The American Soybean Association (ASA) criticized the decision of Rail Grain Receivers (RGR) to import as much as 75,000 metric tons of soybean meal (the equivalent of nearly 3.5 million bushels of soybeans) from Brazil despite the availability of low cost domestic supplies of high quality U.S. soybean meal.

"This decision to import soybean meal when we have the largest U.S. supplies of soybeans and soybean meal, as well as the lowest prices we’ve seen in over a decade, makes no sense." said ASA President Mike Yost, a soybean producer from Murdock, Minn. "Trade sources and market analysts tell us RGR is most likely losing $5.00 per ton on this deal, so it is hard to understand why these companies would turn their backs on the very farmers who have supported them during hard times."

ASA has repeatedly asked Rail Grain Receivers and its members to reconsider their decision. Today, however, ASA learned that the first of three intended shipments is now enroute and scheduled to dock in Wilmington, N.C. by Friday on a ship named the Calypso N.

Rail Grain Receivers, Inc., of Rosehill, N. Carolina, is a cooperative buying group whose members include Murphy Family Farms, Carroll/Smithfield, Prestage Farms, Nash Johnson & Sons Farms, and Goldsboro Milling. The group has cited high domestic transportation costs as the reason the company is importing meal.

"U.S. soybean farmers have worked hard to supply the world’s livestock industry with high-quality, affordable soy protein. We have also worked hard on transportation issues—making sure that our product can be delivered efficiently," added Yost. "We’re anxious to work with RGR to address any transportation issues that may be impeding the competitive delivery of U.S. soybeans and meal to the southeast, but we need the group to share details of transportation rates, purchase prices, etc., if we are to be helpful."

Cost estimates compiled by the ASA from the sources and market analysts (see below) were provided to RGR for review and comment last month. ASA asked RGR representatives to share the details of the purchase so that ASA could more effectively address any legitimate transportation issues affecting the U.S. grain and livestock industries. At this time, RGR has not provided ASA with any information about their intended purchase. ASA is still hoping the group will share all transactional details on a confidential basis so that ASA can help address any issues which may exist.

"ASA has repeatedly asked RGR to be forthcoming with information and to reconsider their decision to import", Yost said. "We want to work with RGR to make sure that U.S. soybean farmers remain the top quality suppliers of affordable soybean meal, but we can’t work with them if we don’t have the information we need to solve the problem."

ASA and soybean farmers clearly recognize and sincerely appreciate the domestic pork and poultry industries as their best customers of soybean meal. ASA recognizes that the health of these two industries is closely linked. That is why ASA works closely with the pork and poultry industries on state and national legislative and trade issues, and why soybean farmers are investing over $3 million in soybean checkoff funds this year alone in pork and poultry export promotion efforts.

"We were extremely disappointed to learn that the first shipment is ready to dock", Yost said. "By their action, Murphy Farms, Nash Johnson & Sons Farms, Prestage Farms, Carroll/Smithfield and Goldsboro Milling are taking about $16 million out of the pockets of U.S. soybean farmers at a time of their greatest need."

Estimated Costs for Rail Grain Receivers to Import Meal From Paranagua, Brazil

Compiled by ASA from Various Trade Sources & Market Analysts
(all figures are in short tons)

The most aggressive known Brazilian trade at the time of Rail Grain Receivers’ 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

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

Conclusion: Murphy Farms, Carroll/Smithfield, Prestage Farms, Nash Johnson & Sons Farms, and Goldsboro Milling are likely losing $5 per ton in order to import Brazilian soybean meal.