Annual Report - USSEC 2018

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U.S. SOY for a growing world For more information visit: www.ussec.org

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CONTENTS Welcome

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Who We Are

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USSEC Leadership

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International Marketing Strategy

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Promoting Today’s U.S. Soy Advantage

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USSEC Financials USSEC Members

16 Back cover

Welcome USSEC is the international marketing arm of U.S. Soy. Maintaining a global presence is vital to all stakeholders of the U.S. soy industry.

Each year, our goals remain the same: to build preference and demand for U.S. Soy by developing and maintaining relationships through trade and technical services, and taking key steps to ensure market access. These objectives speak to what we do.

2018 served up some particularly tough challenges for U.S. Soy. We faced a major challenge when China and the U.S. became embroiled in a trade war. With up to fifty percent of U.S. soy exports heading to China in recent years, we needed to quickly adapt to a new trade climate and take advantage of changing trade flows.

Making lemonade from these lemons meant taking a good look at market diversity and seeking opportunities. As we work to adapt to the complexities of the current market, we are employing both short-term strategies to maximize near-term exports and long-term strategies to develop new demand in markets where current protein consumption is low.

USSEC has continued to look into alternative U.S. Department of Agriculture (USDA) funding opportunities conducting Emerging Markets Program (EMP) projects for the first time, applying for and receiving approval for two separate Section 108 projects and then submitting a robust application for Agricultural Trade Promotion (ATP) program funds representing the overall U.S. Soy family.

We are proud of the resiliency of the U.S. soy industry. We’re proving that we’re capable of adjusting to just about any situation.

U.S. Soy remains dependable and consistent, regardless of market challenges or weather. Year after year, we will continue to produce a reliable supply of soybeans to meet our customers’ demands.

Jim Sutter | USSEC Chief Executive Officer Derek Haigwood | USSEC Chairman of the Board

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WHO WE ARE USSEC is a dynamic, member-directed, not-for-profit partnership of key stakeholders representing U.S. soybean producers, processors, commodity shippers, merchandisers, allied agribusinesses, and agricultural organizations.

Through a global network of international offices,

that promote and represent the U.S. soy industry around

USSEC differentiates and builds a preference for U.S.

the world. Our network of experts builds a preference for

Soy, advocates for the use of soy in feed, aquaculture,

U.S. Soy using the latest product research and information.

and human consumption, promotes the benefits of soy

We work as an integral part of the U.S. Soy family through

use through education, and connects industry leaders

the use of trade teams, joint media, international projects,

through a robust menu of programs and projects. USSEC

feeding trials, and numerous participation opportunities for

works independently and collaboratively across the globe

grower leaders to help educate buyers about the superior

to ensure that U.S. Soy enjoys market access in all the

composition of U.S. Soy.

markets that exporters want to supply. USSEC’s mission is to maximize the use of U.S. Soy internationally by meeting

USSEC demonstrates the intrinsic and extrinsic values

the needs of our stakeholders and global customers.

of U.S. soybeans in trade and technical servicing venues, which further increases the value of the product. From

USSEC’s board is comprised of 15 members representing

our superior contracting, transportation, ports, and nearly

various stakeholders from the U.S. soy industry. Four

120 USSEC associates working around the world, to the

members are from the American Soybean Association

enhanced amino acid profile, U.S. Soy is a superior product!

(ASA), four members are from the United Soybean Board (USB), and seven seats represent trade, allied industry, and

USSEC routinely manages projects in all significant

state organizations.

international markets worldwide throughout the year.

This work is critical and influential, making a measurable

USSEC works in partnership with ASA, the Foreign

impact by informing and changing buying decisions. It is

Agricultural Service (FAS), USB, Qualified State Soybean

this commitment to relationship management that sets

Boards (QSSBs), and our members to create programs

U.S. Soy apart from the competition.

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USSEC LEADERSHIP EXECUTIVE LEADERSHIP

REGIONAL DIRECTORS

Jim Sutter

Brent Babb

Chief Executive Officer

Stephanie Perotti

Regional Director, Greater Europe, Middle East, North Africa

Chief Financial Officer

Ed Beaman

Ed Beaman

Regional Director, Asia Subcontinent

Senior Director, Basic Market Development

Rosalind Leeck

Paul Burke

Timothy Loh

Regional Director, North Asia

Senior Director, U.S. Soy Marketing Programs

Regional Director, Southeast Asia

Kevin Roepke

Rosalind Leeck

Regional Director, Americas

Senior Director, Market Access

2018 - 2019 BOARD OF DIRECTORS

Zhang Xiaoping Regional Director, Greater China

2019 - 2020 BOARD OF DIRECTORS

ALLIED SUB-CLASS Sharon Covert, Illinois Soybean Association

Tori Sorensen, Insta-Pro

Dawn Scheier, South Dakota Soybean Research &

Dawn Scheier, South Dakota Soybean Research &

Promotion Council

Promotion Council

EXPORTER SUB-CLASS Chris Arnold, The Scoular Company

Chris Arnold, The Scoular Company

Brandon Bickham, The DeLong Company

John Buboltz, Cargill

Matt Hopkins, Archer Daniels Midland

Matt Hopkins, Archer Daniels Midland

Aaron Skyberg, Healthy Food Ingredients

Aaron Skyberg, Healthy Food Ingredients

(SK Food International, Inc.) Jim Traub, Clarkson Grain Company

Ken Dallmier, Clarkson Grain Company (Ken was previously elected to finish Jim Traub’s 3rd term)

