C. M. (Chester Millington) Wells.

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UNIVERSITY OF

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AGRICULTURE



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titan tun . UNIVERS1TY Of ILLINOIS

AGRICULTURE LIBRARY

THE EXPANDING SOYBEAN
MEAL MARKET

How Changes in Feeding Practices and
Growth of the FormulaJFeed Industry
Have Affected Demand




By C. M. WELLS, JR.



BULLETIN 620



University of Illinois Agricultural Experiment Station



THREE IMPORTANT CHANGES that have been dependent on or closely
related to the production and utilization of soybean meal have oc-
curred in the agricultural economy of the United States in recent years.
They are increases in the proportion of high-protein feeds in livestock
rations, in the production and utilization of formula feeds, and in the
production of soybeans.

Feeding larger proportions of high-protein feeds to an expanding
livestock population and the rapid expansion of the formula feed in-
dustry have been possible only because producers responded to market
demands by greatly increasing soybean production. In recent years, over
80 percent of soybean meal production has gone into formula feeds. If
the formula feed industry had to depend on high-protein feeds other than
soybean meal, its current output would have to be drastically curtailed.
In spite of the increases in the proportion of high-protein feeds in
livestock rations, not all farmers balance the rations of their livestock.
Until they do, the protein deficit will provide an opportunity for expand-
ing the market for soybean meal. Additional opportunities for expanding
this market are apparent when it is realized that still larger quantities of
high-protein feeds will be needed to produce enough meat, milk, and
eggs to nourish an expanding population according to presently accepted
standards of human nutrition.

It seems reasonable to expect that increasing supplies of soybean meal
can be absorbed by our economy without any appreciable decline in the
price of soybean meal as related to the price of other commodities.



CONTENTS

Page
FEEDING PRACTICES AFFECT MARKET FOR CONCENTRATE FEEDS 3

SUPPLIES AND PRICES OF CONCENTRATE FEEDS 9

THE FORMULA FEED INDUSTRY 15

SUMMARY 22

LITERATURE CITED . . . .24



This bulletin was prepared by C. M. Wells, Jr., formerly Research Associate
in Agricultural Marketing.



THE EXPANDING MARKET FOR SOYBEAN MEAL

THE PURPOSE OF THIS STUDY was to isolate and describe the
major factors that determine the market for soybean meal. It was be-
lieved that the results would be useful to those interested in estimating
the amount of and the rate of growth of the market for soybean meal
and that they would be of particular interest to soybean processors and
mixed feed manufacturers. These firms possess a wealth of technical
and economic information not available to others. The results of the
study, when appraised in the light of the information they have, should
increase the accuracy of their estimates.

Accurate estimates, in turn, should be helpful in determining the
facilities that will be needed to handle future production. Adequate
marketing facilities for soybean meal affect the well-being of all people
in our economy. They are particularly important to the farmers who
produce soybeans and feed the meal to their livestock.

Feeding Practices Affect Market for Concentrate Feeds

Changes in feeding practices directly affect the market for con-
centrate feeds. Changes in the proportion of protein in livestock
rations are particularly important. Any attempt to measure the market
for soybean meal must take into account the effects of changes in the
importance of protein in the aggregate and of changes in the feeding
of different classes of livestock.

Recent improvements in feeding. The quantity of high-protein
feeds fed, as related to other concentrates, has increased significantly
since the end of World War II. During the same period, the produc-
tion of livestock products per unit of concentrates fed has increased. a
These latter changes have been closely associated with changes in the
proportion of high-protein feeds in livestock rations (Fig. 1). Large
decreases in production per unit of concentrate feeds fed have oc-
curred in years when the consumption of other concentrates has in-
creased in relation to consumption of high-protein feeds (Fig. 2).

* Detailed data on the findings of this study are available in a mimeographed
supplement to this bulletin. This supplement may be obtained by writing to the
Information Office, College of Agriculture, Urbana, Illinois.

Data on quantities of high-proteins fed and production of livestock products
per unit of concentrates fed are given in Table 21 of the mimeographed sup-
plement. Hildreth and Jarrett (Literature Cited, 5) have computed measures of
increases in the efficiency of feed conversion in terms of all feeds fed (feed
grains, by-product feeds, and all roughages including pasture). A summary of
their results is given in Table 22 of the mimeographed supplement to this bulletin.



