The Supply Chain for Organic Corn & Soybeans w/ John Meuret
Interview with John Meuret, Merchandiser at J.E. Meuret Grain Company
Farmers can raise all the organic crops they want, but if they don’t have someone to sell it to, life can get quite difficult. That’s where folks like organic grain merchandiser John Meuret come in. John serves an important role in the supply chain for local farmers by purchasing organic corn and soybeans. On this week’s Organics Unpacked, John tells his story as a fourth-generation grain marketer who went from not knowing any organic farmers in his area to opening a facility specifically designed to handle organic grains.
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Learn more about J.E. Meuret Grain Company: www.jemeuretgrain.com
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TOM: This week, I interviewed John Meuret, an organic grain merchandiser for J.E. Meuret Grain Company, located in Dakota City, Nebraska. J.E. Meuret Grain Company serves an important role in the supply chain for local farmers by purchasing organic corn and soybeans. John tells his story as a fourth-generation grain marketer who went from not knowing any farmers in his vicinity who raised organic crops to buying a completely separate facility to handle the organic grains.
INTRO: Welcome to Organics Unpacked, a podcast for the business-minded organic grower — an interview podcast where we hear from the top experts in the commercial organic industry — with a focus on the business elements of organic growing both in and out of the field. You will gain insight and grow your operation. This show is brought to you ad-free by Avé Organics, a Wilbur-Ellis company. To learn more about Avé Organics, visit our program notes. In the meantime, enjoy the show.
TOM: Hello, everyone. Thanks for tuning in today. Welcome to a new episode of Organics Unpacked, a podcast where we discuss organic farming from a practical view. I’m your host, Tom Buman. Today, I’m joined by John Meuret. John is a grain merchandiser at J.E. Meuret Grain Company, and it is located in Dakota City, Nebraska. John, welcome to Organics Unpacked.
JOHN: Thanks for having me, Tom.
Organic Grain Merchandising in the Supply Chain
TOM: It’s really good to have you. Organic farming’s not much good if you don’t have a place to take your crop. Your part of the supply chain is absolutely crucial to organic farming, and so I wanted to talk to you today about your operation. But first, John, give us a feel for: how did you get into organic grain merchandising?
JOHN: Yeah, you bet. Back up about seven or eight years in the railroad, and we sit on the BNSF railroad. They’ll do a customer meeting in Dallas, Texas about once a year. And at that meeting, they said: ‘Would you like to meet a family?’ I said: ‘Sure, I’ll meet this family. What do they want?’ Well, they want somebody to supply non-GMO. So I took the meeting and met with them, and I said: ‘You bet. I can come up with non-GMO.’ And the guy said: ‘How about organic?’ And I said: ‘There’s no organic grown around us.’ My family has lived here forever, and I can think of two people that I knew did organic. And I thought: ‘I’m not even going to begin to think about filling a train with these two customers.’ So fast forward, and I learned — and that happens a lot — that I was wrong. There’s significant organic production. It was really what you alluded to: a limiting factor of making sure you had a market.
TOM: Yeah, and so you got into the business. Tell me about your family business. How long have they been in operation? If I’m a farmer, what gives you credibility that I should be coming to talk to you?
JOHN: No, it makes sense. I’m fourth generation. Our facility’s been here since 1923, and I actually sit in Brunswick, which is west of Dakota City about 90 miles. But my great-grandfather started the business. My grandpa, my dad and now I’ve got two brothers in the business and two cousins in the business, as well. So you know why the farmer wants to deal with us? I think it’s trust. Just like with anything, we’ve got a lot of history. If we tell people that they should look into organic production, I think they trust us. There’s a genuine trust there. And we know that in order to be successful, whether it’s a farmer or an elevator like us, you have to be nimble. And part of being nimble is adapting with the change. It’s my own belief — and our company’s, as well — that you need to roll with the times. If we’re going to go to organic production, we need to handle organic production. If it moves to something even more fun in 10 years, we’ll have to move right with the farmer.
Growing in the Organic Market
TOM: Okay, so, John, you’ve moved into this. You had this meeting with the family with the railroad set up for you, and then you kind of looked at the organic market. At first, you said there’s not any. Then, you realize there is. What did you do? I know you bought an elevator you set up. What was the process?
