UNIVERSITY OF ILLINOIS LIBRARY AT URBAN A -CHAMPAIGN AGRICULTURE NQN CIRCULATING > CHECK FOR UNBOUND CIRCULATING COPY 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. In the past, market evaluations of the various concentrates have usually ranged from slightly above minimum to slightly below their maximum feeding values. They have, however, sometimes varied from below minimum for some to above maximum for others. Such evalua- tions, however, have been rare and of short duration. Though supplies of high-protein feeds have increased significantly since 1935 as compared with those of feed grains, prices of high- protein feeds as compared with those of feed grains have undergone no appreciable change (Fig. 3). Three things account for the relative strength of the high-protein feed market: increased supplies of feeds of higher quality; a growing awareness of their value in animal nutri- tion; and a decline in the protein content of corn. a A large carryover of stocks of feed grains has developed in recent years (Figs. 3 and 4). These stocks have been associated with higher prices of feed grains than would have prevailed otherwise. At the same "Analyses of the composition of corn reported by F. B. Morrison and the National Research Council indicate that the protein content of corn in recent years has been more than 5 percent lower than in the late 1930' s. These studies indicate that the total protein content of corn has declined from 9.4 percent to less than 9 percent and the digestible protein content has declined from 7.0 per- cent to 6.5 percent." Literature Cited, 14. 1957] EXPANDING MARKET FOR SOYBEAN MEAL 13 140 OT 130 QUJ 2 - 120 4- uj SLJ 100 x o 1 " 90 g i? 80 60 '39 to '49 '38 '41 '46 '54 51 ' 45 '48 130 70 80 90 100 110 120 RATIO OF HIGH- PROTEIN FEED SUPPLIES TO FEED-GRAINS FED Relationship of supply and price of high-protein feeds to quantity fed and to price of feed grains. United States, 1935-1954. Source: Table 17 of the mimeographed supplement to this bulletin. (Fig. 4) time, the prices of high-protein feeds have been lower as related to feed grain prices than they otherwise would have been. The importance of this relationship will depend on the disposition of Commodity Credit Corporation stocks of feed grains. Other condi- tions remaining the same, rapid liquidation of these stocks would de- press the prices of all concentrate feeds, but would depress the prices of feed grains more than the prices of high-protein feeds. Slow liquida- tion of these stocks would keep high-protein feed prices low, as at present, in relationship to feed-grain prices. These relative changes in supply-price relationships of high-protein feeds and feed grains have occurred concomitantly with large in- creases in the demand for both classes of feeds. The average supply and price of the 11 principal high-protein feeds has increased in each five-year period since 1935-1939 (Table 6). In 1950-1954, supplies of the 11 principal high-protein feeds averaged 219 percent and prices 254 percent of the 1935-1939 average. Increases in demand, however, have not been uniform. The demand for soybean meal has increased much more than the demand for the 10 other high-protein feeds (Table 6). By 1950-1954, supplies of soy- bean meal had increased to 658 percent and prices to 273 percent of the 1935-1939 average. In 1950-1954, however, supplies of the 10 other high-protein feeds were only 136 percent and prices only 241 percent of the 1935-1939 average. Several factors have been responsible for the relatively greater increase in demand for soybean meal. First, better methods of process- 14 BULLETIN No. 620 [October, c3 & 2 O OO ^O O^ t^* ^O *~^ ^* ON *^ iO to- 'O *^~ ^fw^CNON- ^^ ^H C^l ^H C*^ C^ C^J CM ^* ON V a *' g ON ^H PO ON ON c3 V ON t^. r^-OTH ^ o\ 10 r^ CM s 1 OO '^ t^** ^O IO r'j ^* ^^ O\ ja 0\ ;> ^ ^,^Hf-H CN CNCNCNCM- o ^ ON CO "o C 4-> C * 0) o O\ >(> OOOCMr}*'* O g to Tj< lOONto 1--. OOt~~- v O'^HCM u ON ON 69 *-< r O C OC C * 03 *" Jo V w >> > ^f *O O ^t ^J t~ IOCM^~ *-> r^NOCMON " CO 2 <^ t"-*. CM *-^ OO ON ** PO ^^ frj <-M ! ~ ^->PO t-~NOPOOCM H o O ^t 1 rsi i/-> oO PO ^f ^ ^ PO ^^ PO .So ON ON 6S- *""' +J *"* o .3 ON ^ t) ON O\ ^prjCM t^ PO^OCMIO Tj< CMi^NO PO IO ' 1 PO O J3 C 1 OO IO PO *O .... bj3 rt | ~ * O POCMIOIOO fO ^ir>CM PO POPOCM CM s ON t^ 6"9. ** 4-l U ^^ oi ^3 "^3 o3 "^ "^ * C3 '{ fecc"- bccg- k' o rt rt -S o rt -S : 8g . C! cj rt u rt ** * 1 J_< > 1 ^ t*-H ^ C i- 13 CrtCT3 S C^S'Ohii KG rt &^- J B rt ^-c g | 8 tsi'oflrb'Bg'oP " ^ ^-x o & g^ rt *< ^ 2 g 2l|| ^ 4 Sg^^ .? | | t> ov,;;"'Oc4j o.t,.