Gillis Gets Look at Asian Corn Markets

By Jane Fyksen, Crops Editor
Thursday, February 1, 2007 6:14 PM CST

It's a global marketplace, but Asian customers of U.S. corn still want to be able to shake hands with the farmers who produce the grain they're looking to buy.

Tom Gillis recently extended to Japanese and Chinese importers on behalf of his fellow growers.

While some farmers are reluctant to make a trip to the next county for a farm meeting, this St. Croix County producer recently traveled to the other side of the world on behalf of Wisconsin's corn checkoff program and the entire U.S. corn industry.

Relatively new to a leadership role in Wisconsin's corn industry (with just two years' service behind him on the Wisconsin Corn Promotion Board), Tom has unselfishly sacrificed time he could have invested in his own operation at Roberts, to work for the good of his industry as a whole. This past September, he boarded a jet in Chicago with a handful of corn producers from other states for a grueling 14-hour flight to Tokyo, Japan. Three days later, barely recovered from jet lag, the team flew into China, to meet with top-level Chinese agribusiness people in both Beijing and Guangzhou, in southern China.

The trip was organized by the U.S. Grains Council, which is, in part, funded by state corn checkoffs, including Wisconsin's. The USGC, headquartered in Washington D.C., has 10 offices overseas, from which it reaches out to the far corners of the globe to do market development work, wooing potential customers from the arms of competing exporting nations, and creating new uses for U.S. feed grains abroad.

When he's not walking the Great Wall of China and rubbing shoulders with international businessmen and foreign-government officials, this grower farms with his older brother, Bob, a bachelor, in a family corporation. Recently, they hired their nephew, Dan Gillis, full-time. The brothers' folks, William and Beverly Gillis, are retired but living on the main farm. Tom and his wife, Cecily, and children live a mile to the north.

Cecily is a high school teacher in River Falls, working with disabled students. They have two children. Daughter Tracy is a junior at the University of Minnesota studying civil engineering. Their son, Zack, is a freshman at St. Croix Central High School (between Roberts and Hammond).

Tom, one of six siblings, is a life-long farmer, whose college days were cut short after his oldest brother fell 20 feet off a grain bin. Tom notes there's been a parlor on the farm since he was born. Following a barn fire in '69, his dad expanded the herd to 180 cows - pretty big for back then.

He and Bob quit dairying in the early '90s, after milking 240 grade Holsteins in a parlor. Labor was an issue, as was cost efficiency. Their setup was obsolete; the alternative was a major herd expansion. They decided to concentrate on cash crops instead.

Today they farm 1,300 acres of corn and soybeans. They're able to store 300,000 bushels. The brothers do some custom planting and harvesting (another 300 to 500 acres). They dry and store corn for other producers, too. "Local grain elevators have gone out of business. There's one elevator in the whole county, at Baldwin," Tom remarks.

They also do their own crop scouting and spraying. Tom doesn't feel there's "enough margin" to hire these services. For the past couple years, Tom has also been selling Pioneer seed and offering crop insurance through Pioneer to farmers in northwest Wisconsin.

While the corporation owns 1,300 acres, some of that land is in Iowa and Illinois and cash-rented out. In turn, he and Bob cash rent ground closer to home. Seventy percent of the land they farm in St. Croix County is owned. All of the land they farm is within four to five miles. Two-thirds of their acreage will be in corn this year, one-third in soybeans (their typical ratio).

Like many of their "neighbors" in northwest Wisconsin, the Gillis brothers suffered with drought last year. Tom says 100 of their rented acres are irrigated. After last year's dismal growing season, they're very seriously looking at putting 300 acres of their own under irrigation this year.

Tom and Bob have been avid no-tillers for about 25 years. Beans are entirely no-till. Since way back in '89, they've been perfecting a cropping practice with their corn that's still considered "cutting edge" - strip-till. Another hot trend, auto guidance, has made strip-till a lot easier now, remarks Tom, who farms silt loam with a gravel or sand bottom.

