END PRODUCT: “It boils down to three key points,” says Andrew Hoelscher, owner founder of Farm Strategy. “Know what you produce, know who needs it and know how to produce it again."
Farm Strategy encourages farmers to plant and grow wheat for quality premiums by marketing to end users.
P.J. Griekspoor 1 | Mar 16, 2018
Knowledge is power, the saying goes, but Andrew Hoelscher, owner and founder of Farm Strategy, says knowledge can also translate to better prices for wheat.
“Most farmers know something about protein premiums, and many are aware of futures market contracting,” he says. “But most farmers have no idea about milling and baking qualities beyond protein, and no knowledge of what premium markets might be available if they did know.”
He hopes Farm Strategy will be the company that helps them learn.
“It boils down to three key points,” Hoelscher says. “Know what you produce, know who needs it and know how to produce it again. It’s kind of like U.S. Premium Beef, except for wheat instead of beef.”
Farm Strategy encourages farmers to have a sample from every truckload of wheat they harvest tested for whole grain analysis, as well as a weighted aggregate tested for milling and baking qualities, and to document the results of those tests, and then store the high-quality wheat and market it directly to the end users who want the qualities they have.
He says there are varieties that are known for good milling and baking qualities, and agronomic practices that help increase the protein content such as topdressing with sulfur or nitrogen. It’s a systems approach — don’t think that just one tweak or new product will solve the problem.
“The reality is many farmers have not put in the research and effort necessary to produce those qualities, simply because they have not been rewarded for doing it," he says. "What we have developed is a commodity grain system that rewards the farmer who produces the most bushels, regardless of the quality. That has encouraged planting and managing for maximum yield."
“When it comes to wheat, the market — the millers and bakers that are the end users — hasn’t done a very good job of communicating what it wants,” Hoelscher says. “If farmers know what the demand is, they will respond when they are rewarded for it.”
THE BEST LOAF: One of the jobs of a wheat quality testing lab is running tests on the flour produced by various samples of wheat, including making dough and baking bread. The goal is a high, light loaf coming out of the oven.
The big caveat, he adds, comes at the end of that sentence “when they are rewarded for it.” Some of this reward comes in significant basis improvement, but the goal is to be rewarded for being an “ingredient supplier.”
The commodity market system in Kansas has become very efficient at moving large volumes of grain quickly from farm trucks to country elevators to big terminals, and eventually to end users. But that system does not encourage identification and segregation based on quality characteristics, in part because that would slow down the system.
“What you end up with is wheat of all different qualities mixed together in an elevator,” Hoelscher says. “The farmer doesn’t even know what he delivered, let alone get a chance to get paid more it.”
Farm Strategy’s system takes a sample from every truckload of wheat to test it for wheat quality lab characteristics such as mixing stability, absorption rates and protein levels, in order to help farmers find the end users who are looking for those characteristics.
“I guess you could say that our goal is to teach farmers to think of themselves as providers of food ingredients, not bulk grain,” he says. “Beyond that, we want to connect the producer and the end users and help them produce more of what the end user needs.”
Miller sees intriguing aspects to Farm Strategy approach
Reuben McLean, senior director of quality and regulatory at Grain Craft in Chattanooga, Tenn., says there are intriguing aspects to the concept that Hoelscher is promoting and he sees potential for wheat growers to gain significant value if they can offer a product that meets specific needs.
“The miller’s job is to source and deliver a consistent flour to the bakery day after day," he says. "This has become increasingly difficult as high-yielding, poor-quality wheat varieties have been promoted and become a large portion of the commercial hard winter wheat crop over the past several years. Marginal quality varieties, coupled with environmental conditions which favor high yields and low protein content, have magnified the problem.”
Attempting to grow wheat with a number of sought-after quality characteristics such as good flour yield, high water absorption, good mixability and dough strength, is a daunting task. A complication could come in the fact that not all end users are looking for the same characteristics, and growers who want to market characteristics would definitely need an efficient way to identify those qualities and have on-farm storage to allow for segregation and holding for the best market opportunity.
McLean says Grain Craft, like most millers, conducts new crop harvest surveys throughout the hard winter wheat growing regions. These samples are evaluated for milling and baking performance in the company’s bake lab in Wichita, Kan., utilizing the farinograph and 1 pound sponge and dough bread bake test as the standard evaluation. The quality data is used to note which areas of the hard winter wheat growing region have desirable quality, as well as identifying those areas with undesirable quality. Most years, he says, it isn’t about locating where the best wheat is as much as it is about pinpointing poor quality areas and avoiding wheat purchases from those regions.
