Niche Corn Opportunities

Organic Corn

Overview

According to the 2016 Certified Organic Survey, which is the most recent, between 2015 to 2016, the number of certified organic farms in the country increased 11 percent to 14,217, and the number of certified acres increased 15 percent to 5.0 million. U.S. organic corn acreage increased from 166,841 in 2015 to 213,934 in 2016. The majority of this production was used in organic feed rations and the remainder was used in food products.  More than 90% of organic corn production is used domestically.  Future growth in organic corn production will depend on increased demands from both organic livestock producers and final consumers.

Regulations

In 2002, the U.S. Department of Agriculture (USDA) established a set of national standards that food labeled "organic" must follow.  As a result, organic corn must be raised without the use of synthetic pesticides or fertilizers.  To ensure that appropriate production methods are being applied at the farm level, government-approved inspectors evaluate organic operations to validate that approved USDA organic practices are being used.  However, organic growers with less than $5,000 in sales do not need to be certified.  In addition companies that elevate, transport, or process organic grains must also be certified by the USDA.

Production

The majority of organic corn production occurs in Wisconsin, Iowa, Minnesota, Michigan and New York.  Organic corn was grown in 37 states on 213,934 acres in 2016.  Thus, corn is the second largest organic grain/seed crop after organic wheat (336,550).

In 2016, Wisconsin was the largest producer of organic corn with 27,855 acres.  Iowa ranked second with 29,684 acres, and Minnesota was third with 28,524 acres.

Note: For state-specific information on organic corn production and market opportunities in your state, please refer to the National Organic Program Web site at: www.ams.usda.gov/nop This site can connect you with local certifying agency and state-specific data.

Marketing

  • Accredited Certifying Agents, National Organic Program, Ag Marketing Service (AMS), USDA - Current listing of certification agencies.
  • Alternative Farming Systems Information Center, USDA - Identifies resources about sustainable food systems and practices, including current updates on regulatory and marketing issues.
  • Corn and Feed Grains, Economic Research Service (ERS), USDA.
  • Evaluate Your Organic Grain Marketing Opportunities, Rodale Institute.
  • Feed Outlook, ERS, USDA - Examines supply, use, prices, and trade for feed grains, including supply and demand prospects in major importing and exporting countries. Focuses on corn but also contains information on sorghum, barley, oats and hay.
  • Market Trends, Organic Trade Association.
  • Marketing Organic Grain, Appropriate Technology Transfer for Rural Areas (ATTRA), National Center for Appropriate Technology (NCAT), 2005 - Organic grains can be successfully marketed at premium prices. To achieve the best prices, growers need to understand and build relationships with buyers, find markets for most of the crops in the rotation, meet quality standards, be able to store the crop if necessary and be able to contract most of their crop to reliable buyers.
  • National Organic Grain and Feedstuffs, AMS, USDA - Includes a biweekly summary for organic grains and feedstuffs and a weekly feed and seed summary.
  • Organic Agriculture, Iowa State University - Information from production to marketing, including resources for certification compliance.
  • Organic Grain Buyers, Iowa State University - This list provides the contact information for Midwestern organic grain buyers.
  • Organic Grain Buyers, North Carolina State University - This list provides the contact information for organic grain buyers in North Carolina, South Carolina, Virginia, Pennsylvania, New York and several other states.
  • Organic Crop Exchange

Processing/Manufacturing

  • National Organic Program, AMS, USDA - Governing body for organic standards, labeling and regulations. Includes a list of state by state certifying agencies and regulatory changes.
  • Organic Trade Association - Covers current industry news, events and links related to organic food processing, production and marketing.

Production

 

Popcorn

Background

Although evidence of popcorn (Zea mays everta) seeds has been discovered in ancient ruins, the development, production, and use of popcorn is generally a product of the United States. Popcorn was produced by early Native Americans, and most of the world’s popcorn is produced in the United States. Popcorn has become one of the most popular U.S. snacks.

Early varieties of popcorn can be traced back thousands of years. North American explorers observed Native American tribes eating popcorn and using it in necklaces and headdresses. European settlers served popcorn as a breakfast cereal with milk or cream. However, popcorn did not become commercially popular until the Great Depression because it was a low priced snack. During World War II, much of the U.S. sugar supply was diverted to the war effort. Hence, candy manufacturing was greatly curtailed, and popcorn was used as a substitute by many consumers.

