],” says Bob Viveiros, owner of Crossroads Dairy in Delta, Utah.
Dairies are one of the two main end users AEG is focusing on currently because the impact of buying corn with a higher starch content can be seen quickly. The other key end user is ethanol plants.
I can see [increased production] in seven days with an ethanol plant, and I can see a ration change within one to three days on a dairy because they’re producing milk every single day,” says Thompson.
AEG partnered with dairy expert John Goeser, owner of Cows Agree Consulting, to dig into this further. The research found corn with a higher percentage of digestible starch could result in 2 to 4 pounds of additional milk production per cow per day.
The Benefit of Attribute Marketing
Farmers receive a premium price through the AEG market. AEG guarantees a minimum of 25¢ per bushel over the best basis price they can find. That premium can increase as competition is created and end users bid for the bushels they need. Thompson says AEG traded some bushels $2.50 over local basis last summer because the grower happened to be in the right place with the right volume.
“I don’t think there are any question that higher-quality grain is worth a premium,” Goeser says. “Premiums per bushel are going to look pretty small relative to the type of returns I think that increased milk production can yield.”
Bruce Nelson, a farmer from Clark, South Dakota, is a certified grower with AEG. He says he was attracted to the idea of being able to market his higher-quality corn for a premium price.
“Quality has been preached to the ag community and me specifically as long as I’ve been farming, and the system we sell into is not set up that way,” he says. “It is set up to blend stuff to get to the lowest common denominator that will still pass.”
To join the AEG market, corn growers must be certified and pay a fee. The fee depends on the size of the grower’s operation, but the average cost is $5,000 annually.
“We’re showing the producer that we’re going to have more value in he system, and it’s going to come back to their doorstep. You wouldn’t believe the reaction,” says AEG founder Terry Wastweet. “It’s a boil-ing up of producers who know they grow better corn, know they’re going to get some value out of it, [and] they’re willing to pay for the program.” To certify a producer, American Edge Grain representatives conduct a farm visit and run through a checklist of requirements.
One key requirement is on-farm storage because the grain moves directly from the farm to the end user. AEG handles transport of the grain. “With grain, every time you move it, you lose something,” says Wastweet “There’s always value loss whenever you move that kernel from one place to another. And so, the less you can move it, the more value it actually has maintained. From our on-farm plat-forms, they dump it in the bin, it stays there until they load it for the end user and that itself is worth some-thing.” For now, AEG is focused on corn, but Thompson says, “Absolutely, we plan to expand to other crops. All I can say about that is absolutely.”