A burning hot new market for corn farmersby Bob Reha, Minnesota Public Radio
Farmers are always looking for new markets, new ways to make more money from their crops. For some it's exports. Others try to develop niche markets for specialty crops. Two Red River Valley farmers are hoping to increase their profit margin with a new use for an old product.
Moorhead, Minn. — Tim Hudson pushes a hand cart through his shop door, he struggles with the cart as he pushes it through the snow. The cart holds four bags of corn each bag weighs 40 pounds, not quite a bushel of corn. Hudson picks each one up and loads them into the back of an SUV.
Hudson has just sold corn to a new customer, but this corn won't be processed into food for people or animals. It will burn in a special furnace to heat a home.
Hudson got the idea to sell corn for fuel, when he bought a corn furnace to heat his shop. He discovered people are buying the furnaces, but they don't know where to buy corn. Hudson knows of only one other farmer in the Red River Valley who is selling corn for fuel. He says it's a good market to cash in on.
"I am charging more than I would get at the elevator, I charge $2.50 a bushel versus a $1.70 to a $1.90 at the local elevator," says Hudson. "I'm making more a bushel, but I'm not selling a big volume."
Hudson believes these days farmers need to take advantage of every market they can because one bad year can force a farmer out of business. Hudson's partner Jim Overby agrees.
"Basically you have to make money wherever you can, in the winter time it's hard to take on a part-time job because you have so many other things going on," says Overby. "If you can do something out of your own shop, if you can use them year round and do something that makes money, that's the name of the game."
Overby and Hudson have known each other since high school. So far business is good, they started out this winter with four customers and now have 20.
Tim Hudson wishes this winter was colder, he jokes, when the temperature goes down, he sells more corn. He's optimistic, their customer list will grow.
"I think it will increase, I really do, especially if the fossil fuel price stays up," says Hudson. "Another thing to remember is the corn price fluctuates as well, if corn someday gets to $3.00, it may not be as cost effective to burn corn."
Tim Hudson holds an empty bag under a spout attached to an auger. The bag sits on a scale, when Hudson steps on a foot pedal, corn spills into the bag.
When the scale reaches 40 pounds, he stops the machine, picks up the bag and swings it over to Jim Overby. He sets it on a trailer bed and using a machine that resembles a hand held drill, sews it shut.
The two men spent about $10,000 for scales and other equipment to bag corn. They've built a wagon to make delivers for customers who buy in larger quantities. Tim Hudson notes unlike other niche markets, there is no need to grow a special variety, corn is corn.
"When you burn it in a stove, you like to dry it down a little more than what we're required to dry it, to deliver it to the elevator,"says Hudson. "Twelve percent seems to be the optimum moisture for burning."
Hudson says it's not likely the two men will get rich or challenge the utility companies for markets. He acknowledges corn furnaces don't need much fuel.
"The average stove will burn, between 80 or 90 pounds a day," says Hudson. "One and-a-half to two bushels a day, $5.00 a day to heat the average sized home."
Hudson says there is an opportunity here to create a new market for their crop. Hudson says this year the two men are just getting started. He and Jim Overby are building a customer base, one they hope will continue to grow and become repeat customers. They see a chance to improve their bottom line, possibly by a few thousand dollars. Tim Hudson says these days, that can make the difference between staying on the farm or going broke.
- Morning Edition, 02/28/2006, 7:50 a.m.