June 2006
Printable version

By Bob Callanan

More than 50 years ago, U.S. soybean farmers set a course to explore and secure a large share of the global marketplace. That forward thinking, and many years of successful market development activities, led U.S. soybeans to become the single highest value U.S. agricultural export. In marketing year 2004, $9 billion worth — 50 percent — of the U.S. soybean crop was exported as whole soybeans, processed meal and oil, and as a feed component of meat and poultry exports. The 2005 crop value is somewhat lower, $17.4 billion, but total export value was still about $9 billion. Much of this success can be attributed to U.S. soybean farmers’ focusing marketing efforts on Japan, one of the top three U.S. agricultural markets for the past half century.

Japan’s importance as an agricultural market will likely continue for the foreseeable future. In fiscal 2006, U.S. agricultural exports are forecast to reach $67 billion, and Japan is forecast to be the third largest U.S. customer, with purchases of $8 billion. Soybeans make up most of Japan’s oilseed imports, forecast to total 4.2 million metric tons in 2006, and the U.S. share should remain at the 2005 level, roughly 76 percent.
Based on 2005 purchases, ASA (the American Soybean Association) anticipates that Japan will be the second largest purchaser of U.S. soybeans and soybean products this year, buying more than $1 billion, which includes nearly 100,708 metric tons of high-value, IP (identity preserved), food grade soybeans. The IP soybean market is driven by user requirements for specialty varieties.

Before 1940, the U.S. soybean industry was in its infancy, with production (and demand) far below commercial levels. But World War II fueled a massive expansion as supplies of tropical oils from Asia and other edible fats dried up. Between 1940 and 1946, U.S. soybean production nearly tripled, from 78 to 201 million bushels, driven primarily by the demand for oil. No longer was the soybean viewed as anything but a major oilseed contender. Ironically, following the war, Japan and Germany became two of the earliest international markets for U.S. soybeans, and today they remain very important customers.

Celebrating a Market
For U.S. soybean farmers, Japan proved the ideal market to begin export promotion activities. The soybean, in addition to its value in cooking oil and high-protein feed, was widely consumed in a variety of traditional Japanese foods. So Japan needed a reliable source of soybeans.

A series of soybean grower initiatives and U.S. government policies led to the opening of ASA’s international marketing office in Japan in 1956. ASA’s Japanese office was the very first foreign commodity office to receive FAS funding for market development.

To mark the 50th anniversary of the office, farmer leaders and staff of ASA, state affiliates, ASA-IM (ASA International Marketing), USSEC (the U.S. Soybean Export Council), and USB (the United Soybean Board) will hold a celebration this August in Tokyo with join members of JOPA (the Japanese Oilseed Processors Association), JOFEIA (the Japan Oil Fats Export Import Association), the Japan Federation of Miso Manufacturers Cooperative, and the Japan Tofu Association. USDA officials have also been invited. The celebration will coincide with partnership activities and the annual Food Bean Conference.

How It All Got Started
In the late 1940s, ASA representatives, prompted by increasing soybean production, began searching the far reaches of the globe for U.S. soybean markets. In 1955, ASA’s first executive officer, George M. Strayer, wrote an editorial in The Soybean Digest calling for more exports.

Mr. and Mrs. George M. Strayer en route to Japan, October 1955. Strayer served as ASA’s executive vice president and secretary-treasurer, 1940-67. Photos courtesy of the American Soybean Association, used by FAS with permission

Japan began importing small quantities of U.S. soybeans in 1946, when it bought 3,441 metric tons. By 1955, that quantity had soared to 572,052 tons. Also in that year, M. Hirano, managing director of Hohnen Oil Company and president of the Japan Oil and Fat Manufacturers Association, spoke at ASA’s annual convention, where he stated two concerns limiting U.S. soybean sales: the inferior quality of U.S. beans compared with those from Manchuria, and the requirement for payment in U.S. dollars, which Japan did not have at the time.

