The American Soybean Association (ASA) and the North Carolina Soybean Association sent letters today to North Carolina’s Congressional Delegation, Members of the North Carolina State Legislature, North Carolina Governor, and the North Carolina Commissioner of Agriculture and Secretary of Commerce expressing concern and disappointment over the import of soybean meal from Brazil by several North Carolina livestock integrators. ASA President Mike Yost and North Carolina Soybean Association President Dick Tunnel co-signed the letters, citing estimated costs of the Brazilian transaction. The letters urge government officials to counsel the companies involved not to take $16 million out of North Carolina and U.S. soybean farmer pockets, and to urge the firms to reconsider proceeding with the importation of the two remaining shipments of Brazilian meal.

Murphy Family Farms, Nash Johnson & Sons Farms, Prestage Farms, Carroll/Smithfield, and Goldsboro Milling, all North Carolina livestock integrators, contracted to import as much as 75,000 metric tons of soybean meal into the U.S., citing high domestic transportation costs as the reason for their action. According to trade sources, market analysts, and other livestock integrators, however, the group is likely losing $5.00 per ton on this deal. Skepticism about the economics of this Brazilian transaction is reinforced by the steadfast refusal of the North Carolina livestock integrators to share information on a confidential, non-disclosure basis. Cost estimates compiled by ASA from trade sources (see below) were provided to the firms for comment last month, with no response.

This Brazilian imports by the North Carolina firms come during a time when U.S. soybean and soybean meal prices are at their lowest levels in 23 years and soybean supplies are the largest in over a decade.

"It is hard to understand why these companies would turn their backs on the very farmers who have supported them during hard times", said ASA President Mike Yost, a soybean producer from Murdock, Minnesota. "Soybean farmers this year are investing over $3 million in producer funds to help support pork and poultry exports. Soybean farmers also actively supported Federal assistance measures for the pork industry when it recently faced the lowest prices ever," said Yost.

The first of three shipments of Brazilian soybean meal recently arrived; the other two shipments are due in July and August. ASA and the North Carolina Soybean Association asked the North Carolina legislators to urge the companies to reconsider proceeding with the importation of the two remaining shipments of Brazilian meal.

Soybean farmers clearly recognize and sincerely appreciate the domestic pork and poultry industries as their best customers of soybean meal. "We recognize that the health of our industries is closely linked. That is why we are so disappointed that these firms would turn their backs on North Carolina and other U.S. soybean farmers to complete a transaction with questionable economics at best, " added Yost.

Estimated Costs for Murphy Family Family Farms, Nash Johnson & Sons Farms, Prestage Farms, Carroll/Smithfield, and Goldsboro Million To Import Meal From Paranagua, Brazil Compiled from Various Trade Sources

(all figures are in short tons)

The most aggressive known Brazilian trade at the time of the purchase was $15/ton under U.S. soybean meal prices on the Chicago Board of Trade (CBOT).

Cost of Brazilian Soybean Meal

$15.00/ton savings under U.S. CBOT meal prices

• 14.50/ton ocean freight costs to port of Wilmington, NC
• 5.50/ton put-through costs (port charges, unloading, elevation, etc.)
• 4.50/ton truck freight from port to feed mills
• 3.00/ton grinding costs (since Brazilian meal is pelletized)
• 8.00/ton quality spread between Brazilian and U.S. meal (Brazilian 47.5% Profat meal is higher fiber, lower protein, etc. than U.S. 48% HiPro meal)
• 3.50/ton U.S. import tariff
• 1.00/ton shrink

$25.00/ton cost over U.S. CBOT meal prices which in early April were about $136/ton

$136 + $25 = $161/ton cost of Brazilian soybean meal delivered to company feedmills

Cost of U.S. Soybean Meal

Meal to companies was selling for $19-$20/ton over U.S. CBOT meal prices

$136 + $20 = $156/ton cost of U.S. soybean meal delivered to company feedmills

Conclusion

Murphy Family Farms, Nash Johnson & Sons Farms, Prestage Farms, Carroll/Smithfield, and Goldsboro Milling likely are losing $5 per ton in order to import Brazilian soybean meal rather than purchase it from North Carolina and U.S. soybean farmers