Wayne Janzen, an Okeene, Okla., farmer hopes a new feed mill scheduled to open near his operation this summer will create market alternatives to wheat, which has been his primary crop.
“A Seaboard Farms feed mill will not only provide a new market for milo producers, but will also allow grain producers to spread their risk over more than one crop,”Janzen says.
Janzen has been operating Janzen Farms with his father Gus for the past 25 years and began raising grain sorghum about five years ago. He expects to see a better return on grain sorghum this year since he won't have transportation expenses of hauling his crop to Enid, 40 miles away.
“Until now, with no ready market in the area, we had to invest in additional on-site storage facilities for milo,” he says. Since producers no longer face this initial expense, he predicts many will add grain sorghum to their cropping schedule.
Janzen initially began planting grain sorghum as a rotation crop for wheat. “Part of the advantage of rotation is additional income; another is improvement to the land. By building a feed mill in Okeene, Seaboard Farms will increase the basis of milo, as they've done in Optima, but at the same time the new market will provide a risk management tool for area grain producers. They'll no longer have to depend solely on wheat as a source of income.”
And now, even though world demand for grain sorghum has decreased over the last few years, producers in the Oklahoma Panhandle have a reliable market in their backyard — a market that consumed nearly 9 million bushels last year.
To meet that demand, 170,000 bushels per week, the Seaboard Farms feed mill in Optima purchases grain from local producers.
Currently trading at 15 cents above the historical value of basis, or local supply and demand, proves the Optima market is thriving. So far this year, Seaboard Farms is also purchasing grain sorghum at an average of 10 cents above the Chicago Board of Trade.
A reliable outlet protects grain sorghum producers from fluctuations in the traditional corn and grain markets.
“A constant demand base reduces volatility in the market,” says Matt Johnson, director of feed ingredient procurement for Seaboard Farms. Johnson said a local grain market can deviate in only two directions: “The grain can be fed locally or railed out of here for consumption.
“When that happens, sorghum — or any grain for that matter — has to compete with other grains on the world market,” Johnson says.
“Essentially, the price will have to drop and continue to drop until it's low enough to get a buyer, which isn't good for the agriculture economy. To prevent that from happening, Seaboard Farms has to pay to keep the supply local.”
When more grain sorghum stays within the local area rather than exported to other countries or other regions of the United States, the agriculture economy in the Oklahoma Panhandle benefits.
“Using more regionally produced grain to feed livestock in this area can only have a positive impact on the agriculture economy in the Panhandle,” says Shawn Lepard, executive director of Plains Resident Organization for Ag Growth (ProAg).
Lepard says livestock producers have opened new markets for producers in the area. “Ten years ago,” he says, “most local crops were sold as basic commodities. Today those crops are bought by livestock producers and converted to value-added products sold throughout the world,.”
With the success of the feed mill in Optima, Seaboard Farms decided to open another one this summer in Okeene, something area farmers like Janzen are excited about.
Although the grain sorghum is used locally, Oklahoma Panhandle farmers are still helping to produce food that is shipped around the world.
“Milo is a valuable ingredient that allows us to make a product that meets our high standards of quality,” says Gary Louis, assistant vice president of nutrition, research and development for Seaboard Farms.