The soybean situation: 2021 and beyond

Already, large areas of native habitat have been destroyed for activities such as pulp production, beef production and soybean cultivation, mostly for animal feed.

Nutritional profile of soy

Among plant protein ingredients, soybeans have the highest crude protein content, about 40%, depending on their location. They also have a balanced amino acid profile, and very good digestibility.

Largest global source of protein for livestock

It’s no surprise then, that in 2021 (as explained in a June 2021 report in the journal Nature Sustainability), soybeans are the largest global source of protein for livestock feed. The authors, who work at academic institutions all over the world, note that global production of soybeans has more than doubled since 2000, mostly from new acreage (about 70% of production) but also from yield gains due to advances in soybean genetics and cropping practices. In total, there are about 100 countries where soybeans are grown.

China’s hunger for soy

China’s soybean import from Brazil has surged by 2,000% since 2000. Most of which is used for animal feed to support increasing meat consumption. At the same time, trade tensions between China and the US (a country from which China also imports soybeans) are expected to result in even more soybean imports into China from South America in future.

“China is the biggest source of soybean demand,” explains Stefan Vogel, Global Sector Strategist, Grains & Oilseeds, at RaboResearch Food & Agribusiness. “Generally, whole soybeans are imported by China for animal feed, mostly from Brazil and the US, with some from Argentina, and are processed into meal there. The hot market is pig feed, although the use of soy in chicken feed production has increased recently as well.”

China rebuilding pig herd

China is currently rebuilding its national pig herd after heavy losses in recent years due to African Swine Fever. Currently, there are over 440 million live pigs in China, notes Asim Anand, Senior Editor at SP Global.

Brazil’s soybean acreage continues to grow

Brazil also exports sizeable amounts of whole soybeans to Europe, and additional volumes to Asia, the Middle East and other parts of the world, says Vogel. Soybean meal (SBM) produced in Brazil is exported to many countries with Europe being the largest destination followed by countries in eastern and southern Asia. “We expect the soybean acreage in Brazil to continue to increase,” says Vogel. “In the past 5 years, it has grown by 2 to 3% a year, but already for this year’s crop growth was close to 4.5%. And it may be even larger than that in 2022 as demand is strong and farmers are making good margins given high global prices and a relatively weak Brazilian currency.”

Huge demand for soybean meal for feed

Apart from China and the EU, Anand says Thailand, Turkey and Russia are major importers of South American soybeans, along with Vietnam, Indonesia and Algeria. However, he adds that soybean meal for feed is in huge demand within both Brazil and Argentina amid their soaring meat production for export, making it tough for soybean exporters to procure the volumes they’d like to ship. He adds that Argentina’s weak economy, high export taxes and dual-currency system are challenges for soybean export there in comparison to Brazil.

European soy cannot meet demand

Vogel notes that in the EU, there is a relatively stable livestock population and, while soybean production in the EU has increased over the last decade, meal made for stock feed from EU soybeans only currently amounts to about 7% of what’s needed. “We need 28-29 million tonnes in the EU, not including the UK, and only about 2 million tonnes of this is from soybeans grown domestically,” he says. “The rest is imported, with over half of the EU’s needs coming from Brazil and Argentina as soybean meal. The remaining 35% stems from imported soybeans processed in the EU, largely again from Brazil and Argentina, and a little from North America and Paraguay. At this point and for the foreseeable future, the EU will need to continue to import soybean meal for livestock feed if we want to maintain current levels of meat consumption.”

Soybeans fix their own nitrogen and grow well in many regions without any inputs.

European soy: Growth & potential

However, Soya Europe President Matthias Krön notes that if we look at all of Europe, soybean production is growing and the potential to increase acreage is very high. He explains that soybeans are an excellent choice for crop farmers across Europe, especially in Ukraine and Serbia, because there are now fewer crop protection products available and nitrogen fertiliser will continue to be very expensive. “Soybeans fix their own nitrogen and grow well in many regions without any inputs,” Krön observes. “The crop can also be grown in more northern countries, like maize, and more farmers are learning how to grow soybeans. There are also subsidies available. There are 10 million tonnes grown now in Europe and this will grow to 15 million tonnes in the next 9 years. Of which, 80% will go into animal feed.

“Soybeans can be an excellent choice for European crop farmers”

Global meat consumption

Globally, the question of whether we have reached ‘peak’ meat consumption is very difficult to answer. Consumption levels in China are similar to those in Europe now and Europe’s consumption is decreasing. I advise everyone not to underestimate European soybeans when it comes to meeting our livestock feed needs. We will continue to use a mixture of both imports and domestic soybeans with a goal of more sustainable global soybean production everywhere”, he says. To help European agriculture become more sustainable, the European Feed Manufacturers’ Federation (FEFAC) released its most-recent soy sourcing guideline document in February 2021.

