Higher-quality products are worth more to end users
Many people are willing to pay more if it means getting a higher-quality product. As was discussed at CONNECTIONS 2014, the pork sector has been experiencing the benefits of value-added pork for nearly 30 years, and a similar system could possibly be in soy’s future as well.
Value-added soybean meal could lead to more money for soybean farmers, while giving animal ag the quality it desires. In fact, a recent soy-checkoff-funded study shows that increasing protein content by 1 percent leads to greater value per acre.
“Value is all about creating more demand; it’s critical that everyone in the chain sees value, from the farmer to the processor to the end user,” says Chris Nikkel, vice president and risk manager, oilseeds at Bunge North America, who spoke at CONNECTIONS, a recent checkoff-led, industrywide gathering to set future strategy for the U.S. soy industry.
Poultry and livestock farmers depend on high levels of protein, amino acids and digestible energy to maximize their animals’ potential and are looking for the highest-quality feed they can find.
“As a nutritionist, the most expensive nutrient in the diet of poultry is energy,” says Roy Brister, director of nutrition and feed milling with Tyson Foods, who also spoke at CONNECTIONS. “Look at soybean meal, it’s a good source of energy for chickens, but it could be better.”
One way U.S. soybean farmers can help meet the needs of their poultry and livestock customers is by planting varieties that will deliver both high protein and high yield. Find those varieties by using the checkoff’s free Soybean Quality Toolbox.
Higher Quality Worth More
Higher-protein soybeans create more demand. The checkoff just released a new study that will back that up.
According to a checkoff-funded study, if farmers increased the protein content in their soybeans by 1 percentage point, the estimated processed value (EPV) could increase an additional $7.70-$12.96 per acre, depending on the state.
Farmers in regions with higher-quality soybeans receive better prices than those in areas with lower protein content. That is because higher-quality soybeans create more demand. That brings processors more value and allows them to pay more to farmers.
“The livestock and poultry sectors are always interested in having higher protein and a better amino acid balance in soybean meal because that’s what is fed to their animals,” says Scott Singlestad, checkoff farmer-leader from Waseca, Minnesota. “They really appreciate having a constant high-quality meal supply.”
Hans Stein, professor at the University of Illinois Department of Animal Sciences, says it’s crucial for animal ag to be provided with the highest-quality soybean meal possible, especially when it comes to hogs.
“Soybean meal is by far the most important amino acid source that we have in diets fed to pigs,” Stein says.
He says there are two main reasons why soybean meal is a great source of amino acids:
- The protein in soybean meal is very easy for pigs to digest. That means that a very high percentage of the amino acids in soybeans will be absorbed by the pigs.
- The balance of the different indispensable amino acids in soybean meal is favorable for pigs compared with most other protein sources.
Example of Quality Incentive
While it is not yet common for processors to pay premiums for high-quality soybeans, there are agricultural sectors that have gone that route.
One example of this is the pork sector, which currently uses a value-added model for lean pork. The industry started using the model in the 1980s when people were cutting down on the amount of fat in their diets. Livestock farmers then learned there was a market for leaner pork that consumers would pay more for.
In 1987, the pork sector introduced “The Other White Meat” campaign with the goal of increasing consumer demand and ending pork’s reputation as a fatty protein. The successful promotion of lean pork has caused pig breeders to develop swine genetics that produce leaner carcasses.
With the benefits the pork sector has realized through quality improvements, it may be possible for soybean farmers to capture value from similar adjustments in the future. Processors and end users have shown a willingness to pay for a high-quality product.
“Having high-quality meal reduces the overall costs for livestock farmers,” Singlestad says. “It makes their job that much easier to get a maximum performance out of it.”