Nutrition

Background

The state of soybeans: 2021 and beyond

Soybeans: a crop that is now critical in sustaining the current human population. It is, however, also a crop that brings with it huge sustainability concerns in terms of cultivation in South America. How is it affecting global production and trade – and what role does the swine industry play?

Large amounts of native habitat have already been destroyed for activities such as pulp production, beef production and soybean cultivation, mostly for animal feed. Among plant protein ingredients, soybeans have the highest crude protein content, about 40% depending on global location. They also have a balanced amino acid profile and very good digestibility.

It is no surprise, then, that in 2021 (as explained in a June 2021 report in the journalNatureSustainability), soybeans are the largest global source of protein for livestock feed. The authors, who hail from 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.

Harvest of soybeans in Rio Grande do Sul state, Brazil. - Photo: Shutterstock
Harvest of soybeans in Rio Grande do Sul state, Brazil. - Photo: Shutterstock

Soybean-harvested area

“More than half of the world’s soybean production currently resides in South America, where soybean-harvested area has increased since 2000 by 160% in Brazil and by 57% in Argentina,” the researchers state. “Over the same period, China’s soybean import from Brazil has surged by 2,000%, mostly for providing animal feed to meet 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 US with some from Argentina, and are processed into meal there. The hot market is hog feed, although chicken feed production has made a jump recently as well.”

China and Brazil

China is 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 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 soybean acreage in Brazil to continue to increase,” says Vogel. “In the past 5 years, it has been 2–3% a year, but already for this year’s crop it 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.”

The state of soybeans: 2021 and beyond

EU and Europe

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 thereof is from soybeans domestically grown,” he says. “The rest is imported, with over half of the EU’s needs as soybean meal mostly from Brazil and Argentina. The remaining 35% or so stems from imported soybeans processed in the EU, again largely from Brazil and Argentina, and little from North America and Paraguay. At this point and for the foreseeable future, the EU will have to continue to import soybean meal for livestock feed if we want to keep up current meat consumption.”

Excellent choice for crop farmers across Europe

However, Soya Europe president Matthias Krön notes that when looking 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 products,” Krön observes. “The crop is also able to be grown in more northern countries, as corn is, 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 nine years, of which 80% goes into animal feed.”

“Globally, the question of whether we have reached ‘peak’ meat consumption is very difficult to answer,” he says. “Consumption levels in China are similar to that of Europe now and Europe’s is decreasing. I advise everyone, don’t underestimate European soybeans to fill 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.”

To help European agriculture be more sustainable, the European Feed Manufacturers’ Federation released its most-recent soy sourcing guideline document in February 2021.

Other countries

Apart from China and the EU, Anand says, Thailand, Turkey and Russia are the major importers of South American soybeans, along with Vietnam, Indonesia and Algeria. However, he adds that SBM 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 would 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.

The state of soybeans: 2021 and beyond

Soy cultivation areas in South America

According to the scientists who published the Nature Sustainability paper, soybeans are grown in many areas of South America. They used both satellite imagery and site verification to identify the main areas to be the Amazon rainforest, the Atlantic Forest, the Cerrado scrubland, the Chaco dry forest, the Chiquitania savanna, the Pampas grassland, the Pantanal wetland and the Caatinga thorn-scrub forest.

Their study reveals that soybean coverage in South America increased from 26.4 million ha in 2001 to 55.1 million ha in 2019, an area larger than California.

Regarding the past season of 2020–21, according to the Brazilian government report Projections of Agribusiness Brazil 2020/21 to 2030/31, soybean production currently sits at about 135.4 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%. 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”.

Brazilian soybean production

In 10 years (2030–31), Brazilian soybean production is projected to be 175.4 million tonnes, an increase of almost 30%. Domestic consumption of soybeans is expected to reach 59.1 million tonnes at that point, but could reach as high as 66.8 million tonnes. “It should grow in the coming years just above the consumption of corn, which is projected at 22.8% between 2021 and 2030,” state the report’s authors, “both products essential in the preparation of animal feeds.”

Brazil’s soybean exports in 2030–31 are projected to be 116.0 million tonnes. However, the US Department of Agriculture (USDA) projection is 121.5 million tonnes, which will total 55.5% of the world soybean exports.