BULLETIN No. 620



[October,



PERCENT OF 1940
160



150
140
130
120
110
100

90,




LIVESTOCK PRODUCTION PER UNIT
OF CONCENTRATE FEED FED-



1940 '41 '42 '43 44 '45 46 47 '48 '49 '50 '51 '52 '53 1954

Gain-to-feed ratios as related to changes in use of high-protein and other
concentrate feeds. United States, year beginning October 1. Source:
Table 21 of the mimeographed supplement to this bulletin. (Fig. 1)



Table 1. Eleven High-Protein Feeds Consumed by Livestock as
Percentage of All Concentrates Consumed

(United States, 1940-1953)



Year beginning
October 1


Dairy

cattle


Beef
cattle


Hogs


Poultry


All
livestock


1940


perct.
11 6


perct.
8.6
8.2
8.9
9.1
9.2

8.9
9.9
11.2

12.4

13.4
13.6
11.0
9.9
9.1


perct.
3.9
3.4

3.4
3.4
3.4

3.0
3.6

4.4
4.5

4.1
5.0
5.8
6.8
6.6


perct.
9.1
8.7
8.1
8.8
9.0

8.4
9.1
10.5
10.9

10.9
11.8
12.4
13.3
13.5


perct.
6.6
6.5
6.5
6.8
7.4

6.5
7.4
8.4

8.7

8.8
9.5
9.6
10.2
10.1


1941


12.4


1942


14.2


1943


14.5


1944 . .


. 15


1945


13 2


1946


14


1947


14 7


1948


15


1949.


15 2


1950


15 9


1951... .


14 5


1952


13.5


1953


13.1






Source: Table 20
page 3).


of the mimeographed supplement


to this


bulletin (see


footnote a,



The most significant of the changes in consumption of concentrates
has been the marked increase in the proportions of high-protein feeds
in the feeding of some classes of livestock (Table 1). Since the end of
World War II, there has been no consistent change in the relative
importance of high-protein feeds in the rations of dairy and beef



1957} EXPANDING MARKET FOR SOYBEAN MEAL

PERCENT OF I94O



130



Q
UJ



or

o
1

U_
O



OC





120



no



100



'54
'53



'47



'46



'48



.'50



45 V

'43

'42



678 9 10 II

HIGH- PROTEIN FEEDS AS PERCENTAGE OF ALL CONCENTRATES FED

Gain-to-feed ratios related to high-protein and other concentrate feeds.
United States, year beginning October 1, 1940-1954. Source: Tables 15
and 21 of the mimeographed supplement to this bulletin. (Fig. 2)



cattle. Changes in feeding high-protein feeds to these animals appear
to have been more closely related to changes in milk and beef prices
than to their nutritional requirements. High prices have resulted in
more intensive feeding and in greater use of high-protein feeds.

The proportion of high-protein feeds in the rations of poultry and
hogs has shown a pronounced upward trend. The largest increases in
gain-to-feed ratios have been made by poultry (Table 2). Less strik-
ing, but of great importance has been the increase by hogs. a The

" "An interesting story can be gleaned from the published reports of the
AFMA Feed Survey Committee over the past ten years. These committeemen
calculate feed use by specific type of livestock and poultry. They attempt to
calculate what will be fed, not what should be fed. In their 1945 publication they
estimated broiler feed use at 14.0 pounds per bird; in 1950, 12.3 pounds; and in
1955, 8.5 pounds. This represents a feed saving per bird of 5.5 pounds. Applied
to the 1955 crop of broilers, this means we saved 2,750,000 tons of feed which
otherwise would have been consumed. In 1945, the committee calculated 500
pounds of feed would be consumed per hundredweight of pork; in 1950, 480
pounds; and in 1955, 456 pounds. Applied to the current pig crop, this means we
saved 5 million tons of feed that otherwise might have been required." Diamond,
W. L., Are We in a Fix in '56? Proceedings, Distillers' Feed Conference. 1956.



BULLETIN No. 620



[October,



Table 2. Pounds of Concentrate Feeds Consumed per 100 Pounds of
Selected Livestock Products Produced and per 100 Eggs Produced
(United States, 1940-1953)



Year


Pounds of feed consumed per 100 pounds of product


Pounds
of feed
consumed
per 100
eggs
produced


beginning
October 1


Milk '


battle and


Hogs


Broilers


Chickens
raised


Turkeys


1940..


28
29
31
32
32

32
31
31
32
32

31
31
31
31


126

123
134
131
129

147
139
114
135
135

136

153
144
145


448
450

482
475
488

526
479
440
469
473

463
476
433
447


421
407
426
410
397

407
395
380
377
335

337
322
302
296


509

502
513
532
534

524
536
528
531
610

603
500
491
514


532
542
559
558
555

546
540
540
523
517

488
479
451
431


58
59
62
60
59

63
58
57
56
62

58
58
55
54


1941


1942


1943


1944


1945


1946


1947


1948


1949


1950


1951.


