Raising soybeans looks simple. Farmers plant the seeds and the plants grow, then farmers harvest the mature soybeans and take them to elevators for processing. But any soybean farmer will tell you that growing this crop is much more difficult than it looks. There’s soil health to contend with, as well as pests and diseases. And, of course, there’s the weather.
At first glance, the current soybean-pricing system seems easy to understand, too. U.S. soybean farmers get paid by the bushel at the elevator. But it’s actually much more complicated. The cash price farmers receive for their bushels is actually based on the estimated value that processors think they will receive for the meal and oil in the soybeans.
The soy checkoff realized that the market signals are not aligned This could mean U.S. soybean farmers are missing an opportunity to focus on improving the quality of their soybeans. So, in February 2010, the soy checkoff established the Value Task Force (VTF) to explore ways to increase the overall value of the U.S. soybean crop and farmer profitability.
“The task force’s aim is to bring value to all U.S. soybean farmers, as well as the U.S. soy value chain,” says Dan Corcoran, a checkoff farmer-leader from Piketon, Ohio, and VTF team lead. “Many U.S. soybean farmers think only in terms of yield, but it’s actually much more complicated than that. We’re really producing protein and oil.”
Because this aim requires a broad understanding of the soybean market, the VTF draws members from throughout the value chain and soy industries.
The VTF commissioned several research studies to explore different ways to align the market to add value to the soybean industry.
Two projects took an in-depth look at two key issues: the true value of Identity Preserved (IP) soybeans and strategies used by other commodities to add value to their product. And the other research studies explored several other aspects of the U.S. soy value chain to see if any methods for increasing value had been overlooked.
Finding the True Cost of IP Soybeans
In order to determine if the premium offered for an IP soybean program makes sense, you must first understand what it would cost to grow IP soybeans on your farm. So the VTF asked Purdue University Professor of Economics Joan Fulton, Ph.D., and graduate student Hayley Wendler to explore the cost of growing different IP soybeans.
The study examined the cost of growing several different types of IP soybeans including a slew of variables like the cost of border strips, weather patterns, planting and harvest delays, the cost of cleaning out machinery. The key is understanding which costs are applicable for different types of IP soybeans and determining how to apply an economic cost to each of the variables.
The study found that the additional cost of a soft IP soybean per bushel could be as low as $0.17 to upwards of $1.00 per bushel depending on their situation. And if a farmer decides to devote all of his or her acres to a soft IP variety, additional costs could nearly disappear.
Learning by Example: Hard Red Spring Wheat and Canadian Canola Markets
The VTF knows that calling for any change within the U.S. soy industry is going to be a challenge, and that’s why the task force asked North Dakota State professor William Wilson, Ph.D., and researcher Bruce Dahl, to explore how other crop industries have motivated their markets to improve value.
Click here to see more...