ISA Special Alert Series Update #1 – Synthetic Amino Acids Threaten Soybean Producers’ Revenue
Loss of Livestock Market Share Driven by Synthetic Amino Acids
If soybean producers need a target to vent their frustration over plummeting soy-inclusion levels in swine feed, they need look no further than declining soybean feed quality and the rising use of synthetic amino acids.
The increasing use of synthetic amino acids as an alternative to soybean meal in livestock rations, especially for swine, cuts revenue from soybean growers and much of the value chain. Checkoff-funded research has found that soybean inclusion rates in swine feed have dropped 70 percent since 1990, in large part replaced by synthetic amino acids and corn byproducts.
Given that 70 percent of soybeans produced in the U.S. go to feed livestock, and the displaced soybeans pay farmers more than the corn byproducts, this synthetic incursion is costing U.S. farmers millions of dollars in lost revenue. On a global scale, the losses would run in the billions.
These losses manifest themselves in several different ways. One 90,000-sow swine operation in the Midwest has reduced soybean meal purchases by 6,222 semi-truck loads per year, all of which were replaced by 146 semi-truck loads of synthetic amino acids and 6,068 semi-truck loads of corn byproducts. If soybean meal is $326 per ton and corn byproducts are $165 per ton, $26 million in soybean revenue is lost by farmers across this one single swine operation. Multiply this experience across the entire swine industry and you have some significant and sad losses.
It’s the amino acid levels in soybeans—not protein or oil—that determines livestock feed value. Livestock producers and nutritionists rely on seven essential amino acids to drive animal growth, productivity and profitability. If soybeans don’t deliver those amino acids, then customers in livestock markets go elsewhere for them. Synthetic replicas are abundant, cheap, and fighting for the soybean share of swine rations.
The sales organizations behind synthetic amino acids have sales teams that aggressively and effectively market directly against soybean meal. And, synthetic amino acid prices have been driven down by the African Swine Flu epidemic in China, which is forecast to reduce the swine herd in that and neighboring countries by 50 percent. As a result, manufacturers are reducing prices for synthetic amino acids to recoup sales, further displacing soybeans.
“The economic ramifications for the soybean industry are as simple as they are devastating,” says Chuck Hill, CCA, specialty products manager for the LG Seeds and AgriGold seed brands. “Growers, seed suppliers and most processors, for instance, don’t make any money off synthetic amino acids. They make money from soybeans via the price they receive. Replacing soybeans with synthetic amino acids has a negative impact on soybean demand and market price, as well as on farm revenue.”
LG Seed and AgriGold are the first two seed companies to join the Illinois Soybean Association’s (ISA) High Yield PLUS Quality (HY+Q) program designed to identify and encourage selection and planting of those soybean varieties which feature high livestock feed value based on essential amino acid profiles.
At present, these two seed companies have more than 20 varieties in their portfolios that meet the HY+Q criteria for designation as superior varieties for livestock feed, and also yield well.
“Nearly half of the soybean varieties available on the market today already offer above average feed quality without sacrificing high yield potential,” says Dr. Linda Kull, director of ag innovations for ISA. “Farmers can increase the demand for their soybeans through fully informed seed selection and planting high-feed-value soybean varieties. That simple step can help the soybean industry maintain and recapture market share in critical livestock feed markets.
Duane Dahlman, a former ISA director who farms near Marengo, Illinois, has participated in ISA’s feed value testing program for years. He says that knowing the make-up of the beans you harvest helps improve understanding of variety performance under your conditions. And the data helps with variety decisions.
“Information about the varieties our soybean seed companies are marketing is a valuable tool, and we have to use it,” he urges. “We have the ability to raise the best beans in the country—to better the entire industry and raise the bar on soybean value.”
A complete list of top-performing varieties across many national and regional seed brands has been developed by extensive soybean checkoff sampling data and can be accessed on line at Soyvalue.com.
The Illinois Soybean Association (ISA) checkoff and membership programs represent more than 43,000 soybean growers in Illinois. The checkoff funds market development, soybean innovation and profitability efforts, issues analysis, communications and education. Membership and advocacy efforts support Illinois soybean farmer interests in local areas, Springfield and Washington, D.C. through the Illinois Soybean Growers. ISA programs are designed to ensure Illinois soy is the highest quality, most dependable, sustainable and competitive in the global marketplace. For more information, visit the website www.ilsoy.org.