SITE
NAVIGATION

TRADE LEADS SERVICE

Conversion Factors

Control Panel

Food Supply Market for the United States

The following is an overview of the food supply market for the United States.

This overview addresses a wide range of topics and was based on a review of the available literature from a wide variety of sources and supplemented by interviews with persons knowledgeable about the country market. The extent of information available varied by the topic addressed.

Basic facts about the U.S. market include the following:

• Population of 278 million people.
• Gross Domestic Product (GDP) of US$10.0 trillion, making it the largest economy in the world.
• Per capita GDP is US$36,200.

During the past decade, the U.S. economy has experienced an unprecedented economic expansion. This expansion has influenced the attitudes and consumption patterns of Americans in many facets of life including foods and food consumption.

Table of Contents

• General Characteristics of Market & Culture
• Crops Used in Market
• Sources of Crops
• IP Crops from Field/Port to End User
• Role of Intermediaries
• Major Players
• Regulations Influencing Import of IP Crops
• Market Segments for IP Crops

1. General Characteristics of Market & Culture

The following information provides a summary view of the agriculture sector of the U.S. economy.

• Agriculture equals 2 percent of the nation’s GDP or US$200 billion.
• Nineteen percent of the landmass is arable.
• Poultry production equals 16.0 million metric tons annually.
• Pork production equals 8.6 million metric tons annually.
• Egg production equals 84.4 billion pieces annually.
• Soybean production in the United States equaled 72.2 million metric tons.
• Corn production equaled 239.6 million metric tons.
• Wheat production in the United States equaled 60.5 million metric tons.

Diet. The U.S. is a melting pot of nationalities and diet is a reflection of this including common cuisines such as Italian, Mexican and Chinese.  A large amount of fast foods are also consumed reflecting a fast-paced lifestyle.

Americans consume relatively large quantities of meat protein including poultry, beef, and pork. Per capita consumption of red meat, poultry and fish in the U.S. has reached a record high level of 235 pounds. Pork consumption has remained fairly stable over the last 20 years; beef consumption has incrementally trended upwards over the past several years; and per capita poultry consumption has increased steadily since 1970 with both chicken and turkey consumption more than doubling (25 to 54 pounds and 6 to 14 pounds per capita, respectively).

Consumer concern about fat and cholesterol has encouraged the production of leaner animals (e.g., 30 percent reduction in retail pork fat content). Health concerns have created demand for other protein food products. It is estimated that about 4.8 million adults eat no meat, 12 million are semi-vegetarians, and 15 percent of university students identify themselves as vegetarians. Fresh produce is available to U.S. consumers year-round. Americans have a reputation for consuming relatively large quantities of sweets. New foods and food ingredients are easily introduced into the market and Americans are eager consumers of new products.

Changes in Demand for Food. The U.S. market has experienced a number of changes in food demand that are increasingly creating new opportunities for producers of IP crops.

Consumers have a better understanding of diet and nutrition and are purchasing foods providing specific health or nutritional benefits. Food processors are developing new and improved or better performing products that require trait-specific inputs. As end users and consumers more specifically define desirable product attributes and benefits, these are being translated into a growing number of trait-specific seeds and IP crops.

The following is a summary of some of the changes in foods being demanded by consumers.

Soyfoods. Currently a wide variety of soy-based foods are available. A United Soybean Board survey found that 71 percent of consumers perceive soy products as very healthy, up from 59 percent in 1997. More than 40 million consumers are using soyfood products that include meat alternatives such as tofu, tempeh, veggie burgers; dairy alternatives such as soy milk, soy yogurts, soy cheese; grains, snacks and cereals containing soy; bulk fresh, frozen and dried soybeans; textured vegetable protein; meal replacements and protein powders that contain soy; and other soyfoods such as miso soynut butter, soy sauce.

Increased consumer awareness of soy’s health benefits and consumer interest in choosing a healthier lifestyle will continue to drive soyfood sales and new product development. In addition, sales of soy products will likely continue to increase after an FDA ruling that allows marketers to state that foods containing soy protein may reduce the risk of heart disease.

Organic Foods: Organic foods are now considered mainstream in the United States, and large food companies are entering the organic food market in order to meet the growing demands of consumers. The U.S. market for organic foods is valued at about $7 billion annually and sales continue to increase. Organic food sales currently account for a little over 1 percent of total retail food sales and command a 10 to 30 percent premium over regular products.

Turkey. During the last twenty years the turkey industry has grown from a single product, holiday-oriented business into a fully integrated industry with a diversified product line that competes with other protein products on a year-round basis. U.S. consumption of turkey meat in 2000 was 17.75 pounds per person which represents a 216 percent increase since 1975. The total 1999 value of production by turkey processors was about $8 billion.

