Aquaculture Opportunities Remain Close to Home

The soybean checkoff enjoys success with soy in aquaculture in China and other markets and looks to capitalize closer to home as well. The Caribbean Basin represents one promising area where the checkoff is exploring opportunities, including countries in the Caribbean, Central America and northern South America.

“The Caribbean Basin could represent a huge opportunity for aquaculture,” says Roy Bardole, United Soybean Board (USB) director and a soybean farmer from Rippey, Iowa. “That area features thousands of miles of coastline with good water and good current, which helps maintain good water quality where fish are raised. If we can help get that aquaculture industry thriving, the U.S. soy industry has an advantage to become the feed supplier, due to proximity.”

To help evaluate the market potential of the Caribbean Basin, USB’s Global Opportunities Committee has selected Promar International, a Washington, D.C.-based market assessment and promotion strategy development company, to perform a market potential analysis. The analysis will study the feasibility of commercial aquaculture in the countries bordering the Caribbean Basin with a view to identifying opportunities for expanding the U.S. market for soybeans and soybean products as feed ingredients for offshore marine and inland aquaculture fisheries.

The analysis will provide a profile of key industry players in the market, evaluate the economics and cost structure of the aquaculture value chain, identify the regulatory and legal framework and governmental policies that apply for aquaculture development and identify available infrastructure and logistics for aquaculture production and to supply those products to the United States.

USB also wants the study to analyze other conditions that may affect aquaculture and the U.S. soy industry development in the region and provide analysis of strengths and weaknesses for aquaculture development and increased demand for U.S. soy products. The Carribbean Basin examination will provide U.S. soybean farmer-leaders with recommendations on how to approach target markets by overcoming challenges, combating threats, taking advantage of opportunities and leveraging strengths, and develop and complete the necessary matrices to make recommendations on geographical markets, locations, species of fish and production systems.

This project will follow up on the highly successful soy in aquaculture program that began in China. Since that program, the U.S. soybean industry has expanded its efforts to the rapidly growing aquaculture industries in other parts of Asia, Latin America, the Caribbean, the Middle East and Mediterranean Europe. Eighteen different countries around the world now use feeds and production technologies developed in China and through collaborative research with the soybean checkoff. More soy products will be used in the aquafeed industry this year because of price increases for fish meal, as well as other plant ingredients like rapeseed meal and cotton meal. Now more markets are aware of the advantages of soy protein concentrate (SPC) to partially or completely replace fishmeal for different fish and shrimp species. The annual SPC consumed for aquafeed production will be about 30,000 tons in 2010. Other advances in soy aquafeeds could yield additional market benefits.

“If we can develop soybeans with increased omega-3 fatty acids, that would be an advantage for soy as an aquafeed,” says Bardole. “Currently, despite the fact that fish meal is becoming prohibitively expensive due to supply, aquaculture producers feed fish meal late in production to increase omega-3 fatty acids in their fish. Soy has an opportunity to replace even more fish meal in the future.”

The benefits of developing the aquaculture industry in the Caribbean Basin could be significant for U.S. consumers, in addition to the U.S. soy industry.

“The closer you raise the fish you consume, the better chance there is have to have a degree of control over environmental concerns and food quality,” says Bardole. “It’s a great opportunity to provide consumers with high-quality, environmentally friendly fish and shrimp. The Caribbean Basin holds a tremendous opportunity to provide benefits to U.S. consumers.”

Opportunity for More U.S. Soybean Oil Exports to China?

The United States exports more than half of all its soybeans across its borders and overseas. Since the soybean checkoff began, U.S. soy exports have doubled. The United States exported 1.56 billion bushels of the 2009 soybean crop, breaking another record last year. Still, increased prospects might be around the corner as United Soybean Board’s (USB) Global Opportunities Committee (GOC) continues to  track overseas policy and regulatory issues between China and Argentina that may end up as an opportunity for U.S. soy exports.

