Cargill juggles deliveries to manage soy protein

There were about 1.6 million acres of soybeans in Western Canada in 2015, and probably half of them were grown east of Portage la Prairie, Man.

Back then, companies such as Cargill didn’t have to worry about the protein content in soybeans because there were sufficient supplies of high protein beans from Manitoba’s Red River Valley to offset lower protein soybeans from more westerly regions.

Nowadays, Cargill employees do worry about protein.

“We have to manage the protein more than we ever had before,” said James Dunlop, Cargill regional food safety, quality and regulatory leader for grain in Canada.

“We have to be selective in how we bring the beans in. Not everybody can show up at the elevator on any day they want to.”

Buyers expect soybeans to have at least 34 percent protein, using a 13 percent moisture basis, in order to produce soybean meal of a certain quality.

In 2017, when there were more than three million acres of soybeans on the Prairies, the average protein level was around 33.1 percent in Manitoba and 32.2 percent in Saskatchewan, Dunlop said.

“To my knowledge, the 34 percent expectation for protein was rarely met for cargoes of western soybeans for the 2017-18 handling season,” Dunlop said in an email.

“This is why producers are seeing protein discounts at country elevators, (and) the handlers are being discounted for not meeting sales specs at port.”

Last year Cargill didn’t discount the price when farmers delivered low protein soybeans, but the company did have to manage the issue. Cargill merchandisers, when buying soybeans, selected growers known for producing high protein beans and blended that delivery with lower protein sources.

“We’ll match. If we’ve got one guy that (has) high (protein), we’ll match him with someone who has low (protein) beans and co-ordinate it,” Dunlop said.

“It takes a level of co-ordination that we don’t usually have to do in anything except malt barley.”

That balancing act is now more challenging because the longer-maturing and higher protein beans of the Red River Valley are the minority supply in Western Canada.

“The bigger the growing area, the lower the protein got,” Dunlop said.

Soy Canada, which represents growers, processors, seed companies and exporters, is well aware of the protein problem.

The commodity group conducted a risk assessment this year to identify threats to Canada’s soybean sector.

The report said low protein soybeans are a major risk.

“Soy Canada is already prioritizing its resources on addressing the top two risks that were identified: … market access and protein content,” said Ron Davidson, Soy Canada executive director.

Experts don’t know what causes low protein in soybeans, but the length of growing season is a major factor. Soybeans grown in southern states have more protein than beans in North Dakota.

Breeding for higher protein content is part of the solution, but producers may be reluctant to adopt higher protein soybeans because of the trade-off between protein and yield. More protein means lower yields.

Some grain handlers are now discounting the elevator price if soybeans don’t meet a protein standard, which may soon become the industry standard. The price discount, or premium for high protein, will send a message to growers.

“(It) will become part of the producer’s decision-making process on what genetics they want to seed,” Dunlop said.

“Are they going for yield or are they going for protein?”

Industry reps have said grain handlers solve the protein challenge by blending western Canadian soybeans with higher protein beans from Ontario.

In Cargill’s case, that does not happen.

“Typically, anything grown in Manitoba and Saskatchewan … will go to Vancouver for shipment,” Dunlop said, adding it doesn’t make economic sense to ship southern Ontario soybeans to Manitoba and blend them at a western Canadian terminal.

“I can only speak for my own company, but there’s no way we would load stuff onto a laker and then send it this way by rail.”

One risk to western Canadian growers is that international buyers could view the region as a source of low quality soybeans, in the same way that certain parts of the world have a reputation for low quality wheat.

Such a reputation leads to price discounts and lower farmgate revenues for producers.

“It’s becoming clear that the Ontario soybean and the western Canadian soybean are almost two separate products,” Dunlop said.

“There is established demand for that higher protein bean. I think we’re really starting to explore the demand for the lower protein bean.”

Manitoba Pulse & Soybean Growers has contracted a University of Manitoba economist to write a report on lower protein beans and the financial consequences for growers.

It will likely be ready this fall.

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