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Summary of Report

Economic Implications of Cleaning
Soybeans in the United States

AER-737, September 1996

Stock # AER-737. $9.00.

Contact: William Lin, 202-694-5303, wwlin@ERS.USDA.gov

The costs of increased soybean cleaning exceed the benefits. Even at the most cost-effective points of cleaning (river elevators and inland subterminals), additional cleaning of U.S. export soybeans would add a net cost in domestic markets in the range of $26-$76 million annually, according to Economic Implications of Cleaning Soybeans in the United States, AER-737, a new ERS report.

Thus, benefits from international markets would need, at minimum, to exceed $26 million to justify additional cleaning of all U.S. export soybeans, and they would not.

This publication is one of three reports prepared in response to a request from Congress. The other two are:

  • The Role of Quality in Soybean Import Decisionmaking, AER-722, which focuses on importers' preferences with respect to cleanliness and other quality factors and assesses the benefits of cleaning soybeans for international markets.

  • Costs and Benefits of Cleaning U.S. Soybeans: Overview and Implications, AER-736, which summarizes the other two reports.

Soybean cleanliness refers to the level of foreign material, which consists of all extraneous material, such as pieces of soybeans, weed seeds, plant parts, other grains, leaves, dirt, stone, and stalks, that passes through an 8/64-inch, round-hole sieve and all nonsoybean material that remains in the sample after sieving. The composition of soybean foreign material for the 1991 crop, according to an annual 29-State survey conducted by the American Soybean Association, was 37.5 percent plant parts, 24.2 percent broken beans, 23.5 percent weed seeds, 9.6 percent dirt, 2.4 percent whole beans, 2.3 percent pods, 0.6 percent insects, and 0.1 percent corn.

The costs associated with cleaning soybeans are weight loss, the cost of cleaner operation, and increased transportation and storage costs. Weight loss accounts for the bulk of cleaning costs, ranging from two-thirds at the farm to about three-fourths at interior elevators, and over 90 percent at export elevators. The benefits include reduced penalties for foreign material, increased storability, the sale of screenings, and decreased transportation costs. Producers and commercial elevator operators cited avoiding weight deduction and/or price discounts as the most important reasons for cleaning soybeans.

Cleaning at both river elevators and inland subterminals has the least net cost because (1) these elevators limit cleaning to export volume, which is smaller than volume marketed by farms or handled by country elevators, and (2) the per-bushel cost of cleaning is lower than at export elevators due to a smaller value of weight loss. Net costs of cleaning averaged at least 6.2 cents per bushel at both river elevators and inland subterminals.

Producers and handlers in the South would bear a disproportionate share of the net costs because the average foreign material level is the highest in this region (3.0 percent), and the South exported 48 percent of its soybean production, compared with 26 percent for the Corn Belt.

To convey the value of cleanliness to their suppliers, soybean buyers use weight deductions, price discounts, and contract specifications. Weight deduction refers to the common practice of buyers deducting the weight of foreign material from the gross weight of the soybeans they agree to purchase when the foreign material level exceeds 1 percent. According to an on-farm survey of producers who delivered soybeans with foreign material of greater than 1 percent, 73 percent were charged weight deductions. However, domestic buyers seldom offer premiums for cleaner soybeans. Thus, any incentives for additional cleaning, in terms of premiums for cleaner soybeans, would need to come from foreign buyers. All export elevators clean soybeans primarily to meet contract specifications.

Although most soybean foreign material originates from the farm, the foreign material in U.S. soybeans increases as soybeans move toward export. The proportion of broken beans increases during handling and the proportion of nonsoybean materials decreases because of cleaning and the fact that foreign material, once removed, is prohibited from being re-added to soybeans. The average level of foreign material increases from 1.3 percent at harvest to 1.5 percent when delivered to country and subterminal elevators, and 1.8 percent upon arrival at export elevators.

One strategy to address the soybean cleanliness issue is to create incentives for producers to alter production and harvesting practices. For instance, better weed control and combine adjustment offer potential to lower foreign material in soybeans.


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