Today’s technology is making it easier for U.S. soybean producers to grow high quality commodity soybeans with less work and fewer inputs than ever before. Growing soybeans for the bulk, No. 2 grade yellow commodity market may be the customary practice in today’s soybean market, but for a growing number of producers, the opportunity to make greater profits growing specialty soybean varieties is a challenge worth embracing.

World demand for food-grade soybeans is increasing, not only in traditional Asian markets, but also in new markets being created as more people choose to add soy to their diets. Growers who can manage risk and provide products meeting the varied standards of identity preserved (IP) foods are receiving price premiums for their efforts.

The timing for increased opportunities for growers to move from commodity production to raising a crop with specific traits for specific markets appears to be key. As competition for commodity soybean markets continues to increase, many U.S. growers view value-added production as a way to not only retain acres for their farming operation, but also to capture additional profit opportunities.

The biggest share of commodity soybeans will continue to be for use in animal feed. In some markets, the demand for non-GMO animal feed is already creating significant opportunities that require IP production systems. This market segment could soon explode as new regulations calling for strict labeling and traceability of biotech products come into force.

Another major factor that is increasing demand for IP soybeans is the annual, double-digit growth rate of soy protein for direct human consumption. Soybeans are finding their way into a number of different food types including soymilk, soy flour, soy breakfast cereals, and meat substitutes.

Specialty soybeans have specific physical or chemical characteristics that are required by certain customers to meet a specific need. Depending on the end use of the crop, the soybean characteristics of most importance will vary. In some cases, production may call for a large or small seed size, a certain color of hilum, or prescribed levels of protein, oil or sugar. The oil quality or fatty acid profile may be of concern to the final user, or a customer may require a special variety to meet the needs of a particular niche market.

Value-added soybean production requires a uniform and uncontaminated supply of quality soybeans, with only the particular traits desired by the end user. For that reason, production and handling of specialty soybeans must be done under a controlled system of identity preservation.

Careful record keeping is required for the storage, bagging and containerized cargo shipments that may be involved, and in some cases, it may be necessary to document chemical composition with laboratory testing.

Many varieties of non-GMO varieties show good yield results, while some of the more specialized varieties may have a lower yield potential. These comparisons, along with any cost for added management and labor, should be considered as the grower evaluates the return on the system.

In Rock County, Wisconsin, a grain elevator and buyer recognized an opportunity to develop a source of food-grade soybeans to meet the changing market demands. The local extension agent and a campus-based soybean specialist worked with the Rock County Grain Company to assess the production and market needs.

Trial plots were planted to compare performance, yield and suitability for food-grade production. Information was gathered about the requirements for identity-preserved products, and educational sessions were held with prospective growers to discuss production and storage techniques. The grain company developed a premium program, and the extension agent provided third party verification to meet the IP requirements.

During the second and third year of the program, participating producers earned about $2.5 million in additional income from premiums that ranged from 35-cents up to $15 per bushel. Premiums averaged about $2.85 per bushel or about $30,000 per grower. The grain company predicts growers will earn $8 million in premiums by 2004.

The grain company received a two-year agriculture diversification grant of $49,970 and the local community gained five new jobs at the grain company to clean and process the IP soybeans. The company markets the Wisconsin-grown IP beans to customers in Germany, Italy, Japan and other Asian counties.

For one reason or another, some specialty soybean buyers are reluctant to widely publish the terms and conditions of their IP contracts. Among specialty grain traders that’s understandable because competition is keen for good customers and capable growers. Other efforts have grown successful by promoting awareness.

Omaha, Neb. based Ag Processing Inc (AGP) currently conducts a non-GMO premium program through its Manning, Iowa and Mason City, Iowa locations, working with participating member cooperatives in the trade territory surrounding each plant. Details of AGP’s programs are readily available at www.agp.com.

