There’s more than meets the eye in determining soybean value than just bushels per acre.
U.S. soy’s biggest customers buy soybeans for the oil and protein content inside. Better soybean quality improves demand among these customers, which impacts the price farmers receive. The United Soybean Board’s Value Task Force finds multiple ways to add value to U.S. soybeans and make them more competitive in the global marketplace. The group also helps the U.S. soybean industry, including farmers, capture more of that added value.
Tom Malecha, vice president of CHS’s Processing and Food Ingredients divisions, serves on the Value Task Force as a representative of the soybean-processing industry. In this interview with Beyond the Bean Online, Malecha discusses the task force’s work on behalf of U.S. soybean farmers.
Q: One of the items the task force has looked into is converting the soybean-pricing system to one that compensates farmers based on soybean quality, rather than just yield. Is that a realistic goal?
A: It certainly is. In fact, the market already values U.S. soybeans based on the component makeup of the bean. In the end, I think we’ll see more component pricing, rather than less, but I don’t believe it’s a change that will happen overnight.
Q: How would it compare to the system that exists now?
A: Just about every soybean is processed into protein and oil, but it’s hard to determine what part of the soybean price is a premium or discount for oil or protein content because the entire price of soybeans is based on the value of those. You have a pricing component on the Chicago Board of Trade called soybean meal and a pricing component called soybean oil, and then of course you have the soybean futures. So there’s already somewhat of a market-driven trading platform based on the two components.
Q: Is it feasible for elevators and processors to test every load of soybeans that comes in and compensate that farmer based on oil and protein content?
A: We use NIR (near infrared spectroscopy) machines to test every inbound load and pay based on oil and protein content, and we’ve had a premium program since 2003. NIR technology is becoming a much more widely approved method for testing soybean quality because of its accuracy. If farmers and the industry decide that component pricing is appropriate, then it will be imperative that farmers understand what NIR machines are and I think you’ll begin to see farmers begin to put them on their farm, which will allow them to segregate soybeans coming off the combine based on oil and protein content.
Q: How would you judge the Value Task Force’s progress?
A: I think it’s doing a very good job of getting to things that will benefit the entire industry for the long term and not being specific to one player in the industry. So it truly is working for the betterment of the entire soybean industry, and I think that’s valuable. As we continue, we’ll have interaction with other players in the industry, and the recommendations that this task force will make should have very good backing from the entire industry. The recommendations the task force comes up with won’t happen overnight, but they’ll make our industry more competitive, and I think just as importantly, will continue to add profitability to all levels the U.S. soy industry.
Source : unitedsoybean.org