Published on 11/29/00

Study: Oilseed Growers Can Raise Profits

A University of Georgia study released this week shows that Georgia farmers who grow oilseeds (canola, soybeans, peanuts and cotton) can make their crops more valuable.

By building a crushing/refining facility in the state and by forming a cooperative, the study says, farmers can control the raw materials they produce all the way to the grocery shelf.

The New Way to Look at Farming

In the past, a farmer only grew and harvested crops. He sold the crops in bulk to off-farm buyers at wholesale prices. Once they left the farm, the farmer had little to do with the crops, which were then manufactured into higher-valued consumer products.

But now, the move toward globalization is smothering wholesale crop prices. So farmers should look beyond just growing and harvesting crops, said George Shumaker, an economist with the UGA Extension Service and one of the authors of the study.

Farmers should look beyond how many bushels or pounds they can produce per acre, he said. They need to envision how many bottles of oil, or how many shirts or candy bars they can make from their crops.

The New Generation Co-op

Randy Hudson, coordinator of the Emerging Crop and Technologies Initiative of the UGA College of Agricultural and Environmental Sciences, agrees.

"We're now looking at how the farmer can carry the product beyond the realm of just production and move higher up that food chain," he said.

For the past several years, farmers across the country have formed co-ops in hopes of spreading risks and making consumer products from their crops. These new-generation co-ops market their products to grocery or other retail outlets. This brings the farmer a greater dollar value, Hudson said.

The keys to forming such a co-op, he said, are an adequate processing facility and timely delivery of the products.

Georgia Could Support Oilseed Facility

The UGA study said such a facility could be built and economically supported in Georgia. The crushing-refining facility would primarily convert seeds from canola and soybeans into oils. But it could handle cotton and peanuts, too.

To get the facility up and running would cost about $56 million. However, it would add about $172 million in economic activity to the Georgia economy, the report said. Its impact would affect more than 250,000 acres of farm land. Besides the 53 jobs the facility would create directly, about 1,100 jobs would be created indirectly, mostly in rural Georgia.

Such facilities use a crushing process to extract oil from the seed. The result is actually two products: oil and meal. The meal can be used to feed livestock and chickens.

"But this is something that will have to be done by the Georgia farmers," Shumaker said.

"Agriculture is very weak, and we need a way to get more profit into farming," said Marty McLendon, a Calhoun County farmer. "We fully believe value-added products, letting the farmer put products on the grocery shelf ... is the wave of the future."

McLendon said he believes the oilseed facility has potential if growers are committed. "There is always risk," he said. "But I think we've got some direction."

Brad Haire is the former news editor with the University of Georgia College of Agricultural and Environmental Sciences.