For 2003, AGP has 14 participating cooperatives offering "non-GMO Grower Contracts" in the Manning, Iowa area. At three locations, AGP offered a 35-cent per bushel "Elevator Storage Contract" with harvest delivery to elevator LH September – October delivery. All locations also offered a 37-cent "Preferred Buyers Call Contract" where producer could select their "Preferred" delivery months (first come, first served) provided producer did not book more than 50 percent of production for delivery in any one month November – August delivery. A 40-cent "Open Buyers Call Contract" was also available. Any production that does not have a "Preferred" delivery month, the buyer gives 7-calendar days notice prior to a weekly delivery period.

In the Mason City, Iowa area, AGP lists 11 additional non-GMO contract participating cooperatives with contract options for a 27-cent "Preferred Buyers Call" and a 30-cent "Open Buyers Call." One participating cooperative offers fall delivery to its elevator at a 25-cent premium.

"One of our objectives is to show there is truly a value to producers being part of the cooperative system and having AGP as your processing arm," said Greg Twist, AGP Director of Marketing, Processing. "If there’s a value in it for us as a processor, whether it’s component premiums or non-GMO, we can share that value with our members and their producers and strengthen our ties."

Growers must complete a "Grower Certification" which includes herbicide verification, and a 20-foot buffer zone at harvest from biotech soybean fields. Fields must be volunteer corn free or the ears must be removed before harvest. Combines must be flushed with 50 bushels of non-GMO beans prior to harvesting if the equipment was used for harvesting any biotech crops or corn.

All loads are tested upon delivery to elevator (where available) and again when brought to the AGP plant. If either test results in detection of more than .10 percent GMO, all non-GMO premiums will be deducted. All loads are subject to AGP’s discount schedule if moisture is greater than 13.0 percent, splits is greater than 20.0 percent, total damage is greater than 2.0 percent, heat damage is greater than .2 percent, foreign material is greater than 1.0 percent, odor must be cool & sweet. Beans must meet all U.S. # 1 quality standards not listed here and must have less than .3 percent corn or is subject to rejection.

"Contract flexibility can be in both the buyer’s and the grower’s best interest," said Jim Wilder, Executive Vice President of the North Carolina Soybean Producers Association. "Our growers wanted to find a way to improve their bottom line with minimum added risk."

In 2000, Wilder helped form a local grower’s cooperative to produce natto beans for customers in Japan. During 2001, the group successfully harvested and delivered natto beans as specified under an IP contract. Participating growers received a premium of about $1.00 per bushel for their efforts. The beans were shipped to Japan in containers holding 720 bushel each.

Pleased with the success of their program, the grower’s signed a contract to grow in 2002, 10 more containers of natto beans, with an option to ship up to a total of 25 containers. Due to extremely dry growing conditions however, the co-op was only able to produce enough for 6 containers that met the contract quality specifications.

Fortunately for these growers, their IP contract provided for "Acts of God" such as weather, which allowed the growers to sell to the customer a portion of the crop that met the quality requirements, and just as important, also allowed the producers to sell the remainder of the beans at commodity prices paid by the local elevator.

In cases like this, the buyer’s contract price is lower because the grower’s additional IP risk was limited to the yield drag of the special natto varieties.

"Growers did experience some loss in 2002, but at least they could recover a portion of their cost," Wilder said. "A seed breeder is now working on yield improvements for our natto varieties so that a similar situation in the future will at least bring this up to a break-even proposition."

Since the advent and widespread use of biotech-enhanced commodity soybean varieties, it has become essential that producers of value-added soybeans adhere to strict identity preserved production practices in order to capture the full market value of specialty crops. Understanding what it means to identity preserve is critical to producer success.

"ASA narrowly defines Identity Preservation because that’s what customers are demanding," said ASA Technical Issues Director Kimball Nill. "IP soybeans are a reality business where production is carefully scrutinized and tested to determine actual content. It is a myth to believe that any scheme to segregate or channel a crop is going to effectively preserve the integrity of that crop."

An IP system must begin with a contract outlining what is to be delivered at a stated price. Price premiums will vary widely depending upon the nature of the variety grown and the quality and purity levels required by the customer. Price premiums need to take into consideration the additional care and handling required, including yield drag, and the increased costs for inputs, storage and transportation.

