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Corn+Soybean Digest

Kick-Starting Trade

U.S. soybean farmers continue to export more soybeans each year, but competition for global market share grows more intense. Fortunately, U.S. farmers are working to develop marketing strategies to bump up the value of U.S. soy exports and the U.S. soybean farmer's share of targeted export markets.

Developing these marketing strategies began nearly two years ago. “We saw changes in the grain market around the world and realized, at some point, we would no longer be the dominate world supplier,” says Criss Davis, a corn, soybean and livestock producer from Shullsburg, WI, and international marketing chair of the United Soybean Board (USB). “We asked the questions, ‘What do we do?’ ‘How do we respond?’ and put together a strategic plan developed by an industry export competitiveness task force, involving the entire industry, to answer those questions.”

The group broke its activities into three basic areas: building targeted demand, creating customer preference and addressing market access or trade issues.

  1. “We want to build targeted demand where we can successfully compete,” says Davis. “It doesn't make sense for us to create additional demand if we can't capture it. Then we're just creating it for somebody else, and that's not in the interest of U.S. farmers.

    He cites Mexico as an example of this effort. The U.S. has a 95% market share in Mexico and it's growing. “If we grow demand for soy in Mexico we're going to receive the benefit from it,” says Davis. “We don't have to go through that extra step of creating the value of U.S. soy vs. something else.”

    Davis says there's also growth potential for use of U.S. soy in China's aquaculture industry, where USB actually developed the use of soy as feed.

  2. Creating customer preference for U.S. products is another area the task force addressed. “We want other countries to prefer buying from us,” says Davis. “Some of it involves basic marketing relationships, but it also means using available tools, like GSM credits, (credit terms offered through the importing country's banks that are in some way guaranteed, providing better interest than may have been available without the guarantee) that add value to our commodity.” He adds that other factors, like knowing a customer can offload U.S. soybeans in 18 days versus 35-38 days from another country, is another selling point in U.S. farmers' favor. Other examples include offering technical assistance and information, and improving the quality of U.S. soybeans.

    “Our quality (protein content) isn't keeping pace with our competition,” says Davis. “Through genetic research and choosing higher-protein varieties there's a lot we can do, and it will help us internationally if we have better quality.”

  3. Addressing market access or trade issues is the third area the task force identified. “There are hundreds of issues that restrict us or impede our ability to get into a market,” Davis says. “It's often up to farmers, working through the American Oilseeds Coalition, to make the U.S. government aware of unfair trade practices.”

He says there's work to be done with developing and growing market share. There is still potential growth for soybeans in countries like Japan and Taiwan, as well as smaller players like the Caribbean and North Africa. U.S. soybean growers also actively pursue a reverse market technique, which encourages home consumption of crops versus release of those crops into potential U.S. export destinations. Davis says if India used its soybean meal at home it would help its people and the U.S.

“It will be difficult to compete in the international market, but we can,” says Davis. “We may have to compete in different ways than we have in the past, and that's what this is about — looking at ways we can capitalize on our strengths and compete for market share.”

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