MF2512 Economic Issues with Soybeans
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MF-2512 Economic Issues with Soybeans Kansas State University Agricultural Experiment Station and Cooperative Extension Service Economic Issues with Soybeans The United States is the largest pro- Figure 1. Planted Soybean Acres in Kansas and United States, 1980 to 2000 80 3.5 ducer and exporter of soybeans worldwide. U.S. 70 While Kansas ranks 10th in U.S. soybean 3.0 production, it only accounts for approxi- 60 2.5 mately three percent of the total production Kansas (Kansas Ag Statistics). Although Kansas’ 50 2.0 soybean production has been a relatively 40 small share of total U.S. production, 1.5 30 soybeans are becoming an increasingly U.S. acres (millions) 1.0 Kansas acres (millions) important crop to the state. Soybean 20 acreage has nearly doubled in the last 20 0.5 10 years from 1.55 million acres in 1980 to 0 0.0 2.95 million acres in 2000 (Figure 1). 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 From 1981 to 1985 the annual average Figure 2. Soybean Production in Kansas and United States, 1980 to 2000 acres planted to soybeans in Kansas was 3,000 150 approximately 1.63 million acres, how- U.S. ever, acres planted from 1996 to 2000 to 2,500 125 soybeans increased to 2.56 million annu- ally (an increase of 57 percent). During 2,000 100 this same time period, acres planted to soybeans in the United States increased by only 6.4 percent. Figure 2 illustrates U.S. 1,500 75 and Kansas’ soybean production from Kansas 1,000 50 1980 through 2000. Historically, about 75 U.S. bushels (millions) percent of the production in Kansas has Kansas bushels (millions) come from the eastern third of the state, 500 25 however, soybeans have become increas- ingly more important statewide since the 0 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 1996 Farm Bill (Figure 3). This publica- tion describes new uses for soybeans and Figure 3. Distribution of Soybean Production in Kansas by Region, illustrates differences in value across 1980 to 2000 90% soybean varieties. 80% Demand for Soybeans 70% Eastern KS Much of the soybean’s popularity is 60% attributed to its versatility. The soybean’s many uses can be categorized into three 50% groups: industrial, human food, and 40% Central KS livestock feed. 30% Currently, industrial uses of soybeans Production Total Percent of are a small portion of total soybean use. 20% However, many new products are becom- 10% Western KS ing available as scientists find new uses for 0% soybeans. Many of these products are 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 substitutes for petroleum-based products. active ingredients in performing their task. For example, soybean oil-based pesticide Soybean oil-based lubricants and cleaners spray adjuvants are widely used by farmers are relatively new, but the demand for and custom applicators. They provide a them as an environmentally friendly safe, cost-effective tank mix that aids the alternatives to petroleum-based products is 1 increasing. Biodiesel includes a partial and Drug Administration. Tofu, tempeh, blend of a soy-based product that improves and natto are soyfood products common in lubricity and reduces harmful emissions Asia. Soy flour often is mixed with other after combustion. flours to increase the protein content. About 7.4 billion pounds of adhesives Soybeans are also used as a soy analog in are used annually in the United States for meat products. Soybean oil has many uses applications in plywood, particleboard, in the food industry. paper manufacturing, bookbinding, and A large majority of the U.S. soybean packaging and labeling. The various forms production is for livestock feed. Soybeans of wood use represent the largest and most are the most cost effective source of diverse market for adhesives today. protein in many feed rations. Usually the Petroleum-based adhesives for plywood or soybean is crushed, separating the oil from fiber cardboard applications often contain the remaining flake or meal. Soybean meal phenol/urea formaldehyde as a cross typically contains 44 to 50 percent protein. linking agent. These applications cause Figure 4 shows a steady increase in unpleasant environmental effects due to monthly meal and oil production from formaldehyde emission and toxicity 1992 through 2000 (USDA). The lines for problems during product manufacturing soybean oil and soybean meal lie on top of and distribution. The plywood industry is each other because, on average, a bushel of currently seeking new types of wood soybeans yields oil and meal in constant adhesives from renewable resources, proportions. potentially increasing the demand for soybeans. Overview of New Researchers at Kansas State University Soybean Varieties are developing formaldehyde-free adhe- Small, niche markets exist for several sives from soybean proteins, and types of specialty soybeans. Care at