JOHN: You bet. So, in that time, when I told them there wasn’t much organic, obviously, I discovered that there’s more. And the more that I took, and the more people I talked to, the bigger it grew, and it grew really fast. Really fast. So what happened was we fast-forward that six or seven years. And suddenly, I needed to either make some expansion here at our place in Brunswick, or we needed to find another asset to help us control the volume because it became not just a side business but, really, 20 – 30% of our total business. So we had to find some unique way to maintain the integrity and the quality in a facility that was completely separate. In your world, it’s a parallel production. We did not want to have any risk of contamination as we started to grow more and more. So this facility came up in Dakota City about, oh, it might’ve been about 18 months ago now. And we worked on it for 6 – 7 months trying to secure the facility and bought it from Cargill. And we became really lucky because it was in the right spot. It had what we call shuttle access, and so it had trackage for 115 cars, which was unique because the bigger quantity for us, the cheaper we could ship that grain to the destination. That was unique for us, and it was concrete. And I know your brother was at the open house we had in the middle of August, but it’s got really slow-moving elevator legs. And it was really like it was meant for organic: so built in 1981 but having that ability to handle it slowly. And what I mean by slowly is not the unload speed, but the bucket elevator speed allows it to not break up. And that’s valuable for us, and it’s valuable for the customer on the other end.
TOM: Okay, so tell me what crops you handle in your elevator.
JOHN: You bet. Organic corn and organic soybeans.
TOM: Okay, so only those two crops, and they are the major ones.
JOHN: Only those two.
Services for Organic Growers
TOM: So, then, what services do you provide around your grain facility? I mean, do you just handle grain, or do you contract? Do you help provide technical assistance? Agronomic help?
JOHN: Great call. From the beginning, obviously, we forward-contract. So we’ll work out with growers for a couple years in advance, have those forward contracts in place, advise them, and that goes back to my honesty ‘thing.’ We’ll tell the farmer when we think it’s an honest-to-gosh good time to sell. Of course, that’s a decision they make on their own, but we can nudge them if we think it’s time. Wet grain. We can take and handle your wet corn. So we have a dryer, a grain dryer there that dries at 5,000 bushels an hour and can take corn that’s 25 and 30 moisture and take it down into a condition that will store. On the back end, once we’ve got the grain, we pay weekly. So, once a week, we kick the check out to you. Very, very simple. Pretty high tech on the way in. We’ve got some capabilities to record bill-of-lading numbers, self-assurance that we get transparency and traceability for that grain really all the way through.
TOM: So there’s a lot there, John.
JOHN: There’s a lot.
Contracting with Growers
TOM: It’s not a simple operation, it doesn’t sound like. So, first off, let’s say I’m just starting my transition period, right? Three-year transition period. But you’ll contract with me two years out for my grain?
JOHN: That’s correct, and we think part of when we started in the business and learned about it is the farmer really didn’t know where he was. He had to make sure he got a price that was going to pay him back. And ultimately, he needed to be able to take it to his banker and say: ‘I’m not nuts. Here’s a contract in hand from the fine folks at Meuret Grain, and I can make it to the finish line. And here’s the proof. Here’s the proof.’ Otherwise, his plan, really, Tom, was: ‘Well, don’t worry, Mr. Banker or Mrs. Banker. It’ll work really well. Just trust me. Keep lending me money.’ So that’s what allows us to make sure that the farmer’s not only taken care of, but he’s actually got a market that he can work more ground towards. So, in your example, you’re right. If you’re driving in the dark, and you don’t know where the cliff is, we’re going to turn the headlights on for you and make sure you’re aware that we are a market. We’ll take it five days a week, 52 weeks a year, and we make sure you’re paid for your corn. That’s important to us.
TOM: Okay. Soybeans? Same?
JOHN: Same thing on soybeans.
TOM: Okay, so I can contract my corn and soybeans out for two years with you and have a pretty good assurance of where I’m going to be. Then, all I have to do is deliver the corn.
JOHN: That’s exactly right, and we’ll buy one-month deliveries. So, if I bought October soybeans from you or corn from you, you could have all month to bring it. And each month will have its own price that will be negotiated prior.
