As shown by analysis of the world practice of soybean use, there are several major directions, namely: the production of vegetable oil and animal feedstuff; the production of food from beans; and the use of processed soybean products as food ingredients.
Most of the industrially developed countries (the United States, Japan, Belgium, Netherlands, etc.) have already gained practical experience in soybean processing with the production of soya proteins and a wide range of high-quality food products on their basis. As a rule, these production facilities use an environmentally safe waste-free technology and, in addition to highly concentrated proteins for food industry, they manufacture high-quality animal feed and biologically active preparations.
Special attention to soya proteins is based on the following factors:
• Accessibility of raw materials
• Unique chemical composition of soya seeds contributing to profitability of industrial processing;
• High biological and nutritive value and positive functional properties of soya protein products;
• Extensive historical experience of using soybean products for nutrition.
Though it is known that soybeans have been used as food products for several millennia, mainly full fat soy products have been consumed such as soy milk, tofu, tempe, etc. Technologies of the production of concentrated soy proteins were introduced only in XX century. Soybean flour appeared at the beginning of XX century: it was made of whole seeds, press cake and later - fat-free bean cakes. A strong bean aftertaste was a limiting factor for the growth of soybean flour market. So, significant efforts were undertaken to develop odor removal technologies.
• Unique chemical composition of soya seeds contributing to profitability of industrial processing;
• High biological and nutritive value and positive functional properties of soya protein products;
• Extensive historical experience of using soybean products for nutrition.
Though it is known that soybeans have been used as food products for several millennia, mainly full fat soy products have been consumed such as soy milk, tofu, tempe, etc. Technologies of the production of concentrated soy proteins were introduced only in XX century. Soybean flour appeared at the beginning of XX century: it was made of whole seeds, press cake and later - fat-free bean cakes. A strong bean aftertaste was a limiting factor for the growth of soybean flour market. So, significant efforts were undertaken to develop odor removal technologies.
The widespread development of soya protein production technologies started only after the introduction of an oil extraction process with solvent. In 1937, technical soya isolates were proposed as binders for pigments in paper coatings and “foamy blanket” for fire extinguishing. In 1950-s concentrates became available. They were considered as intermediate ingredients between flour and isolates.
The production of highly concentrated soya proteins (isolates and concentrates) has been arranged at several plants of the firms located in the United States, Western Europe, Japan and Israel. The leading companies are Central Soya Company, ADM, Protein Technology International (PTI), Solbar Hatzor Ltd., Solae Company. In the last several years, the production of soya protein concentrates and isolates is developing actively in India and China.
Nowadays, the production of functional concentrates is increasing very rapidly. Usually they are made of concentrates obtained by the method of alcohol extraction followed by physical modification. Concentrates and isolates have comparable functional characteristics, while the yield of concentrates from feedstock is higher (48%) vs. isolates (26%). Thus, the level of prices on functional concentrates could be lower than on isolates.
Currently, the deficiency of soya proteins is becoming more obvious throughout the world. To a large extent, it is caused by the expanding interest to biofuel. In addition, the Asian market – one of the major suppliers of soy feedstock – is gradually reducing export, since soybean consumption in these countries is now growing.
The increase of consumption of soya proteins is associated with the natural growth of meat products output. Prices on meat source materials are also going up rather rapidly. Soya proteins possess a number of functional characteristics supporting favorable application performance. It should be noted that it is the only protein with the biological nutritive value equal to that of milk, egg and meat proteins, in contrast to the so-called “animal” connective-tissue proteins with a lack of nutritive value. Consumers and surveillance authorities in Russia and other countries put emphasis on a balanced protein component in food products.
Soy consumption in the Former Soviet Union (FSU) countries is much less than in the majority of foreign countries. Market players, who forecast a significant growth in this segment, believe that soybean business is potentially profitable and promising. In the FSU countries, sunflower oil is preferred traditionally, because it has higher (vs. other oil crops) oil concentration.
However, as a result of the decline in animal husbandry, there is a growing interest to vegetable proteins. Soybean has the highest protein content and therefore it is a preferable crop. Soybean is one of the critical components for animal husbandry rise in any country. The utilization of soybean products is expanding rather rapidly in food industry, too. The major consumers of these products include meat processing factories, dairy plants, food mills and confectionary plants.
