HOW I MADE $812 IN THE OAT BRAN CRAZE Our writer thought she could cash in by raising the trendy grain. She had a lot to learn, about that and every other aspect of this health phenomenon.
By Penny Ward Moser REPORTER ASSOCIATE Andrew Erdman

(FORTUNE Magazine) – YOU'VE HEARD BEFORE that farming is a crazy business. Now let me tell you how crazy. I'm a transplanted farm girl living in Washington, D.C., and I can't quite get farming out of my blood. When my father died nine years ago, he left me a 26-acre corner of the family land near Shabbona, Illinois, 75 miles west of Chicago. I visit frequently. Last year it was mostly to commiserate with my mother and sister about the drought, which kept the corn knee high in July when it should have stood taller than I am. This year I got the bright idea of cashing in on a consumer craze. So in April I headed back to Illinois to sow some seeds myself. My choice of crops: Oats.

Traditionally good as animal feed or a breakfast that tasted like wallpaper paste, oats had suddenly become the latest diet fad, a way to battle killer cholesterol. And just as suddenly America ran out of them. Overshadowed by more lucrative corn, soybeans, and wheat, which get more federal support, last year's oat crop was about a fifth of the 1960 harvest and the smallest in 112 years. Even Quaker Oats found itself short, importing the grain, then running its processing plants around the clock. Says company spokesman Ron Bottrell: ''What happened to oats was serendipitous, a phenomenon. No one could have predicted all the hot buttons that were pushed at once.'' No science to how I found this out. My husband came home from our Washington supermarket one day last fall and announced incredulously: ''They were out of oatmeal. All they had was lime flavor.'' When I went to the store myself, I was astounded: There they all were, yuppies in Izod shirts or Fila joggers, reading cereal boxes as if they were bodice rippers. The only oatmeal left was apple-cinnamon in a green box (my husband had thought it was lime because he didn't have his glasses). Like any good consumer in a frenzy, I bought it. What started the craze was a California medical writer, Robert E. Kowalski, whose book The 8-Week Cholesterol Cure was published in 1987. The cure's magic bullet: oat bran. The book climbed onto the best-seller list and sits there still. Then, the following spring, JAMA, the journal of the American Medical Association, carried a report on the virtues of reducing cholesterol through diet, including oat bran. In a flash grocers across the land heard the nonstop patter of feet in the cereal aisle. After the boxes labeled oat bran disappeared, oatmeal, which is about 40% bran, became scarce. Sales of oat cereal were up an estimated 900% last year. Americans will eat about seven pounds of oats per capita this year, up from less than four before the furor. The industry expects that number to go to ten by 1991. All of which explains why I was bouncing across a quarter mile of chilly prairie in a 50-year-old wooden seed wagon when the wind stopped blowing last spring. A friend and I dumped 76-pound bags of Certified Seed Oats -- 22 bags in all -- into a big funnel. The oats would hit a rotor blade and go skittering across the ground. We later snuggled them into the dirt with a 64- blade disk. My decision on a crop was a lot more reasoned than my purchase of that apple-cinnamon stuff. In 1988 my mom and sister had harvested a paltry yield of corn and soybeans, both late-season crops, off the parched earth. No one was sure 1989 would be better. Oats are an early spring crop, one that can make use of moisture from melted snow. They're easy to grow and, of personal importance to me, require no pesticides and make good wildlife habitat. Last year at harvest they'd gone for as much as $4.25 a bushel. For the first time in history, they gave corn and soybeans a run for the money. WHEN I CONSIDERED that oat bran at the local health food store was selling for $1.99 for 14 ounces, I calculated that meant oats were worth about $79.60 a bushel. Now if we oat farmers were to get even 10% of the pie (farmers generally get a lot less than that on grain), my friend Joe at the Shabbona grain elevator would be handing over $7.96 a bushel for my oats. That seemed a little far-fetched, but still, I didn't see how I could lose. If my urban neighbors wanted horse feed, I'd grow it for them. Preparing for my career as an oat producer, I bought books and read studies. I learned that oat bran, more than corn or wheat bran, contains soluble fibers that in turn contain something called beta-glucan. Nobody knows exactly how that substance works. But a friend of mine, a nutrition instructor, gave me an approximate explanation: You eat. Cholesterol goes squirting from your liver into your gallbladder and then to the small intestine. There it breaks down fats. The cholesterol changes form and some of it gets back into the bloodstream, clogging up your arteries. You eat oat bran. Cholesterol becomes very attached -- literally -- to it in your gut. ''I like to think of it as cholesterol passengers running to get on oat bran buses,'' my friend says. Then buses and passengers all move quickly from the body. Your liver has to grab more cholesterol out of your bloodstream. Your arteries dance for joy. Now a student of oat bran, I became devoted to it. My cholesterol wasn't high, but if I was going to jog through city smog every day, I might as well eat right too. I bought some oat bran cookies, then found that each cookie contains only a half gram of oat bran. I'd have to eat 112 of them a day to get the daily dose suggested by an American Medical Association study. So I ate bran like a Marine: two-thirds of a cup each morning, straight up with a skim milk back.