-. T! hb *- -* J 4jSw - t ^ w M & i T vd V 1 illllilillliill !lr- s -"l ! s Ir-^l ! M 1 tlllilll! I'lllll 1* Sprtc^-S^iSo J=S^-S^^ 8 ^|^2 e --- "S ^ S^S E --- | -S -S -S rlcS | | |ld | | | 1 co (x]co H K 1957] EXPANDING MARKET FOR SOYBEAN MEAL 15 ing have improved the quality of the product. Second, in the earlier period, the feeding value of soybean meal was not fully appreciated. It is now known that soybean meal adequately supplements the protein deficiencies of grains. Vitamin Bi 2 must be added when soybean meal is substituted for an animal protein. Third, the quality of tankage and meat scraps has declined in recent years. The demand for soybean meal has also increased more than the demand for corn (Table 6). Supplies and prices of both have increased since 1935-1939. Supplies and prices of soybean meal, however, have increased as related to supplies and prices of corn (Table 6). The aver- age price of soybean meal in 1935-1939 exceeded that of corn by only $5.05 per ton. By 1950-1954, the price of soybean meal averaged $24.80 more per ton than the price of corn. The Formula Feed Industry Since the discovery of the value of high-protein feeds in animal nutrition, the formula feed industry has been an important means of moving these products into consumption, increasing in importance as production and utilization of high-protein feeds have increased. De- velopments in the formula feed industry will have an important influence on future markets for high-protein feeds. Formula feed production. Little data on the industry prior to 1947 are available. Most of what information there is consists of estimates by people in the industry or in the U. S. Department of Agriculture. These estimates, supplemented by reports of the Bureau of the Census, reasonably approximate past production of mixed feeds and past use of ingredients. The mixed-feed industry expanded slowly until the 1920's when a period of more rapid growth started. Jennings 7 reported that 13 million tons of prepared feeds were manufactured in 1939. Jennings and Earp 10 reported that manufacture had increased to 15 million tons in 1941, 20 million tons in 1942, and 29 million tons in 1943. The Census of Manufacturers for 1947, 16 containing the most com- plete data on production of mixed feeds, reports 22.3 million tons of prepared livestock and poultry feeds were produced in 1947. Since 1947, the American Feed Manufacturers Association has estimated the production of mixed feeds. These estimates (Table 7) show that in 1950 production had again reached the previous high reported in 1943. Each year since 1950, production has exceeded 30 million tons. An all-time high of 35 million tons was reported in 1954. Production of mixed feed per animal unit has increased since 1939. 16 BULLETIN No. 620 [October, For each high-protein-consuming animal unit, 296 pounds of mixed feed were produced in 1939; 388 pounds in 1942; and 513 pounds in 1943. The rate of increase, however, has declined in recent years (Table 7). Average annual production of 636 pounds per animal unit for 1952-1954 was 123 pounds greater than in 1943, but only 74 pounds greater than the average for 1948-1950. Mixed feeds have been of much greater importance in the rations of some classes of livestock than in those of others (Table 8). Poul- try feeds have accounted for a larger proportion of the total than have feeds for any other class of livestock. Mixed feeds have also accounted for a larger percentage of the feeds fed to poultry than they have for other classes of livestock. Jennings 7 estimated that in 1942 the following quantities of feed were produced: poultry, 11.5 million tons; dairy, 4.5 million tons; and other feeds, 4 million tons. In his opinion, these quantities repre- sented about 37 percent of all poultry feeds fed, 20 percent of the total concentrates fed to dairy cattle, and about 15 percent of all grain and other concentrates fed to all livestock. The Bureau of the Census 16 reported that the 22.3 million tons of mixed feeds produced in 1947 were made up of 9.9 million tons of poultry feed, 5.3 million tons of dairy feed, and 5.3 million tons of feed for other livestock. This was probably about 36 percent of all poultry feed fed, a 25 percent of all concentrates fed to dairy cattle, and 20 percent of the total concentrates fed to all livestock. 