By Ray Hansen, content specialist, AgMRC, Iowa State University, email@example.com.
Revised July 2012 by Malinda Geisler, AgMRC, Iowa State University.
Organic soyfoods have experienced the fastest growth of all consumer food segments during the past 10 years. This phenomenon is driven by the fact that soymilk and meat analogs have made substantial improvements in versatility and have been recognized for their health attributes. Once reserved as a staple for “true” vegetarians, organic soy products are now finding their way onto the shopping lists of more traditional consumers.
By volume, soybeans make up the largest segment of organic legumes but still only encompass less than one percent (0.2) of the total soybean production in the United States. The number of acres planted to organic soybeans peaked in 2001, at 174,467 acres. Since then, the number of acres of organic soybeans has hovered around 125,000.
In 2008 organic soybeans were produced on 125,621 acres. Minnesota reported the largest number of acres planted to certified organic soybeans that year: 21,229. That same year, Iowa had 19,913 acres planted in organic soybeans, and Michigan had 11,251 acres. In comparison, Canadian producers planted organic soybeans on 26,982 acres in 2008.
Frequently, the organic market specifies 'Vinton' and other varieties of food-grade soybeans. These varieties are used primarily in the production of tofu, tempeh, soya nuts and a host of other products and are generally grown under contract.
In 1999, the U.S. Food and Drug Administration issued the health claim that consuming 25 grams of soy protein per day, as part of a diet that is low in saturated fat and cholesterol, may reduce the risk of heart disease. Because of the health attributes being accredited to soyfoods, both conventional and organic soy protein sources are experiencing unprecedented growth in sales.
Total U.S. sales of organic foods in 2010 were estimated at $27 billion, up 9 percent from 2009 according to research by the Schaumburg, Ill.-based company SPINS. According to the 2007 Census of Agriculture (2009), the sales of organic commodities totaled $1.7 billion.
Growth in both organic and non-organic soyfood products is now resulting in competition between these two products. There is some additional competitive pressure from other organic oilseed products such as flax and sunflower.
Organic soybeans are experiencing a unique competitive situation because they are currently the beneficiaries of the success of their biggest competitor, non-organic soybeans. As soyfoods continue to become more widely used in all types of foods, both conventional and organic beans benefit from the expanded consumer usage. Originally only used for tofu, soyfood uses are expanding daily. USDA statistics show that soyfoods have experienced an average growth rate of 14.3 percent for the last ten years. This growth creates new market opportunities for small-scale producers serving local and niche markets, right up to large-scale production operations meeting the commodity-sized volume demands from mainstream food processors. Market opportunities will likely continue to develop for organic soybeans for use in food production, but there will also be increasing demand from the feed industry in supporting the needs of organic livestock production.
Even with the rapid growth experienced in all areas of organic production, the United States had only 0.5 percent of its total farmland under organic production in 2005 compared to nearly 10 percent in Austria and over 7 percent in both Sweden and Finland. Rapid growth in organic production is also occurring in Australia, China and Argentina.
By 2008 the United States had approximately 4.8 million acres of land used for organic production. Of that amount, 2.7 million were planted to organic crops and 2.1 million acres were organic pasture or rangeland (2007 Census of Agriculture).
Organic soy prices tend to be variable. In July 2012, organic feed-grade soybean prices averaged between $26-$27 per bushel and organic food-grade soybean prices averaged $27 to $29 per bushel, according to the Organic Price Report provided by the Rodale Institute.
Organic soybean crops enjoyed substantial price premiums during the 1990s, exceeding 50 percent during 1993 to 1999, and continue to carry a substantial premium. A Henry Wallace Institute of Alternative Agriculture review of university-based comparative studies in the 1980s and early 1990s on Midwestern organic grain and soybean production found organic systems needed price premiums to be more profitable than conventional systems. However, several of these studies found that organic grain and soybean production could be as profitable even without price premiums due to higher yields in drier areas or periods, lower input costs or higher revenue from the mix of crops used in the system.
