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Soybeans and Their Products

Soybeans and Their Products: Markets, Models, and Policy

Copyright Date: 1972
Edition: NED - New edition
Pages: 296
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  • Book Info
    Soybeans and Their Products
    Book Description:

    This is the report of a comprehensive study designated to identify and measure empirically the forces, interrelationships, and processes which shape the behavior of the total soybean market. The research focused on the years from 1946 to 1967, a period when the soybean economy developed from its small beginnings to its present magnitude. Soybeans are now the leading oilseed in world trade; soybean oil is the most prominent among the many edible oils available in the world; and soybean meal stands first in importance in world markets for high-protein livestock feeds. As a top cash crop in U.S. agriculture soybeans are rivaled only by corn. Much of the remarkable surge in soybean and related markets in recent years can be explained and analyzed by using the concepts of demand growth and commodity substitution developed in this book. In addition to serving the specific interests of commodity experts, the study will be useful to econometricians and price analysts as an example of empirical investigation of a major agricultural and industrial raw material. The research was carried out through close cooperation between the University of Minnesota’s Department of Agricultura and Applied Economics and the Economic and Statistical Analysis Division of the Economic Research Service, U.S. Department of Agriculture.

    eISBN: 978-0-8166-6304-0
    Subjects: Botany & Plant Sciences

Table of Contents

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  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-2)
  3. 1 Introduction
    (pp. 3-8)

    Thousands of words have been written in recent years about the surge of U.S. soybeans from virtual obscurity before World War II to their present position as one of the world’s foremost agricultural commodities. To agriculturists and farm politicians, the soybean story is one bright spot in a panorama of agricultural problems in the United States and around the world. The catalog of these problems includes widespread hunger and malnutrition in some places and food surpluses in others; heavily subsidized food exports facing complex tariff and bureaucratic barriers against imports; low farm incomes yet growing governmental costs for agricultural programs;...

  4. PART ONE· The Markets

    • 2 World Markets for Food Oils and High-Protein Meals
      (pp. 11-27)

      Since World War II, world markets for fats, oils, and high-protein meals have grown in both value and complexity. Markets for some commodities have grown rapidly and others more slowly. In virtually all cases, however, both production and trade have expanded to meet rising demand stimulated by population and income growth around the globe. In 1967, exports of all fats and oils, at $2.5 billion, ranked third, among food commodity groups in international trade (see table 2.1). Oil-meal exports, at $1.8 billion, ranked seventh among traded commodity groups. Although many food oils and high-protein meals are joint products of processed...

    • 3 Soybean Markets in the United States
      (pp. 28-49)

      The United States is unrivaled as the world’s foremost producer, consumer, and exporter of soybeans and soybean products. The objective of this chapter is to examine the U.S. production, marketing, and processing systems which have evolved largely since World War II to service this expanding sector.

      In areas where they are produced, soybeans are a vital source of farm income. Nationally, soybeans generate some $2.5 billion of gross farm income annually. This places soybeans among the top three income-earning crops of the nation along with corn and wheat. When direct payments from the federal government’s wheat and corn price-support programs...

    • 4 Prices in the Soybean Sector
      (pp. 50-64)

      In the soybean sector, prices of beans, meal, and oil result from the interplay of demand forces, supply forces, and government programs. There are several distinctive features of the markets and the commodities which shape the way in which these forces interact: (1) the joint-product aspects of soybean meal and oil; (2) the multiple market outlets, domestic and foreign, that compete for available meal, oil, and beans; (3) the position of soybean products as major competitors in the fats and oils complex and in the livestock-feed sector; (4) the specific government programs for soybean price support and concessional soybean-oil exports;...

  5. PART TWO· An Aggregate Model and Its Policy Implications

    • 5 Dynamic Supply and Demand Model of the Market for U.S. Soybeans and Their Products
      (pp. 67-101)

      Among the many economists whose interest and attention have been stimulated by the rapid growth of the soybean economy are analysts whose major goal is to quantify the economic relationships in the industry. Previous model-building and estimation work on the market for soybeans and soybean products has emphasized the demand side.¹ Some supply estimation work has been done, but it has not been incorporated as an integral part of a simultaneous demand-supply model.²

      In the model presented in this chapter, the meshing of both demand and supply relationships is undertaken with special attention to policy variables. In this way, a...

