Soybean Demand Continues to Drive Production
The world soybean harvest reached a record 214 million tons in 2005, the latest year with data, an increase of 4.4 percent from 2004.1 (See Figure 1.) The United States, Brazil, Argentina, and China accounted for 90 percent of that output.2 (See Figure 2.)
The United States is the largest producer of soybeans, with an output of 83.4 million tons in 2005.3 Over the past 25 years, however, its market dominance has eroded.4 The United States produced 60 percent of the world’s soybeans in 1980 but only 39 percent in 2005.5 The country’s declining role as an exporter can be traced to increased competition with South American producers, growing domestic competition with corn, the production of biodiesel, and the resistance in some markets to genetically modified (GM) soybeans.6
Soybeans enrich the soil with nitrogen, which can then be used by other plants, making them beneficial for crop rotations.7 In the United States, this has usually meant planting soybeans and corn in alternating years. But high demand for corn for ethanol production and distiller’s grains (a high-protein animal feed) has driven many farmers to plant two years of corn for every year of soybeans.8 This in large part explains the 7-percent decline in total U.S. soybean harvested area in 2005.9 Globally, however, harvested area stayed stable at 92 million hectares.10 (See Figure 3.)
Brazil produces a quarter of the soybeans worldwide and in 2003 became the largest exporter.11 Its success in this field is largely due to vast tracts of undeveloped land.12 The 11 states of the center-west and Amazonia regions, which include the cerrado—the world’s most diverse savanna—and large portions of the Amazon rainforest, doubled production from 2000 to 2005.13
Production in Argentina is growing even faster, with an increased output of 216 percent since 1995.14 Rapid South American soybean expansion is creating mono-crop plantations at a rate that endangers 22 million hectares of tropical forest and savanna in the next 20 years.15 Global growth in wealth and in industrial agriculture has resulted in greater consumption of meat and convenience foods, raising demand for soybeans as animal feed and as soybean oil (the most widely used vegetable oil).16 Soybean meal, the protein-rich solid produced in the soybean crushing and oil extraction process, accounts for 65 percent of the world’s protein feed.17 The majority of soy meal is used for animal feed, including 98 percent in the United States.18
Increased reliance on soy meal for industrial agriculture to supply China’s huge and increasingly urban population, coupled with the growing scarcity of agricultural land, has made China reliant on imported soybeans.19 Even though soybean cultivation began in China 5,000 years ago, in 2005 the country imported 74 percent of its soy.20 After entering the World Trade Organization in 2002, China reduced trade restrictions and doubled its imports to 21.4 million tons in 2003—accounting for 55 percent of its consumption.21 Soy meal demand in China and in Southeast Asia is reliant on poultry production, so success in controlling avian flu is expected to lead to further demand increases.22
Genetically modified soybeans were introduced to the market in 1996 to be resistant to the pesticide glyphosate, commonly sold as Roundup.23 In 2005, “Roundup Ready” soybeans accounted for 87 percent of the crop in the United States and 98 percent in Argentina. Similarly, GM soybeans accounted for 41 percent of Brazil’s harvested area—an 88 percent increase from 2004.24 Though the European Union was the top soy meal importer in 2005, it imports very little soybean oil for human consumption because of mandatory GM labeling and public stigma surrounding genetic engineering. 25
Sustained demand increases are expected for soybeans for animal feed, vegetable oil, and biodiesel, with a projected growth of 60 percent by 2025.26 In 2005, soybean oil accounted for 92 percent of the 250 million liters of biodiesel made in the United States, a recent use that is bound to grow as Americans turn to biofuels to replace imported oil.27 Similarly, 59 percent of Brazilian biodiesel came from soy.28
FAOSTAT Statistical Database, at faostat.fao.org,
updated 6 February 2007.
6. U.S. Department of Agriculture (USDA), “Soybean
Backgrounder,” at www.ers.usda.gov/publications/
OCS/apr06/OCS200601_Lowres.pdf, April 2006.
9. FAO, op. cit. note 1.
12. USDA, Production Estimates and Crop Assessment
Division, Foreign Agricultural Service, “Brazil:
2005/06 Soybean Area Projected to Decline,” at
_12sep2005/, 12 September 2005.
14. FAO, op. cit. note 1.
15.World Wide Fund for Nature (WWF), “Problems:
Forest Conversion,” at www.panda.org/about
/index.cfm, 18 June 2006.
16. KeShun Liu, Soybeans: Chemistry, Technology, and Utilization
(Gaithersburg, MD: Aspen, 1999), p. 25.
17. USDA, op. cit. note 6.
18. Liu, op. cit. note 16.
19. USDA, op. cit. note 6.
20. Ibid.; FAO, op. cit. note 1.
21. USDA, op. cit. note 6; FAO, op. cit. note 1.
22. USDA, op. cit. note 6.
23. Jorge Fernandez-Cornejo and Margriet Caswel, The
First Decade of Genetically Engineered Crops in the
United States (Washington, DC: Economic Research
Service, USDA, 2006).
24. Ibid.; Oliver Batch, “Seeds of Dispute,” (London) The
Guardian, 22 February 2006; FAO, op. cit. note 1.
25. USDA, op. cit. note 6.
26. FAO, Food Outlook (Rome: December 2006), p. 20;
WWF, op. cit. note 15.
27. USDA, op. cit. note 6.
28. “Brazil Biodiesel Production Set to Reach 1.3 Bln
Litres by July,” F.O. Licht’s World Ethanol & Biofuels
Report, 22 February 2007.