Physical and Economic Constraints to Isolation of Transgenic Grains Sub Title: Quality Management Systems

Charles Hurburgh, Faculty - Center for Crop Utilization Research; Chad Laux, Graduate Student - Agricultural and Biosystems Engineering; and Tom Miller, Vice President Operations for Grain and Agronomy, FC Cooperative Co.

Situation

Farmers Cooperative Elevator Company (FC), Farnhamville, Iowa is expanding their ISO certification to other facilities beyond those initially certified.   Two ISO audits were passed with no nonconformance, and minimal remarks.  The FC quality manual is being converted to a guideline for application of ISO 9000-2000 to the grain industry.  Charles Hurburgh is the advisor for FC in this process.  One of the graduate students, Chad Laux, is now developing a cost-benefit benchmarking process for agribusinesses to use in justifying application of quality management systems. 
 
FC will be adding their agronomy department to the ISO program starting in January 2007. Iowa State support for this process will be a joint effort of GQI and the Corn-Soybean Initiative, to which FC is a partner. The company restructured its management organization to better fit the application of the ISO standards in all their divisions.
 
Objective

Develop an ISO-9000 quality management system template for the Iowa grain handling industry.  Establish the quality control procedures necessary to support the customer demands for product traceability.
 
Activities/Output

Quality Management Systems (QMS) have great potential to expand markets and improve efficiency of food production systems.  While ISO 9000 is the most clearly recognizable QMS, industry specific systems have been used as effectively as a transition and educational process in the introduction of statistically based process controls.  The largest producer owned grain handling firm in Iowa, FC has taken the national lead in application of system based QMS for agricultural marketing and now agricultural input supply as well.
 
The ISO certification added the dimension of upper management review of performance data generated in the statistical controls.  The initial estimate of $2 profit per $1 invested in the QMS has remained, and a major study to define performance benchmarks for QMS in agriculture has begun.  
 
The company has begun an organizational restructuring of all its operations, specifically to prepare for expanding the QMS within its grain business and to its feed and input supply businesses.  Traceability has emerged as a major concern in all food markets; one of the QMS statistics is an index of traceability, to measure how precisely grain from the farm can be tracked to individual food lots sold by second and third stage processors.  Relatively simple processes have sharpened traceability beyond what most industry participants thought possible.
 
Iowa State students have done much of the developmental work for FC, within the format of internship programs.  One new position, quality manager, has been created, and a recent Iowa State graduate from the grains program is now in that role, having had an internship at FC the previous summer.
 
Impact/Outcomes:  (quotes from Tom Miller, FC Vice president of Operations)
Our quality management plan has been to date a great success and without ISU we would not be anywhere close to having this program moving in such a positive direction. We started out 4 years ago pursuing this from the standpoint of being able to IP grain after the Starlink disaster. After getting further into it we found that a program like this is an excellent people management tool. It assigns responsibility/accountability/measurability to our employees at each location. It also becomes our main training tool for our employees as well as a performance monitor for wage adjustments.
 
This has become our short term strategy and to put a value to this is hard. However we believe we are saving in insurance premiums alone $200,000 - $400,000 dollars annually because of our housekeeping and safety procedures created from this program. Our insurance company has told us our locations on this program are the best looking facilities that they insure and are looking forward to getting all our locations on the program. These saving are impossible to prove but when your insurance company believes we are running the cleanest and safest facilities; they guarantee it has to have an economic impact.
 
Our long term strategy is simple. Someday identity preserving grain will be a must from the farm gate to the railcar or end user and because of this program we will be able to offer that at of course a premium and the real gravy in the program will be realized then. While there is no way to prove this, we believe the real value to this could be up to $1.0 million caused by running our locations more efficiently, because our people know what their jobs are and make fewer mistakes because of that.
 
One more value that ISU brought to the table was what we call our train grain blend report. This report allows us to manage our grain inventories by helping us maximize our train blends on outbound product. The value to this is hard to measure as well but my guess would be a value of $250,000/year.


May 5, 2006
123 - Grain Quality Initiative
 

Page last updated: July 9, 2006
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