Market of soybean oil
Soybean oil is the most popular vegetable oil in the Western Europe, U.S., Japan and China. The percentage of soybean oil in the total world output of vegetable oils reaches 30% and oils used for cooking – about 80%.
In Russia, soybean is processed mostly by fat-and-oil industry. Soybean runs second after sunflower in the structure of processed oilseeds. However, in the structure of consumption of vegetable oils, its share is less than 3%. The volumes of soybean processing at oil extraction plants vary and make up 80-95% of the gross soybean output in Russia.
In the last 6 years, a trend to the reduction of soybean oil import to Russia has emerged. Thus, from 2002-20007, the import volume reduced by 3.2 times, but in 2007 vs. 2006 it increased by 48.7%. As concerns import to the RF, it includes primarily packed refined oil for the consumer sector. The leading positions were held by companies from Netherlands – Leaderland TTM B.V., Oils & Fats Packers Rotterdam B.V. and Elburg Global B.V. and from Brazil – Imcopa International S.A. Their consolidated share in the total volume of soybean oil imported into the RF was 75.4%. Export of soybean oil is unstable and insignificant.
In general, the consumption of soybean oil in the RF is varying. The main cause is that sunflower oil has been used traditionally in food industry. The size of the RF market of soybean oil in 2007 increased by 11.6% vs. 2006 and reached 131 thousand tons.
The key consumers of domestic soybean oil comprise margarine factories, fat-and-oil plants and other food industry facilities, using oil as a source material for making margarine, mayonnaise, food fats and other products.
Market of soybean lecithin
The volumes of production and import of soybean lecithin are increasing every year. The most rapid growth is seen for imports, since a product with better quality is imported to Russia, i.e. pure lecithin with the concentration of the main active ingredient – phosphatidylcholine about 25-30%. This product is free from neutral oil, while the domestic manufacturers produce only phosphatide concentrates.
In view of the emerging trend – higher demand for phosphatide concentrate and lecithin, it is becoming important to increase their output. And it’s worth noting that consumers are mostly concerned about quality parameters (high consumer properties of lecithin).
The traditional leaders-importers of soybean lecithin are ADM Company, Cargill Inc. and DSM Group. In 2007, their consolidated share in the overall import volume was 80.5%. Other major suppliers inlcude Solae, LLC (6.4% of the total import volume) and Central Soya Company (3.1%).
In general, the volume of the Russian market of soybean lecithin in 2007 made up 16.5 thousand tons, i.e. by 29.6% more than in 2006.
Market of soybean flour
The industrial production of soya proteins in Russia is limited by the production of various types of soybean flour, soybean texturates and soymilk products – soy beverages, yogurts, tofu, etc. Some attempts have been made to set up a production of soya proteins with higher concentrations – soybean concentrates. However, so far these attempts have failed.
Recently, Russia’s soybean flour has become quite competitive. In 2002, the Russian market almost for 100% consisted of imported soybean flour, but by 2007 the situation has changed and the share of imported soybean flour in the Russian market made up 28.5%. The major manufacturers of soybean flour in Russia include the Irkutsk oil-and-fat facility and the Association of Soya Processing Facilities “Assoya,” Krasnodar.
The list of leading importers of soybean flour in 2007 included Cargill Inc., Shandong Wonderful Industrial Group Co. Ltd., Sojaprotein A.D. and Linyi Shansong Biological Products Co. Ltd. In 2007, their consolidated share in the overall import volume reached 49.9%.
In 2007, the volume of the Russian market of soybean flour increased by 18.4% vs. 2006.
Availability and quality of source materials are the main problems for the Russian manufacturers of flour. Since Russia is not a major soybean producer, these problems are the most important among many other difficulties faced by domestic companies.
Market of soybean texturates
Soybean food texturates are special products with a wide range of shapes, sizes and colors. They are made of fat-free soy cake to simulate texture of the most valuable food products – meat, fish and mushrooms.
In Russia, the consumption of soybean texturates in 2007 increased by 6.5% vs. 2006. In the last six years, the volumes of import and export were insignificant as the Russian manufacturers satisfied completely the growing demand for these products at the domestic market.
