WHITE PAPER - Part 2 of 6

Identity Preserved Marketing -
Key to Future Agricultural Viability



Current Situation
Today, the U.S. crop production system is geared toward commodities. In some regions, for some products, identity preservation is common. Barley used in the brewing industry, for example, is routinely identity preserved to assure strict quality standards are maintained. And the seed production industry is a very strict identity preservation system. But the majority of crop production is for the commodity market.

In looking at the current crop production system, there are two important categories of identity preservation in place today.

The largest is the non-genetically-modified organism market.
USDA surveyed growers to determine what percentage had planted GMO varieties. In the June 2000 crop report USDA reports that 25 percent of corn and 55 percent of soybeans were GMO. Producers have found that some markets will pay premiums to get grain that is certified GMO-free.

Market intelligence in grain trading channels tells us that sales of non-GMO grains will double in 2000 compared to 1999. The key for producers seeking these premiums is to confirm the identity through screening tests and preserve that identity as the grain travels to customers.
The second market is value-added crops.
While this market is smaller in volume today, it holds the larger potential for the future. Agricultural economists agree that in the long-term all grain production will be specialized to meet particular customer requirements.

Today, it’s hard to get a handle on the amount of crop production that is produced with identity preservation in mind. Many of the production arrangements are contracts between local processors and local growers so they are not centrally reported. There is no CBOT for trading identity preserved crops. Since this trend is growing, many groups are working to measure these market segments.

One recent study in Illinois found that 25 percent of all country elevators and grain terminals handled some identity preserved grain. These elevator managers were asked to estimate what percentage of their volume would be identity preserved by 2005. Answers range as high as 40 percent of corn and 45 percent of soybeans. 

Another study of Illinois crop producers showed that 18 percent of corn and soybean producers grew corn or soybeans under a value-added contract in the 1998 crop year.


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