Nutraceuticals. Demand for and production of nutraceutical food products – foods that provide enhanced medical benefits – is on the rise. About 84% of all households use vitamins, 72% use minerals, and 37% use herbal supplements. One example of a high-value nutraceutical food product is yogurt containing sterol esters, derived from soy, that have been shown to aid in cholesterol reduction when consumed daily.

Future Direction. This is a time of high consolidation in agribusiness with movement toward some form of integrated food product systems. Alliances are becoming increasingly important in the farm-food sector. There is already some alignment in pork and wheat. Producers typically grow niche market soybeans under a contract agreement with a grain company which has developed or identified niche markets. However, increasingly both producers and end users are seeking a more direct relationship.

IP Traits. Identity preserved grains and oilseeds generally have specific traits that have been genetically developed for specific end-customer purposes. Traits-based marketing to specific market segments is beginning to replace the traditional grade-based crop marketing. In order for growers and local suppliers to benefit from marketing IP crops based on value-adding end customer characteristics, they need to know what traits customers require and how to grow, market, handle, and deliver the product with the desired trait. It is becoming increasingly clear that producers will have multiple partners over time and for different market segments.

2. Crops Used in Market

The following is an overview of the uses of IP and commodity soybeans, corn, and wheat in the U.S. market:

Soybean Use

The total annual domestic use of commodity and IP soybeans equals 47.5 million metric tons with:

• Oil and soybean meal use at 43.0 million metric tons.
• Food use at 1.0 million metric tons.
• Other uses at 3.5 million metric tons.

Soybean Oil Uses. Soybean oil provides over 70 percent of the edible consumption of fats and oils in the United States. The primary uses of refined soybean oil are for salad/cooking oil, baking/frying fats, and margarine/other edible uses. There are also industrial applications.

Soybean Meal Uses. The meal is used primarily in animal feed and accounts for the use of 98 percent of all soybean meal. Soybean meal is the world’s dominate high-protein feed.

A small amount of soybean meal (2 percent) is processed into soy protein products such as soy flour, concentrates, isolates, and textured soy protein. These products are used as ingredients in baked goods, meat alternatives, and other foods.

Food Uses. The food uses of soybeans include soymilk, tofu, natto, soy flour, soy isolates, and other soyfoods. Food soybeans have specific characteristics appropriate for each use, therefore, soymilk and tofu soybeans are different from natto soybeans and so forth.

Soyfood consumption has risen over 400 percent in the past 20 years. The annual demand for soybean food use is expected to double in the next five years.

Other Uses. The other uses of soybeans include seed at 2.0 million metric tons and on-farm dairy feed.

Types of Soybeans Used. The types of soybeans used include: high-oleic (yield oil with less saturated fat), high-sucrose (better taste and greater digestibility), high-amino acid (lysine and methionine), STS, clear hilum (food), natto, high-lysine, high oil, high protein, high-stearate, low-phytate, low-linolenic, low-saturate, non-GMO, organic, and chemical free.

Corn Use

The total annual domestic use of commodity and IP corn averages approximately 192.5 million metric tons with:

• Feed us
• Food uses at 27.0 million metric tons
• Industrial uses at 21.6 million metric tons.

Most of the corn crop is used as the main energy ingredient in livestock feed. The balance of corn is processed by wet millers and dry millers for food and industrial uses with the bi-products of these processes being used for feed.

Feed Uses. Feed accounts for 74 percent of the all corn used in the market. Manufactured feed equals 67 percent of total corn used, while on-farm use of corn for feed equals about 7 percent of the total use of corn.

Food Uses. Approximately 14 percent of total corn use is for food products. The primary foods produced from corn are syrups and sweeteners at about 10 percent of the total uses of corn. Other food products produced from corn include starches, beverage alcoholic, flour, masa flour, grits, cereals, germ, refined edible oils, margarine, shortenings, and other food products.

Industrial Uses. Industrial uses of corn account for approximately 11 percent of total corn use, and the products produced include ethanol, industrial alcohol, chemicals, and starches. Ethanol represents about 9 percent of total corn use.

By-Products Used. The following by-products resulting from the above uses of corn include the following: Gluten meal and feed, wet fiber, stepwater, and DDG which is used for animal feed.

Types of Corn Used. The corns used include: yellow dent, high-oil, non-GMO, nutritionally-dense, organic, waxy, high-lysine, low-phytate, food-grade yellow, organic, blue, waxy corn, food-grade white, chemical-free, high-amylose, chemical-free, high-amino acids, high-available phosphorus, high-lysine, high-protein, and high-starch.