Competition at the market is very high: with the annual consumption of soybean texturates of 60 thousand tons, the consolidated capacities available for the manufacture of these products (including new capacities put into operation) exceed 150 thousand tons.
The pool of major producers of soybean texturates is changing: as a result of financial difficulties with credit repayment, “Technomol” (the first Russian plant with advanced soya processing which was put into operation in 2005 in Lytkarino, the Moscow Oblast) shutdown its production of texturates. However, almost at the same time “VitaRos” (Dzerzhinsk) and company “Protein. Technologies. Ingredients” were put into operation.
The growth of soybean texturate market in Russia is slowing down and, probably, the market is close to saturation. As a result of high competition, in 2007 the Russian manufacturers reduced prices on soybean concentrates despite the increase in costs of source materials (soybean and soybean flour) for about 20%.
Market of soybean concentrates and isolates
Russia does not have facilities for the production of concentrated or isolated soya proteins. The Russian market requirements are satisfied only by imported products.
Concentrated soya proteins (concentrates) are soybean products obtained after the purification of soybean flour from fat and soluble carbohydrates. Concentrates contain up to 70% of protein and 20% of food plant fibers (cellulose).
The supplies of large volumes of cheap Chinese isolates to the Russian market caused a significant drop of prices on isolates and an increase of the share of isolates vs. concentrates in the structure of overall import of proteins. In addition, isolate supplies by some of the key Western manufacturers reduced and functional concentrates were replaced with inexpensive isolates which make up a substantial share of the consumption sector.
The current customs regulations in the area of soya proteins cause a lot of confusion in labeling and identification of groups of soya proteins at the border crossing points. Import of high-tech functional concentrates supplied to Russia by the leading Western firms which are almost not produced in China (or have inferior quality) is becoming non-competitive with the supplied Chinese isolates taking into account the difference in customs duties – 15% and 5%, respectively.
In 2007, the leading importers of soybean concentrates included ADM Company, Solae LLC and Solbar Industries Ltd. Their consolidated share in the overall import volume in 2007 reached 78.3%.
The size of the Russian market of soybean concentrates reduced vs. 2006 and 2002 by 1.7 and 4.0 times, respectively.
Isolated soya proteins (isolates) are characterized by high functionality. They are fat-, carbohydrate- and cellulose-free soya products containing at least 90% of pure protein in dry matter. They are mostly efficient when used for processing meat of low grade or long-term storage, fatty beef and pork, poultry meat after mechanical deboning and meat with high content of connective tissue.
Russia does not produce concentrated or isolated soya proteins. The Russian market requirements are satisfied fully by imported products.
In 2007, the leading importers of soybean isolates comprised Solae LLC, PTI Int., Shandong Sinoglory Group and Crown Soya Protein Group Company. Their consolidated share in the overall import volume was 74.5% in 2007.
The share of Chinese manufacturers increased from 59.8% in 2005 to 69.7% in 2007.
Market forecast for processed soybean products
At present, the following key areas of industrial soybean processing can be identified:
• Soybean processing for the production of oil and bean cakes or press cakes at oil extraction and press factories.
• Production of food soya proteins (soybean flour, textured soya proteins, concentrates, isolates).
• Production of traditional soybean products (soymilk, tofu, etc.).
The volumes of soybean processing in the above areas are different. Over 80% of the total amount of soybeans is processed annually to make oil and oilcake, i.e. processed within the first direction. Out of the total amount of the produced cake less than 5% is processed into food proteins (the second direction). Less than 10% of the overall amount of produced soy seeds is used for the manufacture of traditional soybean products (the third direction), and the remaining portion is assigned to seeds, carry-over stocks, etc.
Nowadays, beginning from the last decade, the world is experiencing a soybean boom. The number of processing facilities and developments in this area is growing in geometric progression and biotechnologies are evolving rapidly. It is likely that in the next few years the market of soybean and soya products will be characterized by further increase in demand for soybeans and products of their processing. Pricing will depend not only on the current yield and carry-over stocks; as expected, a significant impact on demand for the products will be made by China and India.
