June 9, 2011
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USB’s GO Program Off to Fast Start in 2011
By: Vanessa Kummer, USB GO Committee Chair
U.S. soybean farmers can be proud they have a checkoff program that monitors our rapidly changing world and invests in the necessary work we need to do to stay on top of these changes and adjust our U.S. soy research and promotion programs or adopt new ones if necessary. That’s what the United Soybean Board’s (USB) Global Opportunities (GO) program accomplishes.
The USB GO Committee consists of all of the USB farmer-directors who serve as vice-chairs of the five USB program committees, with additional representation from our International Marketing Committee. Farmer-directors on the boards of the American Soybean Association and U.S. Soybean Federation also serve us in an advisory capacity. Our group got off to a fast start after the USB chairman, Mississippi soybean farmer Marc Curtis, made committee appointments following his election last December. We met in early February, heard updates on existing important studies under way and approved several new ones intended to keep U.S. soybean farmers competitive and profitable. For example, in 2011, USB’s GO program will:
• Conduct a survey of U.S. soybean farmers on perceptions toward federal crop insurance and reasons for or against purchasing it in different regions of the country. This survey will prove especially important as the Obama Administration and the U.S. Congress begin work on new multi-year farm legislation and examine existing and new options for revenue assurance products that will work better for U.S. soybean and other farmers. While the soybean checkoff cannot be engaged in legislative or regulatory policy advocacy, it can conduct research deemed necessary that can reveal different legislative or regulatory policy options for U.S. soybean farmers.
• The USB GO program will remain actively engaged in the soybean checkoff’s effort to continue to provide fact-based information about biotechnology to government officials and others in Turkey. A new law took effect at the start of the year that restricts imports of soy produced from biotech seed. We approved work that will continue to strive to get the facts about biotech into the hands of Turkish government officials and others in order to prevent market-access disruption in this important market for U.S. soy.
• The GO Committee also discussed development of a possible new, checkoff-funded study that directly addresses the “Farm to Customer Transportation Analysis” project recommended as part of the biennial U.S. soy industry CONNECTIONS meeting outcomes last December.
Our future depends on what happens in the global environment in which we now operate. “Global” means here in the United States and around the world, so you’ll have access to information later this year about existing GO projects at or near completion, such as one on the viability of how the United States funds our much-needed transportation infrastructure improvements, as well as a comprehensive look at what expansion of the Panama Canal might really mean to U.S. soybean farmers.
USB’s GO program makes a concerted effort to put our work into action by distributing results of studies and research to you and others who need it to make decisions that can benefit the entire U.S. soy industry. I hope you find this edition of GOing Beyond the Bean, our GO Briefings and other information helpful. Since the “Global Opportunities” section of the USB website at www.unitedsoybean.org launched last year, it has been one of the most visited sections of the site, where you can access a library of nearly all of our important work. USB recently updated the site, and you can find more in-depth information at http://www.unitedsoybean.org/topics/global-opportunities or by going to www.unitedsoybean.org, clicking on “Browse by Category” in the upper-right-hand side of the front page, and then clicking on “Global Opportunities” in the drop-down menu.
Now, let’s get GOing!
USB GO Committee Chair
Colfax, N.D., soybean farmer
Exploring U.S. Soy Potential in Caribbean Basin Aquaculture
Fish farming continues to expand its market share in seafood consumption, now supplying more than half of seafood consumed globally. As the aquaculture industry expands around the world, a major opportunity may exist for U.S. soybean farmers. Soy products, such as soybean meal and soy concentrate, still represent some of the leading alternatives to fishmeal, a dwindling feed source from the scarce, overfished wild fish populations. A recent soybean checkoff-funded study investigated the feasibility of aquaculture production in the Caribbean basin and Central America.
“Soybeans provide a sustainable alternative to fish meal in aquafeeds,” says Roy Bardole, USB Global Opportunities Vice Chair and soybean farmer from Rippey, Iowa. “The Caribbean basin offers a place close to the U.S. to expand our soybean markets, cutting costs for aquaculture production and delivering fresher fish to U.S. consumers.”
He adds, “The excellent environmental conditions and the natural ocean current, coupled with the population capable and willing to operate aquaculture farms, make the Caribbean basin a reasonable option for expansion. These factors led to the checkoff-funded study.”
The 10-month study reviewed the aquaculture value chain and the key factors impacting demand. Price competitiveness and U.S. food industry needs rank critically high for aquaculture production.
According to the study, only minor competition exists for U.S. soy products in the Caribbean region, an area including all countries bordered by the Caribbean Sea. However, with the exception of Mexico, the area lacks infrastructure to supply aquaculture feed to the region, creating price competitiveness challenges.
