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Conversion Factors

Control Panel

This section provides a brief summary of the market overview and customer profile study. The following issues are addressed:

• Background of the study.
• Objectives of the study.
• Summary of the significant findings of the study.
• Approach taken to implementing the study.

A. Background

The background leading up to the development of this study included the following events.

IP Crop Infrastructure Model

The Minnesota Department of Agriculture is in the process of implementing a multi-phased, long-range strategy with regard to the creation of a comprehensive and highly synergized IP crop infrastructure model. This new IP crop infrastructure would:

• Utilize the existing infrastructure to the highest degree possible.
• Create significant synergies among the marketing, handling, shipping, and customer-focused certification programs supported by the Department.
• Respond to the unique demands of individual IP crop customers

Port Access Study

The shipping component of the IP crop infrastructure model was addressed in the Minnesota Port Access Study: Identity Preserved Crop Handling & Shipping System completed in 2000.

The study provided answers to the question:

How can the Minnesota Department of Agriculture stimulate the development of an infrastructure that will assist individual farmers, networks of farmers, and small locally owned firms in Minnesota efficiently and cost-effectively handle and ship IP crops grown in Minnesota directly to end buyers in export and non-Minnesota domestic markets.

A recommendation of the port access study was that the Department provide support for the creation of a formal shippers’ association that would become an aggressive advocate for individual farmers and small firms shipping IP crops and also provide an array of traditional and non-traditional services including:

• Arranging and purchasing cost-effective transportation and related services on behalf of its members and offer those services to its members on a non-profit basis by amassing large volumes of product from the association’s members in order to achieve negotiating power with terminal port handlers and shippers.
• Outreach, education, technical assistance, volume service contracts, consolidation of shipments, assumption of financial risk for multi-shipper contracted services, experimentation with new modes of shipment, and support services such as the development of competitive offers, preparation and presentation of documents, arranging of financing, and so forth.

Market Overview & Customer Profiles Study

This study, Minnesota Identity Preserved Agricultural Products: Market Overview & Customer Profiles, addresses two aspects of the marketing component of the IP crop infrastructure model:

• The study initiated the profiling of potential customers for the three priority Minnesota IP base crops in the four target country markets.
• The study provides an overview of four target country markets for three priority Minnesota IP base crops.

The customer profiles provide an extensive database of potential customers including marketing information on those companies that use one or more of the three priority IP base crops. The profiled customers can be divided into two targeted tiers:

• Current High-Potential Customers that are interested purchasing Minnesota IP crops direct from Minnesota growers and local suppliers.
• Future Potential Customers that use the crops and would be potential future prospects.

The profile database provides a vehicle whereby existing profiles can be expanded, new potential customers can be added, and information can be routinely updated so that the database remains a dynamic and valuable resource to the Department, growers, and local suppliers of Minnesota IP crops.

The target country market overviews cover a wide range of topics including general characteristics of the market and culture, crops used in the market, sources of crops, IP crops from field/port to end user, role of importers and distributors, major players, regulations influencing the import of IP crops, and market segments for IP crops. The overviews are intended to provide summary information on each topic that will assist the Department, growers, and local suppliers in further defining opportunities and developing marketing strategies. 

Figure
IP Crop Infrastructure Model

A comprehensive IP crop system that creates significant synergies among the marketing, handling, shipping, and customer focused certification programs supported by the MDA

B. Objectives

The objectives of this identity preserved (IP) market overview and customer profiles study were as follows:

Minnesota IP Crops

To assist the Department develop and finalize a list of Minnesota IP crops to be promoted in selected target country markets.

To prepare a summary of the production of and market for Minnesota IP crops.

Target Country Markets

To assist the Department develop and finalize a list of primary and secondary target country markets for Minnesota IP crops.

Customer Profiles

To design a system for identifying and collecting information from potential customers for Minnesota IP crops and related service organizations in the target country markets.

To collect information from and build a profile database of potential customers for Minnesota IP crops with a focus on potential customers expressing an interest in purchasing Minnesota IP crops directly from growers and local suppliers.

Overview of Target Country Markets

To prepare an overview of the food supply market for the primary target country markets.

C. Summary of Findings

The most significant findings of the study include the following.

Background

• Study implements one aspect of the marketing component of the IP Crop Infrastructure Model.

Minnesota IP Crops

• The base IP crops to be promoted are soybeans, corn, and wheat.
• A total of 31 specific IP crops were selected for promotion.

