Current prices may not completely reflect that global soybean demand is expected to rise, but ag economists suggest it is just a matter of time until they do. A growing world population and expanding middle class are forecast to increase meat and poultry consumption. That, in turn, will create the need for more high-quality U.S. soybeans.
“Growing demand here and abroad will help us achieve a price rebound,” says Bob Derr, a soybean farmer from Marshall, Wis., and United Soybean Board (USB) director. “But in order to take advantage of expanding markets, farmers must look for and grow soybeans with the higher protein and amino acid content that will benefit livestock and poultry producers.”
Poultry Looks Positive
“If soybean producers are discouraged with prices now, it won’t last,” predicts Paul Aho, president of Poultry Perspective, in Storrs, Conn. He expects prices to improve as poultry production rebuilds.
The growth rate in world chicken production dropped from 6% in 2010 to 1% in 2014, which Aho says was due partly to high feed costs. The global poultry industry consumes more than 50% of the U.S. soybean meal supply each year.
“The world economy will sputter along in 2015 and improve 2 to 3% in 2016 and 2017. As long as we see that improvement, I predict chicken production will shoot up with 3 to 4% annual growth again,” Aho contends.
He looks for poultry buyer interest to build primarily in Southeast Asia and Africa. However, lower oil prices may curb demand for U.S. chicken in the Middle East in the near term.
“Chicken will be one of the major protein sources feeding the world’s people in the future,” Aho says. “Chicken is a better converter of grain to meat than any other species and really has no religious sensitivities attached to its consumption. That is good news for U.S. soybean farmers.”
Pork Predictions
Aho says in the long run, higher soybean prices could again dampen feed demand in the pork industry. But that’s where touting the benefits of U.S. soybean quality comes in, says Greg Hanes, assistant vice president for international marketing and programs, U.S. Meat Export Federation (USMEF).
“Quality is a big deal with international pork buyers, and higher soybean quality enhances U.S. pork quality,” he says. “More of the countries purchasing U.S. pork today, such as Japan, want to know the source of the feed and the pork. We discuss feed quality with these buyers and even have them meet with U.S. soybean farmers so they can be assured of the quality.”
As with poultry, worldwide demand for U.S. pork is expected to climb the rest of the decade. Hanes says China produces half of the world’s pork but also consumes most of it. Additionally, China imports pork from the U.S., and per-capita consumption in China is projected to continue to rise.
Hanes says total U.S. pork exports in 2013 were 2.14 million metric tons (mmt). Conservatively, U.S. pork exports are expected to increase to 2.62 mmt by 2018. For every pound of U.S. pork exported, Hanes says 0.91 pounds of U.S. soybean meal are exported. For the first 10 months of 2014, he estimates about 3.75 billion pounds of soybean meal (from about 78 million bushels of soybeans) were shipped overseas as pork.
“That is significant volume. We will continue to see pork exports grow soy’s value,” he says. “When we export soybean meal as pork, we add value and create jobs. We don’t take anything away from meal exports, either. There is enough demand for both soybean meal and pork around the world, so the strong relationship between soybean and pork producers is important.”
Hanes notes that while the North American middle class will fall from 340 million people to 322 million by 2030, Asia’s middle class market will grow from 650 million to 3.23 billion in the same time period.
“That is huge growth,” he says. “USB is working with USMEF in Mexico, South Korea and Japan to build pork demand in what are three key markets for U.S. pork sales. Mexico is the biggest volume buyer of U.S. pork, while Japan is the biggest value buyer.”
In Japan, USMEF uses soy checkoff funding to work with a convenience store chain to market packaged lunches containing U.S. pork. Convenience stores in Japan commonly sell bentos, which are fresh and complete meals, for breakfast, lunch and dinner. Meals in the store cases turn over frequently throughout the day because of their popularity. Lunch bentos are promoted as containing 3 to 4 ounces of high-quality U.S. pork. Hanes says the store chain is selling half a million bentos per month, which equals about 45 metric tons of pork per month.
USMEF also works with soy checkoff funding in Japan and South Korea to support cooking instructors there who create recipes for U.S. pork to promote its quality and availability.
“U.S. pork exports do face fierce competition from Europe, Canada, Mexico and domestic production in many markets,” Hanes explains. “But the U.S. has the edge to capture market growth. U.S. producers can increase pork output more cost effectively because they have room to expand, abundant feed sources and the infrastructure.”
Evaluate Composition
Aho and Hanes are confident U.S. soybean farmers can continue to supply the quality and volume of feed needed to support the U.S. poultry and pork industries. Wisconsin farmer Derr agrees. He says the soy checkoff is currently invested in research projects to enhance soybean protein and amino acid composition, so U.S. farmers are prepared to meet demand.
“Already, as individual farmers, we can look for and plant higher-protein varieties, and continue to work with seed companies to further improve composition,” Derr says. “Yield will always be a priority in soybean variety selection, but composition will be more of a priority in the future.”
Soybean Composition Is a Priority
In addition to pork and poultry promotions around the world, the United Soybean Board (USB) invests in soybean research projects to help improve composition to meet future consumer needs. Here is a sample of the projects now underway.
▶ Purdue University is analyzing modified carbohydrate composition in U.S. soybeans. The goal is to develop soybean germplasm and varieties with decreased oligosaccharide and elevated sucrose content in maturity Groups II, III and IV. A second goal is to develop soybean germplasm and varieties with modified carbohydrate composition and other valuable meal and oil traits. The research will define a metabolizable energy value index for soybeans based on animal performance data.
▶ USDA’s Agricultural Research Service (ARS) is looking to develop high-yielding soybean cultivars and germplasm with more seed protein content and improved amino acid composition. Breeders from seven states are collaborating to better understand the underlying genetic mechanisms that control protein content and amino acid composition in soybeans, and to then use the information in applied-breeding programs across a wide range of maturity groups.
Researchers also want to break the negative relationship of protein with yield and oil. The long-term goal is to release commercial varieties with a minimum 18% oil and 36 to 38% protein. Such beans will produce soy meal with consistently greater than 48% protein.
▶ The University of Minnesota is studying precision genomics for soybean composition. The project is part of an initiative to develop soybean lines with targeted mutations that improve seed composition traits. The project uses precision genomics tools to target mutations to soybean genes involved in seed oil and protein biosynthesis.
▶ Field-trial research showcasing soybean varieties with high levels of protein that do not give up yield potential can be found at www.GrowSoybeanValue.com.
This story originally appeared in the March issue of The Progressive Farmer.