I also made another discovery: In all the hooha about the grain, insufficient attention has been paid to the ticklish matter of just what constitutes oat bran. The bran is only about 40% of the grain, which is technically called a groat. A groat is an oat without its hull. The hulls, removed and sold separately to the furfural industry, go into the making of golf balls, potato-chip bags, roller-skate wheels and Hula-Hoops. The bran is found in the outer third of the groat. Imagine my surprise when the pricey oat bran from my health food store ($1.99 for 14 ounces) turned out not to be just pure oat bran, but oat bran with much of the less precious center of the oat -- the flour -- left in. ''It isn't what we would call oat bran,'' says Jim Mills, president of the American Oat Association, an Iowa-based organization of growers and millers. The definition of oat bran has become a Washington issue. So much so that a technical committee of the American Association of Cereal Chemists is exploring the establishment of a strict definition that could be used for regulatory purposes. ''We don't want oat bran to become another granola,'' explains Bill Lapp, an economist with Omaha-based miller ConAgra. ''The granola craze got to the point where you could throw anything in with anything and call it granola.'' Nor is making oat bran a simple proposition. Mills's description of the elaborate milling process that goes into extracting the bran from the whole grain nixed my fantasy of producing the stuff at home in a blender. No, my role, I realized, was confined to the two ends of the process: ultimate consumer and originator of the agricultural raw material. The prospects for my acreage were looking ever better, I thought. I didn't fret over a U.S. Department of Agriculture prediction in late February that 1989 oats at harvest would fetch $2.70 a bushel. I figured the bureaucrats were wrong. There was so much I didn't know. I didn't know that out in the upper Midwest, Quaker was blitzing the radio waves, beseeching farmers to plant oats. I didn't know it was going to rain copiously. My sister, who gets to farm half my land in return for her labor and machinery, eyed my oats project with suspicion; she planted corn on her half. The expenses for my 13 acres mounted quickly: fertilizer, $380.50; seed, $207; 100 pounds of Hawkeye alfalfa and 50 pounds of mammoth clover (sowed with the oats so the ground doesn't get naked and blow to Indiana after harvest), $262.50; land taxes, $286. So right off I was $1,136 in the hole. I was cheered a little when I saw a pair of Hungarian partridges in a clump of early spring weeds near my field. Even if I lost my shirt, they'd have a swell place to nest.

My oats grew. So did everyone else's -- enough to produce 420 million bushels, 92% more than in 1988. And so each day back in the city I'd check the < Wall Street Journal for commodity prices. And my sister would summarize the growing season this way: ''Your oats are doing great. The price falls every day.'' Indeed, as my friend Gene Larson pulled his big green harvester into the field, my oats were worth $1.45 up at the Shabbona grain elevator. Quaker would have paid me $1.80, but trucking fees to Cedar Rapids made it a wash. Besides, the elevator in Shabbona gives you free coffee, and manager Joe Suddeth said I had about the best oats he'd seen this year. I WAS PROUD. My sister and I had squeezed from the ground 103 bushels an acre, 2 1/2 times the national yield, enough to qualify me for a Quaker Oats Improvement Scholarship had I only been in high school. I had 1,339 bushels. At $1.45, I took in $1,941.55. I sold the straw -- 975 bales for 30 cents a bale -- for another $292.50. Deducting the $1,136 planting cost plus $286 in harvesting fees, I'd made $812.05 on my oats. Before taxes. Just before I left Shabbona, I carried a one-pound box of oat cereal from the grocery store into the grain elevator. It had cost me $2.79. At this rate I figured that my profit represented less than 1% of the retail price. ''Joe,'' I said, ''something's wrong.'' ''Nothing's wrong,'' another farmer said, helping himself to the free coffee. ''That's just farming. If you don't grow any of something, it's worth a fortune. If you've got a lot of it, it's not.'' Back home in the city, the oat bran displays now all but blocked the door of my health food store. The makers of Wonder Bread had a new baby -- Oatmeal Goodness. The Washington Post had an oat bran watch in its food section. I went to a gourmet shop that said it had oat bran fettuccine. It was out. I bought oat bran pretzels instead. The next week I happened upon a five-ounce bag of whole oats selling for $3. You were to grow them indoors as snacks for your cat. While oats plummeted further to $1.15 a bushel, I hoped that Hungarian partridges across the Midwest had nested successfully. And my cholesterol has dropped 32 points.