By Wade Cowan
Editor’s note: Agri-Pulse and The Chicago Council on Global Affairs are teaming up to host a monthly column to explore how the U.S. agriculture and food sector can maintain its competitive edge and advance food security in an increasingly integrated and dynamic world.
Judging by acreage and harvest trends over the past twenty years, there can be no doubt that soybeans—once considered to be a rotational crop for corn-centric operations—are now at the heart of an American farm renaissance. Most American soybean producers have seen greater success in recent years than at any time in their careers.
But why? To a major extent, soy’s recent success is due to the sharp rise in demand for soybean meal and oil overseas. In 2014, we sent $16 billion in American soybeans to China, roughly on par with what we shipped to the rest of our global customers combined. But while soybean farmers value their existing relationship with China, they are looking to markets that are less developed to support trade in the future. Emerging markets of South Asia and Latin America are offering increased opportunities for soybeans. However, nowhere is there greater need or a bigger potential return on investment in agricultural development than in sub-Saharan Africa.
Considering the path that nations take as their economies develop, the importance of a crop like soybeans is clearly defined. At the earliest stage of development, poor countries are looking to move from low-nutrient starchy crops to higher-protein oilseeds and pulse crops, to provide improved nutrition in their populations’ diets. Then, as the economy develops further, the population begins to demand more meat-based protein, typically in the order of poultry, followed by lamb or goat or fish (if possible), then pork, and finally beef. Each stage in this “meat continuum” demands input of soybeans as a valuable source of protein in animal feed. And, at each stage of development, soybean oil is a critical component for cooking and frying.
But supporting the use of imported soybeans by poor countries is only half the equation. The other and arguably more important half consists of sharing both our technology and our knowledge so that farmers in developing nations can increase production—on however small a scale—for themselves. Supporting developing countries through agricultural development has admittedly given many American farmers heartburn in the past. Why help farmers in poor countries provide for their own national needs if they may one day not need American soybeans? Certainly a valid question, but one that finds an answer in our role as a member of the larger global economy.
First, increasing the yields of farmers in poor nations creates new markets for American agriculture and food products over the long-term. We’ve seen that, around the world, agriculture is the biggest driver of economic growth, and agricultural growth is twice as effective at reducing poverty as growth in other sectors. Economic growth of one percent in agriculture generates a six percent increase in overall expenditures in the poorest ten countries. This benefit is not solely found in the poorest populations, either; the global middle class is projected to reach 4.9 billion by 2030,and this transition means greater demand for animal products, processed foods, and higher-value commodities.
Second, agricultural development supports expanded and mutually beneficial trading relationships. Two prime examples are Japan and South Korea, which have grown from early stages of development in the 1950’s to become two of our biggest customers. One of our chief competitors, Argentina, is benefiting from a similar relationship in Africa – Argentine investment has led to an increase in African soy consumption, and the country has now become a major supplier.
Third, enhancing the yields, and the incomes, of small-scale farmers in poor nations enhances food security. This is where our global challenge to feed more than 9 billion people by 2050 enters the equation. Global population growth over the next 30 to 40 years will see its epicenters in the developing world, so not only will we have more people to feed, we will have more people in markets where there is already chronic hunger and malnutrition to feed. Agricultural development is a sustainable approach to helping more than 800 million people out of chronic hunger, and we’ve seen that as economies transition through the stages of development, no country has achieved broad-based economic growth without first developing its own agriculture sector.
Fourth, food security is arguably the most essential component of national political security. Nations that cannot feed themselves are far more prone to political instability than food-secure nations. As a global leader with national security interests around the world, it benefits America to ensure that food security is reduced, if not eliminated entirely, to reduce the chances of social unrest and political upheaval.
Finally—and admittedly a point of pride for our domestic industry—American agriculture has a lot to offer. Commodities like soy can help enhance nutrition and diversify diets; our land-grant research institutions are at the forefront of the agricultural research that helps to advance on-farm efficiencies, both here and abroad; our technology companies and equipment providers are global leaders; and our farmers themselves are skilled not only at applying these resources on their farms, but also explaining and sharing that knowledge with a broad range of audiences.
For all of these reasons, soybean farmers have approved and enacted a resolution that aims to raisethe importance of international agricultural development as a policy priority. We believe that the training, knowledge and technology transfer, and long-term potential for market growth of agricultural development programs will sustain U.S. soybean production as a leader in the global farm economy. It will also help as our entire food production community, regardless of national borders, attempts to tackle the challenge of feeding a rapidly growing world population.
Wade Cowan is a soybean producer from Brownfield, Texas and is President of the American Soybean Association.
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