JEFFERSONVILLE – If you want to know how valuable Ohio non-GMO soybeans are to companies in Japan that use the beans in their food, consider this:
In August 2013, two directors with Japanese food companies traveled from Tokyo to Washington Court House to honor president and owner Dave Martin of Bluegrass Farms in Jeffersonville at the Fayette County Field Agronomy Day.
Their message to Ohio farmers was simple: Send us more of your non-GMO soybeans, please.
Just a year before, Bluegrass Farms had added a state-of-the-art $10 million grain distribution facility.
Now the non-GMO soybean processor is poised to expand – into the non-GMO corn market.
Martin told Civitas Media that starting with this fall’s corn crop, Bluegrass Farms will begin processing non-GMO corn for the first time; a major decision and growth for the Jeffersonville company.
“One of the things we have been working on the last several years is the introduction of non-GMO corn into the area and developing a market for that,” Martin said.
“We have been focusing so heavily on soybeans over the last 15 years, and corn is also a product that is used in Asia and non-GM corn is appreciated there. They will pay a premium for that, as well,” said Martin.
He said he has been promoting and pushing the concept that non-GM corn is here to stay. “We have a good supply of non-GMO corn in this market. Because of this opportunity, we have been able to open up a few doors,” he said.
“What is exciting about our future here is that we are actually loading a vessel of non-GMO corn next spring, as our introduction, our first business going to Asia and hopefully that will develop into a nice market for non-GMO corn growers in the future,” Martin said.
Located on both sides of Milledgeville Jeffersonville Road, he said one side has been designed for corn processing, while the facility on the other side of the road will continue non-GMO soybean processing. “We will start processing non-GMO corn this fall. We will be doing about 9,000 tons. It is an introductory volume that is going to about 10 different companies. We are saying, ‘hey, we can do this too.’”
He said he is excited about this addition. “Farmers have been asking us for years to buy their non-GMO corn and we want our growers to be successful. We want every load to pass (the non-GMO standard), and they get the maximum premium. We want the whole farm to be non-GMO. We want to go to buyers and tell them that the non-GMO corn growers are committed, they do a great job and not only do they supply us with non-GMO soybeans but they also supply us with non-GMO corn.”
Will this non-GMO corn processing business ever grow as large as Bluegrass Farm’s non-GMO soybean business?
“We are going about this very cautiously,” Martin answered. “Keep in mind that when we started in the non-GMO soybean processing business, everyone else was running in one direction and we were running in the other. Right now the big companies that have been handling non-GMO corn are getting out. The market has been having difficulty establishing the right premiums and who will be the suppliers. So we are entering the market at the time when there is a lot of speculation. Five years from now the suppliers might be completely different.”
Bluegrass Farms has been a non-GMO soybean processing plant for more than 15 years. Why only non-GMO?
“The people aware of the differences between GMO (genetically modified organisms) versus non-GMO prefer non-GMO when given the choice. We found that in most markets, as long as the price isn’t too high, most people prefer non-GMO,” Martin said.
“The safety issues for the consumer are rather grey. When things are grey it is better to be cautious when making those choices. We’ve been dealing in non-GMO soybeans since 1999, right about the time of the introduction of GMO soybeans. We had to make the choice which one to pursue. We chose non-GMO.”
How does he feel today about that choice? “I feel good about it. We are in a niche market, and we feel that there is a market there and we serve that market quite well. You can’t do both (GMO and non-GMO) processing. The requirements of segregation of the beans are too great, just two different paths,” Martin pointed out.
For the Fayette County company, the non-GMO choice was a successful one. In 2014, Martin said, Bluegrass Farms of Ohio Inc. processed more than 60,000 tons of non-GMO soybeans.
More than three-fourths of these non-GMO beans head straight for Japan.
Why Japan? “It is all about supply and demand in dealing with any market. In Japan, the food safety issue is all about accountability and providing the information about what all is done during the process.
At the 2013 Fayette County event, Shuichiro Hanaoka, Director of Hanamaruki Food Inc in Tokyo, along with Kazumori Suzuki, Director of Mitsui & Co. Food (U.S.A.) spoke at the luncheon program and talked about how valuable Martin’s Bluegrass Farms is to their non-GMO soybean food production in Japan.
Hanaoka told the approximately 300 farmers at the event that Japanese consumers want to see the “non-GMO” label on their products, “And we will pay a premium for these non-GMO soybeans.”
“Japan is the market, the customer, that understands and appreciates non-GMO soybeans the most. It can be a difficult market to get into. Our target is the Japanese market. The rest of the markets operate on a spot basis. In Japan, contracts are done a year ahead of time. The Japanese have been a longer trading partner and have been educated on how to get that consistent supply. The other countries are just now starting to do contracts a year ahead,” Martin said. In addition to Japan, Martin says about 25 percent of his beans go to South Korea.
Bluegrass Farms’s non-GMO soybeans meet private sector certification standards through certification sources such as the Non-GMO project. He said the USDA is now setting up its own certification process as well. They are certified through the Association of Official Seed Certifying Agencies.
Valued Ohio farmers
Where do the non-GMO beans come from? Martin said the non-GMO beans come from growers all over the area. “Mostly southern Ohio. We have about a hundred growers within a 35 mile radius. We used to have to travel quite far, but because of the acceptance of the bean and the nice premium, it is a good reward for the growers.”
