Global Animal Feed Update

The Issue

As the demand for protein grows, so does the demand for quality animal feed in many regions of the globe.

Why it Matters

An increase in global demand for animal feed could potentially drive an increase in U.S. soy exports in areas where U.S. soy already holds market share, and in new areas, as well. However, regulations in the European Union (EU) on biotech feed and animals fed with biotech soybean meal continue to hamper U.S. soy exports to countries such as Turkey and even Thailand, which exports poultry meat to EU countries. Despite these hurdles opportunities still exist for the United States to increase its exports of soybean meal and other feed ingredients.

Issue Summary

A recent, checkoff-funded study entitled Opportunities and Challenges for Increasing U.S. Exports to the Global Animal Feed Industry highlights strategies to boost U.S. soybean and soybean-meal exports used for feed ingredients. Demand for U.S. soybeans and soybean meal will continue to increase as poultry, livestock and fish operations grow to meet the growing global demand for protein. However, U.S. soybean meal exports will continue to be challenged by EU restrictions on biotech products. The U.S. soy industry needs to focus on areas where the United States already has a competitive advantage over South American countries.

Critical Facts

Due to increased soybean processing China, North Africa and Southeast Asia, especially Vietnam, these countries represent opportunities for U.S. soybeans. A trade agreement already exists between the United States and Morocco, for example, that lowers import duties on U.S. soybeans. This trade agreement also provides possible advantages for U.S. soybean meal. Processors in Egypt and Tunisia prefer U.S. soybeans because of the higher quality of U.S. soy. With its expanding oilseed processing industry, Vietnam has been making efforts to improve trade relations with the United States, which could also open the door for more U.S. soy.

Restrictions on biotechnology will continue to limit U.S. soybean meal exports to some EU countries. But the EU’s reach doesn’t stop at its borders. For example, Thailand has stopped importing U.S. soybean meal for its poultry industry since it sends poultry meat to EU countries that restrict products enhanced by biotechnology. For its part, Turkey recently slapped stringent restrictions on biotech imports as it applies for EU membership. Through efforts to provide fact-based information about biotechnology funded by the United Soybean Board (USB) and others, the Turkish feed industry has restored imports of U.S. soy. Because of the proximity to the United States and trade agreements, Canada and Mexico will both remain significant markets for U.S. soybean and soybean meal exports.

Trade agreements and lower freight costs provide an opportunity for U.S. soybean meal in the Caribbean Basin region and Central America. U.S. soy products remain the feed ingredients of choice for these regions because of quality and transportation advantages.

U.S. exports to China also have a transportation advantage thanks to ports on the U.S. West Coast, although the U.S. soy industry will need to pay close attention to the Panama Canal expansion to improve inland waterway and port infrastructure to maintain transportation advantages. And as the Chinese soybean-processing industry continues to expand, U.S. soybean exports will be needed to meet Chinese demand.

The biotech issue in the EU will remain a problem for U.S. soy exports, but could become a problem for poultry and livestock producers in the EU as they struggle to source more expensive, and increasingly difficult to find, non-biotech feed ingredients. These increased costs could be passed along to consumers, which could reflect poorly on the EU’s anti-biotech regulations. If the EU were to drop its ban on biotech feed ingredients, the United States would have a competitive advantage exporting into EU member-nations.

Issue Conclusion

To remain competitive, the United States will need to maintain the quality of its soy and other feed ingredients and work together as an industry to gain benefits from existing trade agreements and transportation advantages.

For More Information on this Issue
For a copy of the results of the USB/checkoff funded report: Opportunities and Challenges for Increasing U.S. Exports to the Global Animal Feed Industry
The United Soybean Board’s (USB) Global Opportunities program publishes Global Opportunities Briefing. If you would like permission to redistribute, reprint or repost this information with credit given to the USB/Soybean Checkoff, please contact USB at info@unitedsoybean.org.