FARGO, N.D. — Peter Schott is working toward a day when farmers dropping off soybeans at a local elevator get more money based on the crop's energy, including “sugar” and amino acid benefits.
“We’re helping people rethink the real value of feed ingredients, like corn and soybeans,” said Schott, 42, an owner of Genesis Feed Technologies LLC of Fargo. The company was established Oct. 13, 2016, and started with the Innovate ND grant program through the North Dakota Department of Commerce. The company has two full-time employees and two contract employees in Fargo.
Schott works on the business side of the company in downtown Fargo, from the “Prairie Den” location in the Emerging Prairie non-profit group. On the technical side, partner Matthew Clark, originally from the United Kingdom, is in Kuala Lumpur, in Malaysia, and has been in the poultry swine feed industry for 40 years.
Shifting to ‘energy’
"Soybeans traditionally are traded based on price and protein," Schott said. "We take a step back and look at the other pieces of that, there’s a real economic advantage that isn’t being realized on the trading side of it, that we’re helping to find right now.”
In soybeans this is a big advantage for the U.S., and an even bigger advantage for North Dakota and surrounding states.
The North Dakota Soybean Council is using the Genesis Feed Technologies software to promote beans in several countries around the world to help customers see the value provided by soybeans from this region.
“They’ll meet boots-on-the-ground feed ingredient buyers, saying if you buy U.S. soybeans versus Argentina or Brazil, we might have a $30 per ton advantage, while you might have thought it was only a $15 a ton advantage,” Schott said. “We can show them where they’re leaving money on the table.”
There are “‘microeconomies’ in each of these regions around the world,” if all of the characteristics are added in, he said.
“Maybe in one region it’s a $5 (per ton of soybean meal) spread, and maybe in another region it’s a $25 spread, because of conditions in that area,” he said. It depends on what other ingredients are traded in that part of the world, what the price is, what the demand is and what types of animals are being fed.
Schott said there generally, is a “sugar advantage” to soybeans that are grown in this region due to the growing conditions. And that is a factor buyers looking for protein levels don't always realize.
“We can show what that sugar component does to raise that value up, to be competitive overseas," he said. “With sugar there comes energy, and energy is very valuable to animals that eat the soybeans in it.”
GFT’s software platform will take information produced by a separate but related marketing study being done by William Wilson, a NDSU agricultural economist, and research associate professor, David Bullock.
Based on buyer strategies supplied by GFT, Wilson and Bullock, plan together to define premium standards for soybeans based on energy and amino acid characteristics. This eventually could provide premium value for North Dakota and surrounding states. (A decade ago, Wilson led a similar study on wheat, defining values for falling number and quality specifications.)
The economists will look at regional buying and specific quality contracts, to determine “risk” or probability that specifications will be met. Bullock said the study could indicate some buyers may already be acquiring certain amino acids profiles in this way, which may have impacts on basis.
“If, instead of trading on protein, I would have traded on energy, would that have done on my bottom line?” Schott said.
Schott has a deep interest in improving returns for the region’s farmers. He grew up at Kulm, N.D., where he graduated high school in 1997 and went on to Concordia College, where he majored in psychology and social work. (Peter’s father, Bart Schott, is a former president of the National Corn Growers Association. Peter’s brother, Andrew, continues to operate the farm near Kulm, N.D.)
He worked for Microsoft in Fargo and moved to the Domican Republic and for five years did child and youth work. Back in the U.S. he worked with Feed Management Systems, with feed manufacturing and formulation software. After Cargill Inc., acquired FMS, and Schott worked with them for two years while running a seed business on the family farm, near Kulm, N.D. In 2013 went to work for Myriad Mobile (later “Bushel”) in Fargo, and eventually started Genesis Feed Technologies.
GFT worked with the U.S. Soybean Export Council and North Dakota Soybean Council, along with the Northern Soy Marketing LLC, based in Mankato, Minn., which essentially is a consortium of state soybean checkoff boards in North Dakota, Minnesota and South Dakota. Its income is from subscription license to their software and from consulting fees.
Schott talks with USSEC with personnel in places like Ecuador, Bangladesh, China, Columbia.
The company is also working with the United Soybean Board and some of the “more domestically-focused groups” to educate farmers and crushers on nutritional added economic values for beans with certain traits.
“We can start to do more of a grassroots push for the farmers to be aware of it, find progressive crushers that want to pay an incentive for a higher-quality ingredient because it’s going to make them more money downstream,” he said.
“Why shouldn’t some of that come back to the farmers?” Schott said. “We want that to bring that back down the supply chain to the soybeans that are being grown, using the same type of (analysis) methods, just further down the supply chain.”
The value could come back to farmers in trading standards, or contract values.
“It could be container ships with identity preserved,” he said. Changes could take place over time, but he thinks it could possibly be in the next five years.