Value Enhancement Opportunity Assessment Briefing forEnhanced Nutritional Energy Soybean Meal

This Value Enhancement Opportunity (VEO) involves the development of varieties that produce meal with reduced raffinose and stachyose content and higher sucrose content. Increases of 100 kcal/lb in Nutritional Energy are considered to be attainable based on experimental varieties developed and evaluated to date. Other beneficial changes such as increases in protein and reductions in phytate have also been associated with this trait in some genetic backgrounds. Oil and meal volume and quality is within the range typically observed for standard commodity soybeans.

In addition to enhanced nutritional energy as a standalone trait, combining it with high oleic is also being examined.

As you review the following points, please consider the following questions:

How would the implementation of this VEO impact your sector (risk, return, market power)?

What do you see as the biggest impediments to the industry embracing this VEO?

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VALUE PROPOSITION SUMMARYBenefits include:

The value of this meal will be increased because it will allow manufacturers of livestock feed to reduce the amount of energy supplements, typically fat, that they need to add to their feed rations.

The amount of value will vary based on a number of factors including the species, growth stage, health status, environment, formulation objectives and market prices.

Increasing Nutritional Energy in soybean meal improves its overall Nutritional Bundle and associated Value Proposition. In a competitive ingredient environment, this will support higher usage levels and/or prices for soybean meal in a given formulation scenario.

Soybean meal usage is often limited in feeds for baby pigs and some other young animals due to anti-nutritional factors in soybean meal. Insoluble carbohydrates, such as raffinose and stachyose, are some of these factors. Feeds for some species of young animals might be able to utilize higher levels of soybean meal when the levels of raffinose-saccharides are reduced.

The primary costs will be from:

Developing varieties and bringing them to market Maintaining segregated handling channels from farm production through meal

processing and distribution

MARKET TRANSFORMATION REQUIREDThe following is an overview how various sectors in the value chain will be impacted by bringing this opportunity to market.

Seed Sector

Experimental seed varieties have been developed and testing continues Trait will need to be inserted into elite varieties in targeted growing areas Introduction into high oleic varieties will simplify the segregation required

(“killing two birds with one stone”).

Farmer

No yield drag is expected with these varieties No special agronomic practices are expected to be required (will grow just like

commodity) Raising these varieties will require “soft” IP during production up to delivery into

grain markets Relatively low direct premiums will be paid to cover soft IP

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Majority of value will come from increase in overall demand for soybean meal which will drive soybean production and prices higher

Grain Handlers

Segregation from farmer to processor will be required to maintain value

Processor

Will need to manage relationships with upstream supply chain as well as customers

It is not expected that any special processing techniques will be required The beans and meal will need to be segregated from seed procurement up until the

meal is sold to the feed manufacturer

Feed Manufacturers

The incremental value will be maximized by feed manufacturers having accurate knowledge of the energy content of the meal. This may require additional onsite measurement capabilities

Additional storage may be required depending on existing configuration Book values used by feed optimization models will need to be adjusted to allow

for the higher value of this new meal type

Livestock and Poultry Feeders

Additional storage may be required depending on existing configuration and types of livestock fed, but to the extent that feed mixed off site is fed, no change in feeding practices will be required.

The end feed product will still be balanced according to ration specifications, so no change in animal performance is expected

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