Knowledge Is Profit

Man smiling

By Harry Bormann, MaxYield Cooperative® Grain Team Leader

Just because you get your check or other form of payment for your soybeans from the elevator doesn’t necessarily mean we’re your end-use customer. Elevators don’t set the price for your soybeans – supply, demand, quality and transportation economics handle that. Animal agriculture will make up the demand portion of that equation, and the more soybeans that are used as animal feed, the better the prices you’ll get from your elevator.

For example, soybeans grown in MaxYield Cooperative’s trade territory in northern Iowa tend to stay pretty close to home, at least in the early part of their journey. Trucks transported 80 percent of the soybeans that came through our elevators in 2010 to local soybean processing plants within a 50-mile radius of MaxYield’s locations.

Most of the remaining 20 percent was shipped by rail before being exported. A majority of these soybeans went through the port of New Orleans on their way to buyers in Asia.

While the locally shipped soybeans are processed into a number of products,AGP, the processor that receives most of these soybeans, relies on them to make three main products, says Greg Twist, its senior vice president. These include:

• Soybean meal, which is the main protein source in most livestock rations, particularly for hogs and poultry, because it is balanced in amino acids. AGP also further processes soybean meal into Amino Plus, an all-natural, soybean-based bypass protein used in the dairy industry.

• Soybean oil, which is used in a host of food products, from margarines to salad dressings, and is also used to cook fried foods. Soybean oil can also be used as base stock for biodiesel production, which AGP also produces.

• Soybean hulls, which offer a fiber source in livestock feeds.

My colleague, Rick Abrahamson, who serves as MaxYield’s grain accounting and compliance leader, says soy processors in this area of the country offer monetary incentives for both oil and protein content. On loads shipped to local AGP processing facilities, elevators and farmers earn a 2-cent-per-bushel oilcontent premium starting at 19.5 percent. A 3-cent protein-content premium begins at 37 percent protein.

Collecting the protein premium is difficult, though, as not only do the loads have to average at least 37 percent protein, they also must contain a minimum of 19.5 percent oil. That doesn’t happen very often. Most loads delivered in 2011 directly by area farmers and by the cooperative are earning at least the minimum oil-content premium.

Knowing your end users and their needs makes for greater profit potential and a brighter future for all of us: U.S. soybean farmers, elevators and processors, and the important animal ag sector. MaxYield Cooperative is a farmerowned agricultural cooperative with 18 locations in Iowa and one in Riga, Mich. It is headquartered in West Bend, Iowa.

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