Target Country Markets

• China: Potential to be significant IP crop market in the future.
• Japan: Currently largest IP crop export market.
• Mexico: Agriculture sector developing demand for IP crops.
• United States: Largest market in world for IP crops.

Customer Profiles

• Identified and contacted select list of 1,634 potential customers for IP crops in four target markets – 742 in China, 230 in Japan, 308 in Mexico, 354 in United States.
• Completed profiles for 551 potential customers – 85 in China, 59 in Japan, 148 in Mexico, 259 in United States.
• Targeted 291 Current High-Potential Customers interested in purchasing IP crops direct from Minnesota sellers – 36 China, 41 Japan, 44 Mexico, 78 United States.
• Identified approximately 1,300 Future Potential Customers for the purchase of IP crops direct from Minnesota sellers – 640 China, 200 Japan, 200 Mexico, 240 Unites States.
• Data: Does your company purchase soybeans, corn, or wheat?
• Data: Is your company interested in purchasing IP soybeans, corn, or wheat?
• Data: Is your company interested in establishing direct buying relationships with Minnesota farmers and suppliers for the purchase of soybeans, corn, or wheat?
• Data: What specific Minnesota IP soybeans, corn, or wheat is your company interested in purchasing?
• Data: Buyer’s name, Managing Director’s name, English-Speaker’s name, products produced by company, number of employees, etc.
• Established unique marketing database for Department and Minnesota sellers – 291 targeted Current High-Potential Customers that expect to be contacted by the Department and informed about Minnesota IP crops and sellers.
• Established dynamic marketing database that can continuously be updated and expanded to include new potential customer and new target markets.

Overview of Target Country Market: China

• Soybean uses 25.8 MMT (950 MBU)  – 6.2 MMT food, 18.0 MMT oil and meal, 1.6 MMT feed and other.
• Soybean sources -- 11.0 MMT imports (5.2 MMT USA), 15.7 MMT domestic.
• Corn uses 114.0 MMT (4,500 MBU) – 25.0 MMT food, 89.0 MMT feed.
• Corn sources -- no imports, domestic 106.0 MMT, 8.0 MMT stock.
• Wheat uses 117.0 MMT (4,300 MBU) – 105.0 MMT food, 12.0 MMT feed.
• Wheat sources – 0.5 MMT imports, domestic 99.6 MMT, 16.9 MMT stock.
• GMO -- Domestic soybeans and corn are non-GMO; GMO regulation in process.
• Organic – US$13 billion retail sales.
• Developing “Superior Agricultural Products” – for domestic and export markets.
• Soybeans --ASA focusing on dehulled soybeans for crushing industry and major crushers in East and South.
• Wheat -- Millers want imported wheat for blending.
• Corn -- domestic low quality and high prices – world quality high and price low.
• Markets segments & customer profiles – crushers, millers, large and integrated feed manufacturers.

Overview of Target Country Market: Japan

• Soybean uses 5.0 MMT (180 MBU) – 1.0 MMT food, 3.7 MMT oil and meal, 0.3 MMT feed and other.
• Soybean sources – 4.9 MMT imports (3.6 MMT USA), 0.2 MMT domestic.
• Corn uses 16.0 MMT (590 MBU) – 5.0 MMT food, 11.0 MMT feed.
• Corn sources – 16.0 MMT (14.8 MMT USA), 0.0 MMT domestic.
• Wheat uses 6.1 MMT (240 MBU) – 5.2 MMT food, 0.9 MMT feed.
• Wheat sources – 5.7 MMT imports (3.1 MMT USA), 0.4 MMT domestic.
• GMO -- use 9.7 MMT (370 MBU) non-GMO – zero tolerance for unapproved GMO – consumers demand non-GMO.
• Organic – retail market US$4 billion.
• Soybeans – continue to be major IP market for non-GMO.
• Corn – face increasing competition from non-GMO Latin American suppliers.
• Wheat – USWA promoting white wheat for noodle market.
• Market segments & customer profiles – soyfoods, organic foods, crushers, feed mills, middle-size trading companies, current end customers that import.

