Discount reports put a new focus on soybean protein

Soybean producers are used to focusing on yield, but the new threat of discounts or rejection has some reconsidering where protein fits in their priorities

Calvin Penner suddenly has a new risk to contend with — the possibility his soybeans could be discounted or even outright rejected for low protein levels.

Penner, who farms southeast of Elm Creek, says the threat’s a new one and makes him more aware than ever of the clauses contained within the contracts he signs every year. He also hopes better production conditions in the coming season could mean the problem fades.

“I’m thinking it’s just a one-off as far as years go,” Penner said. “It’s never been an issue before in the 20 years that we’ve been growing soybeans.”

Growers concerned

Producers, particularly those reliant on soybeans to drive profit, had a sudden shock in February after reports that Viterra had introduced discounts on low-protein soybeans, something that came as a rude surprise in a commodity more focused on yield.

Francois Labelle, executive director of the Manitoba Pulse and Soybean Growers (MPSG) said they have heard from “quite a few” growers concerned by the discounts.

“We are trying to get a handle on what is causing the lower protein more than anything else,” he said. “This is a big unknown why 2017 in particular was a problem on low protein. We’re all aware that our soybeans in Manitoba and in Western Canada are lower protein. Our protein curve is lower than it is in Iowa over the last number of years. But, for some reason in 2017 the protein was lower, not only here, but in other areas of North America as well.”

Dennis Lange, Manitoba Agriculture pulse specialist, says protein ranged across the province with spots of low protein.

As-is protein from Manitoba Agriculture trials ranged from 31 per cent to 35 per cent, with the lowest protein reported near Melita. In other regions, though, protein was comparable or even higher than 2016.

At the same time, protein has emerged as a wider topic among producers across Western Canada and into the U.S.

Brazil has overtaken the U.S. in soybean exports to China, something that was widely blamed on lower protein content in the United States when it made headlines early this year.

The topic also came up last winter at an MPSG meeting, with the organization noting that buyers had begun to express concern over low protein content.

Uncertainty for farmers

News of the discounts have raised concern that other companies may follow suit, although Lange says he has only confirmed discounts from Viterra.

“From my conversations with different companies at this point, they’re aware that our protein content has been lower this year, but they’ve been able to make it work with the markets they’ve been working with,” he said.

Viterra did not respond to requests for an interview as of press time. The company has not confirmed discount amounts or clarified if the discounts are temporary or a long-term measure.

Local farmers, however, say they have been told that protein contents below 33 per cent will have a $6-per-tonne discount, while beans below 32.4 per cent will face discounts up to $9 a tonne and price cuts become prohibitive below 32 per cent, an account that matches statements from the Manitoba Pulse and Soybean Growers. Other sources report that soybeans below 32 per cent could face outright rejection.

Farmer Calvin Penner expects renewed calls for seed companies to focus on protein in their breeding programs.

“If that’s what the buyers are going to want and that’s what the importers and other countries are going to need, which I can understand, then it’s something that we’re going to have to address,” he said. “But at this point, we don’t have any protein (data).”

That means when farmers select the varieties they intend to grow, they have no idea if it’s a low- or high-protein variety, Penner said, which means they can’t plant to avoid the problem. He also added the industry was going to need to take the initiative to get to the bottom of things even if the problem does become less pronounced in the upcoming season.

“That issue will probably go away and come back and bite us another year,” he said.

The reported discounts add a sour note to a commodity that, until now, has enjoyed exponential growth over the last decade, reaching 2.3 million acres in Manitoba last year.

Lange expects those numbers to fall to two million acres this year, largely driven by the dry season and drop in yields through 2017.

Shifting priorities

Farmers have had to make an abrupt about-face in light of the discounts.

“Protein has not been an emphasis (for) a lot of people in the soybean industry for seed, for varieties and that type of thing,” Labelle said. “We haven’t paid attention to it. We’ve paid attention to bushels, early growing varieties and that type of thing and now all of a sudden this requires us to refocus on the protein side and try and get a good understanding on it.”

MPSG has not heard of any producers moving away from soybeans because of the discounts, Labelle said, but added that producers are looking for ways to bolster protein as the 2018 season approaches.

Unfortunately, according to Lange, there is no easy agronomic solution to that problem and genetic solutions will be years down the road.

No variety has come out significantly ahead in protein, he said.

“I think what you need to do as a producer is you need to follow your best management practices for growing a crop, choosing a variety that is suited for your own growing region that is going to perform well for you, looking at the yield data, maturity data, looking at IDC scores to produce a really good healthy plant,” he said.

Weather has the bigger impact on protein content, he said, arguing that last year’s dry conditions were a factor in the low protein that came off the field.

Likewise, there is little the producer can do to boost protein through nutrition, Lange said.

Research from Manitoba Agriculture in 2011 showed limited protein benefit from nitrogen. Taking a field without inoculation, researchers found that nitrogen application had to climb to 100 pounds an acre at either flower or pod fill before finding any significant protein jump (36.5 per cent protein when nitrogen was applied at flower and 36.9 per cent at pod fill, compared to 32.8 per cent protein in the unfertilized check).

Those levels are uneconomical at the farm level, Lange said. Spring applications also show little impact, he argued, as protein is set later in the season.

Lange encouraged producers to ask companies about protein requirements when entering a forward contract and to consider whether they can make those numbers work.

“At the end of the day, if you had discounts on your soybeans you have to realize that you’re going to have years like that when weather conditions play a major role on what protein content is like and there’s really not a lot you can do about it,” he said.

About the author

Reporter

Alexis Stockford

Alexis Stockford is a journalist and photographer with the Manitoba Co-operator. She previously reported with the Morden Times and was news editor of  campus newspaper, The Omega, at Thompson Rivers University in Kamloops, BC. She grew up on a mixed farm near Miami, Man.

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