Wheat Use

The total annual domestic use of commodity and IP wheat is 36.2 million metric tons with:

• Food uses at 25.7 million metric tons.
• Feed uses at 4.1 million metric tons.
• Seed and other uses at 6.4 million metric tons.

Food Uses. Breads are produced primarily from hard red winter wheat production. Cakes, cookies, and crackers are produced from soft red winter wheat.

Specialty breads are produced from hard red spring wheat and Dark Northern Spring wheat. These wheats are also blended with lower protein wheat since they have high protein levels.

Noodle products, crackers, cereals, and white-crusted breads are produced from white wheat. The hard white wheat is used primarily for noodles and breads, and the soft white is used primarily for cakes, cookies, and crackers.

Durum wheat production is used domestically for pasta products.

Types of Wheat Used. Wheat is divided into two general classes depending on the season each is planted: winter wheat and spring wheat.

Hard red winter represents 40 percent of total production with one-third exported. Soft red winter represents 15 to 20 percent of total production with one-third exported.

Hard red spring and Dark Northern Spring represent 25 percent of total production with one-half exported.

Hard and soft white wheat represent 10 to 15 percent of total production with two-thirds exported.

Durum wheat represents 3 to 5 percent of total production with one-third exported.

By-Product Uses. By-products from wheat milling – bran, shorts, and middlings -- are used by feed manufacturers in the production of animal feed.

Non-GMO Use

The total annual domestic use of non-GMO crops in the U.S. market is estimated at 196.7 million metric tons with:

• Soybeans at 17.6 million metric tons.
• Corn at 142.9 million metric tons.
• Wheat at 36.2 million metric tons.

The actual use of IP non-GMO has not been determined. It is assumed that much of the IP non-GMO is segregated out of the general commodity flow after it leaves the grower and local supplier.

An estimated 37 percent of the U.S. soybean production is non-GMO product. In the U.S. market there is a demand for identity preservation of non-GMO product, but data on the quantities segregated were not identified. Non-GMO soybeans are in demand for mostly food uses.

The estimated non-GMO corn produced is 74 percent of total production. In the U.S. market there is a demand for identity preservation of non-GMO product, but data on the quantities segregated were not identified. Non-GMO corn is in demand for mostly food uses.

All wheat production is currently non-GMO product.

Organic Use

The total annual domestic production of certified organic crops in the U.S. market is estimated at 550,000 metric tons with:

• Soybeans at an estimated 160,000 metric tons.
• Corn at an estimated 250,000 metric tons.
• Wheat at an estimated 140,000 metric tons.

Organic soybeans, corn, and wheat are used primarily in the production of food products, although there is also a demand for organic product for the production of organic animal feed.

According to USDA, organic farming became one of the fastest growing segments of U.S. agriculture during the 1990s and producers struggled to meet consumer demand for a wide range of organic products.

IP Crops

It is estimated that 10 to 12 percent of all grains produced in the United States are identity preserved crops. This percentage is expected to grow to 25 percent in the coming years.

3. Sources of Crops

The following is an overview of the sources of commodity and IP crops in the U.S. market.

Soybean Sources

The sources of the annual domestic use of 47.4 million metric tons of soybeans are as follows:

• Domestic production of 72.2 million metric tons.
• Imports of 100,000 metric tons.
• Adjusted by an increase in stock of 1.6 million metric tons and exports of 26.5 million metric tons.

The United States is the leading producer and exporter of soybeans in the world.

Imported soybeans are supplied primarily by the following countries:

Canada (87,379 MT), Trinidad and Tobago (3,196 MT), China (1,422 MT), Argentina (612 MT), Taiwan (485 MT), Brazil (440 MT), Hong Kong (136 MT), India (16 MT), and Japan (1 MT). 

Corn Sources

The sources of the annual domestic use of 192.5 million metric tons of corn are as follows:

• Domestic production of 239.6 million metric tons.
• Imports of 400,000 metric tons.
• Adjusted by an increase in stock of 1.7 million metric tons and exports of 49.2 million metric tons.

Corn is the most widely produced feed grain in the U.S. and accounts for about 90 percent of the total value and production of feed grains.

Imported corn is supplied primarily by the following countries:

Canada (139,900 MT), Mexico (10,642 MT), Peru (518 MT), Thailand (217MT), Ecuador (39 MT), and UK (20 MT).

Wheat Sources

The sources of the annual domestic use of 36.2 million metric tons of wheat are as follows:

• Domestic production of 60.5 million metric tons.
• Imports of 2.6 million metric tons.
• Adjusted by an increase in stock of 3.7 million metric tons and exports of 30.6 million metric tons.