15 Since 1947 important changes have occurred in the production of mixed feeds for the different classes of livestock (Table 8). Average production of all mixed feeds in 1951-1953 was 5.9 million tons greater than in 1948-1950. Two-thirds of this increase was poultry feed. Other important changes were the noticeable increases in produc- tion of beef and sheep feeds and of hog feeds and the decline in the production of scratch feeds. Since 1947 the use of mixed feeds as related to the use of other concentrates has also increased (Table 9). Mixed feeds, which ac- counted for only 20 percent of all concentrates fed to all classes of livestock in 1947, averaged 24 percent of all concentrates fed in 1948- 1950 and 28 percent in 1951-1953. Most of this increase was in poultry feeds. Mixed feeds averaged 60 percent of all concentrates fed to "This estimate does not include scratch feed. If scratch is included, produc- tion of poultry feeds amounted to 11.7 million tons or 42 percent of all feeds fed to poultry. b Computed from estimates of concentrate feeds consumed. Estimates are given in Table 20 of the mimeographed supplement to this bulletin. 1957} EXPANDING MARKET FOR SOYBEAN MEAL 17 Table 7. Mixed Feed Production, High-Protein Feed-Consuming Animal Units, and Mixed Feed Production per Animal Unit (United States, 1948-1954) Year Mixed feed production iigh-protein feed- :onsuming animal units* Mixed feed per animal unit 1948.. million tons 25.5 no. 94,791 Ib. 538 1949 28.5 98,549 578 1950 29.1 102,035 570 1951 32.8 105,516 622 1952 34.4 107,297 641 1953 33.7 107,810 625 1954 35.0 108,992 642 Data for year beginning October 1 were adjusted to calendar year basis by use of straight-line interpolation. For example, animals numbers for calendar year 1948 are the result of multiplying numbers for year beginning October 1, 1947 by .75 and year beginning October 1, 1948 by .25 and summing results. Source: Reports of the American Feed Manufacturers Association and Table 4 of the mimeographed supplement to this bulletin. Table 8. Total Production" of Mixed Feeds and Production for Selected Classes of Livestock" (United States, 1948-1954, and three-year averages) Year Total P^Jjy Beef oroduc- ' Dairy Hog and Scratch Other f iVm " excluding feeds feeds sheep feeds feeds scratch feeds million tons tion 1948 .. 25.5 12.9 6.6 2.1 .7 1.6 1.6 1949 .. 28.5 16.1 6.5 2.1 .8 1.6 1.4 1950 .. 29.1 16.6 6.1 2.4 1.0 1.4 1.6 1951 .. 32.8 18.8 6.2 3.0 1.7 1.3 1.8 1952 .. 34.4 19.0 7.0 3.0 2.5 1.3 1.6 1953 .. 33.7 19.5 7.0 2.8 1.6 1.1 1.7 1954 .. 35.0 20.5 6.5 3.5 1.9 1.0 1.6 1948-1950 average .... .. 27.7 15.2 6.4 2.2 .8 1.5 1.5 1951-1953 average . . , 33.6 19.1 6.7 2.9 1.9 1.2 1.7 * Estimates of the American Feed Manufacturers Association, Inc. b Production for different classes of livestock was computed as follows: the American Feed Manufacturers Association reports of different kinds of feed were expressed as percent- ages of the total tonnage reported by participating firms; these percentages were then applied to the estimates of total feeds produced. The participating firms account for 45 to 50 percent of total mixed feed production. poultry in 1951-1953 as compared with 51 percent in 1948-1950 and 42 percent in 1947. Use of ingredients. Ingredients used in formula feeds in 1947 were reported by the Census of Manufacturers to be 47.9 percent grains, 26.9 percent high-protein feeds, and 25.2 percent mill feeds 18 BULLETIN No. 620 [October, Table 9. Consumption of Mixed Feeds as Percentage of Total Concentrates Consumed by Selected Classes of Livestock (United States, 1948-1953; and three-year averages) Year Poultry Dairy cattle All livestock 1948 perct. 