Demand

Domestic popcorn demand peaked in the early 1990s and has remained relatively steady since. U.S. per capita consumption averages 42 quarts of popped popcorn per year. (2017) For nearly 20 years starting in 1970, popcorn sales increased 2% to 8% annually

Domestic popcorn sales accelerated in the 1980s with the advent of microwaveable popcorn. By 1995, microwave popcorn accounted for 65% of all popcorn sales. The market share increased to 72% by 1999. More recently, consumers’ tastes appear to be shifting from popcorn to other processed snack foods. Retail sales of potato chips, nuts and seeds, and corn chips now outpace popcorn.

Nearly all of U.S. popcorn production is contracted with processors. Because of contractual arrangements and thin markets, most popcorn is produced under irrigation. More than 80% of U.S. production is consumed domestically. Although popcorn is often associated with consumption in movie theaters and at sporting events, away-from-home consumption represents only one-third of total popcorn consumption.

The Popcorn Promotion, Research, and Consumer Information Act was signed in 1996. The Act authorizes the Popcorn Board to collect assessments from those processors with annual production exceeding 4 million pounds. The assessment rate is $0.06/hundredweight. The rate may be lowered or raised but cannot exceed $0.08/hundredweight. Collected funds are used to strengthen popcorn's competitive position by maintaining, developing, and expanding popcorn markets. Most funds are used for generic promotion, the provision of consumer information, and investments in market and related research.

Production

Popcorn was produced by 1,040 farms on over 218,461 acres during 2012 (most recent data). Popcorn production totaled 785.7 million pounds. Nebraska is the top popcorn-producing state and produced 353.7 million pounds of shelled popcorn, or 44% of all popcorn production. Indiana, Illinois, and Ohio are also top producers of popcorn.

Popcorn varieties are quite different from either sweet corn or field corn varieties. White, yellow, red, and black kernel varieties are available, but only white and yellow (both small and large kernels) are grown commercially.

The major factors that influence popcorn quality are kernel moisture, expansion ratios, and popping ratios. High-quality popcorn has a moisture content of 13.5%. Expansion ratios refer to the volume of popped corn per gram of unpopped kernels. Some varieties expand to over 40 cubic centimeters per gram. In addition, kernel moisture and expansion ratio are also related to popping ratios. Popping ratios represent the proportion of kernels that actually pop during the popping process. The highest-quality popcorn has at least a 98% popping ratio.

Competitive Products

Because popcorn is a snack food, it faces substantial competition from other products. However, popcorn’s versatility and nutritional attributes helps it compete with other snacks. Popcorn is low in calories and fat, and high in carbohydrates. Weight Watchers® recommends popcorn as a snack for the weight-conscious. The American Dental Association® endorses popcorn as a sugar-free snack. The American Cancer Society® recognizes the benefits of its fiber content.
 

Within the popcorn industry, competition centers on flavoring and packaging. In the unpopped category, nearly all companies offer microwaveable packaging. This packaging form not only meets consumer convenience demands, but also allows for a variety of flavors.

Competitive Forces

The popcorn processing sector has three distinct groups: commercial processors, regional processors, and gourmet niche market processors.

The Popcorn Board was established in 1998 to help processors promote and strengthen popcorn markets both domestically and internationally. Processors that produce a minimum of four million pounds of popcorn annually are charged assessments. It is nearly impossible to estimate the number of smaller processors (those under four million pounds) that serve regional or niche markets. Through contracting agreements, many of these processors market their own branded products or contract processing capacity to other wholesale firms.

ConAgra Foods is the largest manufacturer of microwave popcorn in the world with sales in more than 30 countries and branded labels such as ACT II, Orville Redenbacher, Crunch 'n Munch and Jiffy Pop. However, ConAgra closed two popcorn plants in 2007. Within ConAgra’s Foods snack group, Vogel Popcorn is a leading producer and processor of bulk popcorn for U.S. and international markets. The company contracts approximately 50% of total annual popcorn production in the United States and has processing facilities in Iowa, Ohio and Argentina.

The American Popcorn Company produces Jolly Time popcorn brands. Jolly Time was the first branded popcorn, and it remains an industry leader by offering numerous microwaveable and traditional popcorn varieties.

