January 21, 2011
Aquaculture Opportunities Remain Close to Home
The soybean checkoff enjoys success with soy in aquaculture in China and other markets and looks to capitalize closer to home as well. The Caribbean Basin represents one promising area where the checkoff is exploring opportunities, including countries in the Caribbean, Central America and northern South America.
“The Caribbean Basin could represent a huge opportunity for aquaculture,” says Roy Bardole, United Soybean Board (USB) director and a soybean farmer from Rippey, Iowa. “That area features thousands of miles of coastline with good water and good current, which helps maintain good water quality where fish are raised. If we can help get that aquaculture industry thriving, the U.S. soy industry has an advantage to become the feed supplier, due to proximity.”
To help evaluate the market potential of the Caribbean Basin, USB’s Global Opportunities Committee has selected Promar International, a Washington, D.C.-based market assessment and promotion strategy development company, to perform a market potential analysis. The analysis will study the feasibility of commercial aquaculture in the countries bordering the Caribbean Basin with a view to identifying opportunities for expanding the U.S. market for soybeans and soybean products as feed ingredients for offshore marine and inland aquaculture fisheries.
The analysis will provide a profile of key industry players in the market, evaluate the economics and cost structure of the aquaculture value chain, identify the regulatory and legal framework and governmental policies that apply for aquaculture development and identify available infrastructure and logistics for aquaculture production and to supply those products to the United States.
USB also wants the study to analyze other conditions that may affect aquaculture and the U.S. soy industry development in the region and provide analysis of strengths and weaknesses for aquaculture development and increased demand for U.S. soy products. The Carribbean Basin examination will provide U.S. soybean farmer-leaders with recommendations on how to approach target markets by overcoming challenges, combating threats, taking advantage of opportunities and leveraging strengths, and develop and complete the necessary matrices to make recommendations on geographical markets, locations, species of fish and production systems.
This project will follow up on the highly successful soy in aquaculture program that began in China. Since that program, the U.S. soybean industry has expanded its efforts to the rapidly growing aquaculture industries in other parts of Asia, Latin America, the Caribbean, the Middle East and Mediterranean Europe. Eighteen different countries around the world now use feeds and production technologies developed in China and through collaborative research with the soybean checkoff. More soy products will be used in the aquafeed industry this year because of price increases for fish meal, as well as other plant ingredients like rapeseed meal and cotton meal. Now more markets are aware of the advantages of soy protein concentrate (SPC) to partially or completely replace fishmeal for different fish and shrimp species. The annual SPC consumed for aquafeed production will be about 30,000 tons in 2010. Other advances in soy aquafeeds could yield additional market benefits.
“If we can develop soybeans with increased omega-3 fatty acids, that would be an advantage for soy as an aquafeed,” says Bardole. “Currently, despite the fact that fish meal is becoming prohibitively expensive due to supply, aquaculture producers feed fish meal late in production to increase omega-3 fatty acids in their fish. Soy has an opportunity to replace even more fish meal in the future.”
The benefits of developing the aquaculture industry in the Caribbean Basin could be significant for U.S. consumers, in addition to the U.S. soy industry.
“The closer you raise the fish you consume, the better chance there is have to have a degree of control over environmental concerns and food quality,” says Bardole. “It’s a great opportunity to provide consumers with high-quality, environmentally friendly fish and shrimp. The Caribbean Basin holds a tremendous opportunity to provide benefits to U.S. consumers.”
Opportunity for More U.S. Soybean Oil Exports to China?
The United States exports more than half of all its soybeans across its borders and overseas. Since the soybean checkoff began, U.S. soy exports have doubled. The United States exported 1.56 billion bushels of the 2009 soybean crop, breaking another record last year. Still, increased prospects might be around the corner as United Soybean Board’s (USB) Global Opportunities Committee (GOC) continues to track overseas policy and regulatory issues between China and Argentina that may end up as an opportunity for U.S. soy exports.
On April 1, China, the world’s largest user of soy oil, restricted imports of Argentine soy oil due to an asserted failure to meet quality standards. China began applying standards that had been in place—but not enforced— on excessive solvent residue in soy oil, a quality standard put in place for consumer safety.