48 perct. 32 perct. 24 1949 55 30 25 1950 52 29 24 1951 58 29 26 1952 61 32 28 1953 63 31 29 Average, 1948-1950 51 30 24 Average, 1951-1953 60 31 28 Source: Table 8 of this bulletin and Table 20 of the mimeographed supplement to this bulletin. Table 10. High-Protein Feeds Manufactured Into Mixed Feed; Tonnage of and Percent of Each as Percent of Total (United States 1947 and year beginning October 1, 1949) High-protein feed 10A7 Year beginning 1OA7 Year beginning October 1, 1949 October 1, 1949 Soybean meal thousand tons 2,392 287 205 159 940 462 667 5,112 thousand tons 3,870 662 407 294 969 424 804 7,430 perct. 46.8 5.6 4.0 3.1 18.4 19.0 13.1 100.0 perct. 52.1 8.9 5.5 4.0 13.0 5.7 10.8 100.0 Cottonseed meal Linseed meal Other oil meals. Animal proteins Brewers' and distillers' grains. . , Gluten feed and meal Total Source: Literature Cited, 8 and 16. and other products. 16 High-protein feeds totaled 5,112,000 tons and accounted for almost 60 percent of the supplies of these feeds avail- able for the year. For the year beginning October 1, 1949, Jennings 8 estimated that the ingredients used in formula feeds were 44 percent grains, 28 percent high-protein feeds, and 28 percent mill feeds and other products. High-protein feeds amounted to 7,430,000 tons (Table 10) or 80 percent of the supplies available for the feeding period. In the latter period the use of high-protein feeds in formula feeds was greater as related to use of other ingredients and a larger proportion of available high-protein feeds was used by feed mixers. Soybean meal was the most important high-protein feed used by 1957} EXPANDING MARKET FOR SOYBEAN MEAL 19 the formula feed industry, both in 1947 and in the year beginning October 1, 1949. Soybean meal accounted for 46.8 percent of the high- protein feeds used in the earlier period and 52.1 percent in the latter (Table 10). Animal proteins ranked next in importance to soybean meal in both periods. In the latter period, however, animal proteins were a smaller proportion of total high-protein feed used than in 1947. The use of soybean meal in mixed feeds appears to have increased as related to that of other high-protein feeds in more recent years. If it is assumed that there has been no change in the relative importance of high-protein feeds, the mixed- feed industry would have used 2.4 million tons more of high-protein feeds in 1954 than it used in the year beginning October 1, 1949. a This figure may, however, be low, because the proportion of high-protein feeds has probably increased. Feed mixers are now producing more highly concentrated feeds (higher net energy and protein) than they did in the recent past. Their production indicates that high-protein feeds (particularly those of higher protein content) have increased in use relative to other in- gredients. Availability of the different high-protein feeds in 1955 indicates that soybean meal probably accounted for most of the in- crease in use of high-protein feeds. Role of feed mixers in increasing gain-to-feed ratios. In recent years the feed mixers have been making better feeds. They have in- creased their use of high-protein feeds as related to other ingredients and used high-protein feeds of better quality. Much of the increase in gain-to-feed ratios in the recent past has come from feeding larger relative amounts of improved mixed feeds. It appears unlikely that these increases would have been as great if feed mixers had been less aggressive. Feeders of some classes of livestock have changed to mixed feeds more readily than others. The largest relative gains in mixed- feed consumption in recent years have been by poultry and hogs (Table 8). It is significant that these classes of livestock have also made the largest relative increases in gain-to-feed ratios. Changes in the relative importance of mixed feed to the different classes of livestock appear even more important when converted to consumption per high-protein-consuming animal unit (Table 11). a Computed by taking 28 percent (estimated proportion of high-protein feeds used in mixed feeds in the year beginning October 1, 1949) of 35 million tons (estimated production of mixed feed in 1954) and subtracting from this 7.4 million tons (estimate of high-protein feeds used in mixed feeds in the year beginning October 1, 1949). 