Various types of domestic wheat are supplied primarily by the following regions: Hard red winter wheat is grown in the Great Plains area from Montana south through Texas. Soft red winter wheat is grown along the Mississippi River and in the Eastern States. Hard red spring is grown in the Northern Plains area including North and South Dakota, Montana, and Minnesota. White wheat is primarily grown in the West (Washington, Oregon, and Idaho), Midwest (Michigan), and East (New York). Durum wheat is grown in North Dakota and Montana.

Imported wheat is supplied primarily by the following countries:

Canada (2,069,482 MT), Mexico (24,712MT), Australia (568MT), Germany (299 MT), Turkey (135 MT), and Egypt (5 MT).

Organic Sources

The primary sources of the annual domestic production of certified organic soybeans, corn, and wheat of 550,000 metric tons were the following states:

• North Dakota
• Minnesota
• Montana
• Iowa
• Wisconsin
• Nebraska
• Utah

Minnesota is the top producer of organic corn followed by Wisconsin and Iowa. Organic wheat production was lead by Montana, North Dakota, and Utah. Minnesota organic soybeans production was second only to Iowa and followed by Nebraska.

While the quantity of domestic organic product produced is sufficient to meet U.S. demand for most major organic food items, the U.S. imports some organic items including food processing items such as flavorings, nuts, fruit concentrates, sugar, as well as items to meet off-season demand for fresh fruits and vegetables and to replace production allocated to foreign contract sales. While no estimate of import share of the U.S. organic market is available, the USDA estimates that it is probably not above 10 percent.

4. IP Crop from Field to End User

The following comments discuss various steps in the handling of commodity and IP crops in the U.S. market.

Supply-Chain Traceability. The need by end customers to trace the origins and handling of IP crops from the seed, through the growing, handling, and shipping process, to the final destination has become critical. The risks that customer face if an IP crop has been adulterated at some point in the supply chain have become of great concern. For example, many food producers export their products to foreign markets that impose civil and criminal penalties for selling products with unapproved genetically modified content. Major factors driving changes in the grain supply chain include the need to guarantee the presence or absence of a particular gene or group of genes, either for regulatory or marketing requirements. Thus, the need for records and certifications for specific shipments of IP crops is swiftly becoming a requirement for those supplying IP crops.

Handling of IP Crops. The following is an example of steps that might be involved in the handling of an IP crop from the seed company to the end customer in a supply chain that involves an increasing number of critical members:

• Grower and customer define specifications, testing procedures, and other procedures and sign contract.
• Seed company supplies seed to grower and provides certificate to grower.
• Grower tests sampling of the seed to reconfirm purity; selects field locations based on ability to segregate to prevent contamination; cleans all planting, handling, and harvesting equipment used throughout the process; plants field.
• Customer inspects field for contamination and management practices.
• Grower cleans transportation and handling equipment; separates and cleans storage facilities; harvests and stores product; tests product; determines order of shipping beans based on storage condition.
• Customer calls for delivery of specified quantity of product.
• Grower cleans handling and transportation equipment, loads product, assures no contamination during shipment (e.g., uses bulk liner in container); ships product, and provides certificates to the customer.
• Any handling facilities separate and clean storage as well as handling equipment and provide certificates to customer.
• Customer separates and cleans storage as well as handling equipment; tests delivered product; stores product; processes each lot of product separately to allow for traceability of product back to grower.
• Grower retains all records for two years (e.g., planting date, field number, seed identity, inputs used, harvest date, storage bin number, handling and transportation, equipment numbers, delivery date, etc.).

Increasingly, current and new technologies will be used to manage and document the handling of IP crops. These technologies might include computer programs to document the growers records, bar coding to identify and track specific lots of product, and computer tracking of the product at each step of the process.

5. Role of Intermediaries

In the past, end customers have procured their ingredients from merchandisers, brokers, and other intermediaries who bought from farmers, elevators or other processors. This intermediary system will continue to be used by the vast majority of customers for most of their soybean, corn, and wheat purchases.

Increasingly, however, direct procurement arrangements are being established between end customers and growers or local suppliers. This change is being driven by the need of the end customers who are purchasing IP crops to control the growing, storage, handling, and shipping of the product from the seed used to the final delivery to the customer’s facility.

One example of the direct-purchase system is found in the organic and food-grade soybean market. End customers have been contracting with and purchasing soybeans, corn, and wheat form growers and local suppliers for many years. As more IP crops come into demand, more direct-purchase arrangements will be established. This will create the need for development pools of growers and local suppliers who are trained and prepared to market to, negotiate with, and supply end customers who want and need their IP products and IP management services.