ASA APPOINTMENTS Stan Born, Grower Leader, Illinois

Stan Born, Grower Leader, Illinois

Brian Kemp, Grower Leader, Iowa

Brian Kemp, Grower Leader, Iowa

Monte Peterson, Grower Leader, North Dakota

Monte Peterson, Grower Leader, North Dakota

Kevin Scott, Grower Leader, South Dakota

Kevin Scott, Grower Leader, South Dakota

USB APPOINTMENTS Todd Gibson, Grower Leader, Missouri

Lance Rezac, Grower Leader, Kansas

Derek Haigwood, Grower Leader, Arkansas

Derek Haigwood, Grower Leader, Arkansas

Darren Kadlec, Grower Leader, North Dakota

Darren Kadlec, Grower Leader, North Dakota

Doug Winter, Grower Leader, Illinois

Doug Winter, Grower Leader, Illinois

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INTERNATIONAL MARKETING STRATEGIES The past year has been an especially challenging one for the U.S. soy industry, with tariffs impacting our top market, and causing USSEC to shift its marketing efforts to a broader list of countries with the goal of making up for lost demand in China. The U.S. soy industry is keenly aware of the importance of a diversified set of export markets for U.S. Soy. As we continuously work to adapt to the complexities of the current market, we are employing both short- and long-term strategies.

SHORT-TERM STRATEGY With the goal of “moving the pile” of U.S. soybeans from a

Although USSEC doesn’t actually sell anything, we work

record sized 2018 crop, we are taking immediate measures

closely with U.S. soy exporters and importers around

to minimize any fall in U.S. soy exports that occurs due to

the world. Our team is focused on helping to achieve the

much smaller shipments to our historic top customer,

“What it Takes” goals so that our level of U.S. soy exports,

China.

approximately 60 percent of total production, is maintained.

Our “What it Takes” initiative looked at all possible markets

In November, USSEC hosted a EU/Middle East North Africa

for U.S. Soy around the world, and put together projections

tariff mitigation trade servicing event, similar to a buyers

for the amount of exports that will be needed to those

conference but with greater attendance, in Barcelona,

markets to make up for volume losses to China.

Spain. This conference, typically held later in the spring,

Lewis Bainbridge, then-chairman of USB; ASA and USSEC director Stan Born; Tom Griffiths, USB director; Bill Bayliss, Ohio Soybean Council director; and Lindsay Greiner, Iowa Soybean Association president were part of the U.S. Soy delegation that traveled to Barcelona, Spain to participate in the EU/MENA Regional Trade Exchange in November 2018.

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was moved up to autumn to capitalize on the opportunity

encourage a longer term trading program that extends

to capture trade flows to Europe and the Middle East. The

beyond the typical seasonality.

meeting provided an important opportunity to connect top EU/MENA purchasers with U.S. exporters and grower leaders with the goal of promoting U.S. Soy, developing or

The conferences launched in December 2018 in Seoul and Jakarta. More are planned in 2019.

further enhancing relationships, and leading to a preference for U.S. Soy, while increasing purchases. The EU/MENA region represents the second largest global export soy market, trailing only China.

We’ve also kicked off a series of special marketing seminars (called “Experience Today’s U.S. Soy Advantage”) in various markets. These provide current and potential customers of U.S. Soy with in-depth information about the benefits of choosing U.S. Soy and help us to leverage relationships in a host of markets, connecting buyers and sellers to

LONG-TERM STRATEGY In 2017, USSEC collaborated with USB on a study to research the most impactful global soy markets for our international marketing investments. Maximizing opportunities for U.S. soy growers and the U.S. soy industry is important and will help prioritize and define target markets. Because markets evolve, it is imperative to make investments in the right places through a two-pronged approach.

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U.S. soybeans are exported to more

THE STUDY ASKED Where are the U.S. Soy industry’s market priorities?

What impactful activities can be carried out in these markets?

How can the U.S. Soy industry carry out promotional or marketing work in the identified markets?

than 100 markets. USSEC’s market access efforts will be enlarged to ensure that basic representation occurs in all markets so they remain “open for business” to U.S. Soy.

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Targeted program investments will focus on high priority markets where we can have a meaningful impact. In select markets, there will be early stage development efforts.

