In 1960, Theodore Levitt, an American economist and professor, said that the railroad industry was failing “because those behind it assumed they were in the railroad business rather than the transportation business.”
The soybean industry is in no way failing. But the railroad example can serve as a cautionary tale to those who don’t expand their market view beyond their own product.
As a U.S. soybean farmer, you aren’t in the soybean business – or even the farming business. You’re in the animal feed business and the commercial baking business and the consumer goods business. So it’s important to think beyond your field and consider your end users’ needs.
Your end users don’t need soybeans. They need the protein, oil and amino acids that come from soybeans.
Take your No. 1 customer of soybean meal, animal agriculture, as an example.
“We buy soybean meal for its protein content and great balance of amino acids,” says Roy Brister, Ph.D., director of nutrition and feed milling at Tyson Foods.
But protein and amino acids can come from sources other than U.S. soybeans.
“We’re faced with a number of competitors, domestically and abroad, that can supply these products,” says Dan Corcoran, a soy checkoff farmer-leader from Ohio. “South America has grown substantially as a global supplier of soybeans. Plus, synthetic amino acids can replace essential amino acids, which opens the door to other protein source options.”
With our exceptional composition, sustainability and available supply, U.S. soy is already a leader in global markets. Now’s the time to defend the castle. Now’s the time to rise up to global demands and show the true value of U.S. soybean meal.
But how can we get end users to see that true value? How do we give them one more reason to choose U.S. soy?
Using data to make a difference
Just as DNA technology changed the criminal justice system, near-infrared, or NIR technology, can change the soybean industry by showing beyond a reasonable doubt that U.S. soybean meal can provide the value end users desire.
Almost like scanning a barcode, NIR technology measures soybean protein and oil content quickly and accurately.
“NIR is fast, well-established technology,” says Brister. “And having data on soy protein and oil content spreads the general awareness of the
components that hold value for end users.”
That transparency is powerful all along the value chain. Not only does it show how we’re meeting end-user needs now, but it serves as a guide to how we can continue meeting their needs in the future.
“No matter the product, there’s always room for improvement,” says Brister. “For us, more protein and more energy from amino acids make soybean meal more valuable as a feed ingredient.”
But what does “more” mean? Without a baseline, promising “more” is no different than those toothpaste commercials promising 30 percent whiter teeth.
That’s where NIR technology comes in. By testing for protein and oil, we can determine those areas that can be impacted in order to meet end-users’ evolving needs.
“If you can measure the composition that makes up soybean meal quality, like protein and amino acids, you can set the baseline for improvement,” says Bruce Weber, director of soybean risk management at CHS, Inc.
Until that baseline is known and shared with the entire value chain, how will farmers and seed companies know what needs improving? You can collect data on your farm, but unless you take it out of your filing cabinet and put it to use when making decisions, you can’t expect to see a difference on your operation.
The same concept applies here.
We know the technology exists, and we know what it can measure. What’s needed now is increased transparency all along the value chain.
“Unfortunately, value chain members often work independently,” says Corcoran. “We need to work together and support not only greater use of NIR measurement technology, but also a system that then shares that measurement data with the entire chain.”
This level of transparency moves the industry toward the checkoff’s long-term goal of creating a market system that looks beyond only yield and rewards on compositional quality.
Adding protein and oil to the equation
“In the future, we shouldn’t just be striving for bushels per acre to be profitable,” says Corcoran. “We need to work toward dollars per acre based on protein and oil levels.”
Making the switch to this system takes a commitment from all members of the value chain, from the seed companies to the farmers to the end users. But before any major change can take place, all parties need to see the collective benefit to make the leap.
“There’s not a reason for me to invest in measuring technology until we’re rewarded for the premium soybeans we’re measuring,” says Sam Sullivan, general manager at Central Elevator, Inc. “But if the farmers produce premium soy and end users want premium soy, as the middleman in the supply chain, we’d have to adapt accordingly.”
Fortunately, we’re already hearing about these demands today. End users say they would pay more for higher-quality soy protein.
“We always benefit when we reduce cost and maintain a quality feed ration,” says Brister. “However, if we can develop a higher-quality value ration, even at a higher cost, the premium for better soybean meal could be justified.”
Next, it’s up to you, the farmer, to do your part.
“Since we know our customers need high-quality meal, farmers need to select and demand the best soybean varieties,” says Corcoran. “Anything we can do to improve quality is going to help all members of our industry.”
This could lead to a win-win-win scenario across the entire value chain where the animal ag industry gets an even better product, first purchasers capture more value from the meal and oil, and farmers are not only paid for bushels but also the composition of their crop.
It takes a village
“The bottom line is, all key members of the chain need to have a broader conversation about capturing more value for soy,” says Brister.
“With everyone at the table with open minds, we can determine steps each can take to ensure the best product is planted, harvested, processed and delivered.”
The checkoff works hard to lay this groundwork to get everyone on the same page, to develop a sense of mutual trust and to create a sense of shared success.
“If the soybean industry can improve its product, it’s going to add value for everyone involved,” says Weber. “This will not happen overnight, but the checkoff’s steps in that direction are a good thing.”
Looking beyond the bushel and measuring protein and oil helps keep the focus where it belongs. In turn, this shift from valuing only bushels to valuing yield plus protein and oil will lead to more profit opportunities through the value chain and will help U.S. soy maintain its title as leader in the industry.
“Our future is brightest when we all work together toward a common goal to produce the highest-quality soy products possible and deliver those to our end users,” says Corcoran. “We don’t want to simply meet the needs of our customers. We want to exceed them.”