Evaluating a New Non-GMO Corn Marketing Opportunity

Between the Fencerows

First look at non-GMO corn marketing offer is interesting, then laughable, then irritating!

Published on: March 26, 2014

Last week, we received a well-intentioned email from one of our seed suppliers. It pointed to a new market for some of our non-gmo corn crops.

At first glance it looked good. The offer was made by a third party to host a reverse auction. A reverse auction works exactly as you would think – start at the max bid and go down, the lowest offer wins. They were seeking 15,000 bushels of #2 yellow non-GMO corn. The delivery location was nearby.

We thought this could work.

Then we read further. The grades were indeed for #2 yellow corn; however, the discounts were anything other than standard. Obscene would be the word I would choose; 10 times normal! OUCH! (We even called to verify the decimal point was in the correct spot.)

Not only that, but then they specified 14% moisture, and wanted to discount 1% of the price for each half a point over. They neglected to consider that the standard for corn is 15% -- some still accept 15.5% at no discount. Just drying the corn the extra point shrinks the corn an additional 1.4%, not to mention the expense of drying.

They should be offering a premium of 2% for the corn that meets their moisture specs. Otherwise, we're already losing by shipping corn their way!

Next, there was a maximum bid price. That's fine, but let's be realistic: the cap they set didn't even include what is pretty much considered the standard base premium for non-gmo corn. In addition to the sketchy discount schedule, this leaves us wondering just what they are doing and if they can be trusted. We wonder how fair the grades would be; they are obviously trying to mediate the price of a premium product.

How will the March 31 USDA reports impact your bottom line? Farm Futures Senior Market Analyst Bryce Knorr and Farm Futures Senior Editor Bob Burgdorfer will discuss the reports and the spring weather outlook in a free webinar April 7 at 7 p.m. CDT. Learn more about the Farm Futures webinar.

The third party seems to have things figured out though. They hold the payment in escrow to protect both parties. I can understand that. They also noted they used the buyer's discount schedule, not their standard discounts. All that is left is to check out the out-of-state company and what ramifications there would be on using the Indiana indemnity program if something would go south during this transaction.

We will keep in touch with them for future opportunities.

All that being said, we declined to make an offer. I don't know who it is that needs this non-gmo corn, but I don't think they're going to get any under their terms. If someone else wants to sell them corn, by all means, I'll let them take the risk!