Low protein problems rattle soybean growers

Chinese soybean imports, 2015-16:

  • Exporting million Percent ofcountry tonnes total imports
  • U.S. 28.90 35 .0
  • Canada* 1.78 2.1
  • Total 83.32 100.0

Farmers love growing soybeans, and why not?

They’re easy to grow and easy to sell.

That’s been true up until now, but what if that changed?

There are early signs that it might stop being so easy to sell soybeans up here in the Great White North, with many farmers rattled by reports of low-protein soybeans being discounted or rejected by Viterra in February.

As readers of this newspaper probably recall, and as dedicated soybean growers know, Western Canada and northern tier U.S. farmers tend to produce soybean crops that have considerably lower protein levels than those grown in the heart of the Midwest, in places like Iowa.

That’s a marketing problem when the main value of the crop is as a protein meal for livestock feeders.

For the past couple of years, farmers and researchers have been fretting about growing skepticism about northern soybeans from influential buyers, including all-important export customer China. The northern industry has pushed back by analyzing and promoting the beneficial impact of other nutritional elements that the lower protein beans have.

However, in February Viterra announced a discount schedule and rejection criterion that prompted western Canadian soybean growers to begin worrying about something that hadn’t previously furrowed too many brows.

Soybeans with sub-33 percent protein could face a $9 per tonne discount, while those under 32 percent faced rejection.

Outright rejection would be a nightmare for a crop worth tens or hundreds of thousands of dollars to a farmer, unless he could easily take it down the street to the next buyer.

“We’re trying to determine how widespread (this situation is) and if this is going to be a thing of the future,” said Michael Davey of FarmLink Marketing, which has heard about this from a number of clients.

Brian Voth of IntelliFarm said there are no signs yet that this situation will become standard.

“Speculation is it’s a one-time thing,” said Voth.

Viterra could not be reached for comment by deadline.

University of Minnesota extension soybean agronomist Seth Naeve told me he has seen these sorts of discounts pop up south of the line, but “we have not seen anything very universal.”

In one case, a major grain company was discounting low-protein soybeans, while nearby competitors were not.

The other day I was sitting in the living room of a soybean grower. He talked about how he loves soybeans, but sticks with a rotation that keeps beans to about one-third of his acreage, while other farmers go 50-50.

Situations like this recent discounting and rejection underline the risk management value of rotations, not just for disease risk and yield maximization but also because a decent rotation can be the ultimate hedge against being blindsided by a novel marketing situation.

Imagine putting half your acreage into soybeans, getting low protein for whatever reason and discovering you can’t sell the crop for anything better than a significantly discounted price.

There’s no reason to believe this is going to happen with soybeans in Western Canada, but it’s a good reminder that having too many eggs in any basket is an invitation for a black swan to come flapping in and crash into your marketing plan.

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