About Food Market series
Food Market is a series of articles published by Khazanah Research Institute (KRI) to analyse statistics related to some key food items in the diet of Malaysians. These articles intend to increase public knowledge and awareness on the production, trade and consumption of various food items in Malaysia.
These articles are short and informative, accessible to the public and policymakers. It utilises publicly available data (unless stated otherwise). They are not meant to study food-specific markets in-depth or make any policy recommendations.
The views expressed in this article are entirely those of the authors. They do not necessarily represent the views of KRI.
Articles are available online at www.KRInstitute.org.
Views
Soy: The King of Beans article is part of the Food Market series of articles at KRI’s website. It intends to provide a brief overview of the soy market in Malaysia, looking at its production, price, trade and consumption. Some insights are drawn for the benefit of the public and policymakers; however, this article is not meant to offer an in-depth analysis nor policy recommendations regarding the soy market.
Executive Summary
Soy is widely consumed in Asia, either as food or as feed for livestock. However, the region produces less than 10% of soybeans and in fact, Malaysia does not produce this legume. Soybeans are mainly produced in the Americas (almost 90% of global production), whereby the United States, Brazil and Argentina alone produced 82% of the total global soybeans.
• Before 2005, soybean oil had long been the leading vegetable oil. However, beginning 2006, palm oil has emerged as the top vegetable oil produced. In 2013, 53.6 million metric tonnes (m MT) of palm oil was produced, as compared to 42.6 m MT of soybean oil.
• The United States and Brazil are the two largest exporters of soybeans leaving Argentina far behind on the third place. China, on the other hand, is the single largest importer of soybeans—taking 63.7% share of the total global soybeans import in 2016. In this regard, China could be said as having a monopsony power in the international soybeans market.
• The most imported soy-based products to Malaysia is soybean cake, used for feed, followed by soybeans (whether or not broken). Malaysia disproportionately relies on Argentina for soybean cake import (96% in 2017) and on the United States for soybeans (57% in 2017).
• Most of the soy in Malaysia is used for feed, in the form of soybean cake—1.7 m MT in 2013. Soybean cake is the second largest source of feed in Malaysia after maize and maize-products—29% of the total feed in 2013.
Introduction
Soy-based foods are ubiquitous in Asian meals. Whether it is our kitchen’s must-have soy sauce, or the uniquely Southeast Asian tempeh, or Pasar Malam's must-buy tau fu fa, they are all derived from soybeans. Soybean is not only rich with protein but also contains fat, carbohydrates, dietary fibres as well as minerals and phytoestrogens (or isoflavones). It is unsurprising that when soybeans were first cultivated by the Chinese around 5,000 years ago, the legume was referred to as the “Yellow Jewel” and the “Great Treasure” due to its nutritious value. When it was then introduced to the Americas around 1765, the crop was dubbed the “King of Beans”.
Interestingly, despite consuming almost 40% of the soybeans, Asia produces less than 10% of the crop. Malaysia, specifically, does not produce soybean and we import this legume.
Aside from being consumed as food, soybeans are also an important source of animal feed and vegetable oil. Thus, any issue in the soy market will not only affect soy-based industries but will likely affect livestock and vegetable oil industries too.
Did you know?
What is legume?
Soybean (Glycine max) is a family of legumes. In general, legume is “a plant that has its seeds in a pod, such as the bean or pea". Legume has a nitrogen fixation feature—the ability to acquire nitrogen from the atmosphere. The residual nitrogen helps to fertilise the soil, making it available to other plants. Hence why legumes are used in crop rotation.
Production and Price
Soybeans are mostly produced in the Americas, where production is almost 90% and consumption is around 53% of the respective world’s total. In 2013, the Americas produced 102 million metric tonnes (m MT) of soybeans more than they consumed (a net producer) whereas Asia consumed 76 m MT more than the continent produced (a net consumer).
