Expanding soybean export markets

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The U.S.-China tariff trade war has resulted in huge export losses to the U.S. soybean industry. However, there is a concentrated effort by groups such as the United Soybean Board (USB) and the American Soybean Association (ASA), along with related soy industries, to find new markets for U.S. soybeans.

“The United Soybean Board and the American Soybean Association are founding members of the United States Soybean Export Council (USSEC) and through it we work on market outreach,” said Jerad Hagert, a member of the USB who farms near Emerado, N.D.

“As luck would have it, about a year before the first tariffs went into place, the USB had undergone an evaluation of our international marketing program just to understand if we were investing in the right places. This was a part of a long-range strategic plan for the USB, but also something the USSEC wanted to look at further.”

To explain the USSEC structure a little more, Valley City, N.D., producer Monte Peterson listed some others who play a role in the USSEC. Peterson serves on the ASA board and is one of four ASA board members who serve on the USSEC board and currently serves as the vice-chair of USSEC.

“We also have four directors from the USB on the USSEC, and the rest of our board is made up of primarily those from within the industry. We have a large exporter, a large crusher, food grade exporter, identity preserved type exporter and an allied class, which is made up of members of qualified state soybean boards or state check-off boards,” Peterson explained. “It is a very diverse group and the primary purpose of the USSEC is to build a preference for U.S. soy worldwide – that is what we do.”

That report indicated the major emphasis was on the China market, Hagert noted, which was understandable since China is the biggest player in the world in the soybean market. But it also made the group a little apprehensive about what could happen.

At that time, they decided to take a step back and re-assess the situation and see if there were other opportunities to market soybeans by taking China out of the pool. This was done before the tariff dispute started and was done knowing that China was the major player that would demand a certain amount of market funding. But that part of the program was set aside and the focus was directed at other possible export markets, Hagert explained.

He also noted that it was decided to rank the markets, from mature down to developing.

“We decided that the mature markets probably weren’t places where the USSEC should be playing a huge part, because those markets are already being serviced by multi-national companies. Instead, we decided to focus the lion’s share of our international marketing dollars to those developing markets.”

It is a bit complicated to understand how the USSEC is funded and administered, and Peterson provided some details on that aspect.

“The funding primarily comes from the USB and that money is leveraged with USDA’s Foreign Ag Service’s Market Access Program (MAP), Foreign Market Development (FMD) and some check-off dollars from the states,” Peterson said. “ASA’s role is it is the entity that is identified by USDA to implement and disperse those market promotion dollars.

“It is a complex structure – funding comes from multiple sources, but it also implements the strategies from multiple entities at the same time. All of this is put together on an annual basis and it is called the Unified Export Strategy (UEF).

Challenges on the horizon

The rounds of tariffs and the lack of negotiations with China has resulted in what Peterson call a “major hiccup” for the U.S. soybean industry.

“Our challenge is to build demand in every other country in the world, beyond China, and that is a huge undertaking,” Peterson said. “Currently, we would need to have about a 92 percent market share in every other country in the world to make up for the loss of sales to China. That is a huge undertaking. That is the effort we have to make and the challenge we are faced with.”

On a positive note, Peterson identified many areas of the world which have potential from developing new markets for U.S. soy, including areas as southeast Asia, the Asian subcontinent, Africa and the European Union, to name just a few.

“Long-term market demand for protein, and especially soy protein, will continue to grow with a growing population of more middle income families around the world who can afford better diets,” Peterson said.

Market access

Market access can be a lot of different issues, according to Peterson, and those issues are ongoing all of the time in varying countries around the world. This is something the ASA works on from Washington, D.C.

To illustrate the concept of market access, he said in the past we have been exporting 9 million bushels of soybeans every year to Vietnam, but at this time we are shipping no soybeans into that country.

“The reason we are not exporting soybeans into Vietnam is because our customers in Vietnam fear the rejection of U.S. soybeans if it is determined there is any trace of Canada thistle in that shipment,” he explained. Therefore they have turned to South America for their soybean needs.

“It is a constant effort to meet at the bargaining table, to gain understanding and acceptance of what is suitable for both sides,” he went on to explain. “Since I have become involved with U.S. exports, I am amazed by the constant issue of market access, and not at just one place in the world, but probably two or three at one time. It is a thing we must continue to stay on top of and work on our behalf to rectify.”

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