He says Grain Craft believes in communicating information about end-use quality needs to producers. “We have published a Grain Craft Preferred Variety list for the past several years," he says. "These varieties are known to produce competitive yields, but also have better quality associated. I believe that, when presented with a choice, growers will select and grow varieties that end-users want, given agronomic performance is comparable. Our preferred list has shown good results. In 2015, only four of the top 10 varieties planted in KS were on our preferred list. Today, seven of the top 10 varieties planted in Kansas for 2018 are represented on the Grain Craft preferred list.”
The program Farm Strategy is promoting would take that approach up several notches, hinging on not just varieties but on agronomic management to enhance quality and testing to document what would be delivered.
“This marketing strategy has some positives associated with it,” he says. “In years when the commercial crop is low in protein content, with marginal bake quality, millers have to find alternate sources of wheat they can blend with the commercial crop to deliver flour, which meets the quality expectations our customers need. That usually comes from the hard red spring wheat crop, which traditionally is a higher-value crop than winter wheat. This program could be a pathway to help winter wheat farmers gain profitability and secure a market which encourages demand for more acres of winter wheat.”
He says millers might also benefit, especially those located in the wheat belt, because they could source the blending wheat they need closer to home.
Baker sees program as way to start improving commercial wheat quality
Len Heflich, a private consultant who retired from a career with Bimbo Bakeries a year and half ago, says he has been concerned about a downward trend in the baking quality characteristics of wheat over the past 20 years.
“There’s a disconnect between farmers and bakers that has resulted from a failure on the part of the end user to incentivize the production of the wheat that suits his needs,” Heflich says. “The industry has been paying to solve problem in other ways, notably by adding gluten into the recipe to make up for the lack of protein in the flour.”
He says gluten is expensive, and the U.S. does not produce enough to meet baking needs so it has to be imported from Australia and the EU.
EXPLAINING THE PROGRAM: Andrew Hoelscher explains how the Farm Strategy program can help wheat growers produce a higher quality product and reap the reward of their effort by direct marketing to the end users of their wheat.
An even bigger quality concern for bakers, he says, comes in dough strength, something that is essential to a high, light loaf of bread. The strength of dough is determined by how long it can be mixed before it starts to break down. A decade or more ago, flour from average, commercial wheat had a mixability time of 18 to 25 minutes, he says. Today, the processing time is down to as low as 6 minutes.
“Anything below 8 minutes just doesn’t work,” he said. “Bakers need at least 12 to 15 minutes of mixability to assure consistent quality.”
He sees the drop-in quality as a product of a market system that rewards farmers for producing more bushels but provides no incentive for producing wheat that makes the best-quality flour.
“You have to pay the farmer to select the right variety, to plant certified seed on good land and use good management practices such as herbicides, fungicides, and fertilizer," Heflich says. "That costs the farmer time and money and his reward has to be competitive with other crops he could grow on that best ground."
One way to ensure consistent quality, he says, has been for millers and bakers to contract with farmers to grow an identity-preserved product, a system similar to the one that was used to try and encourage more U.S. farmers to grow white wheat.
“The problem with that has been an unpredictability of sufficient supplies,” he says. “A large baker, for example, could buy about 500,000 acres of wheat a year. The supply chain needs to be more flexible.”
Heflich says he thinks the Farm Strategy plan has some attractive features that might eventually allow it to incentivize farmers to produce wheat that would improve the overall quality of the commercial blends that are available.
So far, he adds, there has not been a supply crisis for bakers, mostly because enough gluten is available, as are higher quality spring wheat that can be purchased for blending.
“We need to be proactive to do something before there’s a crisis,” he says. “But winter wheat acres keep going down because it’s not competitive economically for the farmer. That needs to change. We need to make wheat a crop farmers want to grow.”
He says that wheat is also a global crop and that, in spite of concerns about diminishing quality, U.S. wheat is still by far the best wheat in the global marketplace.
“That has resulted in strong export markets for U.S. wheat,” he says.
Farm Strategy isn’t at the point of providing higher-quality wheat on that scale at this time, Hoelscher says. Right now, Farm Strategy is a “glorified” merchandizer, connecting known quality crops and end users making the most of them. In the near future, Hoelscher says, Farm Strategy sees a significantly different market, with end users communicating demand and farmers bearing the burden of innovation.
“We do currently work within the cooperative system, but our model is based upon segregating high quality grain, the current system will have a few growing pains to properly execute what the market wants.” he says. “Right now, because of successive years of low-protein wheat, there was significant value in marketing to end users. Every year it’s enough to make farmers see the value of knowing what you have and being able to market to demand, even if it’s only better negotiation power with your local markets.”
Hoelscher says he expects there will be “bumps, trials and even some executive issues,” but he is confident the model of Farm Strategy will work to add value to innovative farmers’ wheat management decisions and practices.
Next month: Visiting with farmers about how Farm Strategy is working for them and how they plan to use the system to market their 2018 crop.