TOM: So, as a beginning organic farmer, if I’m in that position, another thing that I have to struggle with is I probably have some commercial regular/traditional corn, and then I have organic. I don’t have facilities for all of it, and that’s where I hear I can get you to dry my corn and store my organic corn if need be.
JOHN: Correct. Yep.
TOM: Okay, and then do you charge similar to another grain elevator?
JOHN: We do. I mean, organic discounts, like everything in organic, is generally slightly higher, but it’s a reasonable dry charge. So, if your regular corn’s worth $5 and organic’s worth $10, it’s not two times as much, but it’s probably 30% higher.
Reaching Out to Organic Farmers
TOM: So what’s your operating radius around Dakota City? What do you see as your market?
JOHN: You bet. We think, really, our base market’s 150 miles and can draw soybeans as far as 200 miles. So we think it’s a really nice draw. We don’t proclaim to take a big margin. We think the more money we can give to the producer, the better off we are because, again, we want to encourage acres and transparency. We want to make it as clean and as easy for the farmer as we can.
TOM: Okay. So, obviously, one way people can learn about you is this podcast, but what are other ways that you’re reaching out to organic farmers to get your name out and understand what services you have available?
JOHN: You bet. We had that open house with the Iowa Organic Association, which was wonderful. We also think we’ll be at the MOSES conference next spring. Relatively new in the business, word of mouth seems to be the most effective for us. And we want people to have a good experience, and we want them to tell their friends because that’s the most important part. And I strive and the facility strives to get people in and out quickly, to make sure if there is a problem, we handle it up front and make sure that even if it’s a bad experience, it’s a good one by the time we’re done.
Sharing Success in the Organic Community
TOM: Okay, all right. For me, if I were a farmer, that would be comforting to know that I have a partner like you that could really help out. Do you help with anything on certification? You talked a little bit about grain marketing. Do you help with organic certification? Do you help with any agronomic services? Or are those things you don’t?
JOHN: No, we will, Tom. I mean, part of it is, as we talked earlier, our ability to visit with a lot of different producers and share those things. If it’s okay with the producer, share them back with the group to say: ‘Hey, here’s what works. Here’s what doesn’t. Here’s a certifier that we like.’ We’re not compensated by any certifiers, but we certainly will tell you if we have good experience with one that does a nice, reputable job. And same thing on the transition. If we see people using certain types of fertility or livestock manure, we will certainly let the group know that: ‘Hey, we really saw this, and we really liked it.’ Or: ‘This guy’s got the cleanest corn I’ve ever seen.’ Or: ‘This guy’s tried something, and it was a disaster.’ One thing that’s wonderful about organic, Tom, is the producers are never guarded about what they try. They’re always wide open about saying: ‘Here’s what we did, and it really worked.’ In the traditional row crop, what you’d find is the guys were really defensive. They don’t want to tell you their little secret because they might be giving away their goodie, but you don’t find that in the organic, which is nice.
TOM: Yeah, I hear that over and over, that if there is any one group of people that just wants to share what they’re doing, it’s the organic growers.
JOHN: They do, and we need more of it. I think that’s partly what the organic growers understand: it’s that their market is limited by the ability to produce it. And if we want to grow more U.S. organic grain, we need to be transparent with each other, and we need to all be on the up and up to make sure that we do it right.
Crop Insurance in the Organic Market
TOM: Yes, okay. So, John, are you — I don’t mean ‘just’ — an elevator? Do you just take in corn, or do you sell ag inputs as a part of your service?
JOHN: We don’t. We don’t sell ag inputs. The other service side we do: I mean, we do crop insurance. We do grain elevators. We run a feed mill. We raise some hogs. We raise some turkeys. We do a lot of different things, and what’s the old adage? ‘Doer of all, master of none,’ right?
JOHN: So that’s kind of us in a nutshell. No, we see this stuff really closely. Our primary business is grain elevators, like we spoke. We load regular corn, regular soybeans, export them all over the world, year round.
TOM: Okay, all right. So you’re in crop insurance. How does crop insurance play into the organic market?
JOHN: I think, for me, what it does is, if people don’t understand it, it’s just like regular crop insurance, except it has the organic price involved. So a lot of people that maybe are on the fence about transitioning stuff to organic don’t understand that. And the fact that we sell crop insurance lets us be comfortable to tell a producer: ‘It’s okay. You can transition because you’re protected, and here’s why.’ It’s the same basics that apply to a row crop guy. That’s what helps us, and I think that’s what helps the producer, as well: us understanding the programs so we can help them transition.