    • 6 Policy Analysis with the Dynamic Model
      (pp. 102-156)

      The major objectives of this chapter are (1) to provide a theoretical framework for policy analysis in the soybean sector and (2) to apply the empirical estimates developed in the last chapter to analyses of alternative government policies.

      There are three major policy variables in the soybean market now available to the federal government. They are (1) the price-support loan rate for soybeans themselves, (2) the price-support and acreage-restriction mix for crops which compete with soybeans in production, and (3) the level of concessional exports of soybean and cottonseed oils under P.L. 480. Other policy variables might be available in...

  6. PART THREE· Analysis of Regional Export Demand for U.S. Soybeans and Soybean Products

    • 7 The Economic and Statistical Framework for Regional Demand Analysis
      (pp. 159-163)

      A fairly simple analytical framework was used as the basis for the empirical estimates developed in the following chapters. In general, the objective was to approximate an import demand function for the commodity in question applicable to the region being studied.¹

      The demand for imports by a country or a region can be visualized as a schedule measuring the difference between quantities demanded and quantities supplied internally at various prices.² For instance, assume that the demand equation for some commodity, Q, within a region can be stated as

      (7.1) Qd= f(P,X)

      where the subscript d indicates “demanded,” P is...

    • 8 Analysis of Regional Export Demand for U.S. Soybean Oil
      (pp. 164-200)

      The United States has been a net exporter of soybean oil since the 1937–38 crop year, but it was not until after World War II that the volume became sizable. Subsequently, exports expanded irregularly and substantial yearly fluctuations occurred. The following are average annual net exports of soybean oil for selected time period:

      Years Exports (in Million Pounds)

      1937–40................ 8.2

      1941–46................ 40.3

      1947–51................ 292.8

      1952–54................. 71.3

      1955–60................. 795.2

      1961–66.............. 1,164.8

      From 1947 through 1951 and after 1954 exports were greatly increased by U.S. foreign-aid programs. Marshall Plan assistance financed up to three-fourths of...

    • 9 Analysis of Regional Export Demand for U.S. Soybean Meal
      (pp. 201-222)

      Exports of soybean meal from the United States were of relatively minor importance until the 1954–55 crop year when 272,000 short tons were exported. Previously, annual net exports (exports minus imports) did not exceed 150,000 tons. Between 1954 and 1960 exports grew to 600,000 tons, an average increase of 109,000 tons annually. Since 1960 exports have expanded even more rapidly, growing at a yearly rate of 722,000 tons, to over 2.6 million tons in 1966–67.

      The principal use of both oilseed and fish meals is in prepared livestock feed. Demand, therefore, is greatest in developed countries where livestock...

    • 10 Analysis of Regional Export Demand for U.S. Soybeans
      (pp. 223-245)

      Soybean exports from the United States climbed steadily from less than 5 million bushels in 1946 and 1947 to more than 260 million bushels in 1966–67. U.S. soybean trade has followed the general pattern of total oilseed trade. Developed countries consistently have taken about 90 percent of U.S. soybean exports.

      Japan has been the largest single importer of U.S. soybeans. Exports to Japan have accounted for 25 to 30 percent of total U.S. exports in most postwar years. During a few early years of the study period, Japan’s share was as high as 40 percent. Countries in the European...

    • 11 Summary of Regional Analyses
      (pp. 246-258)

      The purpose of the research reported here in Part III was to identify and measure key economic relationships in export markets for U.S. soybeans and their products. By highlighting the basic forces at work in these markets, the research was designed to be useful in policy and marketing decision making. Projections of trade volumes or prices were not made. Soybeans, soybean meal, and soybean oil were considered separately. Each commodity market was divided into regions or multiple-country groupings to permit more detailed analysis. Such a level of aggregation allows identification of some unique local demand relationships that were obscured in...

  7. Appendixes

    • A Description and Sources of Data
      (pp. 261-272)
    • B Effective Support Prices and Acreage Supply Functions: A General Approach
      (pp. 273-276)
  8. Index
    (pp. 279-284)