Consumers Demanding Identity Preservation in
U.S. Grain Markets
Aziz
Elbehri
Modified-starch corn is one of
the fiber-rich grains developed in response to consumer
demand for low-carbohydrate food. This development
and others like it have led to a growing number
of specialty crops requiring either segregation
or full-scale identity preservation (IP) to differentiate
them from conventional commodities. These IP, or
differentiated, crops include products with specific
traits, like waxy corn, nongenetically engineered,
organic, or pharmaceutical crops.
Many other factors have also favored
the expansion of differentiated grains. Biotechnology
has led to innovations such as low-phytate corn,
which is high in digestible phosphorus. When fed
to hogs, it contributes to lower phosphorous pollution
from manure. Advances in industrial processing and
enzymes also play a role. The corn wet-milling industry
is increasingly able to process starches tailored
to specific industrial and food uses, creating demand
for specialty crops, such as waxy and high-amylose
corn. Cereal makers contract for variety-specific
wheat and oats with exacting milling and baking
attributes. The current expansion of ethanol production
is spurring research into new energy crops capable
of more efficient cellulose-to-ethanol conversion.
Meeting these demands requires producers not only
to change production practices but also to work
with buyers, certifiers, and others to ensure identity
preservation.
Differentiated crops often have
higher costs than generic crops to meet segregation
and transaction costs for contract compliance, such
as testing and/or third-party certification. The
cost of segregating specialty crops from conventional
commodities can be influenced by the volume shipped,
shipping method, tolerance levels for foreign materials,
testing, and documentation requirements. IP-specific
risks also contribute to higher costs. These risks
vary depending on the purity level required, and
include price discounts or rejections depending
on the type and level of foreign material in the
crop. Nongenetically engineered crops (including
organic) can be subjected to testing and run the
risk of being rejected if they were accidentally
contaminated. Pharmaceutical crops are not licensed
for food or feed use, so isolating them from the
food supply can make handling them far more costly.
Differentiated grains also command
price premiums that are affected by such factors
as the proximity of suppliers to buyers and the
cost and availability of substitutes. Price premiums
also rise or fall depending on supply conditions
for the generic commodity. The trait-specific quality
attributes of IP grains require more coordination
between growers and handlers/processors and more
sharing of information, often through contracts.
Purchasers often demand assurance of product quality
and authentication of process/product claims. Suppliers
of farm products (for example, seeds) must demonstrate
that product attributes are verifiable and show
supporting documentation. Thus, a key to IP grain
markets is the growing role of third-party services
for auditing, verification, and quality assurance.
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