Studies found that Argentina soybean oil contain excessive solvent residue, according to the China Chamber Commerce Import and Export of Foodstuffs, Native Produce and Animal Byproducts. The Ministry of Commerce limited solvent residues used for processing soybean oil to 100 parts per million. Some past Argentinean soy oil has measured residue levels of 300 ppm.
Around 70 percent of China’s edible oil market depends on imports from major soybean producing countries around the world including Argentina followed by the United States and Brazil. China also imports a lot of whole soybeans. In 2009, it bought 42.5 million tons of soybeans, up 13.5 percent from the previous year, and 4.6 million tons of soybean oil. If China’s restrictions on Argentine soybean oil drag out, it could boost U.S. soy oil exports. “USB’s GO Program continuously monitors issues such as this to maximize potential market increases for U.S. soy and keep an eye on future restrictions that U.S. soybean processors may encounter,” says Russ Carpenter, member of the USB GOC and a soybean farmer from Trumansburg, N.Y. “China’s demand keeps growing, and the food industry is becoming an increasingly globalized sector. These are all positive positions for U.S. soybean farmers.”
Soybean Checkoff Strives for Level Playing Field in Russia
U.S. soybean farmers provide a quality product and steady supply to their export partners, but some countries continue to erect roadblocks at U.S. soybean exports. For example, Russia has introduced practices that limit market access for imported soybeans, artificially bolstering domestic soybean production.
“Without market access, there is no export market, so it’s important to build relationships to strengthen the market access,” says Bob Metz, United Soybean Board (USB) director and a soybean farmer from West Brown Valley, S.D. “Anytime we can open up new markets, it’s of great value for U.S. soybean farmers.”
One example of market access challenges in Russia is the Sodrugestvo soybean crushing plant’s limits on imported U.S. soybeans. Sodrugestvo was hindered by a recently-enacted mandatory biotech labeling law for food and feed products by the Russian government. The law, combined with public assertions about the safety of crops improved through the use of biotechnology, prevented Sodrugestvo from being unable to import U.S. soybeans until 2009. Regulations required the crushing plant to install a separate biotech soy crushing line of equipment to be able to import U.S. soybeans.
Russia’s farmers have recently increased their soybean production efficiency. Russia could double its production of soybeans by 2015, according to SovEcon, Russia’s oldest company specializing in agricultural market research and consulting. Since 2000, Russia has significantly increased soybean production in the wake of the continuing growth of the domestic poultry and feed manufacturing industries, although imports still account for up to 50 percent of the total supply of soybeans in the market.
Some claim the Russian government’s favorable trade measures have made soybeans artificially more profitable to grow, allowing for higher investments into fertilizer and chemicals that increase production.
Government support extends to other agricultural industries as well, with subsidies to rebuild the Russian poultry industry. Cargill is building a large poultry processing plant in the Tula region of Russia, 120 miles south of Moscow. In addition to subsidies, Russia implemented restrictions on the import of poultry meat from overseas, including the United States. Artificially increasing Russian poultry production also increases the market for soy use in Russia, since poultry represents the number one consumer of soybean meal.
The soybean checkoff, through its Global Opportunities program, continues to work for greater market access in Russia. A recent project with World Perspectives, a Washington, D.C.-based firm providing worldwide market information and analysis, will examine the current situation of market access and desired modifications and make a realistic assessment of Russia for U.S. soybean farmers and the soybean checkoff’s potential to increase U.S. soybean farmer profit potential in this market.
“Russia represents great opportunities,” Metz believes. “Russia is increasing their poultry industry, and it makes more sense for Russian farmers to grow cereal grains and import soybeans or soybean meal to feed to the growing poultry industry.”
Checkoff Farmer-Leaders Assess Transportation in Brazil, Panama
The United States typically exports about half or more of its soybeans. The United Soybean Board (USB) and soybean checkoff realize the importance of improving the U.S. transportation infrastructure that farmers need to move U.S. soy from field to port to international market needs. A checkoff-funded delegation of U.S. soybean farmers assessed this critical issue when they studied improvements being made in Brazil and to the Panama Canal.
As part of the Top Producer Frontier Study Tour, the group saw firsthand the progress on expanding the Panama Canal, a crucial channel the U.S. soy industry uses to ship to China and other important Asian export markets. In Brazil, participants got a look at transportation improvements that could help Brazilian farmers trim competitive advantages currently held by U.S. farmers.
