John Baize, president of John Baize and Associates, has spent decades researching and consulting for the U.S. commodities industry. Analyzing global export trends, he says demand for U.S. Soy is strong and positioned to remain strong into the future. He sat down with the U.S. Soybean Export Council (USSEC) to talk about the reasons international buyers can be confident in the U.S. soybeans, soybean meal and soybean oil they purchase.
Q: Tell me a little bit about your history working in the U.S. soybean industry.
A: I started working for the American Soybean Association in 1979 as head of their Washington, D.C. office. Back then, we bragged that the U.S. had grown 2.2 million bushels of soybeans, which was far more than it had ever been before. We had a record yield that year of 32.2 bushels per acre. Now, 38 years later we’ll be producing 4.2 to 4.4 billion bushels of soybeans. Last year we had an average yield of 52.1 bushels per acre. The industry has had phenomenal growth. That’s pretty amazing when you consider the competition we’re faced with from a very aggressive Brazil, in particular, but also Argentina.
Q: How are soybeans used around the world?
A: Soybean meal is used to produce animal protein, primarily. Swine, poultry, farm-raised fish, dairy cattle; the growth in demand for meat (animal protein) has been a key driver, and that’s really a function of growth of per capita income around the world. Soybean oil is a top-quality oil used around the world but it’s also a key feed stock for the production of biodiesel. Meat consumption and human food consumption for soybean meal, plus biodiesel, have been drivers. All of that really stems back to how much money people have to spend. When they’re poor, and get more money, the first thing they do is try to upgrade the quality of their diet – and that requires soybean meal for animal feed.
Q: What emphasis does the U.S. soybean industry place on exports?
A: The U.S. soybean industry, almost from the beginning, has made exports a top priority. They understood very early that we have the opportunity to produce more than we could consume domestically. The price that farmers get for their soybeans is a function of how big of stocks we have at the end of the marketing year before we begin harvesting the next crop. If you have big stocks, you have low prices. So they really focused heavily on exports and that’s been really the central objective of the soybean industry since the 1950s. In 2017, about 59.5 percent of U.S. soybeans were exported into the world market. If you look at the world, the growth that’s occurring is not in the U.S. The global market is growing by about 12 to 13 million tons a year, which is a lot of soybeans. The export market is where the growth is.
Q: China is the biggest customer of U.S. soy, but where do you think the next “boom” will be, in terms of growth?
A: I think the next really big boom is going to come in south Asia. Right now we’re seeing it in Bangladesh, and also in Pakistan. But I think in the longer term it’s going to be India. Some people think that India’s population is already larger than China’s today, and certainly it’s going to be higher in the future. If they start seeing more per capita income growth, they’re going to want to consume a lot more animal protein and they’ll have to import soybeans to do it. They won’t be able to produce what they need. They’ll probably never grow at the rate of China, but India will grow.
Q: How would you describe current global demand for U.S. soybeans?
A: We’re seeing good demand for soybeans right now. In spite of the fact that U.S. subsidies have favored production of other crops versus soybeans, soybeans have continuously increased their production. Demand for soybeans has grown far faster in the global market in percentage terms than it has for corn, or wheat, or cotton or rice. So if the global economy’s going to grow, if the populations is going to go up, there’s going to be a demand for soybeans, and we’re one of the best places in the world to produce it.
Q: To what do you attribute U.S. soybean farmers’ ability to grow a plentiful, healthy crop, year after year?
A: We have some of the best soil in the world. In most years, we have extremely good weather across the growing season. We have a winter kill that helps us control insects and diseases. By contrast, Brazilian farmers have problems we don’t. Soils are terrible. They don’t have winter kill, so any bug or disease present at harvest is going to be there at planting. We have an infrastructure in the U.S. that can get our soybeans to a river and down to the ports very efficiently; in Brazil they have to haul soybeans 1,200 miles in a truck. We have technology, our universities and research centers are doing excellent work. Our farmers are capable of taking advantage of all those things. Plus we have laws from the federal government about inspection, so foreign buyers know they can trust what they buy from us. We have a food safety system in place that other countries really wish they had.
Q: What type of service does USSEC provide to international buyers of U.S. Soy?
A: USSEC helps buyers by teaching them feed formulation, teaching soybean oil refining, and helping with disease control, helping with poultry genetics and swine genetics. Connecting them to industry experts to help them. As those companies develop, they want to learn things like risk management; how can they select quality. In addition, if they have a problem with a shipment of soybeans, they go to USSEC and USSEC helps them find a solution. What that gains you, over the long term, is respect and trust. USSEC doesn’t sell anything, so they trust them.
Q: Any final comments about global soy demand?
A: Global soybean demand has grown almost twice as fast since 1990 as that of corn. It’s about four times as fast as wheat. It’s always going to grow faster if you’re developing technology. There is no substitute today for soybeans in animal feed or vegetable oils.