Niche Market Soybeans - Opportunity for Some Soybean Growers in Illinois
Gary E. Pepper, Extension Agronomist, University of Illinois
On This Page:
What are soybean niche markets?
- What are niche market soybeans used for?
- What are soybean based food items?
- What are niche market opportunities in Illinois?
- Niche market soybean buyers in or near Illinois in 1995
Niche markets might be called markets for "specialty soybeans". Niche
market soybeans have specific characters (physical or chemical) that are needed
by certain industries (usually food industries) to meet a specific need.
Depending on the end use of the crop, the soybean characters of most
importance will vary. In some cases, production with reduced or no chemical
inputs is required to meet market needs. In other cases, large or small seed size
is needed. The color of the hilum on seed is of major concern to certain end
users. Protein, oil or sugar content may be the trait of major concern in other
niche markets. In a few cases, even the oil quality (fatty acid profile) is of
concern to the final user. Production of a single or one of a limited number of
varieties is often required to meet the needs of niche markets for soybean.
In all cases, production of a uniform (uncontaminated) supply of quality
soybeans, with the particular traits desired by end user, is essential. Producing
and handling niche market soybeans as an Identity Preserved grain crop is
required. Management to insure freedom from contaminants may involve extra
cleaning of combines, wagons, bins, and so forth. Additional storage facilities
may be needed to segregate niche market soybeans from those destined to go
into the general market. Record keeping regarding storage, bagging,
containerized cargo shipments, and so forth may be involved. In some cases,
documenting chemical composition of soybeans with laboratory testing may be
required.
Planting one of a limited number of varieties, with the traits required by
the end user, is typically involved with niche market production. In some cases
this will mean production of a variety with less than maximum per acre yield
potential. Higher prices (premiums) paid for niche market soybeans compensate
the grower for added management required in production of a niche market
soybean crop, as well as any reduced yield per acre resulting from production of
varieties having particular traits required.
Producers typically grow niche market soybeans under a contract
agreement with a grain company which has developed or identified niche
markets. Stipulations in the contract generally include the variety grown, the
delivery date and point, as well as the basis for pricing the crop and premium to
be paid. Stipulations regarding the quality of soybeans delivered are typically
part of the contract too, with limits on split beans, other soybean types, seed
sizes, and so forth. If production is for a niche market concerned with chemical
use, then the contract would also detail what and when chemicals could be used
in production of the crop.
All the terms must be met by the contract producer for a premium for the
crop to be received. Otherwise, the soybeans simply become part of the crop
headed to the general market for crushing. Should a producer become involved
in producing niche market soybeans with something other than yellow color,
and then not meet all the specifications of the production contract, a difficult
situation could develop. Soybean elevators and terminals are generally
interested in only yellow soybeans, and would have little interest in soybeans of
other colors produced.
A limited number of individual niche market producers have developed
their own marketing channels, and thus deal directly with the end user.
Identifying niche markets, developing the opportunity to sell directly to the user,
negotiating delivery contracts, arranging for shipping and so forth. can be both
time consuming and costly. This should not suggest that individuals not
consider trying to develop their own markets, but recognize that the task is not
an easy one. Working with a grain company that has already established the
market opportunities is the easiest way to capitalize on soybean production
skills of added value to the soybean niche market arena.
Many oriental foods can be manufactured from soybeans. To maximize
production and quality in the soybean based oriental foods, particular traits are
of great importance to food processors. Depending on the food manufactured,
and depending on the specific manufacturer, specific traits of soybeans looked
for will vary. Consequently, all soybeans sold into niche markets do not all
have the same attributes.
Most of the processed foods made from soybean are made in oriental
countries, with Japan being the major buyer of niche market soybeans for such
purposes. Throughout Asia many countries consume food products made from
soybean, so additional sale of U.S. produced soybeans to countries such as
China, S. Korea, Taiwan, Hong Kong, Malaysia and Indonesia are possibilities.
Japan is currently the biggest buyer of niche market soybeans. Growing
concerns over a healthy diet and lifestyle have helped expand the consumption
of soybean based foods in the U.S. as well. Localized markets do exist in parts
of our country, in part due to dietary concerns and in part to the ethnic groups
which are concentrated in particular areas of the United States.
Foods made from soybean can be grouped into two categories: fermented
and non-fermented foods. Below are listed foods most often made from
soybeans, with some information on the attributes of soybeans required for their
successful manufacture or production.