Asia currently dominates world aquaculture production and applies intense competitive pressure to expansion in the Caribbean region. The study focused on the two most farmed species, shrimp and tilapia, but also considered marine fish markets currently in development.
“We know that we can feed tilapia and shrimp, we’ve done it,” adds Bardole. “Tilapia feeding trials are well documented and the mild flavor helped it gain popularity in the United States.”
China dominates the U.S. tilapia market from an export standpoint, with Mexico serving as China’s second largest export market. The major opportunities for aquaculture growth lie within the tilapia market, specifically providing fresh fish to the U.S. premium, upscale food service industry.
According to the study, Mexico represents the greatest opportunity for growth in the Caribbean region. Mexico holds unique access to the United States, as a result of its close proximity. Mexico’s location lowers cost of airfreight and increases the ability to maintain a product quality for distribution. Mexico also appears the most attractive from an investment standpoint, taking into considering the network of government institutes and inter-professional organizations within Mexico.
“The closer aquaculture is to home, the better chance we have to control quality in our food supply,” says Bardole. “Consumers are more and more interested in knowing where their food comes from. By expanding aquaculture in the Carribean, we gain a better understanding of where our food is grown and the production practices used to supply our fresh fish market.”
Poultry in Russia Could Lead to New Opportunities
Russia continues to challenge imports across the board, with the U.S. poultry industry taking the hardest hit in 2010. From January to August 2010 the country placed a ban on imports of U.S. poultry citing sanitary regulations not being met.
Russia’s leaders continue to place agriculture at the top of their agenda, so it will be a more strategic commodity for their recovering economy.
Imports of U.S. poultry to Russia began in the early 1990’s, under the agreement signed by the former Soviet Union’s last leader, Mikhail Gorbachev, and then U.S. President George H.W. Bush. Some Russians dubbed these imports “Bush legs” because the majority proved to be dark meat cuts and chicken legs. Imports of these products to Russia peaked in 2001 with 1 billion metric tons. However, a decline followed with current imports at 600 metric tons. The U.S. poultry industry projects sales at only 409 million metric tons by 2012.
The decline in of U.S. poultry imports can be credited to Russia’s various bans that have taken place over the years, with the most recent ban lifted this past fall. Russia has placed stricter sanitary regulations regarding poultry processing, as it comes closer to becoming a World Trade Organization (WTO) member.
“Russia has the drive and determination to build poultry production to feed its ever-growing population,” says Bob Metz, soybean farmer from West Brown Valley, South Dakota who serves on the organization’s Global Opportunities (GO) Committee. “They will be looking for reliable feed sources and we can supply them with this demand.”
By turning to U.S. soybean meal as a consistent feed source, Russian poultry producers can increase their production and potentially meet the growing demand placed on their government, added Metz.
U.S. soybean meal offers a consistency in high-nutrient content of crude protein and is readily available year-round to Russian poultry and livestock producers. Challenges still exist with the country’s required phytosanitary certifications for U.S. shipments of processed products, like soybean meal. However, the potential of becoming a WTO member in 2011may allow for clear and fair importing regulations and a greater market for U.S. soybean meal.
Study Reveals Animal Feed Opportunities Abroad
Poultry and livestock consume most soy worldwide, so meeting the needs of animal feed user’s abroad remains vital to the U.S. soybean industry.
Poultry and livestock consume more than 70 percent of the soybeans worldwide. Meeting the needs of the global animal feed industry proves to be critical to U.S. soybean farmers and the rest of the U.S. soy industry. That’s why the soybean checkoff’s Global Opportunities (GO) program funded a study on “Opportunities and Challenges for Increasing U.S. Exports to the Global Animal Feed Industry.”
The study outlines current global and regional trends that could impact growth in the animal feed industry, and illustrates the potential role of the United States in providing feed ingredients through 2020.
“About half of U.S. soybeans are exported, and the soybean meal becomes animal feed in other countries,” says Laura Foell, GO committee member and soybean farmer from Schaller, Iowa. “Regardless of whether U.S. soybean meal is exported, or U.S. soybeans are exported and crushed in other countries, the global animal feed industry remains important for U.S. soybean farmers.”
The report found that U.S. soybean exports are likely to increase to China, North Africa, Southeast Asia, Mexico and Canada. The soybean processing industry in these countries and regions present a great opportunity for the export of whole U.S. soybeans, and in many cases U.S. soy enjoys a competitive advantage in these markets.