Production of a specialty soybean with something other than a yellow color increases a producer’s risk in the event that they do not meet all the contract specifications. Most soybean elevators and terminals are generally interested in only yellow soybeans, and would have little interest in soybeans of other colors.

Before handling or harvesting any identity preserved, non-GMO soybeans, producers must thoroughly clean-out planters, combines, trucks, wagons, augers, storage bins, and anything else that was utilized in the planting, harvesting, transport, or storage of biotech-enhanced commodity crops. All contract transport carriers utilized must practice the same clean-out requirement.

Why all the fuss? A survey of seed and harvest samples conducted by Successful Farming Magazine and reported in mid-February 2001, reported on the effectiveness of maintaining low tolerances for genetic contamination in identity preserved crops. The test concluded that identity-preserved "non-GMO" crops are "easier said than done."

The survey revealed that two out of four soybean seed samples contained low levels of biotech seed, and that at least one harvested sample in four "non-GMO" soybean fields tested positive for the presence of biotech soybeans.

Two other IP fields had biotech soybeans in the harvest samples, even though biotech-enhanced seeds were not found in the seed samples. In this particular survey, the amount of commingling was very low, and was within the limits of most production contracts, many of which currently call for rates of less than 1 percent.

"A grower cannot promise a customer delivery of soybeans that test below 1 percent biotech content when even certified seed is only guaranteed to be 98 percent pure," Nill said. "IP growers can only certify that they purchased seedstock that was represented as "non-biotech," and that the grower took special care to keep it separate during planting, harvesting and transportation."

According to the American Seed Trade Association (ASTA) there are no standards for detecting biotech events in traditional seed, which has caused a disruption in global seed trade because in case of biotech traits, stringent and unreasonable expectations have been placed on varietal purity.

Both global seed trade (valued at nearly $4 billion) and U.S. seed exports (valued at more than $800 million) are potentially threatened. As a result, ASTA is pressing for reasonable thresholds that are based on the reality of seed production and overall needs of the general marketplace.

The International Seed Trade Federation has recommended an experiment to determine whether a 1 percent for biotech events in maize, soybeans, cotton, and canola is achievable, taking into account seed production realities and the absence of documented risks. But ultimately, each threshold will need to be crop-specific and based upon pollen flow data, production realities, and the characteristics of each type of seed.

More research is needed to determine the minimal achievable threshold for each type of seed. But until this data is collected, an interim threshold needs to be put in place to prevent immediate disruptions in international seed trade.

Production Contracts

A contract for Identity Preserved (IP) soybeans should be thoroughly reviewed by the producer and by financial and legal advisors to weigh the potential risks against the potential rewards. Thousands of growers are already boosting their bottom line with specialty soybean production.

IP crop production may require investments in equipment or facilities, and these may need to be approved, certified or calibrated. Special drying, storage, irrigation, or other handling equipment may be needed, and this equipment may require extra management, fuel, utilities, or repairs that will impact a grower’s bottom line. These factors must be weighed against the contract duration to make sure investments can be recovered.

The requirements of any IP contract will increase production costs above those normally expected with commodity type production. A list of each required input or technique, and its associated costs, must be part of an overall IP plan. Be sure to include a primary and secondary source for each input, as well as any extra delivery cost or travel time involved. Consult with your state extension service or land grant university to see what information is available based on other growers’ experiences in your area.

When developing an IP plan for a new variety, always compare the yield results with the type of varieties you currently plant. Never agree to deliver crop purity levels that exceed what the seed company is willing to certify for its seedstock.

Growers should make sure they are able to comply with all the growing obligations in the contract. In many cases, the grower will be required to give up certain decision-making choices on how, when, and where to grow the crop. It is not unusual for the buyer to specify the approved herbicides and insecticides that may be used in the pest control program, which may have a profound effect on costs and crop management depending whether the specialty crop variety is susceptible or resistant.

Contracts may outline specific fertility requirements, or include specifications about the amount of residue that may be left from this crop, and what can or cannot be planted in the same field in the following year. Such requirements may impact a grower’s conservation compliance plan as well.

The buyer may require a legal right to enter agricultural land before, during or after the crop is harvested, to take samples or to do other work in the field. To protect the grower's interest, the contract must include compensation for any delays or damage resulting from contractor field access.