1952


1953





Source: Unpublished estimates supplied by R. D. Jennings, United States Department
of Agriculture.

increased gain-to-feed ratios by both have been closely associated with
the higher levels of protein in their rations (Tables 1 and 2).

Changes in both the protein balance and in gain-to-feed ratios have
been greater for some classes of poultry than for others, the rate of
change being influenced by the extent to which production has become
commercialized. Production of broilers and turkeys is highly com-
mercialized, the birds being fed almost exclusively on formula feeds.
Manufacturers of these feeds rapidly pass improved nutritional prac-
tices on to producers. The owners of less highly commercialized flocks
adopt improved nutritional practices less rapidly.

Needed improvements yet to come. Despite improvements in the
recent past, much more protein should be fed if rations are to be bal-
anced. In a 1952 report, Jennings 6 concluded that in any recent year
enough additional protein to provide a balanced ration would have re-
quired about another 5 million tons of soybean meal or its equivalent.
This amount would have been about 50 percent more oilseed meals
than the total 1951 output. Jennings points out that his estimate may
be low, because it does not allow for the normal overfeeding of protein.

Since the period (1937-1951) covered by Jennings' report, the pro-
tein deficit has been reduced. It averaged slightly less for 1952-1955



1957] EXPANDING MARKET FOR SOYBEAN MEAL

Table 3. Deficit in Protein, All Livestock

(United States, 1949-1955; feeds expressed as the equivalent
of 44-percent soybean meal)



Year be-
ginning
October 1


Grain
consuming
animal
units


High-
protein
feeds
fed


High-
protein
feeds
fed
per
animal
unit


High-
protein
feed
deficit
per
animal
unit*


High-
protein
feed
required
per
animal
unit b


Total
high-
protein
feed
deficit


1949..


millions
156.2


million
tons
10 1


0.

129


Ib.
70


Ib.
199


million
tons
5 5


1950


.. 163.2


11 1


136


59


195


4 8


1951


. . 165 3


11 6


140


60


200


5


1952


160 1


11 4


142


56


198


4 5


1953


158 5


11 5


145


53


198


4 2


1954...


163 9


11 2


137


61


198


5


1955 C


.. 178.0


11 8


133


65


198


5 8

















Deficits for 1952, 1953, 1954, and 1955 were derived by subtracting high-protein feeds
fed per animal from high-protein feed required per animal. Deficits for earlier years are
Jennings' estimates.

b High-protein feed requirements per animal for 1949, 1950, and 1951 were derived by
adding the high-protein feeds fed per animal to the high-protein feed deficit per animal. The
requirements for the later years were assumed to be the average of the requirements for 1949,
1950, and 1951.

c Data are preliminary.

Source: Literature Cited, 6, 14, and 15, and Table 16 of the mimeographed supplement
to this bulletin.



than for 1949-1951 (Table 3). The estimates for 1952-1955 are only
approximate and are based on the assumption that feed requirements
per animal were the same as for 1949-1951. This assumption makes no
allowance for the increased feeding of urea, a or for the rising trend in
protein requirements per animal associated with the declining popula-
tion of horses and mules.

The protein deficiency is probably largest in the rations of hogs. In
a 1946 report, Jennings 9 estimated that in 1941-1942 hogs needed 3.9
million tons of high-protein feeds to meet recommended nutritional
standards and that they consumed 1.5 million tons. Thus they con-
sumed 2.4 million tons less than the recommended amount.

Assuming no change in requirement per hog since 1941, the hog
population in 1951 needed 4.4 million tons of high-protein feeds. b

* Estimates of the feed survey committee of the American Feed Manufac-
turers Association indicate that 75,000 tons (450,000 tons oilmeal equivalent)
were fed in the year beginning October 1, 1953; 80,000 tons (480,000 tons oilmeal
equivalent) in the year beginning October 1, 1954; and that 90,000 tons (540,000
tons oilmeal equivalent) would be available for 1955. No estimates were made
of urea fed in previous years. Literature Cited, 1.

b Per-animal consumption in 1941 multiplied by 1951 hog numbers.



8 BULLETIN No. 620 [October,

Jennings estimated they consumed 2.9 million tons, so the estimated
deficit was 1.5 millions in that year. His estimate was approximate and
made no allowance for changes in the relative quantities of the differ-
ent high-protein feeds fed to hogs.

In a recent study, Mutti 11 found that in 1951 a 27-percent increase
in 35-percent protein supplement would have been needed to bring
the protein level of hog rations up to that recommended by the Animal
Science Department of the University of Illinois. 2 ' 3> 12 The deficiency
was found to be greatest for bred sows. This protein deficit in Illinois, if
applied to the 1951 hog population of the United States, indicates a
deficit equal to 617,000 tons of soybean meal.