20 BULLETIN No. 620 [October, Table 11. Production of Mixed Feed per High-Protein Consuming Animal Unit, by Classes of Livestock (United States, 1948-1954; and three-year averages) Year Poultry feeds Dairy feeds Hog feeds Beef and sheep feeds 1948 Ib. ..... 777 Ib. 452 Ib. 205 Ib. 117 1949 909 454 193 125 1950 .... 898 426 205 153 1951 972 434 246 122 1952 965 489 253 322 1953 982 476 259 187 1954 1,001 437 325 113 Average, 1948-1950 861 444 201 132 Average, 1951-1953 973 466 253 210 Source: Table 8 of this bulletin and Table 4 of the mimeographed supplement to this bulletin. Each high-protein-consuming poultry unit consumes much larger quantities of mixed feeds than does a comparable unit of any other class of livestock. The market for poultry feeds is more nearly sat- urated than is the market for mixed feed for other classes of livestock. Production of mixed feeds per high-protein-consuming hog unit has increased at a faster rate than has production of mixed feeds for poultry (Table 11). The relatively greater increase in production of hog feeds appears even more important when the types of feed are compared. Mixed feeds for hogs are mainly protein supplements and are more highly concentrated than poultry feeds. Probable changes in the mixed-feed industry. The rapid growth of the mixed-feed industry can be attributed to several factors. Some of the more important are: (1) economies in large-scale purchase of ingredients and in distribution of feeds; (2) utilization of byproduct feeds that are unknown to or hold little appeal to farmers; (3) rapid application of new discoveries in the field of animal nutrition; (4) proper blending of micro-ingredients (synthetic vitamins, hor- mones, antibiotics, etc.) with other ingredients; (5) production of feeds that give satisfactory results; and (6) provision of assistance in management to farmers and thereby improvement of results from the feeds used. The mixed- feed industry has a great growth potential. The factors just enumerated will continue to favor its growth. An expanding population will require larger quantities of meat, milk, and eggs. Mixed feeds will play an important role in producing them. Three specific technological changes -- increased use of urea, 1957} EXPANDING MARKET FOR SOYBEAN MEAL 21 diethylstilbestrol, and antibiotics will have an important influence on the production of mixed feeds. These substances all require careful mixing. Urea and other nonprotein sources of nitrogen must be carefully blended to avoid toxicity. Urea is a substitute for protein in the rations of ruminants. Each pound replaces 7 pounds of soybean meal or its equivalent. In the year beginning October 1, 1949, 80,000 tons were fed. This was equivalent to 480,000 tons of soybean meal, or about 6 percent of the total ingredients used in the manufacture of feeds for dairy and beef cattle and sheep. This amount is near the allowable upper limit of urea in the rations of these animals. a Diethylstilbestrol is a powerful substance, less than an ounce being used per ton of feed. At present it is sold only to commercial feed mixers. Increases in its use will result in feeding beef cattle rations that are improved in protein balance as well. The compound is no cure-all for poor rations but can make a good ration more efficient. It will reach the feedlot in mixed supplements, which will contain ade- quate amounts of protein or nonprotein nitrogen. Consequently, its use will increase the use of natural protein, or of nonprotein nitrogen, or of both. Antibiotics are used in micro-quantities in the rations of hogs. Al- though antibiotics tend to reduce the amount of protein supplement needed, their increased use will increase the total consumption of natural protein of the quality that hogs need. This will occur because at present the protein in the rations of hogs is inadequate. Increased use of