U.S. soybean growers are losing market share in the all-important China market because the race to grow higher-yielding crops has robbed their most prized nutrient: protein.
Declining protein levels make soybeans less valuable to the $400 billion industry that produces feed for cattle, pigs, chickens and fish. And the problem is a key factor driving soybean buyers from the U.S. to Brazil, where warmer weather helps offset the impact of higher crop yields on protein levels.
A decade ago, the United States supplied 38 percent of soybeans to China, the world’s top importer, compared to 34 percent from Brazil. Now, Brazil supplies 57 percent of Chinese imports compared to 31 from the United States, according to China’s General Administration of Customs.
Soybeans are by far the most valuable U.S. agricultural export, with $22.8 billion in shipments in 2016. Declining protein levels and market share pose another vexing problem for soy farmers already reeling from a global grains glut and years of depressed prices.
The U.S. soybean industry also faces rising competition from a growing number of synthetic and organic alternative feeds that provide more protein for less money.
These are troubling trends for the $41 billion U.S. soybean sector, but the industry’s response has yet to take on much urgency. That’s because the erosion of protein levels has come over many years, and many industry players still have short-term economic incentives to prioritize higher yields over higher protein.
Protein levels have fallen as biotechnology and other breeding advances have pushed yield per acre to record highs, which dilutes protein content. But U.S. farmers can still make more money producing higher volumes of lower-protein crops because they only get an additional 3 to 5 cents a bushel for higher-protein beans.
Over the long term, however, falling protein levels could have dire consequences for the U.S. industry as a whole – especially in China, which buys two-thirds of all soybeans traded in the world market to feed its vast livestock operations.
“China needs soybeans, and we’re at risk of becoming a residual supplier if we don’t work on protein improvements,” said North Dakota farmer Jared Hagert, a director and past chairman of the United Soybean Board (USB), an industry association.