The Soybean Farming industry is historically volatile. Before the COVID-19 pandemic, industry revenue had declined because of falling exports to China. In 2018, the US and China entered a trade war brought on by the US imposing tariffs on Chinese steel. The Chinese government responded by placing significant tariffs on US soybeans. Historically, China has been a major soybean importer, so these tariffs resulted in revenue declines for industry growers.
However, in 2020, exports of soybeans surged as global supply chain disruptions increased demand for soybeans in other countries. Meanwhile, as the US economy moved beyond the pandemic in 2022, domestic soybean demand grew steadily.
Overall, due to the significant growth in 2020 and 2021, industry revenue is expected to grow at an annualized rate of 6.6% to $56.2 billion over the five years to 2024. However, falling soybean prices are expected to cause revenue to fall 4.7% in 2024.
TRENDS AND INSIGHTS
Supply chain recovery brings soybean prices down
- During the COVID-19 pandemic, supply chain disruptions and trade limitations created a shortage of soybeans in the global marketplace. At the height of the pandemic, outbreaks of COVID disrupted labor, making it difficult for soybean farms to bring their crops to market.
High diesel prices prompt biofuel production
- Soybeans represent one of the most popular inputs for biodiesel, a diesel substitute made from renewable materials. Soybean farmers benefit from increased biodiesel production in the US.
Subsidies will keep soybean farmers afloat
- The volatile nature of soybean farming makes it necessary for the federal government to protect soybean farmers with subsidies to ensure that profit stays healthy and farms don't go out of business.
Small soybean farms keep it in the family
- Soybean growing has a long history in the US, so most growers are long-standing family farms. Family farms keep growing costs low by not relying on outside labor.
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