One example of a direct-purchase system is the developing on-line markets that are being established. These services are creating the opportunity for growers and local suppliers to start up relationships.  These e-markets provide the information a prospective customer needs to make an initial decision about purchasing an IP crop, and it offers a venue for growers and local suppliers to promote their products.

The introduction of designer soybeans and corn has also created the need for a direct-purchase system. Biotechnology has created niche opportunities for the production of high-value crops for companies that maintain control of access to the germplasm currently used. These IP crops may be used for medical or industrial purposes, for example, that have great competitive value to the owners of the germplasm.

6. Major Players

In the U.S. market, major players need to be identified in two ways:

• First, by individual companies such as the large grain, milling, crushing, livestock, and biotechnology companies.
• Secondly, by the food chain clusters formed by groups of these individual companies.

Consolidation within the agricultural industry is occurring through mergers, acquisitions, and strategic alliances. These emerging alliances are creating seamless, fully vertically integrated food systems from gene to shelf. Increasingly the major player alliances own and control a significant share of advanced germplasm for the world’s major agricultural crops and much of the cutting edge technology in agricultural biotechnology. Often the food product remains the property of the company or alliance, with the producer providing labor and capital but increasingly less involvement in ownership and decision-making.

Clearly, in the future it will be critical to think of major players in terms of their alliances and clusters rather than as individual companies. While there are a significant number of individual major player companies in the food industry, the number of food chain clusters will likely be relatively small. Many of these food chain clusters seem fluid, relationships are often loosely formed, and individual companies tend to cross from one food chain cluster to another. Increasingly, the food chain system is woven together by a host of major player working relationships with competition among food chain clusters rather than among individual companies.     

How Minnesota IP crop growers and local suppliers identify and relate to these cluster players will be dependent on how the grower or local supplier decides to participate in the IP market. IP crop producers will increasingly find it necessary to establish new marketing, production, and delivery relationships in order to participate in profits from their value added production. Successful IP crop producers will likely participate in one or more of the following types of entities:

• Vertical Supply/Value Chains (VSC).
• Flexible IP Networks (FIPN).
• Producer Cooperatives (PC).

A VSC alliance usually involves at least three independent supply organizations that, as a group, can more effectively and efficiently serve the customer.

A FIPN would be designed to serve the needs of specific customers and customer segments. It would organize the infrastructure for growing, selling, and delivering value-enhanced IP crops. This would be a means of developing customer preference for sourcing from Minnesota and provide a competitive advantage for Minnesota producers.

As end customers become larger and establish higher standards for the inputs into their systems, the infrastructure for growing and delivering IP crops will have to increase its capacity for quality control and reliability. The fast-pace change in the industry requires that the infrastructure organizations created to serve the customer be flexible enough to respond to the needs of the customer before any of its competitors. As more and more traits are stacked into IP crops the market segments become even more numerous and the opportunity for flexible networks to specialize in market segment niches will increase.

The protection of profitable grower’s premiums depends on growers being more directly in control of the sales process. FIPNs, built on a foundation of growers and local suppliers in formal alliances with other parties are needed in order for growers and local suppliers to maintain control of the sales process and the allocation of sales revenues among growers and handlers. Flexible networks are also needed to better serve the customers in a highly competitive environment. Flexible networks need to be focused on meeting the needs of a specific customer or group of customers. They must be able to move quickly to preempt competitors who would seek to better serve their targeted customers. FIPNs can either be strategic or opportunistic. Key players change depending on the market opportunity pursued, the strengths and weaknesses of potential members, and the needs of the end user.

A list of some of the major players in the U.S. commodity and IP crop market identified in the profiling section of this study include the following:

American Soy Products, Asteca Milling Co., Gold Kist Inc., Mandarin Soy Sauce, Inc., Pilgrim’s Pride Feed Division, Sanderson Farms, Inc., Tyson Foods, Zen-Noh Unico America Corp.; Archer Daniels Midland Co.; Cargill; Bunge North America; Ag Processing; Central Soya Co.; CF Processing; West Central Soy; Access Marketing; Harvest States Processing & Refining; Midwest Protein; Grain States Soya; American Health & Nutrition; Ciranda Inc.; Clifton Mill Co.; Connel Company; Country Life Natural Foods; Dupont Soy Polymers; Heartland Fields; Hodgson Mills; Houston Calco; Jack Daniel Distillery; Kanematsu USA; Kellogg Co.; Kimco World Trade Co.; Midwest Harvest Corp.; North American Foods; Organic & Grain Milling; Premium Standard Foods; Pulmuone USA; Quaker Oats Co.; Purina Mills/ Land O’ Lakes; PM Ag Products; Consolidated Nutrition LC; ADM Alliance Nutrition; Breeder’s Choice Pet Food; Burris Mill & Feed; Cooper Farms; Dekalb Feeds; Diamond V Mills; Doane Product Co.; Farmers Feed Mill /Hallway Feeds; Frontier Feeds; Hatfield Quality Meats/Wenger’s Feed; Hills Pet Nutrition; Hi-Pro Feeds; Kalmbach Feeds; Kramer Feed; LaCrosse Milling Co.; Moroni Feed Co.; Murphy-Brown LLC / Smithfield Foods; Nestle Purina Pet Care Co.; Pennfield Corp.; Perdue Farms; Plainfield Farms/ Feed Division; .Ranch-Way Feed Mills; Sanderson Farms; Southern States Cooperative; Tyson Foods; Vita Plus Corp.; Silver Creek Feeders; Willow Brook Farms; Vitasoy USA; White Way