Overview of Target Country Market: Mexico

• Soybean uses 4.3 MMT (160 MBU) – 0.0 MMT food, 4.3 MMT oil and meal, 0.0 MMT feed.
• Soybean sources – 4.2 MMT import (3.6 MMT USA), domestic 0.1 MMT.
• Corn uses 24.0 MMT (940 MBU) – 15.2 MMT food, 8.8 MMT feed.
• Corn sources – 6.0 MMT import (6.0 MMT USA), domestic 17.9 MMT.
• Wheat uses 5.6 MMT (200 MBU) – 5.4 MMT food, 0.2 MMT feed.
• Wheat sources – 3.1 MMT import (2.0 MMT USA), 3.4 MMT domestic.
• GMO – no identified preference for non-GMO – regulations in process.
• Organic – US$85 million market – supply local market and export to USA.
• Soybeans – crushers, integrated poultry producers.
• Corn – dependent on USA for corn supply – want yellow corn.
• Wheat – demand for soft red winter wheat.
• Market segments & customer profiles – crushers, integrated poultry producers, regional importers.

Overview of Target Country Market: United States

• Soybean uses 47.5 MMT (1,750 MBU)  – 1.0 MMT food, 43.0 MMT oil and meal, 3.5 MMT seed and feed.
• Soybean sources – 72.2 MMT production, 0.1 MMT imports, 26.5 MMT exports.
• Corn uses 192.5 MMT (7,600 MBU) – 27.0 MMT food, 143.9 MMT feed, 21.6 MMT industrial.
• Corn sources –239.5 MMT production, 0.4 MMT imports, 49.2 MMT exports.
• Wheat uses 36.2 MMT (1,300 MBU) – 25.7 MMT food, 4.1 MMT feed, 6.4 MMT seed and other.
• Wheat sources – 60.5 production, 2.6 MMT imports, 30.6 MMT exports.
• GMO – 196.7 MMT (7,500 MBU) – 17.6 MMT soybeans, 142.9 MMT corn, 36.2 MMT wheat.
• Organic – US$7 billion market – 0.5 MMT.
• Soybeans – soyfoods producers, integrated poultry producers, organic
• Corn – organic, feed mills, pet food
• Market segments & customer profiles– crushers, integrated poultry producers.

D. Approach to Study

The approach in implementing the study was as follows.

Minnesota IP Crops

The study was focused on the three major Minnesota crops:  soybeans, corn and wheat. Within these three major crops, 28 specific types of IP crops were identified for promotion in target country markets. In addition, three other IP crops were included.

Within the specific target country markets, certain IP crops were not promoted (e.g., organic crops were not promoted in Mexico) because it was assumed that the potential market would not be sufficient for these IP crops.

For purposes of this study, IP crops were defined as crops with defined characteristics that are traceable to their origin, segregated from similar products at the local level, marketed as identity preserved by a seller, desired by a customer, and not-co-mingled into a commodity flow at any point prior to delivery to the customer. IP crops would include crops such as non-GMO soybeans, high oil corn, and Dark Northern Spring Wheat.

Target Country Markets

The study was limited to four primary target country markets.

Customer Profiles

A working list of potential customers was developed for purposes of developing the customer profiles.

The working lists were developed from a variety of sources including the USDA, in-country association directories, in-country researches, purchased lists, extensive searches of the Internet, and others.

The database and software programs were designed and developed, and questionnaires were prepared in the various languages for faxing, emailing, or mailing to companies on the working list. In order to increase the response rate from potential customers, the questionnaires were supplemented by telephone calls to selected companies in order to obtain the desired profile information.

The extent of basic company and marketing information collected from potential customers was limited to priority items that could reasonably be requested in a two-page questionnaire. Other information items were identified for collection in future follow-up contacts.

The priority customers to be identified and profiled were defined as end users or, in deep distribution networks, end distributors of the IP crops or base commodity crops addressed in this study that purchase regular orders in container, truckload, or larger quantities.

In addition to developing the profiles of potential customers, basic profile information was also collected for selected service organizations such as USDA Foreign Agricultural Service personnel, domestic and in-country commodity organization personnel, governmental ministries, and so forth.

The subsidiaries of large U.S. grain merchandisers were not included in the focus of the profiling activity. In the U.S. target market, Minnesota-based customers were not a focus of the profiling activity.

Overview Target Country Markets

The development of the overviews for the markets was limited to information and data derived from two planned sources.

The first method for obtaining information was an extensive search of the available literature on the various topics to be addressed in the market overviews. Sources included the U.S. Department of Agriculture (USDA) and Foreign Agricultural Service (FAS), U.S. and foreign commodity and industry associations, agricultural journals and other publications, agricultural universities, extensive searches of the Internet, and others. Another method for obtaining supplemental information was conducting interviews with U.S. and in-country-based persons with expertise and knowledge regarding the various topics.

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