Office of Research

Adding commercial soy in developing countries brings unique challenges

Published September 5, 2017
soybean

URBANA, Ill. – Growing commercial soybean in developing countries comes with a set of unique challenges. Pests and weeds are more difficult to control than on farms in the United States, and using chemical inputs is often unfamiliar to farmers. University of Illinois agricultural economist Peter Goldsmith says when they decide to grow commercial crops like soybean, it will likely raise their profits and ability to pay a higher wage to workers, but may require a major shift in thinking in relation to crop production and management.

“Convincing farmers in developing countries to grow soybean as a commercial crop involves a change in how they farm,” says Goldsmith. “It will be different than what they’re used to. It may require new equipment and training. Farmers who have been growing native staples like cow peas for generations have tacit knowledge about the seed, how to store it or where to buy it locally next year, the best row spacing, and other production details.

“With soybean, a new introduction, the best seed sources are certified. Reliable seed suppliers store seed well, can better assure high germination rates, and reflect varietal improvement, local adaptation, disease resistance, and high yield. But unlike cowpea, high quality soybean seed suppliers are commercial, not necessarily a farmer’s usual local source in the next village or from their own saved stores. Production practices to maximize soybean yield and profitability in the tropics requires fertilization and pest management, which involves commercial purchases and application of chemical fertilizers and pesticides.”

Goldsmith recognizes there are some people who would prefer that fewer or no chemicals be used. But there is also the reality that growing productive commercial crops to raise the income level for farmers in developing countries requires chemical inputs to be economically sustainable. He asks, can we do it in balanced, smart way?

Goldsmith analyzed three data sets to demonstrate how using chemical inputs in soybean production affects the economic outcome.

  • In west central Brazil, a low labor cost (only 9 percent of the total cost) and high input cost results in high yields. The outcome means $4.04 for each dollar of labor and has huge implications for elevating rural wages. But, this also came with a tradeoff—chemical inputs are 47 percent of the total production costs.
  • In northern Ghana, labor represents 75 percent of the total cost of production. The yield is one-fifth of the yield in Brazil. With almost no chemical inputs, this example is very environmentally green, but with zero operating profits, it’s unsustainable. These farmers lost money and accordingly generated low returns to labor (wages).
  • The USAID Soybean Innovation Lab research farm in Nyankpala, Ghana, represents a middle path. Results from the SMART (Soybean Management and Appropriate Research and Technology) Farm show employing some basic agronomic and production practices and locally available technologies dramatically improves yields and profitability. Labor costs are still high at 55 percent, but with chemical and fertilizer inputs, yield is better and the profit allows for 79 cents per dollar of invested labor.

“To me, the traditional low-input scenario in northern Ghana is unacceptable,” Goldsmith says. “Asking farmers to grow soy without inputs is like giving them a tractor with three wheels or a pump with no handle. The outcome is going to be bad. Farmers will get frustrated, produce one crop and then stop. It’s a waste of donor dollars.”

Goldsmith says his findings from the three scenarios aren’t pessimistic about soybean catching on in developing countries. Rather, it is a caution to be realistic and appropriately investing in these programs.

“Just today I got a call from a company in Ethiopia that wants to produce edible soy,” Goldsmith says. “I get a lot of calls like that one. Industry demand for soybean as either a food, food oil, or animal feed is great and they want farmers to grow the crop. Prices reflect the strong regional demand. For example, we analyze soybean prices in Ghana. The prices in Northern and Central Ghana, inland, are on average comparable to soybean prices in Chicago (about 4 percent less). "

Goldsmith identifies some of the changes that need to be addressed when shifting from growing native staples such as cowpea to successful and sustainable soybean production in developing countries:

  • Weed and pest pressure are high, so chemical inputs will be required and bundled with environmental stewardship training.
  • Soil quality is poor, so correction and fertilization are important.
  • Traditional practices of seed saving or local procurement may result in unreliable soybean seed supply, so farmers will need to access certified seed supply chains.

He adds, “If changes like these can be implemented, commercial crops like soybean offer remarkable new opportunities for poverty reduction, nutrition improvement, rural economic development, but there is a tradeoff. They will require changes to the norms of traditional agricultural production.”

Goldsmith’s paper, “The Faustian bargain of tropical grain production,” is published in Tropical Conservation Science. He is a professor and economist in the Department of Agricultural and Consumer Economics in the College of Agricultural, Consumer and Environmental Sciences at U of I and principal investigator of USAID’s Soybean Innovation Lab. Funding for this work was provided by USAID.