US Department of Agriculture Economic Research Service researchers, including senior economist Fred Gale, explain that (as indicated in their report USDA Agricultural Projections to 2030) “Chinese demand will drive continued growth in soybean trade during the next ten years, as world soybean imports climb 46.2 million tonnes (26.7%) to 219.2 million tonnes.” Brazil is expected to be the predominant country of soybean export through to 2030. In addition, the dynamics of world production have changed a great deal in recent decades.

Success of plant-based food

In a new book called 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 amongst the 3 countries has changed drastically during 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 is projecting world population to be 9.7 billion by 2050.

Pig production and soybeans

SBM is currently a critical protein source in pig feed around the world. In the EU, domestic and imported soybeans have been a cheap source of protein for pig production since the ban on use of animal products after the BSE crisis of two decades ago.

According to an analysis published by the University of Oxford’s Food Climate Research Network (using USDA data up to 2018), 20% of global soybeans are fed to pigs, 37% to chickens and other types of poultry and 6% goes to feeding various aquaculture species. Only 2% are fed to dairy or beef cattle. The rest is mainly consumed in human food products and dog food.

Brazil

Although it is the world’s largest soybean-exporting country, Brazil also uses soybeans in its own pork production, and exports of pork continue to increase. During the first half of 2021, international sales reached 453,900 tonnes, a volume 18.44% higher than that shipped in the same period last year. By August, the Brazilian Association of Animal Protein (ABPA) stated that year-to-date export volumes have reinforced the expectation of a new record in total sales for 2021. Main destinations for Brazil’s pork exports are China, Hong Kong and Chile.

Trends in various countries

Soybeans are grown in about 100 countries, and it is likely that all of them use SBM in pig diets. Some, such as Brazil, the US and Argentina, export soybeans in whole or meal form for pig and poultry consumption in other countries. Due to demand from China, soybean supply in Brazil, the US and Argentina is always quite tight. The use of soybeans in pig feed in each country fluctuates to some extent every year. Factors that affect usage include pig production levels, domestic soybean acreage and yield, availability and price of imported soybeans or SBM, export volume and availability of other sources of feed protein.

India

In India right now for example, according to the USDA, SBM is the main feed protein source throughout the pig, poultry/egg and dairy sectors. Due to a current spike in prices due to hoarding and other factors that include a critical shortage of livestock feed protein, there are strong calls to increase soybean imports.

Gale at the USDA notes that in China, there is current pressure from the government to use less SBM and corn. Using wheat as a protein source in pig and poultry feeds has already reduced SBM use and may reduce it further in future. The Chinese Ministry of Agriculture has suggested alternatives to SBM that include rapeseed meal, cottonseed meal, peanut meal, sunflower meal, distillers dried grains, palm meal, flaxmeal, sesame meal and corn processing by-products.

European outlook

Krön notes that pork consumption in Europe – and therefore numbers of pigs produced – is declining. Broiler production is increasing in Europe to some extent (and broilers are also more feed efficient and eat less overall than pigs) but there is also a strong driving force in Europe towards less meat consumption, especially pork. He therefore believes the need for soybeans in livestock feed in Europe will decrease.

Need for soybeans in European diets

The need for soybeans in European diets may also decrease significantly in future, now that (as of August 2021) the EU has lifted its ban on the use of animal by-products for animal feed. The proposed change in legislation allows processed animal proteins from pigs to be used in poultry feed and from poultry to be used in pig feed. While most EU member states have endorsed the change, France and Ireland have abstained.

In addition, on a global scale, synthetic amino acids, which can now be produced economically in large volumes, represent another way that soybean use can be reduced in livestock feeds.

According to the United Nations Food and Agriculture Organization report Protein Sources for the Animal Feed Industry, “it is suggested that the incorporation of one tonne of L-lysine hydrochloride could save the use of 33 tonnes of soybean meal. Or, if 550,000 tonnes of L-lysine hydrochloride is used globally, it could replace 18 million tonnes of soybean meal, representing about half of the USA soybean meal production.”

Overall outlook

China remains the country that uses by far the most soybeans for pig feed. Its pig herd is still growing back to the level it was before its recent decimation from African Swine Fever, and it may exceed that level.

Similarly, in other countries, due to population increase and a larger middle class, pork consumption and therefore soybean consumption by pigs will grow. In countries such as those in the EU, pork production may continue to decline.

Alternatives to SBM in pig diets will continue to be investigated and demand for plant-based foods will continue to grow, but it remains to be seen how these will affect the demand for soybeans in pig feed in China and beyond.