Food Staple: Marubeni’s Columbia Grain Becomes Pillar for Japan’s U.S. Grain Imports
By James Simms
GRAND FORKS, North Dakota – “Farm to table” sounds simple enough.
Imagine a chef or consumer shopping at their local farmers’ market for produce grown nearby to use in cooking that night’s dinner.
But in this case of “farm to table,” it’s a bit complicated. Okay, it’s much more complicated – to ensure that Japan has a secure and stable, year-round supply of grain for people to eat and for livestock to consume.
Imagine thousands of kilometers spanning the Pacific and nearly half a continent, hundreds to thousands of people and a tightly choreographed undertaking that encompasses forecasting, planting and harvesting, procuring and processing, and testing and transporting, all in a safe and timely manner.
Playing a central role in this global endeavor is Portland, Oregon-based Columbia Grain International (CGI), a wholly owned subsidiary of Japanese trading giant Marubeni. One of the largest suppliers of corn and soybeans to the Pacific Northwest export market, Columbia Grain, at first, just purchased grain from farmers and marketed it but today also provides agronomy services and inputs like fertilizer and seed to them. The firm also has a nearly 46% stake in the operator of export terminals in Portland and Kalama, Washington, Pacificor.
“We have our own supply chain. So, we can literally go ‘farm to table’ because of the fact that we do have grain elevators across our footprint” in the upper Midwest and Northwest, says Columbia Grain CEO Jeff Van Pevenage, a 34-year company veteran. “Our job is to: Create markets or make markets for the farmers; give them reason to grow the crops they're growing; provide places for them to deliver; manage the logistics; and get it to the end users of the world.”
Indeed, Tokyo-based Marubeni, through these various relationships, has become a key importer of U.S. grain, namely wheat, corn and soybeans, into Japan based on annual tonnage – with a 40% to 50% market share for wheat and nearly 60% share for corn, CGI grain trader Tomotaro Watanabe says.
“The Marubeni group works to provide a stable supply of food. Each company plays different roles: CGI originates inland U.S. grain cargoes; Pacificor has the terminal and is the exporter; and Marubeni manages purchasing [from CGI and others], [wholesale] sales, and the land and sea logistics,” he says.
For Japan, a stable grain supply – even during disruptions like wars and pandemics – is not only critical because of the demand from households, noodle shops, food companies and livestock ranchers but also because the nation’s grain self-sufficiency is only a fraction of other industrial countries.
For example, by tons consumed, grain self-sufficiency is only 29% (62% in Italy and 73% in U.K), ranking it No. 32 out of 38 OECD countries, according to the latest figures from Japan’s agricultural ministry. For animal feed, it’s 26%.
“Contingencies inevitably occur, but we’re not forced to be in a position to buy from other companies [at a higher cost] because we have our own origination. Our strength lies in our ability to meet demand needs stably by using our over 50 [grain elevator] locations,” Watanabe says. “We are the only Japanese trading company that focuses on the U.S. inland cargo market. Working together, we can achieve a stable supply.”
One-Stop Relationships with Farmers
When Columbia Grain first started nearly five decades ago, it just traded grain and had only three elevators buying grain from farmers. Over the years, it expanded organically and through acquisitions into a one-stop company for growers.
To help them with their crops (and build relationships), Columbia Grain provides agronomy advice, including what grains to focus on based on what was previously planted and market conditions, and variable-rate planting. Using stacked satellite imagery showing yields over time, farmers can tailor fertilizer application and planting to maximize output, for instance, says Cole LaValley, an agronomy salesperson based at the Arvilla grain elevator.
“Variable rating is a big, big factor. That helps reduce or can help reduce costs and reduce waste of our inputs,” he says, noting that there can be a half-dozen or more soil types in a plot.
“A lot of the time, if we’re giving guys consulting advice, they're giving us their business,” he says. “Our agronomy business bounces off our grain [buying] business and our grain business bounces off our agronomy business. So, we can establish good relationships.”
Hunter Davis, a grain buyer at Columbia Grain’s elevator in the town of New Rockford, echoes that sentiment about ties.
He provides farmers with market information and insights on how to sell their grain to maximize their profitability, including explaining and offering several different types of grain purchasing contracts. Much of the time, Davis says, his customers use a 50-50 mix of cash and basis contracts. The former is based on the current market price, and the latter locks in a minimum price, yet enables potential upside gains based on the price of grain futures, and even offers partial prepayment before delivery to help the cash flow of growers.
“Establishing, maintaining and improving those business and personal relationships with our farmers is extremely important to get a competitive edge over the other elevators” when buying grain, he says.
“Relationships and service – those are probably the biggest differentiators between us and our competition,” says Sergio Hernandez, Columbia Grain’s assistant vice president for North Dakota and Nebraska.
Those efforts appear to be paying off.
Terry Petsinger, a third-generation North Dakota farmer running a mid-size farm, says that some 95% of his 7,000-acre (2,833 hectares) operation’s crops go to Columbia Grain, which he has worked with for nearly two decades, and that he buys inputs like seed and fertilizer from it and uses its agronomy services. “They have excellent service” and “anything that we need to grow a crop,” he says under a wintry overcast sky during a break from driving a semi-trailer truck to haul harvested corn to a Columbia Grain elevator. “Columbia Grain is typically the leader of the markets.”
Grain’s Long Journey
Fifteen minutes before opening at 9 A.M., during the peak of harvest season in October, trucks each loaded with 20 tons of corn are already lined up at Columbia Grain’s elevator in New Rockford. Scale room attendant John Mullikin, in between chatting with his first customer of the day standing at the counter, explains the grain intake process.
First, a remotely-controlled probe takes grain samples from the trailers, with the attendant typing in the truck’s number and farmer’s name into a computer, and they are pneumatically sent to the scale room for testing. In the case of corn, a tester does the quality checks, including for water content and foreign matter, like stalks. Wheat may have a half dozen plus points assessed. These checks ensure quality and determine the price paid.
The truck then drives to the scale and its overall weight noted. After that, the trailer unloads from underneath into a pit, where a conveyor moves the grain to the elevator or an open-air pile. To get the actual grain’s weight, the empty truck is put on the scale again, taking the difference between the two weights.
“There’re a lot of steps,” he says, noting over 300 trucks handled on peak days that month.
From Columbia Grain’s inland elevators, the grain is mainly shipped via 110-car trains, with some by river barge or truck, to Pacificor’s export terminals, tested again to see if shipping affected the quality, checked by U.S. inspectors and then loaded onto ships.
After about a two-week cruise to one of three facilities in western Japan owned by Fukuoka-based Pacific Grain Terminal, which Marubeni has a nearly 80% stake, the grain is tested by the company and government and offloaded. It’s then transferred for processing into flour, oil and animal feed, including at some plants directly linked by conveyer belt, or to other parts of the country by truck and coastal vessels, or stored as needed.
Petsinger, the farmer, may not know all the ins-and-outs of how the grain gets to his customers but appreciates them nonetheless.
“When we see other countries buying our products, that's telling us that we are doing a good job,” he says. “I'm happy with that.”
All information contained in this article is based on interviews conducted in October 2024.