“The U.S. infrastructure is a very high priority for the checkoff,” says USB Communications Chair Vanessa Kummer, a soybean farmer from Colfax, N.D. “For example, we have so many bridges in disrepair or that are substandard. If those improvements are not made, that could affect U.S. soybean farmers’ competitiveness worldwide.”
The Amazon River represents one valuable natural resource and commerce channel Brazilians have that is like no other river in the United States. Ocean-bearing ships can navigate the Amazon deep into the interior of northern Brazil to load soybeans and other products, allowing for quicker and more efficient transport to international markets.
Transporting crops to the Amazon, however, proves to be more of a problem in Brazil, where farmers currently rely heavily on a network of pothole-filled, two-lane roads and bumpy dirt roads. But the world’s second-largest soybean-producing country continues to make progress toward improving its roads and railways.
At the Panama Canal, work continues on a third set of locks that will double the man-made waterway’s capacity, making room for larger vessels. Officials expect to complete the overhaul by 2014.
“All of those Asia-bound soybeans that come down the Mississippi River end up going through the Panama Canal before they go to Asia,” says soybean checkoff farmer-leader Bob Metz, who is also a member of USB’s Global Opportunities Committee and a soybean farmer from West Brown Valley, S.D. “We need to make sure that the avenues of transportation for our soybeans are open, are well run and are cost-competitive.”
Sustainability Unites Soybean Farmers from Different Countries
U.S. soybean farmers have long known the importance of sustainability. The United Soybean Board (USB) and soybean checkoff proactively embraced the sustainability movement and began formally working on the issue more than two years ago when USB formed its Sustainability Initiative.
The U.S. soybean industry developed the Best Management Practices Manual, which encourages farmers to adopt production practices that increase productivity at the same time as being good stewards of the environment. The International Soybean Growers Alliance (ISGA), an organization that brings together soybean associations and checkoff groups in various countries to collaborate on universal issues, recently adopted this manual and translated it into Portuguese and Spanish for use by soybean farmers in Argentina, Brazil, Paraguay and Uruguay.
USB and the ISGA’s other organizational members believe adoption of these practices will help farmers meet the environmental demands international customers make when buying soy.
“Sustainability is one issue that should not be used to gain market share – that wouldn’t be appropriate,” says USB Director Bob Metz, a member of USB’s Global Opportunities program and a soybean farmer from West Brown Valley, S.D. “We’re all committed to meeting world demand for food, feed and fuel and doing it in a sustainable manner.
“We’ve developed a comprehensive sustainability platform that will work for soybean farmers in the United States and South America and now we’re all on the same page,” Metz adds.
The manual outlines environmentally friendly farm management practices such as soil and water management, conservation tillage methods, reducing fuel use and ways to promote biodiversity while still maximizing yield and profit potential.
“Sustainability is something we can address together,” says Ricardo Silva, administrative director with Aprosoja, the soybean checkoff organization in Mato Grosso, Brazil. “This manual will be very beneficial because all of the South American soybean farmers will have a common way to measure sustainability and communicate how they’re getting more sustainable every year.”
According to checkoff-funded studies by the Conservation Technology Information Center and the Council for Agricultural Science and Technology, biotech crops help soybean farmers become more sustainable, including by requiring less tillage, which saves fuel and reduces erosion and runoff into waterways.
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USB Mission/Global Opportunities
To discover and communicate global opportunities for U.S. soy by analyzing current and potential events.
- Annual Summary
- Is There Room on the Rails for Growth in Agriculture?
- Farmers Could Lose Advantage if Deterioration of Transportation System Continues
- More Opportunities for U.S. Soy Exports Using Containers
- Market Opportunities for U.S. Soy in Africa
- Dilapidated Locks on U.S. Rivers Put Farmers, Consumers at Risk
- Assessment of Agricultural Development in the Black Sea Region (Russia and Ukraine)
- Rail Study: Maintaining a Track Record of Success
- Farm to Market -- A Soybean's Journey
- Grain-Oilseed Market Index Soybean Complex Database (xls, 3 MB)
- Grain-Oilseed Market Index Soybean Complex Report (pdf, 2 MB)
- Market Potential of Sub-Saharan Africa (pdf, 7 MB)
- America's Locks and Dams: "A Ticking Time Bomb for Agriculture?" (pdf, 8MB)
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