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Soybean growers focus on quality

(Monday, July 26, 2003 -- CropChoice news) -- Chris Layton, Omaha World-Herald, 07/26/03: SIOUX FALLS, S.D. - Soybean growers like Wallace Hoye would like to satisfy foreign buyers, but he needs to know what kind of seeds will sell better overseas.

"Tell us what you want, we'll plant it in the spring and get it to you in the fall," said Hoye, who plants about 2,500 acres of row crops near Villisca, Iowa. "I'd like to talk to these end users to see what beans they want us to grow."

Hoye was among those attending the Midwest Soybean Conference in Sioux Falls, S.D., Friday and today.

Facing growing competitive threats, the United Soybean Board says farmers need to focus less on yields and more on what foreign buyers demand - higher protein and oil content.

The Soybean Board will hold meetings in December in Wahoo, Neb., and Storm Lake, Iowa, as well as in other states, to present information on seed varieties with better protein and oil production.

"The key to the future for the entire soybean industry is improving our crop quality here," said David Durham, a Missouri farmer and chairman of the United Soybean Board. "As producers, it's time we take some responsibility for what we produce if we are going to compete in the future."

The competitive threat from Brazil is growing, and U.S. soybean farmers must respond, Durham said.

As soybean production shifts to cooler-climate areas - the upper Midwest, the Dakotas and Minnesota - the level of crude protein in soybeans has dropped. However, in warmer areas such as Brazil, protein levels have increased.

U.S. growers used to have an advantage on the world market because their soybeans had a slightly higher protein content, about 36 percent. But protein levels have recently dropped to about 35 percent, while Brazilian soybeans have risen slightly, also to about 35 percent.

That one-percentage-point difference has translated to a price decline of about 20 cents a bushel. It also hurts the value of soymeal tonnage sold by processors for livestock feed.

"The playing field has been leveled to the point the United States is on par with Brazil," said Robert Galloway, a consultant for the United Soybean Board.

Seed varieties are available to produce better oil and protein levels, but farmers may not plant them if they result in lower yields.

"There are varieties that meet both goals, and that's what we would like producers to look at," said Jim Sutter, a vice president for Cargill in Des Moines.

Farmers could receive premiums of around 4 cents a bushel for soybeans with higher protein content. Ag Processing Inc. of Omaha has been paying a premium since 1999 and paid its co-op elevators $2 million last year for getting members to plant higher-quality beans.

"We started it in select locations in 1999 and have grown the program from there," said Ed Woll of AGP.

But just telling farmers they could get a small premium for planting certain seeds isn't necessarily enough to make them switch.

Farmers have been burned in the past by being promised premiums, only to have processors change the standards. That has created some resistance, said Tom Kersting of South Dakota Soybean Processors.

Targeting higher quality is perhaps the only way the United States can respond to the growing production in Brazil, which exported 1.9 billion bushels of soybeans last year. Brazil's soybean crop last year was 26 percent greater than in 2000.

"We aren't going to improve that yield, not enough to stay up with Brazil," Durham said.

In addition, Brazil has 235 million acres of land still available for soybean production, although there is controversy over whether that means destroying more rain forest.

"What makes the cost of production more effective in Brazil than the United States is the land cost," said Jose Franca, a seed company representative in Brazil. "In our country, we have so much capability to grow."

While genetically modified soybeans have been exported from Argentina and illegally planted in poorer parts of Brazil, the country officially still bans genetically modified crops, mainly because of battles with environmentalists over the crops.

The ban on genetically modified soybeans also has helped Brazil take away some markets from the United States.

"We're not getting better prices than the United States, we are just getting preference now for our beans," Franca said.

Iowa Sen. Charles Grassley has challenged Brazil over subsidies to its farmers. Franca said Brazil doesn't directly subsidize farmers but does subsidize fuel prices for grain transportation. And there are incentives for land buys and planting, he said.

Brazil's growing influence in the market has led to more criticism, Franca said.