Knowing how and when payment will be made is always an essential factor, but it is critically important that these terms be clearly specified in an IP contract. The establishment of the price should either be fixed to dollar amount per bushel/ton, or to a basis price at a predetermined date. If the buyer has control of an open call date, the grower needs to be aware of the impact this may have on storage liability and cash flow.

The contract should state the pricing method and specify whether the Chicago Board of Trade, the Tokyo Grain Exchange, or some other determining factor will be used to set the price. It should also spell out who will actually market the crop and pay the checkoff dollars, and whether it can be forward priced.

Premiums and bonuses are frequently part of IP production contracts, and good contracts will clearly define how these will be calculated and paid. Buyers are beginning to look at tiered pricing for IP contracts that would compensate growers for exceeding certain predetermined thresholds for quality. Protein and oil content, moisture levels, foreign material, and test weight are all measures of how well the grower managed the crop production, and will help balance the grower’s risk of uncontrollable factors like weather.

Established Federal Grain Inspection Service quality standards are often the best place to start, although IP soybeans may require further agreement on specialty traits. The contract should clearly state who will be responsible for conducting the quality tests, the grower’s rights to obtain a third party independent test if there is disagreement with any test results, and who will pay for the costs of quality testing.

Whatever is decided, the grower should be confident of being able to meet or exceed the agreed upon standards. Penalties for not meeting quality standards should be set forth in the contract with special consideration for insufficient quantity or poor quality due to unfavorable weather conditions or other factors that are beyond the grower’s control. Terms should allow the grower to sell without penalty any portion of the crop that does meet the contract standards.

A good contract will specify financial responsibilities for quality compliance costs for things like extra drying to achieve moisture and test weight, and whether the crop can be sold on the open market as a conventional crop if it fails to meet specialty contract requirements. Never assume that a rejected specialty soybean crop can simply be hauled down to the elevator and commingled with your neighbor's commodity beans.

Signing a contract that specifies delivery of a set amount of soybeans should clearly state what the penalties are for any shortfall, and particularly shortfalls caused by weather, insects or diseases. In the event that weather prevents planting a field, the grower may want to have the option of adjusting the number of acres planted or the option to switch production acreage to another location. The grower may even want to have the option to substitute supplies to fulfill the contract.

The contract should specify the delivery site, a target delivery date or period, and clearly state who is responsible for delivery costs. Be sure to understand all requirements for any special handling procedures, penalties for early or late delivery, and when payment will be received. If payment is to be made after delivery, insist on written guarantees that payment will be made.

Ownership of the specialty crop and risk of loss usually remains with the party holding title to the crop. Understand any modifications to this rule made in the contract, and how this may impact loss of the crop and insurance coverage in the field, in storage or while being transported. Be aware of any contract terms that prohibit the granting of liens or security interests on the crop to a third party, such as a landlord, lender, or supplier.

It is equally important for the grower to determine the status of the person or company with which the grower is contracting. Although laws may vary by state, indemnity funds will generally compensate unpaid sellers of grain if the buyer is a licensed grain dealer and the transaction is considered a sale of grain. In this respect, the grower may forfeit certain legal rights if the contract terms define the grower’s participation as providing a service instead of delivering grain.

When contracting with a buyer that is not established in the local area, the grower should ask for and receive a copy of the contractor's financial statement. Look to see if the contractor has made any investments in fixed assets or management staff in the region, and find out if the contractor is bonded for this type of obligation. Find out if the contractor is a subsidiary company, and if the contractor defaults, whether the contract makes the parent company responsible for payment. Ask the contractor to provide a list of other producers who have grown soybeans for them under contract in prior years.

A creditable contractor should not be offended by these questions and requests, and the grower should expect the contractor to make similar inquiries about the grower’s ability to perform the contract. The grower should be willing and able to give the contractor a financial statement and the names of individuals who will verify the grower’s financial stability and management abilities. Make sure the contract specifies what will happen if the grower goes bankrupt, gets sick, become disabled or dies.