evaluating their adhesive performance for harvest is critical to ensure food-grade plywood and particleboard applications soybeans meet quality standards. Many of (Sun). While many new uses for soybeans these specialty or “value-added” soybeans exist, most are cost prohibitive relative to are grown under a production contract (see petroleum-based products based on current MF-2431 Economic Issues with Vertical market conditions. Coordination for a discussion of the Another soybean use is human con- differences between marketing and pro- sumption. Soybeans provide a valuable duction contracts). source of protein and are considered a Tofu or clear hilum food-grade soy- “heart healthy” product by the U.S. Food beans are usually produced for human consumption in the form of soymilk or Figure 4. Monthly Soybean Oil and Soybean Meal Production in the tofu. Soymilk is a milk-like liquid, pro- United States, 1992 to 2000 cessed by the soaking and grinding of 2,000 4,000 Soybean oil whole soybeans with water. Soymilk is a Soybean meal substitute for dairy milk for lactose- 1,750 3,500 intolerant people. Tofu is a soybean curd, 1,500 3,000 made by mixing soymilk with a coagulat- ing agent. It can be eaten in its original 1,250 2,500 form, fried, baked or used as a meat or dairy substitute. 1,000 2,000 Organic food-grade soybeans have Soybean Oil (million pounds) gained tremendous popularity in the last Soybean meal (thousand tons) 750 1,500 decade. A sizable market has developed demanding organically grown food, 500 1,000 although the supply of organic crops is still 1992 1993 1994 1995 1996 1997 1998 1999 2000 2 less than 0.5 percent of all food produced of all soybeans. Mandatory labeling in in the United States (Greene). The USDA certain countries is in its early stages and it has set certification guidelines for organic is unclear whether a premium exists for products that rely on sustainable produc- non-GMO soybeans. For example, Parcell tion processes without the use of synthetic concluded that the price differential fertilizers and pesticides. between the futures contract for Tokyo High sucrose soybeans decrease Grain Exchange’s new genetically en- abdominal discomfort and improve flavor, hanced soybean (of U.S. origin) and that which are two problems commonly for its existing conventional soybean (of associated with regular soybeans. These U.S. origin), was probably not sufficient to varieties contain higher levels of sucrose recoup the costs of the identity-preserved and lower levels of oligosaccharides, the system for the genetically enhanced indigestible sugars that cause abdominal soybean. Additional information on discomfort. High sucrose soybeans also genetically modified soybeans can be offer improved flavor, enabling larger found in MF-2449 Economic Issues with amounts of health beneficial soy product to Genetically Modified (GM) Food and Feed be present in food products. Grains. High oleic soybeans produce a bean that is high in oleic acid and Soybean Processing monounsaturated fatty acid and low in As of 1997 there were 93 soybean- polyunsaturated fat. This gives the high processing plants in the United States with oleic soybean greater heat resistance and payrolls totaling $237 million and value health benefits than the regular soybean. added by manufacturing worth $1.7 billion The soybean’s makeup also permits it to be (U.S. Department of Commerce). Kansas used for many industrial applications had four processing plants that employed because of its greater stability, lubricity 201 people with a value added by manu- and biodegradability. facturing worth $7 million in 1997. Low saturate soybeans contain half the saturated fat of commodity soybeans, The Crush Process while maintaining flavor. Low saturate Before soybeans are processed, they soybean oil has only 7 to 8 percent satu- first need to be dried to a moisture content rated fats, making it similar to canola oil. of 10 percent. After cooling, the soybeans Salad dressings and sauces made with low are cleaned by removing inert matter. The saturate soybean oil have very little or no soybeans are then weighed before they saturated fat. move to the next step, which is the cracker. Low linolenic soybeans produce During this process, the soybeans move cooking oil that has 50 percent less lino- through a series of rollers that crush the lenic acid than commodity soybean oil. beans into smaller pieces. After crushing, This reduces the need for hydrogenated the hulls (outer skin) are removed before oils that are high in unhealthy transfatty steam heating the soybean pieces. Once acids, thereby lowering LDL “bad” the soybean pieces are brought to 11 cholesterol levels and raising HDL “good” percent moisture content, they go through cholesterol levels. a series of rollers that produce thin flakes. High protein soybeans are mainly After the soybean pieces are rolled targeted for the soy food market.