Connecting the Midwest to the West Coast
TOM: So I understand that the Dakota facility, you’re half-owner in, right?
JOHN: That’s correct.
TOM: And the other half is owned by?
JOHN: So it’s owned by the Pitman family in California, which is the manufacturer of Mary’s Chicken, Mary’s Free-Range Chickens. That, backing up to the beginning of our podcast, is the customer I met in Dallas, whatever it was, seven or eight years ago. As they continue to grow, we continue to grow with them. So we love having an end user involved in that facility because, to me, it screams stability. As I indicated to him eight years ago, if I find organic corn, I’ll give it to him. And as soon as he’s got his belly full, I’ll sell it to somebody else. And to date, he hasn’t had his belly full yet. So the growth has been fabulous. There are no other layers. It’s him and I and the farmer, which is a wonderful combination. And he knows, Tom, that he can’t run a facility in the Midwest, just like I know I can’t run a chicken-processing facility in California. So it’s a really nice relationship.
TOM: So he’s your single outlet. I mean, that’s pretty cool that you have an outlet already available to you.
JOHN: Yeah, it’s wonderful, and it isn’t that we can’t sell to more people. It’s that I don’t want to sell to more people. I don’t want to worry about collecting money from them. I don’t want to worry about building relationships. Until I satisfy one customer and he cries uncle, I’m going to keep sending him corn. So it’s been fun to grow together.
Setting a Price for Organic Corn
TOM: How do you set a price for organic corn? Like for #2 yellow corn, I can call up the local elevator and get a price. How do you set that when you are talking to a farmer?
JOHN: You bet. Great question. Working with our part owner in the facility, we know what organic corn is worth in, basically, California. So, if we take that price less the transportation costs from California to Nebraska, which is right where this facility is, we know what the farmer should be paid. So that would be what we would call ‘top dollar’ he can pay. That’s the number, and our ability to be efficient in the facility and our ability to ship 110 cars at a time — or 110 to 115 — is as cheap as we can possibly move that grain to California. So that’s a great question.
TOM: Okay, and how much grain do you hope to move?
JOHN: We think the facility’s got capability to move significant volumes: 20 to 30 million bushels a year. We think this next year will be 6 to 7 million bushel of corn and half-a-million bushel of organic beans, and we see nothing but upside on both of those numbers. So, if we’ve got the lights on every day, we might as well unload corn and load trains.
Why Growers Should Transition to Organic
TOM: Okay, all right. Well, John, I want to be respectful of your time. I really appreciate this opportunity to talk to you. It’s fascinating if they said: ‘Farmers can raise all the organic crops they want. If they don’t have an outlet for it similar to what they’re used to doing, it makes life a whole lot harder.’ So, certainly, you provide a really important part in the supply chain, and I appreciate your time. But you’ve got two minutes with a farmer, right? Captive two minutes. What do you want to tell him about your operation at Dakota City that he should really take into account what you do and maybe give you a call?
JOHN: I think if he’s been on the fence, if he’s been on the fence on organic, and he’s been waiting on market access, and he’s been waiting on stability, I think he has it with us because he can look at the history that we have as a family. He can look at the location of that facility, and he can rest assured that when he gets that farm transitioned to organic, we’ll be there for him. So I think that’s the main thing. And I think, back to your point on: why do I want to convert and grow organic? I think it’s all about: I want to be as efficient as I can, and I want to find a place to go.
TOM: All right. Well, with that, thanks to you, John. It’s been fascinating talking to you. I’m sure you’ll get maybe a call or two. How do people reach you if they want to get a hold of you? We’ll have it in our program notes, but how else would they reach you?
JOHN: You betcha. So you’ll see our company on the website: both Whole Grains, which is what we call this facility, and then J.E. Meuret Grain Company. Our numbers and emails are posted there, and we’d love to hear from people.
TOM: Great. Well, thanks again, John, and thanks to our listening audience for tuning into another episode of Organics Unpacked. Please tune in next time, where we will talk about another facet of organic farming.
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