Soy Checkoff Capitalizes On Global Demand For Soy Through Continuous Improvement

 

 

Times are changing in the soybean industry. No longer is it enough to simply provide the most soybeans.

 

The United Soybean Board (USB) has turned its attention to building preference for U.S. soybeans by focusing on producing sustainable, exceptional meal and oil that meet end-users’ demands.

 

This priority has USB positioned to re-commoditize soy by looking for innovative solutions to improve and create markets for U.S. soybean meal and oil. To show its commitment to forward thinking, this message is a part of USB’s overall vision: U.S. soy drives soybean innovation beyond the bushel.

 

“We are looking beyond just bushel gains and into new ways to capture value on behalf of our farmers,” says USB Director from North Dakota, Jared Hagert. “If we are going to improve our soybeans and growing practices, we have to make sure that the market values our product and the solutions we provide to our end users.”

 

USB capitalizes on global demand for soy by making sure end users prefer U.S. soy over the competition.

 

”The checkoff strives to continue making U.S. soybeans the preferred soybeans globally,” says Hagert.

 

 

Across industries, perhaps especially in agriculture, every dollar counts.

 

So where does profit come from in the soy value chain? Farmers, elevators, processors and end users capture value from several factors.

 

Soybeans are primarily made of meal and oil. Bruce Weber, director of soybean risk management at CHS, Inc., says soybeans are highly valued as a meal product.

 

“Oil uses are important to product value,” says Weber. “But soybean meal is still what drives profitability for farmers and processing plants.”

 

And farmers are seeing a shift in the value proposition – to include more than moisture, weight or even crude protein – that could increase demand and benefit the entire soy value chain.

 

Buyers for animal rations can be price-sensitive, but meal-purchase decisions are increasingly determined by nutritional characteristics. For poultry and swine, soybean meal’s digestible amino acid profile, among other factors, contributes to value.

 

“If the soybean meal we feed is not the proper protein or lysine level, our sows don’t perform as well feeding their piglets,” says Terry O’Neel, a hog farmer in Nebraska. “If our sows can’t feed their piglets, our pigs won’t grow as fast or develop as much lean pork – they won’t reach their genetic potential.”

 

Nutritionists and buyers alike are drawn to meal that has consistent quality and composition. They need to be assured of the product they are getting and how their animals will perform.

 

To meet these end-use customer demands, farmers are investing in building the compositional quality of soybeans, including meal, through the soy checkoff. Since profits from soybeans are driven by meal sales for both processors and farmers, their investment offers a profit opportunity for crushers as well.

 

Most processors do not yet pay for soybeans based on component value, so many farmers remain focused on yield.

 

But as end users continue to communicate their desire for specific aspects of U.S. soy’s exceptional composition, processors will have the opportunity to capture more value from soybeans. Working directly with supplier elevators and farmers to ensure that every link in the chain meets customer needs could mean more profit opportunities across the industry.

 

 

While it is not common yet, there are some processors rewarding farmers for higher-quality protein and oil. In an effort to raise the quality of the soybeans in their area, one of these processors is South Dakota Soybean Processors.

 

Based out of Volga, South Dakota, this practice, through its ValueTrak program, not only brings more value to the farmers, but also allows South Dakota Soybean Processors to provide a higher-quality product to their customers.

 

Kari VanderWal, soybean procurement manager at South Dakota Soybean Processors, discusses the history and results of component-based pricing she has witnessed for almost two decades.

 

 

A. We don’t just pay based on oil or protein content anymore. We switched our program to an estimated processing value (EPV), which combines the value of the soybean meal, oil and hulls. Now it’s the top 25 percent each quarter that have the highest EPV that receive a value-added check for those higher-quality soybeans. We call this the ValueTrak program.

 

 

A. The overall goal of the ValueTrak program is to improve soybean quality in the Northern growing regions of the U.S. through careful variety selection made by the producer. This allows us to be competitive in the soybean meal market by offering a higher-protein meal.

 

 

A. Oil and protein in the soybean are also influenced by the growing season. However, the varieties that have higher oil and protein should always have higher oil and protein than the poorer quality soybeans in good years and poorer years. If we look at a 10-year average for our area, we have seen crude oil increase.

 

 

Making a great U.S. soy product even more valuable serves the needs of customers. Deploying the latest near-infrared reflectance (NIR) technology can enable protein and oil improvements.

 

Accurate and consistent measurement of key components is necessary to evaluate what’s inside the soybean and to assess the true value it offers the end user. By accurately assessing the levels of protein and oil, a baseline for improvement can be set through methods like plant breeding and genetic selection.

 

Of course, evaluating protein and oil is only the beginning.

 

“Providing an instrument to measure grain at the farm or elevator is not new, but until recently, getting the readings to consistently align across the supply chain has been a challenge,” says Tim Welby, sales director with NIR provider FOSS. “Measurements taken at different points throughout the soy value chain with various models of FOSS equipment are now fully aligned. Certain models even have a number of approvals for trade purposes.”