It's critical with strip-till to manage residue. They built their own berm-making machine prior to the availability of commercial units. As they're making the berm, they're injecting dry fertilizer down 6 to 8 inches. They don't apply any additional fertilizer in the spring. It's a necessity to make the strips in the fall, so the ground is residue free in the strip and warms up in the spring. The aim is to simulate conventional tillage in the spot where you're planting. They go between last year's planted rows.

They go with 95-day corn and a seeding rate of 34,000 and have seen "tremendous results" with Bt hybrids. They stay away from glyphosate-resistant corn, because they rely on the technology in their beans and want to avoid weed resistance problems down the road. Rootworm technology showed promise last year and Tom says they'll use it again. They've done some grid sampling and variable-rate applications.

Two years ago, their corn yielded 180 bushels across the farm. Their 10-year average is more like 155. Beans are typically in the mid-40-to-50-bushel range. Without rain last year, corn on some fields only made 40 to 60 bushels. Bean yields were just a little below normal, though, thanks to rain in August that allowed pods to fill out.

When asked what he enjoys about farming, Tom says its making his own decisions "right or wrong" and "being part of a rural community." The latter has heightened importance, as urban sprawl (because of the twin cities) has had a huge influence in his area. He's also appreciated the flexibility the business offers in terms of time-management.

Tom has done a "fair amount" of tractor pulling over the years, starting to compete when he was still in high school. He used to travel a five-state area competing in Super Stock (i.e. multiple turbos), even giving it a go at the National Farm Machinery Show at Louisville, Ky. He sums up his finishes as "a little better than average."

Though he's no longer behind the wheel, he still attends pulls as a spectator and values the "life-long friendships" he's made through tractor pulling. Today, the only tractor work he does, including complete overhauls, is "out of necessity," he quips.

As for recreation these days, he spends a lot of time on the bleachers. His son competes in football, wrestling and track; his daughter runs marathons. And, Tom notes, his son "made me take up fishing." Zack is an avid fisherman, taking after both grandpas. Only recently has he persuaded his dad to cast a line. Tom, in fact, fished in Ontario, Canada, last July.

Tom is also involved in St. Croix Central's FFA Alumni group, donating drying and storage for its "corn drive." The chapter has donated funds to Camp Courage for the mentally handicapped in Minnesota, a project that's near-and-dear to Tom. They have three semis and have also hauled grain for the project.

Typically they've hauled their own crops to terminals at the Twin Cities or Red Wing, Minn., but that's "all changed" with ethanol. ACE Ethanol at Stanley has a delivery point at Cylon, just 10 miles northeast of him, and there's another newer plant at Wheeler (Western Wisconsin Renewable Energy), in which Tom is invested. The presence of those two plants has "done everything the ethanol industry is supposed to do," he notes of prices higher than the river terminals.

Tom, who's long hauled grain to the Mississippi, says he was awestruck, in comparison, by the "astronomical" size of the ports and Panamax vessels in Asia. One ship holds two million bushels.

The objectives of the corn mission to Japan and China were different. In Japan, it was to assure this country's No. 1 customer about the reliability of the U.S. supply. Tom says Japan is worried with the demand from ethanol that there'll be enough corn for them as well. Japanese consumers still want non-GMO corn. Tom learned that industry officials "believe in the science" but non-GMO is still "consumer preference at this point" for food-use corn.

Japan doesn't grow corn, and thus depends highly on the U.S. as a supplier. Tom characterizes it as a "mature market." As for the feed industry, basically one firm imports all of the corn and distributes it to other elevators. The Japanese farmer can only buy processed feed mixes.

Raw egg is a delicacy, and partly because of that (and fear of salmonella) and partly because of bird flu, poultry in Japan is fed a highly specific diet.

The Japanese have greatly expanded their livestock industry and meat in their diet. "It's very evident the work the U.S. Grains Council has done," he says of getting countries to demand hogs and cattle by fostering meat industries and thus markets for corn.