ASA’s Strayer and Howard Kurtz of USDA’s Grain Grading Division studied how to overcome these problems. After much discussion, ASA and Japanese soybean industry groups decided to cooperate directly on market development programs, rather than working through the Japanese government.

In 1956, ASA became the official cooperator, using funds from P.L.480 (Public Law 480, also known as Food for Peace) for soybean market promotion in Japan —  the first time USDA funded a cooperator group to manage such activities.

Staff of the Japanese American Soybean Institute, July 1957. Left to right: Hidekidu Sato, translator; Toshi Yonemura, interpreter and nutrition specialist; Shizuka Hayashi, managing director; Yoshiko Kojima, research and promotion specialist; and Yoko Takahashi, secretary

That first year, ASA established the Japan office to carry out the market development program, participated in the Osaka Trade Fair, and tested the quality of U.S. soybeans under new USDA grading standards. ASA organized a coalition of Japanese business interests for partnership activities. JASI, the Japanese American Soybean Institute, was set up, which provided the confirmation of understandings between ASA and representatives of the Japan Oil and Fats Manufacturers Association, Nippon Shoyu Association, Japan Miso Industrial Association, the Japan Tofu Association, and the Soybean Importers and Exporters Association. These Japanese associations contributed funds for activities, materials, and expenses that could not be covered with P.L. 480 funds.


Market Development Defined
Over the years, ASA’s farmer leaders would define market development as “a combination of activities and programs directed at all levels that result in greater use of soybean products by the end user.” This includes working with government officials, industry leaders at all stages from buyer to retailer, university and research technicians, and the technical and popular news media. The objective of market development is increased demand for end products in order to stimulate demand for the raw materials — U.S. soybeans, oil, and soybean meal.

Partnership programs have always been an integral part of ASA activities to build demand for U.S. soybeans and products. Bringing foreign customers to the United States to meet with growers provides opportunities for buyers to see firsthand the efficiency and quality of U.S. production. Visits to export destinations help U.S. farmers understand customer needs, and also give them a chance to thank customers in person for their purchases.

These innovative farmers realized that their goal was to enlarge total demand for soybeans and soy products, and they took care not to confuse sales promotion with market development. Individual companies and organizations had to bear responsibility for capturing a greater share of the existing soy market for themselves; they could not afford to do market development work that could benefit their competitors, and were ineligible for government financing and other assistance.

ASA leaders also mandated that soy market development be carried out in a manner that would not jeopardize markets for other U.S. agricultural commodities.

Jack Yamashita of ASA, Tokyo, on receiving the FAS Incentive Award Certificate. Left to right: John D. Mortimer, deputy Far East director; Mitsunori Amano, bookkeeper/statistician; Robert W. Allewelt, FAS Fats and Oils Division; Kaoriko Shimodaira, executive secretary; Ralph Jackson, executive vice president, ASA Iowa; Jack Yamashita; David L. Hume, agricultural attaché, FAS Tokyo; Yoshiko Kitade, secretary; Noboru Korikoshi, administrative assistant.; Yoshiko Kojima, food section chief; and Scott Sawyers, Far East director

In the 1950s and 1960s, ASA would open additional international marketing offices and begin market development activities on Taiwan and in Germany, and Iran. During the 1970s, 1980s, and 1990s, ASA would open offices in Austria, Belgium, China, Cyprus, India, South Korea, Mexico, Russia, Singapore, and Venezuela. From these offices, ASA staff and consultants could reach out to customers in more than 80 countries around the world.

After nearly 50 years of successful U.S. soybean export activities, in 2005 ASA and USB formed USSEC to continue these efforts. Due to ASA’s worldwide name recognition and excellent reputation, USSEC will continue to conduct market development activities under the name ASA-IM. These efforts are made possible by ASA’s investment of cost-share funds from FAS and by producer checkoff dollars invested by USB and state soybean Councils.

Bob Callanan is the communications director of the American Soybean Association.