7. Regulations Influencing IP Crops

The following regulations influence the grower or local supplier’s ability to deliver commodity and IP crops to U.S. customers that will meet the customer’s needs.

GMO Crops. In 1986 the federal government developed the “Coordinated Framework for Regulation of Biotechnology” that establishes the framework for the regulation of GMO product. Under this regulation, the U.S. Department of Agriculture, U.S. Environmental Protection Agency, and U.S. Food and Drug Administration control the use of genetically modified products as they relate to the agricultural environment, the safety of pesticidal substances engineered into plants, and the safety of foods, feeds, and drugs derived from genetic engineering.

The federal regulations impact the introduction of GMO product into the market. An example of a crop that contaminated the U.S. corn market in recent years is StarLink corn – this corn was not approved for food use but entered the corn supply and ultimately ended up contaminating the supply of corn used for food.

In addition to federal regulations, the states have laws regulating the certification of seeds, feed, and food that influence the growing and use of crops.

Organic Crops. The U.S. published its Final Rule for public comment in late December 2000, and the regulations became effective in February, 2001, and fully implemented in August 2001. These regulations control the labeling of products as organic and provide a certification process for the growing of organic crops. Growers supplying crops to organic buyers will be required to obtain this certification.

Voluntary Certifications. There are numerous voluntary certification systems to which customers may require growers and local suppliers to comply. Some of these certification systems have been established by producer associations, customer trade associations, or the individual customer.

8. Market Segments for IP Crops

The following is a summary of major market segments in the United States that are potential users of Minnesota IP crops.

Food Industry Market Segment

The food industry market segment uses approximately 54.0 million metric tons of soybeans, corn, and wheat annually in the production of food products.

Food manufacturer sub-segments for soybeans, corn, and wheat include the following: dry miller food producers, corn wet miller food producers, soyfood producers, alkaline cooking producers, and nutraceutical food producers.

Soyfood Producers. Traditional soyfood producers use whole soybeans to produce a variety of products including soymilk and tofu, natto, cooking beans, miso, temphe, sprouts, soynuts, and soy flour. The newer segment of the soyfoods markets is for soyburgers, soy drinks, soy snacks, soy cheeses, and other foods that are using soybeans as the main ingredient. Refined soy oil is use for edible oils, margarine, and shortenings.

Soyfood producers generate sales in the range of US$2.5 billion annually. The annual demand for soyfoods is expected to grow by 15 to 30 percent over the next several years with a projected market of $6 billion in five years. It is estimated that there are 100 major soyfood producers in the United States with sales totaling US$150 million annually.

It is estimated that soybean inputs jumped from 1.0 million metric tons in 1999 to 1.2 million metric tons in 2000. Some estimates put soybean utilization in soyfoods at 1.8 million metric tons in five years and nearly 2.7 million metric tons by the end of the decade. 

The crude soy oil produced by the soy crushing industry is used by refiners to produce edible soy oil as well as margarine and shortenings. According to the United Soybean Board, the primary uses of soybean oil in the U.S. are for salad/cooking oil at 6,200 million pounds annually, baking/frying fats at 4,748 million pounds annually, and margarine and other edible uses at 1,689 million pounds. Soybeans provided 82 percent of the edible consumption of fats and oils in the U.S.

Corn Food Products. The primary food product produced by the corn foods industry are sweeteners and syrups, starches, flour, masa flour, grits, meal, and alcoholic beverages. Refined corn oil is use for edible oils, margarine, and shortenings.

The U.S. is the largest consumer of sweeteners with consumption of corn sweeteners at 12 million tons annually. The major uses for High Fructose Corn Syrup (HFCS) are in the beverage industry, processed food manufacturers, and cereal and bakery producers. The U.S. demand for HFCS increased significantly over the past twenty years, from about 2 million tons in 1980 to about 10 million tons in 2000.

