Soybean-processed product markets are best known for their soybean meal utilised as a protein source in animal feeds and soybean oil for human consumption. Input (raw soybeans) and output (meal and oil) prices are also known to be very volatile. So much so that soybean processers are compelled to hedge (fix prices) both on the input and output side to secure a positive crushing margin (gross profit). This leads to ask if there is an alternative trend.
An alternative trend
Where can soybean processors find alternative, and possibly more consistent, markets? Perhaps the answer lies in the market for isolated soy protein (ISP) for human consumption. The ‘highprotein’ trend has moved from the elite athlete to the mainstream food and beverage industry, as consumers are increasingly becoming more aware of the different types of proteins and their potential health benefits. As this trend does not show any sign of slowing, protein innovation places plantbased proteins in focus.
WHAT IS ISP?
Isolated soy protein is the most concentrated source of protein found in soybeans (over 90%). During production, defatted flakes of soybeans are solubilized in water and the protein is separated from the solid soy residue.
The final step in the production process is to precipitate, separate and dry the protein. This gives the result of isolated soy protein. ISP can be found in many different forms, including tofu, tempeh and even toppers in boerewors. From fortified foods, sports nutrition to targeted dietary supplements and nutritional drinks, consumers are seeking food ingredients that support a healthy lifestyle.
Food security by 2030
In a world with a rapidly increasing population, food security is an ever increasingly important topic. The inability of individuals to pay for or even have adequate access to nutritious food has become a common problem in the world.
The world population is growing at such a hasty pace that the global population is expected to exceed 9 billion by 2050. This will create a two-fold snowball problem: The increase in population size will lead to an increase in the demand for inhabitable space whilst simultaneously increasing the demand for food, which in turn increases the demand for space for food production.
Chapter six of the National Development Plan incorporates food security into an integrated and inclusive rural economy. A key point of this chapter aims to ensure high-quality access to food security by implementing policies to achieve national food self-sufficiency by 2030.
A possible solution to this problem includes substituting animal protein with plant-based proteins, as studies have shown that plant-based proteins are more sustainable than the production of animal proteins. The South African government has already provided funding focused towards integrating soybean products, such as soya mince, into feeding schemes. These soya products are a cost-friendly alternative for protein.
SA’s soybean market
SUPPLY AND DEMAND
Soybeans in South Africa are predominantly used in animal feed, as soybeans are primarily processed for livestock feed.
South Africa’s total demand for soybeans (local production and imports) has seen a drastic increase over the past 30 years (Graph 1), increasing from below 300 000 tons in 1999 to more than 1,8 million tons in 2019, although the total demand was down slightly in the previous year.
Graph 1: Soybean supply and demand in tons (1999 – 2019).
Unfortunately, the demand for human consumption of soybeans (excluding oil) in South Africa has not kept up with the overall demand. However, as discussed in the rest of the article, this may change in the near future.
IMPORTS AND EXPORTS
Soy concentrates, HS 210610, are classified as protein concentrates and textured protein substances. There has been an increase in imports of soy concentrates in South Africa from the year 2002 to 2017. Although imports have reached a plateau, the United States of America (USA) remains one of South Africa’s biggest suppliers of soy concentrates (Graph 2).
The export market for South African produced soy concentrates has remained below the import market since 2002. However, countries such as China, Uganda and the USA are South Africa’s biggest export partners for soy concentrates (Graph 3). As net importers of soy concentrates, South Africa can grow the local soy concentrate production industry.
Graph 2: South African gross imports of soy concentrates in 1 000 USD from 2012 to 2019.
Graph 3: South African gross exports of soy concentrates in 1 000 USD from 2012 to 2017.
This research study made use of willingness to pay experiments (surveys) in order to determine South Africans’ willingness to substitute meat for ISP. A total of 312 respondents were surveyed by means of an electronic survey. The majority of the respondents were between the ages of 18 and 23 years old, and 48% of the respondents had a monthly gross household income of R40 000 or more.
The questionnaire aimed to compare consumers’ willingness to substitute between beef patties (meat option) and Fry’s veggie patties (ISP option), which can be purchased at any large retailer.
Various questions about the health of the respondent, how environmentally friendly they consider themselves to be and how much meat they consume were also asked. Consumers were asked to rank their favourite meats and to also rank factors which could possibly influence them from switching from the meat option to the ISP option, including nutrition, colour, flavour, texture and smell.
Willingness to pay for beef patties and plant-based patties was tested by providing consumers with additional information regarding the ingredients of the products, environmental impacts and concerns, and health issues related to the products. Consumers were then prompted to provide a price they were willing to pay for the alternative products.
As expected, consumers were willing to pay a higher price for beef patties (R64,55 for a packet of four patties) than plant-based patties (R45,94 for a packet of four patties) (Graph 4). However, when the respondents were prompted with additional information regarding the health and environmental benefits of the plant-based substitutes, their willingness to pay for this product increased.
Graph 4: Average willingness to pay (WTP) for beef and plant-based patties.
Other results from the study showed that consumers with higher education certificates or degrees are willing to pay between R41 and R60 for a packet of four plant-based patties. This suggests that there exists a positive correlation between education and a person’s willingness to substitute meat for plant-based proteins.
FACTORS FOR SWITCHING
In order to promote plant-based protein sources, it is important to determine which factors or food attributes motivate or prevent consumers from switching to foods consisting of plant-based proteins. The most important and highest-ranking factor that prevented consumers from switching was concerns about the nutritional value of the patties. Research has, however, shown that plant-based protein can have the same nutritional protein content as animal protein by using products such as ISP.
Globally, there has been an increase in plant-based dieets, especially in developed countries
- Although consumers are willing to increase their consumption of foods containing plant-based protein, they expect the price of such products to be lower than that of their meat counterparts. However, when the environmental and health benefits associated with the consumption of foods containing plant-based proteins are explained, consumers are willing to pay a higher price for the product.
- The results of this research study revealed that there is a possible niche market for ISP in South Africa. Based on the study, there seems to exist a small market of consumers who are willing to switch to plant-based proteins and products. Globally, there has been an increase in plant-based diets, especially in developed countries (an estimated market value of 2,5 billion USD in 2019).
- In developing countries high-quality protein sources are becoming increasingly important as a result of consumers’ rising awareness regarding the sustainable and health benefits of ISP.
- Unfortunately, this study could not quantify the niche market for ISP in South Africa, as it only attempted to determine whether or not South Africans are willing to substitute meat for ISP. Therefore, the study recommends that the market for ISP in South Africa is quantified and that its economic feasibility is measured as an alternative market for soybean processors, especially considering that the compounded annual growth rate for ISP is expected to exceed 5% globally by 2027.
Apostolidis C and McLeay F, 2016. Should we stop meating like this? Reducing meat consumption through substitution. Food Policy, Volume 65, pp. 74-89
Ehlers T, Lazenby and Kobus, 2019. Strategic management: Southern African concepts and cases. 4 ed. Pretoria: Van Schaik Publishers
Futuremarketinsights.com, 2019. An incisive, in-depth analysis on the soy-protein isolate market. Available at: https://www.futuremarketinsights.com/reports/soy-protein-isolate-market [Accessed 27 July 2020]
SAGIS, 2020. SOYBEANS: Supply and demand table based on SAGIS’s info (ton). Available at: https://www.sagis.org.za/sd_marketing_year.html [Accessed 27 July 2020]