This scenario, however, was different before the 1970s. In the 1960s, the United States and China were the two largest producers of soybeans. This is before Brazil’s and Argentina’s production surpassed China’s in 1974 and 1998, respectively. In 2017, the United States, Brazil and Argentina alone produced 82% of the total global soybeans.
The combination of increasing harvested area and farm yield in Brazil and Argentina has contributed to the exponential trend of soybeans productions in the two countries. Production between 1967 and 2017 increased by more than 55-fold in Brazil and 1,000 times in Argentina. The largest growth in hectarage in both countries happened in between 1967 to 1977—more than tenfold for Brazil and almost fourfold for Argentina. In terms of yield, between 1967 to 2017, Brazil’s soybeans yield has increased by 189% whereas Argentina’s by 167%. The largest growth in yield for both countries also happened within the period of 1967 – 1977.
On the other hand, between 1967 to 2017, China’s harvested area for soybeans decreased by 14%, from 10.0 m ha to 7.3 m ha. The largest decrease was in between the years of 1967 to 1977. This period coincides with the Cultural Revolution, which caused a decline in China’s agricultural production.
Trade
Soybeans were exported ten times more than the soybean oil, in quantity. In 2016, 134.9m MT of soybeans was exported, compared to 12.5 m MT of soybean oil. The top five exporters of soybeans are also the top five exporters of soybean oil. However, while the United States and Brazil are the two largest exporters of soybeans leaving Argentina far behind on the third place, Argentina is the single largest exporter of soybean oil, exporting five times more than Brazil, the runner up.
On the other hand, the top five importers of soybeans and soybean oil are of different groups of countries, except China who is one of the largest importers for both products. A stark observation is China’s rapid increase in soybeans import started in 1999. From 1999 to 2016, China’s soybeans import surged by almost 13 times. China took 63.7% share of the total global soybeans import in 2016, while the Netherlands, the second largest importer took only 3.2%! In this regard, China could be said as having a monopsony power in the international soybeans market.
The import of soybean oil, on the other hand, is dominated by India, whose import quantity began to accelerate in 2014, from 1.1m MT in 2013 to 2.1m MT in 2014 and more recently 3.9 m MT in 2016. India took a 31.5% share of the total global soybean oil import in 2016, followed by Bangladesh with only 6.6% of the share. China’s import of soybean oil has been fluctuating vigorously since 1993.
Consumption
Most of the soy in Malaysia is used as feed, in the form of soybean cake—1.7m MT in 2013. Soybean cake is the second largest source of feed in Malaysia after maize and maize-products, 29% of the total feed in 2013. Both maize and soybean cake is by and large imported. In the Hala Tuju Kementerian Pertanian & Industri Asas Tani: Proriti & Strategi 2019 - 2020, the Ministry of Agriculture and Agro-Based Industry (MOA) has stipulated the strategy of reducing the reliance on imported feeds through the development of corn grain industry and increasing the use of palm kernel cake (PKC) in the livestock industry.
In 2013, a total of 71,000MT of soy was consumed as food in the form of soybeans and soybean oil. In addition, 339,000MT of soybeans were processed into other products— however, based on the FAOSTAT data, disaggregation could not be made to determine the proportions of these soybeans that were turned into food items such as soy milk and industrial products such as soy ink.
Conclusion
Soybean is an important crop for various reasons. Firstly, soybean is one of the main sources of animal feed. Globally, around 67% of the soybeans produced are converted to feed. Therefore, any issues in the soybean market will have significant impacts not only on the soy and soy-based industry but also the livestock industry. Secondly, soybean is also one of the main sources of vegetable oil. Before palm oil became the most produced vegetable oil in 2006, soybean oil was the dominant vegetable oil. Given that both oils are generally substitutable and the countries producing the two crops are of different groups, international politics might affect both industries. Thirdly, China holds a monopsony power in the soybean trade whereas the United States is the largest exporter of soybeans. The current US-China trade war would have remarkable consequences on the soy trade, potentially affecting countries that import this legume, including Malaysia.