antibiotics will come through commercial supplements. Conse- quently, increases in the feeding of protein supplements will occur concomitantly with increased use of antibiotics. Most of the increase in use of antibiotics will occur on farms where inadequate amounts of protein supplement are fed. It seems likely that recommended levels of antibiotics' use have already been reached on farms where rations are properly balanced. Results of survey of the industry. A brief survey of the industry made early in 1956 indicates that the above conclusions closely corre- spond to the expectations of some of the leaders in the business. Representatives of five companies in and adjacent to Illinois were interviewed. The companies were all larger than the average and each person interviewed had some responsibility for determining how much * Present information indicates that no more than 25 percent of the natural protein in the rations of beef and dairy cattle can be replaced by urea. Higher rates of utilization of urea by sheep are possible. However, these animals con- sume only very small quantities of mixed feeds. 22 BULLETIN No. 620 [October, of the different kinds of feed to produce and what ingredients to use. The survey was ended after five interviews because all persons gave essentially the same answers to all questions. The consensus of their opinions follows. 1. Larger amounts of feed will be needed to produce the livestock products needed to nourish our expanding population. The production of mixed feeds will continue to increase in absolute tonnage and relative to other feeds. Technological discoveries in animal nutrition will lead to increased relative importance of mixed feeds. 2. The tonnage of mixed feed produced will not be indicative of the total increase in relative importance of these feeds. The tendency is to produce much more highly concentrated feeds than have 'been produced in the recent past and to produce more premix supplements containing all ingredients other than grains. 3. Urea has replaced large quantities of natural protein in the rations of ruminants. Most mixed feeds now contain the amounts of urea recommended by nutritionists. Further increase in the use of urea will be largely a result of a growing market for mixed feeds for ruminants. 4. Diethylstilbestrol will continue to increase in importance in beef cattle rations. Its increased importance will stimulate the production of mixed feeds for these animals. Larger quantities of mixed feeds will require large supplies of nitrogen which may come either from high-protein feeds or urea (or other nitrogenous compounds). 5. The use of antibiotics in hog feeding will increase the use of natural protein of the quality that hogs need. 6. Increased production and utilization of synthetic amino acids will probably not have much effect on the market for natural protein. These compounds will be used largely to improve the quality of rations containing natural high-protein feeds. 7. The mixed- feed industry will require larger quantities of high- protein feeds of the quality of soybean meal. Summary Since the end of World War II, the quantity of high-protein feeds has increased significantly in relation to other concentrates fed. These increases in the proportion of high-protein feeds in livestock rations have been closely associated with increases in the production of live- stock products per unit of concentrate fed. The largest increases in the proportion of high-protein feeds have occurred in poultry rations and 1957] EXPANDING MARKET FOR SOYBEAN MEAL 23 the greatest increases in gain-to-feed ratios have been in poultry feeding. Less protein is fed to livestock than is needed for balanced nutri- tion. The deficit is greatest for hogs. Some classes of poultry, however, are also fed less protein than they need for balanced nutrition. The total amount of protein available in high-protein feeds has increased since 1940. During the same period, supplies of high-protein feeds that contain more nearly complete proteins have increased as related to supplies of other high-protein feeds. Most of the increase has been in soybean meal. Supplies of