Wheat Foods. Wheat is used for the production of flour from which bread, cakes, crackers, noodles, and pasta are produced.

Consumer demand for food products made from wheat flour is closely tied to population, tastes, and preferences. Per capita wheat consumption has been in the range of 150 pounds since 1997 which is an increase from 110 pounds in 1972.

Foods. The total organic food market is estimated at US$7 billion and is projected to grow to as large as US$45 billion by the end of the decade. The sub-segment of the organic market that is a major user of organic crops is the soyfoods industry.

Organic foods differ from non-organic foods by the methods used in their production and processing rather than by observable or testable characteristics. All generally accepted organic rules prohibit use of synthetic fertilizers, pesticides, growth regulators, and livestock feed additives and all require long-term soil management, emphasis on animal welfare, and extensive record keeping and planning.

The Organic Trade Association projects organic food growth product lines to include: grain snacks and candy, cereals, dairy, and frozen foods. In recent years, the organic livestock production increased with the largest gains in milk, egg, and poultry production.

Nutraceuticals. Nutraceutical food products – foods that provide enhanced medical benefits -- are a fast-developing market as are the IP crops that are produced to provide the desired traits. Major oilseed crushers are targeting the nutraceuticals market as a means of offsetting low margins and slow growth in their oilseed crushing operations. The market for soy isoflavones, for example, was estimated at $118.1 million in 2000 versus $75 million in 1999 representing about a 56 percent increase. Cargill Nutraceuticals launched its first product in an evolving line of naturally occurring soy isoflavones under the AdvantaSoy brand in April. It is anticipated that isoflavones will be a key component in the rapidly expanding soy market.

Farmaceutical. As biotechnology advances, it is anticipated that there will be a merging of the food and pharmaceutical markets to create a “farmaceutical” market segment -- traditional crops that have been genetically engineered to provide greater nutritional content, health benefits, and disease fighting antibodies. They are specialty crops that need to be identity preserved and most likely grown under contract. Examples of farmaceutical crops currently under development include genetically engineered tobacco to produce cancer-treating drugs and potatoes to deliver selected vaccines against childhood diseases.  These IP crops will continue the process of decommoditizing farming. This is a new and slowly evolving market segment and there are still many questions to be answered regarding profit potential for producers and processors, the role of vertical integration of companies in the supply chain, and the viability of contract farming as a means of supplying needed crop inputs.

Some of the major U.S. food manufacturers, as well as potential customers identified in the profiling section of this study, are listed below:

21^st Century Foods; Access Marketing Co.; American Health & Nutrition; American Miso Company; American Soy Products; Arrowhead Mills; Asteca Milling Co.; Basic Food Flavors; Bob’s Red Mill Natural Foods; Ciranda Inc.; Clifton Mill Co.; Clofine Dairy Foods; Connel Company; Country Life Natural Foods; Devansoy Farms; Dixie USA; Dupont Soy Polymers; Gold Mine Natural Foods; Hawaiian Miso & Soy Co.; Heartland Fields; Hartland Organic Marketing Coop; Hodgson Mills; Homegrown Natural Foods; Houston Calco; Jack Daniel Distillery; Kanematsu USA; Kellogg Co.; Kimco World Trade Co.; Mandarin Soy Sauce; Midwest Harvest Corp.; Natural Products; North American Foods; Organic & Grain Milling; Ota Tofu Co.; Premium Standard Foods; Pulmuone USA; Quaker Oats Co.; Season’s Harvest; SK Foods; Surata Soyfoods; Vitasoy USA; White Way;

Animal Feed Industry Market Segment.

The U.S. is the world’s largest producer of compound animal feed. The U.S. Census Bureau estimated the value of compound feed shipments by commercial feed mills at $18.0 billion in 1997.

Manufactured animal feed includes complete feeds, supplements, and premixes. Corn, representing 80 percent of the grain in manufactured feed, and protein meal, such as the soybean meal generated by soybean crushers, are the primary ingredients of manufactured animal feed. 

In the compound animal feed industry, there has been a trend toward vertically integrated mills, with livestock producers owning feed mills and producing animal feed for their own operations. Commercial producers of compound animal feeds in the U.S. typically produce for the local market.  On-farm mixing of ingredient feeds has become increasingly common.

Increasingly, livestock and poultry producers in the U.S. are exploring the potential value of current and future IP crops and are beginning to adjust their facilities to accommodate the segregation requirements. According to the ASA, some of the large grain companies that supply the end user market are now investing a significant portion of annual capital budgets so they can increasingly handle IP crops.