Like most organic products, organic soybeans conjure up an image for consumers of healthier and safer food grown locally on small family farms. However, rapid growth in demand for organic soybeans over the past decade has caused the organic industry to undergo many of the same commercialization changes that conventional agriculture has gone through during the past 50 years. Larger scale production at the farm level, cooperative and contract marketing arrangements, and consolidation at the processing and marketing level create an infinite number of supply chain routes to the end user.
Recent success of organic soyfoods has drawn the attention of major processing and marketing firms to the organic soyfoods business. As mainstream food companies enter the soyfood marketplace, they bring the power to gain additional shelf space and the horsepower to introduce powerful marketing campaigns to support their financial investments. As of July 2008, many of the top food processors in North America marketed organic products including household brand names (see table below).
Top North American Food Processors
||Selected Organic Brand Names
||Boca Foods, Back to Nature
Cascadian Farm, Muir Glen, LaraBar
White Wave/Silk, Horizon, Alta Dena, Organic Cow of Vermont
||Lightlife, Alexia Foods
Source: Phil Howard, Michigan State University, 2009.
Along with these well-known food industry leaders, numerous specialty food companies are continually impacting the industry with new product lines. Hain Celestial Group has become one of the organic soyfoods industry leaders by introducing literally hundreds of organic soyfood products under such labels as Arrowhead Mills, Celestial Seasonings, Earth's Best, Spectrum Organics and Westbrae.
The USDA has put in place a set of national standards affecting all food labeled “organic,” whether it is grown in the United States or imported. These standards, released in 2002, can be found at the National Organic Program Web site,http://www.ams.usda.gov/nop/. The National Organics Standards detail the methods, practices and substances that can be used in producing and handling organic crops and livestock, as well as processed products, and establish clear organic labeling criteria. The standards prohibit the use of toxic synthetic pesticides and fertilizers, genetic engineering methods, ionizing radiation and sewage sludge for fertilization. After 2002, food labeled “organic” has been produced using the highest organic production and handling standards in the world.
This type of certification provides certified producers some market protection against rapid entry and exit into the market by non-certified operations trying to capitalize on volatile organic premiums. Organic soybeans must meet both food-grade criteria standards as well as the requirements of the National Organics Standard.
The United States does not have consistent data on organic trade. Organic product codes have not yet been added for organic soybeans. USDA's Foreign Agricultural Service estimates that the value of U.S. organic exports was $125 to $250 million in 2002. Canada is the largest market for U.S. organic exports, and industry data suggests that the value of organic food exported to Canada was between $75 million and $150 million. Organic soybeans are a major organic export.
The United States was at one time a net exporter of organic food, but as a result of strong domestic market growth during the last 10 to 15 years, it is estimated that the value of U.S. imports now exceeds exports.
The estimated value of U.S. organic imports in 2002 was between $1 billion and $1.5 billion, based on analysis of production and consumption data from government and industry reports. Under the current system, organic food is not distinguished from other food, meaning organic soybeans are no different from any other soybeans.
In 2011, the United States imported 64,253 metric tons of organic soybeans valued at $41.7 million. More than 70 percent of the imports originated from Canada. Other suppliers were India, China and Argentina.
Currently, supplies of organic soybeans are tight. They are needed for human consumption and as feed rations for the animals that will be marketed as certified organic beef, chicken and pork. Because demand appears to be growing faster than the supply, organic price premiums will likely remain relatively high.
U.S. organic retail sales are predicted to grow 9 percent to 16 percent through 2010, but this annual growth rate is not likely to continue. Instead, the average annual growth rate by 2025 will probably be closer to five to ten percent. However, annual sales increases in the $2 billion range are seen as feasible. If this occurs, U.S. organic food sales could reach $50 billion by 2025, representing nearly six percent of total U.S. food sales.
EU and U.S. Organic Markets Face Strong Demand Under Different Policies, Amber Waves, Economic Research Service (ERS), USDA, 2006.
