Our Industry: Grains - Oats

OATS

What It Is, How They're Marketed and How They're Used

It is believed oats first were grown by ancient Slavic peoples during the Bronze Age and the Iron Age. Oats were grown for grain in Europe and for animal feed in Asia Minor during the early Christian era.

In central Europe, oats have been used for centuries. Oatmeal came to be an important food in areas with cool, moist climates suitable for growing oats, particularly Scotland.

Today, oats are grown in practically every country in the world. Total world production has been about 2.5 billion bushels in recent years. The world's leading oats producer is the Commonwealth of Independent States, which far outpaces the United States, Canada, the European Community, Australia and Poland.

The United States now grows about 300 million bushels of oats annually, down dramatically from the 1.5 billion bushels grown as recently as 1955. That amounts to only about 13 to 16 percent of world production. U.S. oats are grown primarily in the Northcentral states because the oat plant requires plenty of moisture and relatively cool weather.

The United States, which was a leading exporter of oats as recently as the late 1970s, now imports between 50 million and 80 million bushels of oats each year. That's 15 to 25 percent of our domestic use.

The Many Varieties of Oats

There are four varieties of oats grown in the United States:

1. White oats, which account for most U.S. production, are grown north of the Ohio River and east of the Rocky Mountains.

2. Red oats are grown south of the Ohio River in Texas, Oklahoma and Kansas.

3. Gray oats are produced in the Pacific Northwest.

4. Black oats are grown in small amounts in various parts of the country.

The Oats Plant -- Stages of Life

Oats have a very short growing season compared to other grains. They are very well adapted to grow in cooler temperature climates having 25 or more inches of rain annually. Oats grow best in light- to medium-textured soils having a balanced supply of essential minerals.

Planting: Like wheat and rye, oats have either a spring or winter growing season:

• Red and gray oats are planted in the fall and closely parallel the growth/dormancy/growth cycle of winter wheat.

• White oats are planted in the spring and have about the same growth cycle, appearance and production practices as spring wheat.

Growing: Oat plants range in height from two to five feet. Typically, the plants grow three to five "tillers" -- the stems from which the kernels grow. A mature oats plant can produce more than 100 usable kernels.

Harvesting: Combines are used to harvest the crop, starting in late May in the southern states and finishing in August in the northern states.

Oats -- Their Journey to Market

Currently, about 55 percent of the oats grown in the United States are harvested for grain. The remaining oats acreage is used for other purposes, such as:

• grazing for cattle or sheep;

• a cover crop to protect farmland from wind and water erosion; and

• oat hay, which is used as winter fodder feed for livestock.

Of the oats harvested for grain:

• about 50 percent are fed to livestock. Oats are an excellent feed for horses, dairy cattle, breeding animals, poultry and young livestock.

• about 25 percent are used for food, seed and industrial products.

• less than 2 percent are exported to foreign customers.

• the remainder are stored for future use.

Of the crop that is sold by the farmer, most is trucked to the local country elevator. The country elevator also is where the farmer typically obtains the supplies -- such as seed, fertilizer and chemicals -- needed to grow the crop. The country elevator dries, stores and conditions the grain.

The country elevator determines the quality of the oats before cleaning, drying, storing and conditioning them. The country elevator then sells the oats to a buyer, which may be a local livestock feeder or feed miller, or an oats processing plant. Or the country elevator may sell the oats to a terminal elevator -- a large multi-million bushel grain handling facility located in such major marketing areas as Kansas City, Minneapolis, Portland, St. Louis and Toledo. The terminal elevator, in turn, stores and conditions the grain before selling and shipping it to an oats processor or export elevator, which sells the oats to an overseas customer.

When entering into a contract for oats, the buyer and seller agree on the price, quantity and quality to be delivered; the price discounts or premiums that will apply if the actual grain shipped is of a higher or lower quality than requested; and how the grain is to be shipped (by rail, barge or truck).

As oats are traded, whoever owns them faces market risk as prices rise and fall to reflect supply and demand. For this reason, oats are sometimes "hedged" in the futures market. In "hedging," a person buys or sells an equivalent quantity of grain at a future month at a set price. That protects against unexpected price changes that can trim already small profit margins.

Oats -- How They're Transformed into Useful Products

Oats used in human food and industrial products, as well as many of the oats used for animal feed, are processed.

White oats are preferred for milling, and go through several steps in the milling process:

Step 1: Oats are cleaned and separated based on diameter and length. Chaff and impurities are removed by special machines, leaving 50 to 75 percent of the original weight for milling. Oats are dried to about 5 percent moisture.

Step 2: After drying, oats are cooled and placed in tempering bins for 12 to 24 hours.

Step 3: Oats are graded into two classes -- large (1/2-inch long) and stub (shorter) -- that are milled separately.

Step 4: The hull is removed and the oats are cleaned. The remainder of the oats kernel is cut by rotary granulators for packaging. Kernels for rolled-oats production are put into a steam chamber and partially cooked, then passed through rollers where they are formed into flakes. The flakes then are cooled, weighed and packed.

Oats are high in protein and oil. Compared to wheat, oats contain one-third more protein, nearly four times more fat and less starch.

Many Good Things Come from Oats

Bran: Inner coating of the oat grain. Used in countless products, particularly baked goods.

Hull: High-energy content. A byproduct of the milling process. Used primarily in animal feeds. Also produces furfural, a chemical used to produce industrial products like:

nylon

synthetic rubber solvents

insecticides

disinfectants

resins

pharmaceuticals

preservatives

fiber sources for paper products

fuel (mixed with coal to fuel power plants)

Endosperm (Germ): Inner part of oats kernel. High in protein and fiber. Processed into human food products like:

oatmeal

granola

cookies

baby foods

oat bread

breakfast cereals

Industrial uses include:

cosmetics

bath oil

In addition, rolled oats are used as a thickener in soups, gravies and sauces, as a meat extender in meat loaf and meat patties, and in many home-cooked baked goods.

Click here to see map of "Oats Growing Areas"