Compound feeds are produced by processing together numerous ingredient feeds (energy and protein feeds) and/or vitamins in a manner that is nutritionally appropriate for a particular animal. Types of compound feeds include: completed feeds that adequately meet the total nutritional needs of the animal; supplements; premixes; and medicated feeds.

Organic Feed. Animal producers in nearly half of the states raise certified organic livestock with layer hens, broilers, and dairy cows topping the list. Certified organic livestock is under 1 percent of total U.S. livestock but the market is expected to grow now that organic labeling is permitted.

Some of the major U.S. feed manufacturers, as well as potential customers identified in the profiling section of this study, are listed below:

Cargill; Purina Mills/ Land O’ Lakes; PM Ag Products; Consolidated Nutrition LC; ADM Alliance Nutrition; Breeder’s Choice Pet Food; Burkman Feeds; Burris Mill & Feed; Cooper Farms; Dekalb Feeds; Diamond V Mills; Doane Product Co.; Farmers Feed Mill /Hallway Feeds; Fieldale Farms Corp.; Flint River Mills; Frontier Feeds; Gold Kist;  Harrell Milling Co.; Hartz Mountain Corp.; Hatfield Quality Meats/Wenger’s Feed; Hills Pet Nutrition; Hi-Pro Feeds; J.D. Heiskill & Co.; Kalmbach Feeds; Kramer Feed; LaCrosse Milling Co.; Moroni Feed Co.; Murphy-Brown LLC / Smithfield Foods; Nestle Purina Pet Care Co.; Pennfield Corp.; Perdue Farms; Pilgrim’s Pride/Feed Division; Plainfield Farms/ Feed Division; .Ranch-Way Feed Mills; Sanderson Farms; Southern States Cooperative; Tyson Foods; Vita Plus Corp.; Silver Creek Feeders; Willow Brook Farms.

The following is a brief review of the various segments of the animal feed industry that generate the demand for manufactured animal feed.

Poultry Feed. Turkey production for 2001 was estimated at 267 million birds and primary producing states included Minnesota at 43,500 birds; North Carolina at 41,500; Arkansas at 28,000; Virginia at 25,500; Missouri at 22,000; California at 18,000; and Indiana at 13,500. As a result of consolidation in the poultry industry, major producers have become fully integrated production systems which incorporate all aspects of the production chain including the production of the feed.

Swine Feed. According to the American Feed Industry Association, between 60 to 70 percent of the feed that goes into swine production is mixed on-farm from ingredients produced on-farm and purchased from ingredient manufacturers. Production is 8.6 million metric tons annually.

Pet Food. The value of pet food shipments in 1997 was about $8.3 billion. Pet food consumers are increasingly purchasing premium and super premium brands. 

Oil Crusher Industry Market Segment

The crushing industry uses 43.0 million metric tons of soybeans annually, representing 91 percent of the soybeans used in the United States. There are approximately 90 soybean crushing facilities in the United States.

Soybeans are processed into oil and meal, of which an estimated 80 percent is meal and roughly 20 percent is oil.

The crude oil is used by refiners to produce edible oils (48 percent), shortenings (36 percent) margarine (12 percent), and industrial oils (4 percent).

Soybean meal is used primarily in animal feed and is valued for its content of a number of important amino acids such as lysine, tryptophan, and threonine. The demand for soybean meal currently drives the crushing industry.

Some of the major U.S. soybean crushing operators, as well as potential customers identified in the profiling section of this study, are listed below:

Archer Daniels Midland Co.; Cargill; Bunge North America; Ag Processing; Central Soya Co.; Lauhoff Grain Co.; CF Processing; West Central Soy; Access Marketing; Harvest States Processing & Refining; Midwest Protein; Grain States Soya; Homer Oil Co.; Frontier Mills.

Ethanol Industry Market Segment

Ethanol Industry. The ethanol industry uses an estimated 18.0 million metric tons of corn annually, and it produces 3.0 billion gallons of ethanol annually. Ethanol is the third largest use of corn after feed and food.

Other Industry Market Segments

Other industry market segments that provide a market for commodity and IP soybeans, corn, and wheat include the following:

Biodiesel Industry. The industry uses various oils and animal fats, including soybean and corn oils, to produce methyl ester and crude glycerin. The methyl ester is blended with gasoline at a 20 and 80 percent respectively to produce biodiesel. Approximately 27 million gallons of biodiesel are currently produced annually.

Pharmaceutical Industry. This industry has the potential to be a customer for high-value IP crops that produce drugs that are currently manufactured at much higher costs than if they are extracted from a crop.

Back to Table of Contents