Marketing

Production

 

White Corn

Background

Approximately 3% of U.S. corn production is used for human consumption annually. Of that, white corn accounts for less than 1%. However, demand for white corn is increasing as U.S. Latino populations expand and the popularity of Hispanic cuisine grows. White corn is often the preferred corn variety for use in Mexican-style and other corn-based foods including tortillas, corn flakes, corn meal, grits and hominy.    white corn chips and totillas

Demand

Domestic use of white corn has experienced modest increases of 4% to 7% over the past several years. Domestic white corn usage accounts for about one-half of U.S. production while exports account for the remainder. Domestic production is approximately 80 million bushels, and U.S. white corn exports represent about 35 million bushels.

Production

Food-grade white corn is grown in several states, but Texas and Nebraska are the leading producers. Indiana, Illinois and Iowa also produce significant quantities of white corn. An estimated 700,000 acres were planted to white corn in 2005, compared to 430,000 acres in 1990. Genetic improvements have increased white corn yields and contributed to higher production levels.

White corn must be identity-preserved to maintain its value in end-use products. Producers must minimize cross-pollen contamination from yellow corn, and in some cases, genetically-modified varieties. To maintain necessary isolation requirements, producers use isolated acreages or pay neighboring yellow corn producers to maintain a 660-feet buffer zone between yellow and neighboring white corn fields. These isolation requirements add to production costs. Other factors that increase production costs include handling requirements and low-temperature drying, which is needed to reduce kernel stress cracks.
Increased production costs must be offset by price premiums relative to yellow corn production. Premiums range from $0.30/bushel to $0.60/bushel depending on specific contract and quality standards. End-users or processors often pay growers additional premiums (as much as $0.30/bushel) for meeting various additional quality factors including #1 grade, hardness, cleanliness, kernel size and kernel color.

About one-half of U.S. white corn is produced under contract to buyers or end users. Many contracts stipulate varieties and numbers of acres planted. Several major white corn processors and numerous small processing facilities process food-grade white corn. Major white corn users and millers include PepsiCo-owned products labeled under Frito Lay, Quaker Oats and Archer Daniels Midland (ADM) Milling product lines including Azteca and Martha White. Frito Lay has a large presence in Nebraska and Illinois. llinois and Indiana provide white corn for Azteca.

Processing

Processing practices must preserve the identity of white corn from harvesting through processing. Nearly all white corn is delivered to specific delivery points where it is cleaned and dried. For several large end-users, the specified delivery point is their processing plant. Some growers choose to dry corn on their own farms, provide storage, and then deliver on demand.

Value-added Uses

The three most common uses of white corn are food, starch and paper. White corn is sold to dry-mill processors or used in alkaline cooking processes to produce a high-quality, light-colored flour. Approximately 80% of U.S. white corn is used in corn-based masa products such as tortillas, tortilla chips, corn chips, tostados and tacos.

Although white corn has limited wet-milling uses for food-grade starch, it is used to naturally brighten starch produced from other products. White corn starch is also used in paper products.

Exports

The United States exports about one-third of its white corn production. Exports grew substantially during the 1990s. Almost no white corn was exported in 1990, but about 40 million bushels (out of 100 million bushels of domestic production) were exported in 1999. However, exports declined to about 35 million bushels in 2010.

Mexico grows more white corn than yellow corn because of the country’s focus on food rather than feed production. Nonetheless, Mexico’s production usually does not meet domestic demand. Hence, Mexico has historically been the largest U.S. white corn export market. In 2009, Mexico represented 54% of the U.S. export market. Mexico imported 19 million bushels of white corn followed by Columbia (4.3 million bushels), Honduras (3 million bushels), Costa Rica (2.3 million bushels) and Japan (1.9 million bushels).

Sources

National Organic Grain and Feedstuffs, AMS, USDA.
National Organic Program, Ag Marketing Service (AMS), USDA.
Organic Agriculture, Economic Research Service (ERS), USDA.
Popcorn, Field Crops: 2012 and 2007, National Ag Statistics Service, USDA.

Popcorn, National Agricultural Library, USDA.
Popcorn Promotion, Research and Consumer Information Order, Ag Marketing Service, USDA.
The Popcorn Board
Certified Organic Survey 2016 Summary - USDA NASS

Corn, Economic Research Service (ERS), USDA.
U.S. Corn Trade, ERS, USDA 
Value-Enhanced Grains 2005/2006 Report, U.S. Grains Council, 2006.
Corn Harvest Quality Report 2017/18, U.S. Grains Council, 2018 

 

Links checked 2018.