The protein deficiency in hog rations is probably somewhere be-
tween Mutti's and Jennings' estimates. Both are probably low as
related to the estimates for 1941. In 1941 animal protein feeds, which
are appreciably higher in protein content than the other high-protein
feeds, accounted for larger percentages of the high-protein feeds fed
to hogs.

Jennings estimates indicate that rations for poultry should contain
at least 15 percent of high-protein feeds. 8 For the four years 1950-
1953, high-protein feeds were estimated to be less than 13 percent of
the total concentrates consumed by poultry. On the basis of these
estimates, it would take about 700,000 tons of high-protein feeds to
balance poultry rations. Nearly all of this would be needed by laying
flocks and chickens raised, since broilers and turkeys are usually fed
balanced rations.

Protein deficiencies in the rations of other classes of livestock can,
in part at least, be overcome by using nonprotein nitrogen compounds
and better roughages, including pasture.

Research in animal nutrition indicates that Jennings' estimates may
have been based on recommended levels of protein feeding that are
higher than necessary for some classes of livestock. Commenting on
this research, Jennings 6 said: "... It appears that with the new
knowledge concerning antibiotics, vitamins, and minerals, the disparity
between the protein supply and nutritive requirements may be much
less than was formerly thought. However, much more experimental
feeding will probably be necessary before general acceptance of such
a large reduction in protein requirements for hogs and dairy cows."

The obvious or immediate way to reduce the protein deficit is to
increase the protein content of our feed supply. According to Jen-
nings, 6 its protein content could be increased by: (1) increasing the
acreage and yield of good hay and pasture; (2) planting larger acre-
ages of soybeans and other oilseeds; (3) expanding the use of urea;
(4) increasing the use of Vitamin B 12 and the antibiotics in hog



1957] EXPANDING MARKET FOR SOYBEAN MEAL 9

rations; and (5) producing one or more of the amino acids by chem-
ical means.

These means of increasing the protein content of feed supplies will
not contribute equally to overcoming the protein deficit. Hogs and
poultry can utilize roughages in only limited quantities and cannot
utilize urea at all. An increase in protein from these sources will not
directly reduce the deficit. However, by substituting protein from
other sources in the rations of ruminants, proteins now fed ruminants
can be made available for feeding hogs and poultry and can thus
indirectly help overcome the deficit.

Supplies and Prices of Concentrate Feeds

Jennings 6 estimated that the total protein consumed by livestock in
1952 came from the following feeds in about the percentages shown:

perct. perct.

Grains 23 Hay, silage, and stover 25

Commercial high-protein Pasture 34

byproducts 13

Other byproducts 5

Though only 13 percent of the total protein consumed came from
high-protein feeds, they are critical materials in livestock feeding.
Roughages, grains, and byproduct feeds of low or medium protein
content do not contain enough protein to provide the best balance in
rations. By supplementing these feeds with high-protein feeds, it is
possible to get a more nearly optimum nutritional balance and thus
increase gain-to-feed ratios.

In a sense, each of the sources of protein competes with the others.
But because of the role of the high-protein feeds in overcoming the
protein deficiencies of other feeds, the strongest competition occurs in
the markets for the principal high-protein feeds.

Some general considerations of supply. High-protein feeds are
not primary products. Soybean, linseed, peanut, cotton, and copra meal
are each produced with a corresponding oil. The combined value of the
oil and meal determines their value for crushing. The value of
the products is reflected in prices to producers and directly affects the
quantities supplied.

The price of some of the domestic oil meals soybean, peanut,
linseed, and cottonseed affects the supply much more than others,
the effect of price being greatest where the value of the meal consti-
tutes the highest proportion of the total value of the crop. Supplies of
soybeans have been most sensitive to changes in meal prices, peanut



10 BULLETIN No. 620 [October,

and linseed supplies have been somewhat less so, and cottonseed has
been least responsive.

In most recent years the value of soybean meal per bushel of soy-
beans crushed has been greater than the value of the oil. Peanut and
linseed meals have averaged less than 30 percent of the crushing yield
of the crop. Cottonseed has been valued at less than 15 percent of the
total value of the crop and the meal at less than half the value of the
products from the seed or about 1/lSth of the total value of the crop.

Copra is an imported product. The supplies imported appear to be
largely determined by the competing domestic high-protein feeds and
oils.

