Dry beans steady as commodities flip-flop
People always have to eat, Mike Beltz points out, so no matter how violently the corn or soybean markets flail around, there will always be a need for dry edible beans. And, there seem to be more and more types of beans to grow as time goes on.
Beltz grows beans in Hillsboro, N.D. He has about 1,000 acres of cropland, with about 250 acres of that in beans every year. It’s a riskier crop than corn, he says, and more challenging to grow than soybeans, but it’s a great rotation crop for his 500 acres of corn. And, the varieties he can grow are expanding every year with the market.
Corn, soybeans and sugarbeets are bigger crops in this area, but there’s a core group of edible bean growers who keep at it.
Tim Courneya, executive vice president of the Northarvest Bean Growers Association in Frazee, Minn., says prices for dry beans were strong in 2008, but may soften this year as the acreage for corn, wheat and soybeans fluctuates. Edible beans are a secondary crop in this area—his association’s approximately 3,000 active growers account for about 800,000 acres, most of it in North Dakota—compared to the government-supported commodities.
“The dry bean market is free-wheeling,” Courneya says, with a strict supply and demand backdrop. “The dry bean market has to compete for acres planted.”
Yet, dry beans are still a big factor with some farmers. Many of those 3,000 growers will go in and out of the crop depending on corn and wheat prices. At the end of 2008, there was no oversupply in the United States and demand has been strong. However, there are signs of prices weakening. Courneya notes that the price for pinto beans, the major class of dry beans for his association and in the nation, dropped drastically by the end of 2008.
Courneya explains that dry beans have become a global industry, with the United States a minor player with about 1 to 1.5 million acres grown annually. Most of Northarvest’s beans are sold within the United States, but on average about 20 percent go overseas. About 14 classes of beans are grown nationally, and Northarvest farmers grow nine of those. He says that niche classes such as blacks or small reds are solid performers, but they are still minor crops compared to pintos, navies, kidneys and great northerns. They can bring high prices if there is a shortage, but overproduction can drop prices precipitously.
“Growers still need to be sensitive to the fact of not overgrowing them,” Courneya says. Still, with stable markets and new and improved varieties coming from public and private breeding programs around the country, the minor bean classes are a solid option for growers.
Beltz grew navy, black and small red beans last year. “That may change next year,” he says, because his choices all hinge on the market. Pintos are the biggest crop in his area, with navies second, but black beans have jumped to the third spot in recent years. They are a solid crop with new varieties that grow upright and don’t have to be knifed at harvest. He calls them “flex” beans because they can be harvested with a combine with a flex head. In addition, they have a short season. He plants Eclipse blacks mid-May and harvests them the first week of September; he contracted some of his 2008 crop for 40 cents a pound. He says the Eclipse variety was developed in this region and does well for him every year.
Variety improvement is big with Beltz because he is always looking for new opportunities to grow different types of improved beans. In 2008, he grew quite a few small red beans because a new variety, Merlot, had tested well for yield. He was able to get good contracts for them, some at 40 cents, the same price he contracted his navies and blacks.
“On a larger class of beans it’s easier to know what the market is,” Beltz says of primary crops such as kidneys, pintos and navies, but it’s good to have some acreage of niche beans as well, because the market can fill up quickly with kidneys and pintos and leave a surplus. A good strategy is to have blacks and small reds to both contract and sell on the open market.
Beltz contracts no more than half of his dry bean crop, storing the rest for the end of the season or the next year, giving him flexibility and diversity in the marketplace. Prices can rise markedly based on regional production setbacks, and wet summers can stunt the crop.
The corn and soybean market is confusing right now, Beltz says, and it is uncertain what that, along with the unsteady economy, will do to the bean market. In 2008, edible beans were stable compared to corn and soy.
There are many reasons to grow dry beans, Beltz says. One good reason is that they add nutrition to the soil for a corn crop to be rotated in the following year. His rotation is usually a year of corn, a year of soy and a year of dry beans. He can also vary season length with beans, and depending on the weather in any given year, he may do well with bean production when corn has a setback.
A look at the difference between primary class beans and niche market beans shows the variety of production and market possibilities. Frank Vorderbruggen owns The Bean Mill, Inc., in Perham, Minn., a processing plant for kidney and pink beans. He says the growers he works with find beans a flexible crop because they can be rotated with potatoes, corn and alfalfa.
“The price of beans has gone up astronomically over the last two years,” Vorderbruggen says. It’s something of a mystery why this is so, but he says there is a lot of overall demand.
Vorderbruggen handles about 13,000 acres of beans per year from 40 growers and grows about 100 acres himself. He says it costs $550 to $600 per acre to grow a crop of edible beans, up from about $350 per acre in the early ’90s. The price of equipment necessary for planting and combining beans is high compared to other crops. He has a contract to grow kidney and pink beans sold to Hanover Foods in Pennsylvania and used for chili in the Wendy’s restaurant chain, as well as for school lunches all over the country. Those prices are stable for him.
Pink beans are a niche market and they bring a lower price than kidneys, but they cost less to grow, Vorderbruggen says. Pink beans are grown on nonirrigated land, and some varieties only require about 80 days to get to harvest (dark red kidneys take at least 90 days). This makes them a nice complement to other crops in the area and a good alternative to kidneys. He handles about 70 percent kidneys and 30 percent pinks.
“I would say the margins on pink beans are less than on kidney beans, though the risks are higher with kidneys,” he says. The production budget on pinks can be $200 less than on kidneys, primarily because of the irrigation differences and the lower cost of buying or leasing dryland ground.
There is a lot of uncertainty among local growers about corn prices now that the ethanol market has come into question. Some growers produce corn for local markets, such as a dog food manufacturer, Vorderbruggen says, and corn will always be a solid local crop. Corn growers will come in and out of bean production as crop dynamics change.
As for Vorderbruggen, he has a different rotation for his 100 acres of early pink beans. He grows them for one year and then grows rye for the next two years on a no-till, low-budget regimen.
Courneya says that 2009 will be an interesting year for bean growers, with some not being able to sort out acreage until March. “All of this is going to be calculated out based on what wheat, corn and soybeans have to offer,” he says. It could be an interesting ride for growers in this part of the country.
Don Dale is a freelance writer and a frequent contributor. He resides in Altadena, Calif.