The Russian soybean processing industry has the following structural characteristics (unfortunately, most of them are negative):
• outdated technologies, a lack of offered import-substituting competitive products (soybean concentrates, isolates or functional soybean products);
• geographic disintegration of production capacities between the Far Eastern Region (the Amur and Irkutsk Oblasts) and the European part of Russia (Krasnodar Krai, the Central Economic Region);
• a lack of sustainable market outlets for products in the majority of domestic manufacturers;
and, prevalence of single-time and non-determined product supplies.
As concerns apparently positive characteristics of the domestic soybean industry, they might include the predominant use of domestic ecologically safe and genetically non-modified feedstock and a relatively low level of prices and costs. An additional positive factor is a capacious and rapidly growing market in Russia and CIS countries with a huge import-substitution potential.
In 2006-2007, the structure of soya protein import into Russia was characterized by the following key trends:
• The reduction (vs. 2005) of the overall volumes of import of soybean flour and texturates against the growing amount of supplies of food soybean oilcake;
• Further increase of the share of the Chinese isolates in the structure of isolates’ import against the reduced volumes and shares of supplies of soybean isolates made by the leading Western firms;
• The continuing decline of imported volumes of concentrates. The decline is caused by the replacement of functional concentrates with cheap Chinese isolates in the consumption sector as well as the initiation of production of mixed concentrates in Russia;
• The reduction of import of texturates against the growth of domestic production;
• The growth of imported food soybean oilcake due to its use as a source material for the production of flour and texturates
• Almost an absolute refusal from imports of genetically modified soya proteins.
The production of soybean isolates in China and the expansion of cheap Chinese products to the domestic and international markets have a substantial impact on the situation at the Russian and world market of soya proteins.
So far, soya protein products have been consumed in Russia mainly by meat processing industry.
According to the data on domestic output of meat sausage goods, semi-finished and canned products in 2007 as well as the average amount of soya proteins added to meat product formulas, the calculated requirements of meat-processing industry in soya proteins in Russia today reach over 150 thousand tons a tear (taking into account the predicted growth of consumption of meat products which by 2010 could exceed 200 thousand tons a year).
As compared with the western markets of consumption of products with soya additives or soybean-based products, Russia and CIS countries are far behind in such categories as soybean beverages, meat substitutes, energy and confectionery bars and dry breakfasts. In addition, Russia still has an underdeveloped market of feed production for domestic animals and whole milk substitutes with added soya proteins for feeding youngster of farm animals. There is a considerable potential for higher consumption of soya proteins in baking industry, functional food production and in pharmaceutical industry. In Russia, soya proteins are almost not used for technical purposes (production of plywood, paints, glues, etc.).
The growth of biofuel production applies pressure on prices for oil feedstock and elevates prices on soybean and its derivatives. However, in view of the world trends in the development of soybean market and the limited amount of animal protein resources, one can expect further growth of consumption of soya proteins in Russia in short-term (both the increase of the total consumption of soya proteins and the expansion of the range of applications of soya proteins and the range of products with added soya proteins). A significant impact on the growth of consumption of soybean products and additivies will be made by the promotion of knowledge on the positive effects of soybean products on human health.
Unfortunately, soya protein production facilities existing in Russia do not meet the requirements of the current market (as regards both output and range of products). A certain saturation of the domestic market has now been reached only for the production of textured soya proteins from fat-free flour. However, there is still a potential for consumption growth if the range of manufactured texturates is expanded or if their quality is improved, if factory prices are reduced, or if texturates are used in new categories of food products (nutritive bars, dry mixtures, etc.).
Thus, the market of soya proteins in Russia is now developing rapidly. In short-term future, further market changes can be expected as a result of the launch of specialized industrial facilities manufacturing “white petal,” the construction of new plants manufacturing soya proteins in Russia and CIS countries, as well as the overwhelming growth of prices on dairy products, etc.
Thus, the market of soya proteins in Russia is now developing rapidly. In short-term future, further market changes can be expected as a result of the launch of specialized industrial facilities manufacturing “white petal,” the construction of new plants manufacturing soya proteins in Russia and CIS countries, as well as the overwhelming growth of prices on dairy products, etc.
Source: Abercade Research Company
