Reasons for increases in the price of soybean products

As a result of the increasing demand for livestock products and the derived demand for soybean (from demand for animal products), prices of soybean

Table 20.3. Contribution of soybean to production of biodiesel in 2006/2007 by major producing countries (reprinted with permission from Trostle, 2008).

Country

Amount produced (million l)

% of total global production

% produced from soy feedstock

Argentina

443

5

100

Brazil

398

5

66

EU-27

5004

65

16a

USA

1927

22

74

Total

8583

aAbout two thirds of EU biodiesel production is derived from rapeseed.

aAbout two thirds of EU biodiesel production is derived from rapeseed.

meal have increased dramatically over the last decade (i.e. between 2000 and 2010). Prices of soybean oil and soybean-based foods have also increased, due mainly to increasing dietary health in high-income countries. The increasing soybean prices have also been driven by rising incomes and the consequent higher demand for livestock products and dietary health concerns that increase demand for vegetable-based diets and fibre-rich foods.

Increasing fossil fuel prices have prompted efforts by Brazil, Argentina, the USA and EU countries to develop alternative energy sources, including soybean-based biodiesel. Increasing fossil fuel prices have also increased soybean production costs, contributing to the increasing prices of soybean and other foods (Benson et al., 2008). Policies in these countries have been designed to give incentives for the production of biofuels. This has also led to increasing production of ethanol, which is maize-based. Import and export restrictions, in response to the increasing food prices, have also had the net effect of increasing world food prices (Trostle, 2008). Farmers in the USA and other countries have also substituted production of soybean for maize, leading to an increase in the soybean price due to reduced supply (Tyner, 2008). As shown in Table 20.3, soybean is the major crop used to produce biodiesel in Brazil, Argentina and the USA.

Soybean remains a favourable source of biodiesel for the major soybean-producing countries and this has contributed to the increasing soybean price in the global market. However, production of biodiesel from soybean accounts for only a small share of the total consumption of petroleum diesel, although its demand is likely to increase given its environmental advantage over fossil fuel. Compared to fossil fuel, biodiesel reduces gas emissions by 41% and produces less air pollutants (Hill et al., 2006). As will be discussed below, these environmental advantages have appealed to soybean-producing countries to subsidize production of soybean and biodiesel.

Demand for soybean is also being driven by changing health concerns, as people in developing countries switch to eating more vegetables and fibre-rich foods. While the demand for animal products in Asian countries has sharply risen in response to increasing incomes, livestock product consumption in developed countries has remained stable and in some cases declined slightly in response to increasing dietary health and livestock-related food safety concerns. Soybean is perceived as having health benefits that address these concerns. In the USA, the Federal Food and Drug Administration allows foods containing 5 g of soybean protein per serving to be labelled as reducing heart disease (Ash et al., 2006). The use of high amounts of soy protein (soy isoflavones) in fortified foods and supplements for the prevention of osteoporosis is growing rapidly.

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