Tankage, meat scraps, nshmeal, corn gluten feed and meal, and
brewers' and distillers' dried grains are all pure byproducts. Supplies
of them depend on the output of the primary products of the various
industries of which they are byproducts. In the past, these feeds have
accounted for even smaller proportions of the value of the output of
the industries concerned than cottonseed meal has of the value of the
cottonseed crush. A given relative change in the price of any of these
feeds normally has even less influence on supply than the same relative
change in the price of cottonseed meal has.

Supplies have increased. During the 15-year period 1940-1954,
supplies of the different high-protein feeds changed markedly, the most
important changes having been increases in the supplies of soybean
meal, tankage, meat scraps, and nshmeal. Supplies of these feeds in-
creased from an average of 55 percent of the total in 1940-1944 to 68
percent in 1950-1954 (Tables 4 and 5). They accounted for 90 percent
of the total increase of 3,734,000 tons of high-protein feed supplies.

Because the proteins of soybean meal, tankage, meat scraps, and
nshmeal are more nearly complete than those of other high-protein
feeds, large increases in their supply have permitted a greater improve-
ment in livestock nutrition than the total increases indicate. Their in-
creased use during this period was responsible, at least in part, for the
noticeable increase in gain-to-feed ratios. Despite the improvement in
their rations, livestock are still not fed enough protein. A large increase
in the production and utilization of high-protein feeds is needed to
overcome the protein deficit and properly balance all livestock rations.

Prices of concentrate feeds. The relative feeding values of the
various concentrates vary markedly. When the different feeds are fed
in properly balanced rations to the classes and age of livestock to
which they are suited, the principal high-protein feeds are significantly
higher in value than the grains. 7 If added to rations that are already
balanced, the high-protein feeds replace grains on the basis of total
digestible nutrients or net energy content, both of which on the average



7957]



EXPANDING MARKET FOR SOYBEAN MEAL



11



Table 4. Supply of Principal High-Protein Feeds

(United States, five-year averages; 44-percent soybean meal equivalent)







Average




Percent
1945-1949
average


Percent
1950-1954
average


Commodity


1940-1944


1945-1949


1950-1954


was of
1940-1944
average


was of
1940-1944
average


Oilseed meals
Soybean


thousand
tons

2,479


thousand
tons

3,890


thousand
tons

5,512


157


222


Cottonseed ....


1,514


1,563


1,992


103


132


Linseed


584


441


421


76


72


Peanut


100


118


74


118


74


Copra


28


65


82


232


293


Animal proteins
Tankage and meat
scraps


942


881


1,103


94


117


Fishmeal


312


317


479


102


154


Grain proteins
Gluten feed and meal.
Brewers' dried grains.
Distillers' dried
grains


523

87

198


530
102

179


568
105

165


101
117

90


109

121

83


Total


6 767


8,085


10,501


120


155















Source: Table 11 of the mimeographed supplement to this bulletin.



Table 5. Combined Supply of High-Protein Feeds of Good Quality

(Soybean Meal, Tankage, Meat Scraps, and Fishmeal) and

Combined Supply of Other High-Protein Feeds and

Supply of Both Classes as Percent of Total

(United States, average 1940-1944 and 1950-1954;
44-percent soybean meal equivalent)



Commodity


Average,
1940-1944


Average,
1950-1954


Increase of
1950-1954
average over
1940-1944



average



Soybean meal, tankage, meat scraps, and

fishmeal 3 , 733

Other high-protein feeds 3,034

Total 6,767

Soybean meal, tankage, meat scraps, and

fishmeal 55

Other high-protein feeds 45

Total. . 100



Thousands of tons

7,094 3,361

3,407 373

10,501 3,734

Percent of total



68
32

100



90
10

100



Source: Table 4.



12



BULLETIN No. 620



[October,



140


I 1 I T




'39


tn 130

QUJ


'49


UIU




\(Z


38


2" 120

ujS


'4? '54


fece


\'42 '50 '52


:? no


40


o




xg


_


xu!


'51 5


u.0 100
ot-


'46 *

^


O(O


, '45 - 48


%& 90

a.


"36 + 47

044




'35 '37


flo


t 1 1 A 1



40 50 60 70 80 90

RATIO OF HIGH- PROTEIN FEED SUPPLIES TO FEED-GRAIN SUPPLIES

Relationship of supplies and prices of high-protein feeds and feed grains.
United States, 1935-1954. Source: Table 17 of the mimeographed supple-
ment to this bulletin. (Fig. 3)



are higher for grains. If added to a ration that is already balanced,
the high-protein feeds are lower in value than the grains.


1 3

Online LibraryC. M. (Chester Millington) WellsThe expanding soybean meal market : how changes in feeding practices and growth of the formula feed industry have affected demand → online text (page 1 of 3)