As the price of U.S. corn rises with its increasing use for energy, it poses an opportunity to sell DDGS to Japan as a substitute. The glitch, notes Tom, is that Panamax containers aren't well-suited to DDGS.

In Japan, Tom's group met with the Feed Trade Association, an organization of grain importers, as well as the Starch and Sweeteners Industry Association, companies that produce high fructose corn syrup and starch. They toured a port terminal and feedmills.

What struck Tom about Japan was how "very neat" and "very orderly" it was and how "everything has a purpose" being "so limited on space." The work ethic is "extremely high." Their diet very "traditional," says Tom, who enjoyed the Asian foods he encountered on the trip. "My wife was real worried about that," he admits. "I'm a boring meat-and-potatoes guy."

He says the Japanese afforded the group of U.S. farmers "a lot of respect." Their assurances of adequate supply meant a lot to the high-powered Japanese businessmen.

China is a very different story. At present, that Communist country isn't buying any U.S. corn "to speak of," says Tom, whose directive on the trade trip was to assess China's role in global feed grain trade, both as an exporter and importer, and consider the potential for DDGS sales, too. Obviously with the vast number of mouths to feed, and its economy on fire, China is of major importance as a potential customer to the U.S. corn industry.

Tom is pretty excited about the opportunity he got to visit a 600-cow dairy, the Hua Xia Dairy Farm, which includes a dairy managing training center established just last year by the USGC and China Genetics. Plans are to hit 2,000 milking cows by the end of this year. The company also began marketing a branded milk product in Beijing.

China's dairy sector is growing rapidly and demand for corn can accelerate further if high quality forages are encouraged and cows become more productive. Tom notes this dairy is the first in the entire country to market cold milk. Most is UHT milk.

The cattle Tom saw were small, with considerable crossbreeding, from Australia (as China had a ban on U.S. cattle imports due to BSE).

As for China's corn production, acreage is about the same as this country's, but yields are much less - not breaking 100 bushels. The farmer population is aging and the poorest sector of their economy. Young people are leaving the countryside for better-paying jobs in town. The urban population has shifted from 20 percent of total in 1980 to nearly 42 percent by 2004, and it's still growing. This massive demographic change has fueled remarkable growth in the supermarket sector, and that'll translate into demand for a livestock industry that's more uniform and productive.

"Pollution is a huge problem in China," he says of virtually no government standards. Growth is everywhere. This northwest Wisconsin producer says out his hotel window he counted 18 giant construction cranes.

At present, China is exporting corn, but the USGC sees that vast nation as a "developing market." The U.S. has to be "ready and willing to step up to the plate" for when China makes a move toward becoming a major importer.

In Guangdong Province in southern China they met with representatives of the hog industry as well as the first private company to import corn into China. Commercial-scale swine production is a major force in the growth of feed grain demand, as hogs, raised similarly to how the U.S. does it, consume on average about twice as much feed grains as those raised under China's traditional backyard system.

China shouldn't have a problem dealing with DDGS, which are suited to the 40-foot containers of grains that industry deals with now. What's more, Tom points out that "all of the containers (of Chinese goods) coming over here, go back empty." He's hopeful they could be filled with corn and DDGS.

Tom warns that the "WTO and new farm bill" will have huge ramifications if mishandled."

Traveling in China gave Tom an appreciation of "what we have here" and "what we've accomplished under our system (of government)." He was reassured that the U.S. "is the greatest nation on earth" with its free market and democracy. Tom was, in fact, heading to Washington, D.C. with the National Corn Growers to meet with Congressmen, talk about the farm bill and the progress he's like to see on the much-needed upgrade of the locks and dams on the Mississippi.

If there was a disappointment with the trip, it's that he didn't get to visit a farm growing corn. That, however, wasn't the aim of the trip, says Tom, admitting he'd head back to Asia "tomorrow" if he could. "Maybe some day," he says. Come spring, there'll be corn to plant.

Comments »

Comment on this story

Comments will be approved within 48 hours

Name:

Email: (optional)

Comments:

Image Verification: (Case sensitive)