- Non-Fermented Foods
- Soybean Milk is produced from whole soybeans that are first cleaned and
soaked in water, ground and heated to near boiling for a short time. Filtering
out the solids from the heated slurry produces soybean milk. Tofu and Yuba
can be made using the milk produced, or the milk can be used as a drink for
direct consumption. If soybean milk is dried, it can be incorporated into foods
like ice cream. High protein content varieties with large light yellow color seed
with a clear / yellow hilum is desired by the soy milk market.
- Tofu is a high protein curd used in many oriental dishes. It is made by
coagulating the milk made from soybean. Data available on uses of soybean for
production of foods suggest this is the primary product made from niche market
soybeans. Additional processing of tofu can produce various forms of tofu for
the market place.
- Yuba is a protein rich skin that forms on the top of soybean milk heated to a
temperature just slightly below boiling. Yuba is skimmed off the top of heated
soybean milk several times, each time providing a material made of protein and
lipid. The product is described as "stringy and chewy", and can be used to form
imitation meat products.
- Sprouts are another non-fermented avenue for use of niche market soybeans. If
used as sprouts, the soybean serves as a substitute for mung bean, which is more
commonly used. Soaking in warm water, followed by germination in the dark
for six or seven days, produces sprouts ready for consumption. Sprouts are
generally washed with water to remove hulls and treated with a mild bleach
solution (extending shelf life) prior to marketing. Seed which are small, whole,
have yellow hila, high germination percent and are free of disease and weeds
are desired by the sprout market.
- Flour can be made from whole soybeans or soybean meal, and used as an
ammendment to prepared food. The presence of the flour will enhance
nutritional properties of the food, as well as enhance the consistency or texture
of others. Many canned and otherwise prepared foods sold in the United States
contain soybean flour or other soybean components.
- Fermented Foods-
- Tempeh is a fermented soybean food made from whole beans which are soaked
in water, dehulled, then cooked in boiling water. Starch is added to the cooked
beans, which are then cooled to about 100o F at which time Rhizopus
oligosporus is introduced to ferment the beans for several hours. Packaging and
further fermentation for 2 or 3 days at near 100o F is done before cooling the
market ready material.
- Miso is a food paste resulting from fermentation of a soybean meal and cereal
mixture (rice or wheat). Production of the final product spans roughly three
months. Seed with light yellow cotyledons, clear or light colored hilum, and
high carbohydrate and sucrose content is needed for production. Low prices
tend to be paid for soybeans meeting production needs; consequently the niche
market is of lesser interest to U.S. niche market producers. China tends to be a
producer of soybean used for production of the food.
- Natto is a food made from fermented whole soybeans, and tends to be preferred
in only certain regions of Japan. It is reported to have poor keeping quality, and
therefore is not stable in commerce. Small round seed (maximum of 5.5 mm
diameter), clear hila color, thin seedcoats and high carbohydrate content are
desired in soybeans used to make natto. Relatively short fermentation by
Bacillus natto sawamura, at a temperature of about 110o F is used to make natto
from soybeans that are first steam cooked.
- Soy sauce is a product of fermentation which many U.S. consumers use in
preparing foods. Soybeans, or soybean meal, is mixed with coarsely ground
wheat. Fermentation of the grain mixture by Aspergillus oryzae extends over
one to three months, after which the liquid (soy sauce) and solids are separated.
A number of grain companies offer Illinois soybean producers the
opportunity to produce soybeans to meet niche market needs. There are limits
to the quantity of soybeans required to meet the needs of foreign buyers of niche
market soybeans, so the opportunity cannot be viewed to include the more than
9 million acres of soybeans which Illinois currently produces.
Growers reasonably close to grain companies dealing with export and
domestic markets for soybeans meeting a niche market need may have added
economic opportunities to offer a portion of Illinois farmers, however. Those
grain companies in or nearby Illinois which have been identified as having
connections to niche markets are tabulated below. Specific needs of the
companies may tend to fluctuate across time, as market demand changes.
Companies listed below should be contacted by individual growers
interested in soybean niche market production. Occasionally advertisements are
placed in newspapers during the winter, soliciting growers to produce soybeans
to meet the needs of the companies. Terms of the contracts under which
production is done varies with the companies, as the markets which they supply
are varied and have different needs.