It is best to have a contract that provides for alternative dispute resolution, such as mediation or arbitration, before the parties are forced to take a dispute to court. Understand who would be qualified to act as a neutral party mediator or arbitrator, and decide whether the outcome of a binding arbitration settlement is acceptable.

The conditions under which a contract may be terminated should be based on objective standards. Know what these standards are and who will determine when those conditions are met. Avoid contracts that give the contractor the right to terminate the contract for minor breaches, or that do not give the grower sufficient notice and opportunities to cure a problem before the contract is terminated. Know what your rights will be in the event that the contract is terminated. The contract should also address the options for renewing the contract.

The legal relationship established by the contract could dramatically impact a grower’s tax situation. Be sure to confer with tax and legal advisors to determine how the contract may affect legal status as a tenant, employer or independent contractor, and how it may affect partnerships or joint ventures. This is also a good time to determine whether the contract needs to be approved by other parties, such as landlords, lenders or a spouse. Know whether the grower or the contractor has any legal right to assign or transfer the contract to other parties, which may also result in important tax consequences.

Understand how the contract will affect eligibility for farm program payments, and the potential consequences if the contract jeopardizes "beneficial interest" in the crop being produced for purposes of government loan or deficiency payments. The crop may or may not be qualified as a program crop for purposes of government payments or base retention, and may impact established farm yields.

Contract requirements may increase costs for multi-peril, hail or other crop insurance. The grower also may be required to purchase liability insurance to cover pesticide drift or other problems. Be sure to check if Federal Crop insurance is available on specialty crops.

The grower may also be required to take special steps to protect the contractor's property interests in the seed germplasm. Be sure to understand the responsibilities for security of the germplasm, who owns the germplasm, and whether the contract limits the ability to save seed to plant in the future.

Take special care to note the contract terms regarding the state law that governs. Contracts that specify the grower’s state of residence or the state in which the production takes place are best for the grower. Be aware of any terms that set a location for any lawsuit that might be filed to determine if the location will be fair. Discuss with a legal advisor any contract terms that permit renegotiation or nullification of the contract if the laws governing production contracts are changed.

Needless to say, all agreements, promises and interpretations of the contract must be written down. Oral agreements may not be valid in court and should be avoided by both parties. Always consider having an attorney review any legal document before it is signed, and be comfortable with the contract before it is signed.

A Final Word

The timing for moving from a commodity production system to one focused on raising crops with specific traits for specific markets is key for growers. Many U.S. growers are viewing value-added production as a way to not only retain acreage, but also capture additional profit.

While the majority of commodity soybeans will continue to be used for animal feed, the annual growth rate for soybeans processed into soy protein continues to grow at a double-digit rate. Increasing global demand is helping soybeans find their way into a number of different food types from soymilk to meat substitutes in both traditional Asian markets and in many Western countries.

As the demand for Identity Preserved soybeans increases, the American Soybean Association encourages all growers to learn more about value-added soybean production systems. For producers who are willing to take on additional risk to grow specialty soybean varieties the rewards can make a big difference in farm profitability.

For this article, value-added soybean varieties are grouped into the following 10 categories: "Non-GMO," certified seed, organic food-grade, low saturated fat, clear hilum tofu, natto, high sucrose, high oleic, low linolenic and high protein.

There are areas within these categories that overlap. For instance, organic, low saturated fat, clear hilum tofu, natto, high sucrose, low linolenic and high protein are generally all grown from non-GMO varieties, where as high oleic soybeans are genetically modified.

"NON-GMO" SOYBEANS

The demand for "non-GMO" soybeans has been spurred by consumer concerns in Japan and the European Union about the long-term safety of biotechnology. Non-GMO (genetically modified organism) soybeans are any soybean variety that has not been genetically engineered to add or modify a specific trait, such as herbicide tolerance or nutritional characteristics.

Approximately 14 million acres of conventional, non-GMO soybeans are now in production in the United States. The marketing of non-GMO soybeans is dependent on local processing demand and may offer opportunities for anyone who has grown soybeans from non-GMO seedstock and employed identity preserved production practices.