soybean meal are more respon- sive to price changes than the supplies of the other high-protein feeds. Since 1935, supplies and prices of the eleven high-protein feeds have increased in relation to supplies and prices of feed grains. In- creases in demand for the high-protein feeds have not been uniform. The demand for soybean meal has increased more than the demand for the other high-protein feeds and more than the demand for corn. Supplies and prices of both have increased since 1935. However, the supply and price of soybean meal have both increased in relation to the supply and price of corn. Mixed feeds have been the most important means by which the high-protein feeds have been moved into consumption. As the volume of mixed-feed production has increased, the mixed-feed industry has increased in importance as an outlet for high-protein feeds. The mixed-feed industry's use of soybean meal has increased as related to its use of other high-protein feeds. The quantity of soybean meal used in mixed feeds exceeds that of any other single high-protein feed. Much of the increase in gain-to-feed ratios in recent years has resulted from feeding larger relative amounts of improved mixed feeds. It is not likely that the increase would have been as great if the manufacturers had been less aggressive. It is significant that the largest relative gains in mixed- feed consumption have been by poultry, the class of livestock which has also made the largest relative increase in gain-to-feed ratios. Further increases are expected in the production and consumption of mixed feeds. The mixed feed industry will require increasing quantities of high-protein feeds of the quality of soybean meal. 24 BULLETIN No. 620 Literature Cited 1. AMERICAN FEED MANUFACTURERS ASSOCIATION. Estimated feed use and sup- plies. Chicago. 1955 and earlier issues. 2. BECKER, D. E., LASSITER, J. W., TERRILL, S. W., and NORTON, H. W. Levels of protein in practical rations for the pig. Jour. An. Sci. 13:611-621. 1954. 3. BECKER, D. E., TERRILL, S. W., and NOTZOLD, R. A. Supplementary protein and the response of the pig to antibiotics. Jour. An. Sci. 14:492-498. 1955. 4. DISTILLERS FEED RESEARCH COUNCIL. Distillers Feed Conference Proc. Cin- cinnati, Ohio. 1956 and earlier issues. 5. HILDRETH, CLIFFORD, and JARRETT, F. G. A statistical study of livestock production and marketing. Cowles Comm. for Res. in Econ. in cooperation with U. S. Dept. Agr., Bur. Agr. Econ. Monograph 15:1-156. J. Wiley and Sons, New York. 1955. 6. JENNINGS, R. D. A look at the protein situation for livestock in 1952. U. S. Dept. Agr., Bur. Agr. Econ. F. M. 97:1-15. 1952. Processed. 7. JENNINGS, R. D. Consumption of feed by livestock, 1909-1947. U. S. Dept. Agr., Bur. Agr. Econ. Cir. 836:1-105. 1949. 8. JENNINGS, R. D. Feed consumed by livestock, supply and disposition of feeds, 1949-1950. U. S. Dept. Agr., Agr. Res. Serv. Stat. Bui. 145:1-75. 1954. 9. JENNINGS, R. D. The deficit in protein for livestock. U. S. Dept. Agr., Bur. Agr. Econ. 30 p. April, 1946. Processed. 10. JENNINGS, R. D., and EARP, WORLEY S. The production and distribution of specified feed ingredients and of commercial mixed feeds, 1941-1943. U. S. Dept. Agr., Bur. Agr. Econ. and Agr. Adjust. Agency. 68 p. Feb., 1944. Processed. 11. MUTTI, R. J. Adequacy of protein in swine rations in Illinois. 111. Agr. Exp. Sta. Bui. 599:1-32. 1956. 12. TERRILL, S. W., BECKER, D. E., NORTON, H. W., WARDEN, W. K., and ADAMS, C. R. Some plant and animal sources of crude protein for weaning pigs fed in drylot. Jour. An. Sci. 13:622-629. 1954. 13. U. S. DEPT. AGR., Agr. Market. Serv. Grain and feed statistics through 1954. Stat. Bui. 159. 99 p. 1955. 14. U. S. DEPT. AGR., Agr. Market. Serv. The feed situation. 2 p. Nov., 1955. 15. U. S. DEPT. AGR., Agr. Res. Serv. Animal units of livestock fed annually 1909 to 1954. 18 p. June, 1955. Processed. 16. U. S. BUR. OF CENSUS, Census of Manufact., 1947. Grain Mill Products. MC20D:1-10. 1949. Urbana, Illinois October, 1957 Publications in the Bulletin series report the results of investigations made or sponsored by the Experiment Station 450010-5763103 UNIVERSITY OF ILLINOIS-URBANA