When considering production for the soybean niche market, examine
closely the economic advantage which may be provided to you. If premiums for
production are available, make sure that added management and transportation
to the delivery point for the crop will be covered. Keep in mind that all terms of
the contract regarding the quality of soybeans delivered must be met by the
grower; otherwise the crop produced will only be worth normal market value.
This list may not be complete, as companies involved with niche market
opportunities may have been unintentionally omitted. Information which would
make the following list more complete will be appreciated.
- Pearcy Grain Services, Inc.
- 6149 State Route 64
- Clare, IL 60111
- ph 815-895-8191
- Contact persons -Tom Pearcy, Larry Smith, or Bob Pearcy
- A number of varieties are handled to meet the needs of tofu, milk and
meat replacer markets in Japan. Premiums will depend on variety grown.
Special opportunities exist for growers who can use a "low chemical"
production scheme. Programs for conventional production growers also exist.
Subsidy for trucking to Clare, IL, can be included in the contract, helping attract
growers from about a 200 mile radius of the delivery point.
- Clarkson Grain Company, Inc.
- Box 80, 320 East South Street
- Cerro Gordo, IL 61818-0080
- phone 217-763-6412 or 800-252-1638
- FAX 217-763-2111
- Contact persons - Lynn Clarkson or Dick Widmer
- Niche market is for chemically restricted soybean production. Details of
chemical restrictions are available on request. Premiums paid for varieties
meeting market needs must be delivered to Beardstown, IL. A trucking
allowance, in addition to a premium price for quality grain delivered, is offered
to contract growers.
- Pioneer Hybrids - Specialty Plant Products
- Johnston, IA
- ph 800-247-6803 ext. 2700
- Contact person - Bob Kennedy
- Better Life Grains Program offered by Pioneer involves delivery points at
Beardstown and Deer Grove, IL for 1995. Large, high protein and clear hilum
soybeans are needed to meet specialty markets. Production in the program is
with pesticide free management. Premiums of reduced amounts may be
available for selected varieties if pesticide applications are made to rescue the
crop.
- Production of soybeans having low linolenic acid content may be part of
the niche market opportunities in 1996, requiring very specific Pioneer varieties
be produced, but pesticide applications would be permitted for this portion of
the niche market opportunity.
- ADM/Growmark
- Ottawa, IL
- ph 815-433-3635
- Contact person - Clay Swank
- Several niche market opportunities for soybeans exist, with programs that
involve both conventional and pesticide free production programs. Delivery
points include Ottawa, Morris, and Havana. Premiums paid depend on the
variety grown and the chemical program used in production.
- Continental Grain Co., Morris, IL
- ph 800-677-4045
- Contact person - Dan Mehochko
- Various soybeans, including clear hila, large-seeded types are involved in
programs offered. Delivery points in Illinois include Morris, Lockport, Seneca,
Hennepin, Spring Valley, Lacon, and Beardstown on the Illinois River. A rail
delivery point is also located at Gillman. Most production is with conventional
pesticide applications to soybeans, but a limited amount of chemical free
production is in demand.
- Sharon Inter-State Grain Co.
- Box 345
- Sharon, WI 53585
- ph 414-736-4951
- Contact person - Jerry Gibbons
- Contracts are available for several varieties having different hila
characters. Premiums vary with the yield potential of the variety grown. A low
chemical production program (involving no chemical application after
emergence) pays higher premiums per bushel, but conventional production
programs that allow conventional chemical programs, also exist.
- Knight Seed Co., Inc.
- P.O.Box 989
- Bursville, MN 55337
- Phone: (800) - 328-2999 and (612) 894-8080
- FAX: (612) 894-8095
- Email: pricco@knightseed.com
- WWW site: www.knightseed.com
- JAT International Inc.
- Iowa office located at --
- 2103 185th St.
- Fairfield, IA 52556
- Phone: (515) 472-3963
- FAX: (515) 472-6189
- Email: jimsch@fairfield.com
- Illinois office located at --
- 2050 Old Hwy 51N
- Anna, IL 62906
- Phone/FAX: (618) 833-4078
- Contact: Mr. Larry treece, Anna, IL
- JAT International contracts with growers to produce a variety of types of soybeans destined for the food grade market. Production methods they have contracts for include Certified Organic, Pesticide Free, and Conventional Producers.