Premiums generally range from $.25 to $.50 per bushel over Chicago Board of Trade prices. Weed control costs for non-GMO soybean production in conventional tillage is generally below $30 per acre, but no-till weed control cost may be higher under certain weed situations. Some weed control costs are offset by not having to pay the seed royalty fees associated with GMO varieties.

CERTIFIED SEED

Certified seed production offers producers an opportunity to add value to their farm production. According to the American Seed Trade Association more than 3,500 varieties of soybean seed are available. The United States produces 2 million metric tons of soybean seed each year, which represents approximately 2 million acres of production.

The U.S. seed industry, with total sales of nearly $6 billion annually, is the largest seed sector in the world. Approximately 60,000 varieties of seed are currently produced or marketed in the U.S. Seed exports have grown significantly in the past 20 years, from $76 million in 1973 to about $800 million in 1999, at an average annual growth rate of 7 to 9 percent.

ORGANIC FOOD-GRADE

Organic soybean production occurs today on about 72,000 acres in the United States, with acreage remaining steady to slightly increasing. Soymilk and tofu have been the top selling products made with organic soybeans. However, there is greater interest for soy-based organic food products domestically, so future demand for soy slurry and extruded soy flour will be increasing.

Prices paid for organic food-grade soybeans are dependent on protein levels, ranging from $11 to $18 per bushel in 2003 compared to $8 to $22 per bushel in 1998. Producers pursuing organic production must not use synthetic fertilizers, synthetic pesticides or GMOs three years prior to becoming certified.

New conventional soybean varieties offered by seed companies are limited for use in this market as a result of expanded use of biotech varieties for commodity soybeans. In the next few years, new varieties with special nutritional traits are expected to be released that will increase demand for organic food-grade soybeans.

CLEAR HILUM TOFU

Soybean acreage for clear hilum, food-grade soybeans used primarily for soymilk and tofu production remains relatively stable despite a greater domestic demand for soymilk. Some clear hilum production has shifted to Ontario, Canada. In the United States, the premiums paid for clear hilum soybean production haven’t yet provided enough incentive to displace more acres of biotech varieties. Premiums range from $0.50 to $2.00, depending on soybean quality and yield potential of variety.

Some Japanese companies continue to demand the Vinton 81 soybean variety, an older variety with a 6 percent to 9 percent lower yield potential compared to current varieties. Small seed companies are currently developing new varieties that are higher yielding.

NATTO

Natto soybeans are small-sized, clear hilum soybeans with thin seed coats and high carbohydrate content. They are typically grown and shipped to Japan where they are fermented into a soybean food called natto. The fermentation process breaks down the beans' complex proteins, making them more easily digested than whole soybeans. Natto is reported to have higher levels of isoflavone than either soymilk or tofu.

There are pockets of natto production in Arkansas and North Carolina, and in Ontario, Canada. In some areas of the U.S. a problem with ‘stone beans,’ soybeans that do not readily absorb water, have discouraged Japanese buyers. Current premiums are at $0.35 to $1.25 per bushel. Depending upon variety, weather conditions, and soil type, natto soybeans generally yield from 30 to 35 bushels per acre.

HIGH SUCROSE

High sucrose soybeans provide high protein, full isoflavone content and are lower in the indigestible carbohydrates that may cause abdominal discomfort in some people. These varieties also offer an improved flavor profile that makes increased percentages of soy possible in food products.

There are 4,500 acres of high sucrose soybeans currently grown under contract in Iowa. Farmers receiving contracts to produce high sucrose soybeans are expected to deliver a high quality product. These are non-GMO soybeans and typically yield 85 percent to 90 percent as much as normal soybeans. Premiums are about $0.90 per bushel for high-sucrose soybeans.

Compared to conventional soybeans, high sucrose soybeans contain 40 percent more sucrose but 90 percent less stachyose and raffinose, which are carbohydrates that cause digestive problems. High sucrose soybeans are used to produce soymilk, beverages, baked goods, puddings, cheese and meat analogs. They are available as whole beans, full fat flour, low fat flour, or soymilk powder.