Martin said the GMO seed companies used to target the non-GMO soybean as having less yield. “Now it has been proven to just not be the case. As a matter of fact, all GM variety starts as a non-GM variety first. Yield is comparable.”
The growers need to be certified non-GMO. When a grower contacts Bluegrass Farms about being a supplier, Martin said, “We have an education program that we go over with them, including all the requirements. We want our growers to be successful. We want them to be able to grow a high quality soybean and get premiums for them. We provide them almost a checklist of the things they do to become a supplier for them.”
Martin believes the grower is as important as any other point in the chain, and they need to know how important they are in the chain. “It starts with them. We try to give our growers maximum flexibility on when they deliver. We have storage capacity here, so that gives us more flexibility,” he said.
The Asian mindset
From the supplier’s standpoint, Martin said the most important thing to understand is the culture of the market, the buyers. “There is business etiquette that changes from one market to another, and things that are customary and acceptable in the United States is not necessarily customary and acceptable in another country. So you have to gear your business toward the markets that you serve.
He said they get a number of visitors from his Asian buyers on a regular basis. “We do a lot of show and tell, and vise verse. “I do a lot of traveling myself,” he said, adding that he is planning another trip soon to Japan, and will meet again with buyers Hanaoka and Suzuki while in Tokyo.
“It is a different mindset (in Japan). Some companies entering this market don’t realize what they are getting into,” he pointed out.
Is it fair to say that Bluegrass Farms has that Asian mindset? “Oh yeah, that’s what we do every day – we solve problems, absolutely.” He said his company shared the Asian view that what’s important is solving the problem, not just attributing blame.
He said the face-to-face relationship is also important, so he travels frequently to Japan to meet with his buyers. “I typically see my customers four-five times a year.”He also takes Ohio soybean growers to Japan as well, so they can see what happens to their beans once they are processed and shipped to Japan.
“It’s important for them to see how they are being used,” Martin said. “It is a great trip, and we will be taking more in the future. It is important from an educational standpoint.”
The Bluegrass Farms market
Martin said that because of Mother Nature and fluctuation in yields, “some years we have extra supply. It is nice to have that spot market ability to unload your extra. Because you have to meet the supply of your core customers, sometimes the yield is good and sometimes the quality is good – it is hard to get both. To be a good supplier, you have to overproduce to meet production, and managing that overproduction is the most challenging part of what we do.”
Do they ever have a shortage of non-MO soybeans? “This is always our challenge since there are so many variables that dictate yield and quality.”
At Bluegrass Farms, the company processes the soybeans by cleaning and drying them. “We get the soybeans so they are all uniform, the same size. We clean, sort and package the soybeans for market. We use varieties for each food group, and take them to markets. Some types of soybeans are used for Miso soup, others for soy milk. We do a lot of testing to know what we have and where they go.”
He said the beans then are shipped in 20 ton, 20 foot containers. “We run day and night. We also ship in 60 pound paper bags, a one-ton polybag.” He said the seed containers are suitable for truck, train and boat.
Martin holds up a container of his processed soybeans, looking at the label, “This is a Pioneer variety,” he said after looking at the number on the clear plastic container.
“We can clean and sort and process the soybeans, but we can’t control the volume. That’s dictated by Mother Nature. Our customers take the same amount every year – that doesn’t change. But everything we do, it does change,” he said.
A family business
Is Bluegrass farms a successful non-GMO soybean supplier? “I would say this – all we do is non-GMO, and we don’t pay attention to anything else. Our entire focus is doing that. Most competitors, it is a sideline, or they go through brokers and they really don’t understand non-GMO. We are able to be known as a supplier that the customers can depend on. Our market and our customer base grows every year. We have learned things, lots of times, the hard way.”
Martin said Bluegrass Farms is growing. “One of our goals, however, is to not become a ‘big company.’ Our goal is to be a company that has nice growth every year and does a good job from a supply and growers standpoint.”
What does he see in the future? “I take it year by year. I focus on what’s important that year. If you focus too far ahead of yourself and the big, big picture sometimes you make important mistakes.”
Bluegrass Farms is a family-owned company. “We don’t have stockholders, a board of directors, so we can move on things pretty quick.” The family business started in the 1980s when they began growing identity-preserved soybeans.
Is he satisfied with how Bluegrass Farms is going? “I’m really happy. I have my son-in-law working for us and he is new. I’m trying to recruit additional family members,” he said laughing. He and his wife have four children, three daughters and a son. “I have a son who is studying international business and minoring in Japanese. Hopefully he will come back and join us.”
He said he’s lucky to have the support of Ohio farmers. “We have a really nice group of growers and it is a nice fit. From a retention standpoint, we keep our growers year in and year out because we do focus on their success.”
He said that “this business is not for everybody. If you can’t produce blue ribbon soybeans (like those) over there…” He nodded toward a clear large plastic jar filler with non-GMO soybeans with a Clark County Fair blue ribbon draping it. They were grown and entered into the fair by one of his growers. “That’s what we are striving for. Those are some beautiful beans,” he said with pride.
Gary Brock can be reached at 937-556-5759 or on Twitter at GBrock4.