On April 1, China, the world’s largest user of soy oil, restricted imports of Argentine soy oil due to an asserted failure to meet quality standards. China began applying standards that had been in place—but not enforced— on excessive solvent residue in soy oil, a quality standard put in place for consumer safety.

Studies found that Argentina soybean oil contain excessive solvent residue, according to the China Chamber Commerce Import and Export of Foodstuffs, Native Produce and Animal Byproducts. The Ministry of Commerce limited solvent residues used for processing soybean oil to 100 parts per million. Some past Argentinean soy oil has measured residue levels of 300 ppm.

Around 70 percent of China’s edible oil market depends on imports from major soybean producing countries around the world including Argentina followed by the United States and Brazil. China also imports a lot of whole soybeans. In 2009, it bought 42.5 million tons of soybeans, up 13.5 percent from the previous year, and 4.6 million tons of soybean oil. If China’s restrictions on Argentine soybean oil drag out, it could boost U.S. soy oil exports. “USB’s GO Program continuously monitors issues such as this to maximize potential market increases for U.S. soy and keep an eye on future restrictions that U.S. soybean processors may encounter,” says Russ Carpenter, member of the USB GOC and a soybean farmer from Trumansburg, N.Y. “China’s demand keeps growing, and the food industry is becoming an increasingly globalized sector. These are all positive positions for U.S. soybean farmers.”

U.S. soybean farmers provide a quality product and steady supply to their export partners, but some countries continue to erect roadblocks at U.S. soybean exports. For example, Russia has introduced practices that limit market access for imported soybeans, artificially bolstering domestic soybean production.

“Without market access, there is no export market, so it’s important to build relationships to strengthen the market access,” says Bob Metz, United Soybean Board (USB) director and a soybean farmer from West Brown Valley, S.D. “Anytime we can open up new markets, it’s of great value for U.S. soybean farmers.”

USB Chairman Phil Bradshaw (left) and USB farmer-director Bob Metz (right) explore opportunities for U.S. soy this year in Russia.

One example of market access challenges in Russia is the Sodrugestvo soybean crushing plant’s limits on imported U.S. soybeans. Sodrugestvo was hindered by a recently-enacted mandatory biotech labeling law for food and feed products by the Russian government. The law, combined with public assertions about the safety of crops improved through the use of biotechnology, prevented Sodrugestvo from being unable to import U.S. soybeans until 2009. Regulations required the crushing plant to install a separate biotech soy crushing line of equipment to be able to import U.S. soybeans.

Russia’s farmers have recently increased their soybean production efficiency. Russia could double its production of soybeans by 2015, according to SovEcon, Russia’s oldest company specializing in agricultural market research and consulting. Since 2000, Russia has significantly increased soybean production in the wake of the continuing growth of the domestic poultry and feed manufacturing industries, although imports still account for up to 50 percent of the total supply of soybeans in the market.

Some claim the Russian government’s favorable trade measures have made soybeans artificially more profitable to grow, allowing for higher investments into fertilizer and chemicals that increase production.

Government support extends to other agricultural industries as well, with subsidies to rebuild the Russian poultry industry. Cargill is building a large poultry processing plant in the Tula region of Russia, 120 miles south of Moscow. In addition to subsidies, Russia implemented restrictions on the import of poultry meat from overseas, including the United States. Artificially increasing Russian poultry production also increases the market for soy use in Russia, since poultry represents the number one consumer of soybean meal.

The soybean checkoff, through its Global Opportunities program, continues to work for greater market access in Russia. A recent project with World Perspectives, a Washington, D.C.-based firm providing worldwide market information and analysis, will examine the current situation of market access and desired modifications and make a realistic assessment of Russia for U.S. soybean farmers and the soybean checkoff’s potential to increase U.S. soybean farmer profit potential in this market.

“Russia represents great opportunities,” Metz believes. “Russia is increasing their poultry industry, and it makes more sense for Russian farmers to grow cereal grains and import soybeans or soybean meal to feed to the growing poultry industry.”