Iowa farmers are helping to meet growing global demand by planting food-grade soybeans for processors that send their beans to markets such as Asia where the beans are used in soy-based food products such as tofu and miso.
Iowa growers are expanding their soybean portfolios by taking advantage of the price premiums being offered for planting enhanced-quality traits such as food-grade, Identity Preserved and non-GMO. With the growing demand for these enhanced-quality soybeans from overseas customers, premiums for these soybeans are most likely going to continue rising, according to a report from the United Soybean Board.
"The demand for these soybeans is exploding. Food-grade is the same way; more and more consumers want to buy organic," says Kevin Glanz, a soybean farmer from Manchester, Iowa. "If you put a pencil to it, there is more profit in growing these types of specialty beans. This year, the premium for non-GMO beans was $3.40 a bushel. On 10,000 bushels, that's $34,000 in extra profit."
You can get a better price for a product
Trends indicate that demand for enhanced-quality soybeans is continually increasing, but production acreage is not meeting the demand, culminating in higher prices. Annually 60 million bushels of soybeans are exported at a premium for food-grade uses. Customers in Asia, the likely destination for many of these food-grade soybeans, are adamant about buying non-GMO varieties.
"When I plant in the spring, I know I have a contract, I know I've got a premium and I know they're going to Japan for tofu processing," says Glanz. "I'm not raising a commodity any more, I'm raising a product, and you can get a better price for a product."
The number of non-GMO, food-grade and Identity Preserved varieties now becoming available for planting offer more profit opportunities for farmers. This year's production acreage for low-linolenic soybeans, for instance, is estimated at between 2.5 and 3 million acres. Next year will see a high-oleic variety added to the list. Both of these examples are being sought by the food industry because they result in oil with no trans fat.
Premium price makes up for yield drag
"What I'm trying to do is continually identify varieties that will work for customers in Asia and yield better for farmers," says Don Latham, president of Latham Farms in Alexander, Iowa. "We identify farmers who are willing to grow them and then explain that the premium is high enough to compensate for the yield deficit."
Infrastructure that is already established in the United States offers soybean farmers a competitive advantage from which to work in growing a diverse list of soybean varieties. U.S. facilities can offer storage and shipping space, as well as the record-keeping expertise to accommodate this diverse supply that must be kept segregated and traceable, notes Latham.
For a look at how the premiums for growing food-grade soybeans can improve your farming operation's bottom line, visit www.soybeanpremiums.org.
USB is made up of 68 farmer-directors who oversee the investments of the national soybean checkoff on behalf of all U.S. soybean farmers. Checkoff funds are invested in the areas of animal utilization, human utilization, industrial utilization, industry relations, market access and supply. As stipulated by federal law, USDA's Agricultural Marketing Service has oversight responsibilities for USB and the soybean checkoff.