In addition the soybean checkoff-funded study shows, U.S. soybean meal exports may increase on a global scale as economic conditions in the developing world improve and consumers purchase more animal protein products. However, U.S. soybean meal exports do encounter restrictions in some countries and regions largely as a result of restrictions on biotechnology, particularly in the European Union (EU). The EU remains the world’s largest importer of soybean meal. In addition, restrictions on biotech soybean meal also affect markets in countries such as Thailand, which is a major exporter of poultry to the EU market, and Turkey, which wants to join the EU.
“The U.S. soybean industry must collaborate on efforts to promote exports of U.S. feed ingredients,” says Foell. “Also, it’s important to continue working for fair market access to foreign markets for both U.S. soybeans and U.S. soybean meal.”
The report found that efforts should be focused on markets where the United States has or could have a competitive advantage on exports, rather than just selecting the markets with the largest potential consumption. Feed manufacturers in these regions will select U.S. feed ingredients, such as U.S. soybeans or soybean meal, if they are priced competitively due to their quality.
To read the full report click, http://www.unitedsoybean.com/programs/Global_Opportunities/studies.aspx
Commercialization of More Biotech Crops Create Challenges for U.S. Exports
According to the European Union’s (EU) Joint Research Center, the number of commercialized, biotech crops in the world will multiply from 30 to over 120 in the next four years. Some in the biotech industry believe increased potential for approvals of these crops could come at varying times among trading countries and thus will quadruple trade disruptions over the next five years. The United Soybean Board’s (USB) Global Opportunities program recently assessed the potential adverse impact on U.S. global soybean exports if the EU or other major import markets declare U.S.-origin soybeans to be in violation of import requirements in these countries.
To date, most regulatory infractions have not involved soybeans but not all U.S. products have been so fortunate. In the last 10 years, Liberty Link rice and StarLink corn both failed to pass regulatory requirements in other countries which led to serious trade interruptions, losses to U.S. farmers and a black mark on U.S. reputation within those commodity markets. The regulatory environment constantly changes as a result of political decisions and soybean farmers could face these same risks as more biotech events are commercialized.
“European countries have a zero-tolerance for non-approved biotech events, meaning the slightest existence of an unapproved crop could decline an entire shipment. That is costly,” says Jimmy Sneed, a soybean farmer from Hernando, Miss. who serves on the USB Global Opportunities Committee. “The EU has many extremely vocal activist groups, political groups and sensationalistic media that make the most of such unintended incidents. They spread unnecessary and scientifically undocumented fear to their consumers. ”
The USB study found that establishing a low-tolerance presence for unapproved biotech crops proves to be inadequate compared with across-the-globe approvals of crops improved through the use of biotech. Unapproved biotech events are not the only potential problem U.S. soybean farmers’ face with exports. A growing number of countries have mandated retail food labeling, which most likely could impede or block imports on food products.
The full report, including 10 recommendations to lessen the risk to soybean farmers can be viewed at http://qa.unitedsoybean.com/media-center/background-materials/?q=frequent+violators&topics=6&types=12&types=13&types=14&types=15&submit=Filter This assessment will be recalculated in 2011.
Report Reviews Market for U.S. Soybean Meal
A lot can change in four years, so the soybean checkoff funded a study examining the current state of supply and demand issues for U.S. soybean meal the Soybean Meal Evaluation, originally done in 2006. USB supplemented the report with updates in 2007, 2008 and 2010.
“The study in 2006 focused on the competition between soybeans and corn for land, overseas growth in soybean acreage, poultry and livestock production and support for renewable fuels,” says Vanessa Kummer, United Soybean Board (USB) vice chairperson and soybean farmer from Colfax, North Dakota. “In the latest study, focus was on how global factors, such as the recession and the link between petroleum products and soy oil, has influenced the price.”
Since the price of some agricultural commodities spiked in 2008, the world has suffered a severe and deep recession prompted by the onset of the financial crisis in late 2008 and 2009. The recession, and the sharp correction in agricultural prices that accompanied it, has raised a new set of questions for soybean and other oilseed farmers.
“We are in a global economy,” says Kummer. “What affects one part of the world affects all. With the recession, lower incomes have influenced the lessening demand for soybean oil and soybean meal, as both meal and oil consumption are responsive to income changes and consumers eat less meat. Poultry and livestock consumption is the major use of soybean meal.”
The USB Global Opportunities program update of the soybean meal market explains the linkages that have developed with energy markets. These relationships have altered price forecasting in the vegetable oil arena especially. Researchers conducting the study consider how aggregate oil and meal demand have been influenced by lower incomes, and the shifting preferences for certain oils in the increasingly health-conscious U.S. market.
To see view the entire 2010 Soybean Meal Update, click http://unitedsoybean.com/programs/Global_Opportunities/studies.aspx
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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)
- Proprietary (password protected)