A backgrounder on global challenges and opportunities for U.S. soy produced by the United Soybean Board (USB)/Soy Checkoff Global Opportunities (GO) program in March 2012.

The Issue
A lack of soybean processors and growing demand for soybean meal and oil in western and southern Africa provide an opportunity to increase U.S. soy exports to this region.

Why It Matters
U.S. soy exports to western and southern Africa have competitive advantages in several countries in this region. If U.S. exporters can capitalize on these advantages, U.S. soy products shipped to this region could greatly increase.

Issue Summary
According to a recently released study funded by USB’s GO program titled “Market Potential of Sub-Saharan Africa,” some countries in western and southern Africa may face a shortage of 1 million metric tons of soybean meal and 450,000 metric tons of soybean oil. This gap will continue to widen as increasing personal incomes affect demand for meat and oil. Argentina currently meets most of the soybean needs for this region. However, areas exist where U.S. soy has competitive advantages.

Critical Facts
Even though western and southern African farmers produce approximately 51 million bushels of soybeans, due to processing constraints, this region currently faces a net shortfall of 1 million metric tons of soybean meal, the meal from nearly 47 million bushels of soybeans, and 450,000 metric tons of soybean oil. The study estimates that, as demand for animal protein and edible oil increases, this shortfall will continue to grow. This provides opportunities for U.S. soybean meal and oil exports to increase with this demand.

Argentina remains a major exporter to Africa because of its price competiveness since it can offer lower freight rates than the United States. In addition, Argentine exporters already have close relationships with many of the soy importers in this region.

Through the U.S. Department of Agriculture (USDA), importers in Southern Africa have access to credit. USDA’s GSM-102 program guarantees credit to importers of U.S. agricultural products in approved countries. Increased awareness of this program has the potential to increase U.S. soy exports to African countries approved to use the GSM-102 credit program. Because commercial credit can be difficult to obtain in this region, educating potential customers and banks about the GSM-102 program could provide a competitive advantage for U.S. soy.

Containerized shipments represent the most effective way to reach most ports in western and southern Africa. Few ports have the equipment to unload bulk grain ships. Containers also allow importers to purchase smaller shipments of soy and to move that cargo inland by truck. This could be one area where the United States has an advantage over Argentina, since U.S. exporters have more options for container shipping

Soybeans provide an inexpensive protein source for humans as well. With more promotions for soy in human consumption, demand for multiple uses of U.S. soy could grow.

The study reviewed 48 countries that make up sub-Saharan Africa, but U.S. soy products do not have the competitive advantage in all of those countries.

•    Senegal represents one country where U.S. soybean oil has advantages that could allow it to expand its market share. The United States already exports soybean oil to Senegal and holds a price advantage over other oil imports.

•    In Tanzania, soybean oil consumption continues to grow with increased promotion of soy for human consumption. U.S. soy oil imports could increase here to fill the growing demand.

•    Argentina may currently be the major soybean meal exporter to Nigeria, but, as demand continues to grow, opportunity increases for U.S. soybean meal to gain some of that market share.

•    In Ghana, there’s also potential for U.S. soybean meal imports to increase. The rising price of fish meal has increased the demand for soybean meal as a feed ingredient in this country with limited soybean production.

•    Kenya importers could also start looking to U.S. soy to fulfill demand because these importers would be eligible for the GSM-102 program.

Issue Conclusion
As USB continues to diversify soy export markets for U.S. products, the western and southern regions of Africa provide new opportunities. U.S. exporters need to capitalize on their advantages in countries where U.S. soy products remain competitive.

For More Information on this Issue

For copies of the results of this USB/soy checkoff-funded study, click here.

The United Soybean Board’s (USB) Global Opportunities (GO) program publishes the GO Briefing. If you would like permission to redistribute, reprint or repost this information with credit given to the USB/soy checkoff, please contact USB at info@unitedsoybean.org.