Background on Value Web Component: Logistics/Distribution/Storage
Background
Logistics and storage are important
components of the value chain that ensure the
value of the crop at harvest is not lost by the
time it gets to the end-user. In the U.S., soybeans
are primarily sold to three markets: (1) protein
and oil processing, (2) food-grade processing,
which makes products for human consumption
and (3) export, which eventually leads to
processing (categories 1 and 2) in the importing
countries. The quality attributes by which grain
is sold are physical characteristics (soundness
and purity), intrinsic attributes and uniformity1.
Physical characteristics include percent of trash
and foreign materials including other grains,
split seeds, moisture, test weight, heat damage,
mechanical and mold damaged kernels. Intrinsic
attributes refer to the chemical properties of the
beans. Typically the protein and oil contents and
fatty acid profiles are the primary intrinsic
properties of importance in trade. Uniformity
refers to the physical and chemical variability of
a bulk. These properties are used to determine
the value of the crop when traded in various
markets because they affect storage, processing
and end-use performance to varying degrees.
Most of the soybeans produced in the
U.S. are sold as commodity soybeans to
processors who crush them, producing oil and
soybean meal (protein). Commodity soybeans
are typically shipped either from on-farm
storage to country or river elevators, or directly
from on-farm storage to the processor.
Emerging markets include soybeans grown for
food-grade processing, non-GMO beans or
specialty varieties such as Monsanto’s Vistive®
Gold or DuPont Pioneer’s Plenish high oleic.
The high oleic soybeans offer better oil stability
without hydrogenation, which provides an oil
that is healthier for consumers. Soybeans grown
for these markets typically command a premium,
which can only be gained through a wellmanaged identity preservation (IP) program. As
this market grows and larger volumes of foodgrade and specialty varieties come to market, the
challenges in IP will increase, especially with
respect to planting, storage, handling and
logistics from the seed supplier to the farmer to
the processor to the end user. This results in
additional costs that will require price premiums
to compensate for these additional services and
management activities.
Limitations to Value Realization
The value of food-grade and specialty
soybean varieties can only be gained through
ensuring their identity and end-use quality are
preserved throughout the value chain from
production to processing. Because the majority
of the U.S. grain logistics infrastructure was
built for high-throughput commodity grains and
oilseeds, there is an additional cost associated
with preserving identity during harvesting and
handling. Elevators are typically not efficient at
IP and the costs and risks of managing the
system tend to be high. On-farm storage offers a
better option, but farmers need to be educated on
the techniques and equipped with the proper
tools in order to ensure that quality is maintained
during the storage period.
Another IP issue is how the value of the
soybean crop can be captured effectively by
pricing based on its composition, primarily the
protein, oil and amino acid profiles. This is the
basis for the “Estimated Processed Value” of
soybeans, a concept developed by Iowa State
University. An understanding of how weather
and genetics affect composition, and how to
preserve quality throughout the value chain are
important in capturing the component value.
Photo credit: www.unitedsoybean.org
Problem Overview
The U.S. grain handling and logistics
infrastructure is designed to efficiently handle
high volumes of commodity grain and oilseeds.
Most farmers, however, are not equipped or
trained to handle IP grains. IP requires extra
levels of management and auditing to ensure that
the identity and value of the specialty variety is
maintained throughout the value-chain. While
farms offer a better choice and less risk for IP,
Example of Complex Issue Affecting Logistics/Storage/Distribution
the use of information technology (IT) and smart
technologies in management and inventory
tracking has not yet been fully realized since the
introduction of IP grains in the U.S. and global
markets. Additionally, the storability and
handling performance of new varieties, which
may deviate in physical and intrinsic properties
from commodity soybean varieties, should be
determined so that they can be properly handled
and stored. There is very little information
available on differences in properties such as
kernel size, shape and density, among varieties.
Differences in such attributes could affect
processing efficiency, storage capacity, and the
quality of the end products. Changes in color
and other physical attributes of soybeans during
storage are not well understood.
Research towards a solution
IP costs must be reduced or captured in
the pricing to farmers in order to grow the
market for specialty grains. Additionally, the
storage characteristics of specialty varieties must
be compared with those of commodity soybeans
to determine whether there are differences that
require special management in production and
handling. Research on physical and chemical
properties and on storage and handling
characteristics of specialty and food grade
soybean varieties will provide insight into how
to better handle and store these varieties to
preserve their quality. Effects of storage
conditions on physical and chemical attributes
need to be identified along with factors that
cause seeds to split.
Research on the incorporation of IT and
smart tracking technologies that lead to efficient
IP and marketing is needed especially as the
specialty market volume increases. Chemical
properties of soybeans should be mapped with
respect to growing location so that the industry
can better understand how variability is
impacted by weather conditions. Technology
systems that map component value in soybeans
from the field to the bin should be developed as
part of an integrated IP management system.
Production practices may also vary relative to
fertility or pest management, especially if the
end use is for human consumption.
Research into emerging markets
(economics) for food grade soybeans, organic,
and non-GMO varieties based on soybean
functionality (genetics) cuts across the value
web and should include the effect of production,
storage and handling conditions on end-use
quality. Storage research should include nonchemical control and management of stored
insect pests (entomology & ag. engineering),
prevention of mold growth (plant pathology &
ag. engineering), and reduction of split beans.
Finally, research must be integrated with
extension outreach to producers and others in the
industry. Feedback from stakeholders through
Extension, research collaboration, forums, and
other interactions is essential to identify the key
issues confronting the industry as they arise.
References
[1] USSEC. 2008. How the global oilseed and grain
trade works. 2008. U.S. Soybean Export Council.