Organic Agriculture, ERS, USDA.
Organic Agriculture: 2007 (United States), 2007 Census of Agriculture, National Ag Statistics Service, USDA, 2009.
Organic Price Report, Rodale Institute.
Soybeans and Oil Crops, ERS, USDA.
Organic industry Structure, Phil Howard, Michigan State University, 2008.
Profile created August 2003 and revised July 2012. Links checked November 2013.
- Market Trends, Organic Trade Association (OTA).
- Marketing U.S. Organic Foods: Recent Trends From Farms to Consumers, Economic Research Service (ERS), USDA, 2009 - U.S. organic-industry growth is evident in an expanding number of retailers selling a wider variety of foods, the development of private-label product lines by many supermarkets and the widespread introduction of new products. Retail sales of organic foods have jumped from $3.6 billion in 1997 to $21.1 billion in 2008.
- National Organic Grain and Feedstuffs, Ag Marketing Service (AMS), USDA - Includes a biweekly summary for organic grains and feedstuffs and a weekly feed and seed summary.
- National Organic Program, AMS, USDA - Organic site including policy, rules and regulations, certification process information and certifying agents.
- Organic Agricultural Products: Marketing and Trade Resources, National Ag Library, USDA..
- Organic Feedgrain Producers and Handlers, National Organic Program (NOP), AMS, USDA - This partial list identifies certified feedgrain producers and handlers in the United State and Canada.
- Organic Grain Buyers, North Carolina State University - This list provides the contact information for organic grain buyers in North Carolina, South Carolina, Virginia, Pennsylvania, New York and several other states.
- Organic Price Report, Rodale Institute - This online tool tracks selected prices from the fruit, vegetable, herbs and grain sectors, comparing organic prices to conventional prices in markets across the country.
- Organic Soybean Shortage Squeezes U.S. Producers, Des Moines Register, 2007 - Food companies and the livestock industry are looking to other nations to supply needs.
- Organic Trade Association - Membership-based organization representing the organic industry.
- Soya Oilseed Bluebook - Worldwide industry and business directory for the soy industry. Registration is required to access the book.
- Soybeans and Oil Crops, ERS, USDA.
- Accredited Certifying Agents, NOP, AMS, USDA.
- Growing Organic Soybeans on CRP Land, Iowa State University Extension, 2003.
- Integrated Pest Management Pest Information Platform for Extension and Education (IPMPIPE) - An online warning system to help soybean farmers protect their crop from devastating Asian Soybean Rust (ASR). Farmers can use maps of nationwide sentinel planting results to assess likelihood of disease and whether there is need for preventative fungicide applications. Other management tools and information are available on this site.
- Organic and Conventional Production Systems: Corn and Soybean Yield Trends 1990-2010, Wisconsin Integrated Cropping Systems Trial Project.
- The Organic Crop Improvement Association - Organic certification agency.
- Organic Farm Performance in Minnesota 2010, Minnesota Department of Agriculture, 2011 - This report summarizes actual Minnesota organic farm performance data from 2006 and 2010.
- Organic Production, ERS, USDA.
- Organic Production, Soy Organic Research, Iowa State University Extension - Research and educational material on organic production.
- Organic Soybean Budget, Organic Crop Production Enterprise Budgets, Iowa State University Extension, 2008.
- Specialty Soybeans, University of Kentucky Cooperative Extension Service, 2009.
- The Profitability of Organic Soybean Production, ERS, USDA, 2008 - This study examines the profitability of commercial soybean production using a nationwide survey of soybean producers for 2006 that includes a targeted sample of organic growers.
- American Natural Soy, Cherokee, Iowa, 2008 - This ag operation processes organic soybeans and flax seed into oil and meal.They also organically refine, bleach and deodorize canola, sunflower and safflower oils. Product is shipped all over the world.
- Island Spring Tofu, PCC Natural Markets, 2005.
Links checked November 2013.