HIGH OLEIC

High oleic soybeans are genetically modified to offer both handling and nutritional advantages for manufacturers and consumers. High oleic soybeans are promoted as "heart-healthy" because the oil produced from high oleic soybeans has over 80 percent monounsaturated fat compared to 23 percent for commodity soybean oil. They are also 33 percent lower in saturated fat than regular commodity soybeans.

Several thousand acres of high oleic soybeans are currently contract grown in Iowa. Contracted acres of high oleic soybeans are being grown for industrial use in lubrication materials. The current premium for high oleic soybeans is about $.60 per bushel.

Strict regulations need to be followed from planting through harvest for identity preservation in a closed-loop system. Mandatory grower meetings cover all aspects of seed and grain handling to ensure that the high oleic soybeans do not become commingled with commodity soybeans.

HIGH PROTEIN

High protein soybeans contain protein levels that are 37 percent or greater. High protein varieties offer an improved nutritional additive in both human and livestock diets. These varieties may also qualify for the high isoflavone and food-grade value-added areas. High protein soybeans are used to produce soymilk, beverages, baked goods, puddings, cheese and meat analogs. They are available as whole beans, full fat flour, low fat flour, or soymilk powder.

Several thousand acres of high protein soybeans are currently grown throughout the Midwest states, primarily for the export market. High protein soybeans typically yield 5 percent to 6 percent lower than normal soybeans. Current premiums are at $0.35 to $1.25 per bushel.

This area of value enhanced soybean production is just getting started as seed companies screen their germplasm to select for high protein levels. Companies are developing soybean varieties with protein levels in the 45 percent to 50 percent range with minimal yield drag that could result in higher premiums in the near future.

LOW SATURATED FAT / LOW LINOLENIC

Low saturated fat soybeans contain 50 percent less saturated fat than commodity soybeans and produce oil with approximately 8 percent total saturated fats. With just one gram of saturated fat per 14-gram serving, low saturate soy oil is similar to canola oil. Zero saturated fat product label levels can be reached in formulations for salad oil blends, sauces, salad dressings and other applications when low saturate soy oil is used to replace commodity soy oil.

Approximately 11,000 acres of low saturated fat soybeans are currently being grown under contract in 2003. Low saturated fat soybeans typically yield 95 percent to 100 percent as much as normal soybeans depending on variety and growing conditions. A premium of about $.30 per bushel is offered for low saturated fat soybeans.

Low linolenic soybeans produce oil that has half the linolenic acid level of commodity soybean oil, thus reducing the need for hydrogenation. In some instances, low linolenic soybean oil can be used to replace hydrogenated oils completely. This oil is primarily being used in the industrial lubrication area, with some use in food processing.

There are currently about 2,000 contracted acres of low linolenic soybean production in Michigan. Low linolenic soybeans typically yield 90 percent to 100 percent as much as normal soybeans depending on variety and growing conditions. Price premiums are about $.35 per bushel premium for the 2003 crop of low linolenic soybeans.

Sponsor Message from BASF

The U.S. agricultural industry is at the cusp of a transformation from a public, commodity-output based business model to one driven by contractual agreements between the end user and producer for specific traits and quality that are of a specific value to the end use.

BASF recognizes the critical role the American Soybean Association (ASA) and its grower leaders play in ensuring that the U.S. soybean industry is up to that challenge. BASF is proud to partner with ASA to help educate soybean growers about the opportunities of value-added soybean production. The new market environment will compel growers to embrace a business-to-business philosophy not altogether dissimilar to that which BASF embraces today. But at the foundation of this business model, remains the importance of solid agronomics to protect both quality and quantity of value-added outputs.

BASF is dedicated to brining to market new innovations that bring incremental efficiencies to the channel and increased value to both end users and producers. The keystone of that dedication is a portfolio of crop protection products that protect your investment in – and return from – value-added soybean production. Whether raising genetically enhanced varieties for specific output traits or traditional varieties contracted for “non-GMO” branded food items, BASF recommends ProwlÒ herbicide pre-emergence followed by an early post-emergence application of RaptorÒ or PursuitÒ herbicides for effective and cost efficient protection of your value-added production system.