Soybean production in South America

According to the scientists who published the Nature Sustainability paper, soybeans are grown in many areas of South America. More than half of the world’s soybean production currently comes from South America, where the soybean harvested area has increased since 2000 by 160% in Brazil and by 57% in Argentina.

Both satellite imagery and site verification were used to identify the main areas:

• Amazon Rainforest,
• Atlantic Forest,
• Cerrado scrubland,
• Chaco dry forest,
• Chiquitania savanna,
• Pampas grassland,
• Pantanal wetland and
• Caatinga thorn-scrub forest.

Their study reveals that soybean coverage in South America increased from 26.4 million hectares (65.2 million acres) in 2001 to 55.1 million hectares (136.2 million acres) in 2019, an area larger than California. Regarding the past season (2020-2021), according to the Brazilian government report ‘Projections of Agribusiness Brazil 2020/21 to 2030/31,’ soybean production is currently about 137.6 million tonnes, the most ever produced.

• Production in Brazil is led by the states of:
  Mato Grosso with 27%,
• Rio Grande do Sul with 15%,
• Paraná with 15%, Goiás with 10% and
• Mato Grosso do Sul with 8%.

Growth trends

As stated in the report, factors such as production expansion, cattle herd size and land prices “show a clear trend of agricultural growth towards the North, mainly towards the states of Rondônia, Pará and Tocantins.”

In 10 years (2030/31), Brazilian soybean production is projected to be 178.2 million tonnes, an increase of almost 30%. Domestic consumption of soybeans is expected to reach 60 million tonnes at that point, but could reach as high as 67.9 million tonnes. “It should grow in the coming years just above the consumption of maize, which is projected to increase by 22.8% between 2021 and 2030,” state the report’s authors, “both products being essential in the preparation of animal feeds.” In terms of Brazil’s soybean exports in 2030-2031, they are projected to be 117.8 million tonnes. However, the US Department of Agriculture (USDA) projection is 123.4 million tonnes, which will total 55.5% of the world soybean exports.

Changing dynamics

USDA Economic Research Service researchers that include Senior Economist Fred Gale explain that (as explained in their report USDA Agricultural Projections to 2030) “Chinese demand will drive continued growth in soybean trade over the next 10 years, as world soybean imports climb by 46.9 million tonnes (26.7 percent) to 222.7 million tonnes.” Brazil is expected to be the leading country for soybean exports through 2030. In addition, the dynamics of world production have changed a great deal in recent decades. In a new book, Crop Physiology Case Histories for Major Crops, the authors note that in the early 1990s, the US accounted for half of global soybean production, while Brazil and Argentina produced about a quarter. “The share of global soybean production among these 3 countries has changed drastically over the past 3 decades,” they state, “with Brazil and Argentina together now accounting for half of global production and the US producing a third.” There are a few main factors that may affect world soybean production for animal feed, chief among them being the success of plant-based food products and world population. The United Nations projects world population to be 9.7 billion by 2050.

Consumers of soy

Currently, there are about 100 countries where soybeans are grown and probably all of them use SBM in livestock diets.

According to an analysis published by the University of Oxford’s Food Climate Research Network (using USDA data up to 2018) soy consumption is broken down so:

• 37% is fed to poultry (the largest consumer of global production)
• 20% is fed to pigs
• 6% goes to aquaculture
• 2% is fed to cattle and
• The rest is used in human food products and dog food.

Challenging for soy production

SBM will remain a crucial feed ingredient for many livestock species, but environmental, societal and trade pressures are reducing its use in some areas of the world. More environmentally-friendly alternatives to soybeans produced in South America, such as insect meal, lupin, algae and many others, are actively being examined in some countries.

However, China’s government directed the country’s pig production sector earlier this year to use alternatives to SBM where possible, in order to reduce its reliance on imported soybeans, no matter the country of origin. This comes after China imported a record amount of soybeans in 2020.

In addition, in the EU the need for soybeans in pig and poultry rations may decrease quite significantly in future in that region, now that the ban has been lifted on using some animal by-products in feed.

Rise of synthetic amino acids

Lastly, because synthetic amino acids can now be produced economically in large volumes, they represent another way that the use of SBM in livestock feeds can be reduced. According to the UN FAO report Protein Sources For The Animal Feed Industry, “it is suggested that…if 550,000 tonnes of L-lysine hydrochloride is used globally, it could replace 18 million tonnes of SBM, representing about half of US SBM production.”