The recommendation was approved by USB’s board at their February 2018 meeting and initial strategies following this plan were included in the Unified Export Strategy (UES) application approved by ASA’s Trade Policy and International Affairs (TPIA) in March 2018. The study addresses “Where,” “What,” and “How” of the programs that USSEC implements on behalf of all of its investors.

The Asia Subcontinent market is key to USSEC’s long-term international marketing strategy. In December 2017, John Motter, past USB chairman, and Monte Peterson, USSEC vice chairman and ASA director, traveled to Dhaka, Bangladesh to meet with leading poultry and soy crushing industry firms as part of a market assessment mission in the region. In this photo, the grower leaders are examining U.S. soybeans being unloaded at the riverside facility of the Meghna crush plant.

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THE STUDY HAD TWO MAIN PHASES:

1 IN THE FIRST PHASE, approximately 90 market interviews provided insights into needs and opportunities. The market opportunity assessment scored 232 markets, prioritizing 39 of them.

2 IN THE SECOND PHASE, a series of 20 workshops and one-on-one sessions were held to collect stakeholder input. More than 80 stakeholders provided perspectives on priority markets. As the U.S. soy industry engaged others, it used a market stage spectrum to help inform the “Where?”

MARKETS WERE ASSESSED IN FOUR CATEGORIES:

Currently, 98 percent of U.S. soybean exports go to basic, expansion, or mature markets, and 93 percent of U.S. Soy-

Immature - e.g. Ethiopia, Liberia

related trade value is in its expansion and mature markets.

In basic markets, the U.S. soy industry strives to introduce

Basic ”open” - e.g. Pakistan or India

world-class technology, while in expansion markets, the industry works to create a preference for U.S. Soy. In

Expansion ”grow” - e.g. China or Mexico

mature markets, work focuses on policy issues such as biotechnology. In all markets, the competitive advantage of the great U.S. sustainability story provides a marketing

Mature ”maintain” - e.g. EU or Japan

point of difference. Dividing markets in this manner is a fresh, innovative way to think about international marketing.

The revised international marketing strategy shifts more funding to invest in new markets (basic) with increasing emphasis on growing demand in those current low

2018 USSEC Annual Report

BASIC Algeria Bangladesh Egypt El Salvador Honduras India Morocco

EXPANSION Myanmar Nepal Nicaragua Nigeria Pakistan Sri Lanka Tunisia

China Colombia Costa Rica Cuba Dominican Republic Ecuador Guatemala Indonesia Jamaica

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MATURE Malaysia Mexico Peru Philippines Romania Russia Thailand Turkey Vietnam

Belgium Canada Chile France Germany Italy Japan Netherlands Poland

consumption areas. If the U.S. soy industry could close existing gaps in this per capita consumption growth by 50 percent, that would provide an additional $10 billion in export opportunity annually.

Market access is supported in all market stages. Market access is both proactive and reactive engagement that ensures markets are open, including relationship management, crisis management, and policy advocacy.

Market access maximizes the U.S. Soy competitive advantage and minimizes potential trade barriers.

The revised strategy’s four focus areas, Animal, Aquaculture, Human, and Sustainability, will provide program direction in the priority markets.

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Over

Panama Portugal South Korea Saudi Arabia Spain Taiwan United Kingdom

10 years,

the checkoff

has dedicated 22% more to

international marketing.

In 2018 alone,

$27 million was invested in

INTERNATIONAL MARKETING

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PROMOTING TODAY’S U.S. SOY ADVANTAGE Year after year, the world has counted on U.S. Soy, and harvest after harvest, U.S. Soy has delivered.

U.S. Soy is more than just a commodity – it’s a full experience. Find out more about how we create a global preference for U.S. Soy through Innovation, Sustainability, Nutrition, Reliable Supply and Consistent Delivery, and our Long-Term Partnerships.

INNOVATION Innovation is a key component of the U.S. Soy Advantage.

Mark Caspers, past USB director, traveled to Cancun,

The U.S. soy industry looks for innovative solutions such as

Mexico on a soybean oil marketing mission. In addition to

technological advancements in U.S. soybean production.

participating in a workshop where they learned more about

These featured activities to improve and create markets

customer perspectives on both high oleic and commodity

for U.S. Soy are just a few samples of the work that USSEC

soybean oils, the grower leaders visited local grocery stores

performed worldwide in 2018.

and participated in Exphotel, a major trade show for the

HIGH OLEIC High oleic soybean varieties are one of the most recent achievements in U.S. soybean innovation.

As a U.S.-grown product, higher-functioning high oleic

hotel, restaurants, and institutions (HRI) industry in Mexico and Latin America. Consumers in the Americas region, excited to begin importing U.S. high oleic soybean oil as it becomes more widely available, were eager to learn more about its benefits.

soybeans offer big benefits to many end users of soybean

IN POND RACEWAY SYSTEM

oil, and USSEC is eager to spread the word. The soybean

In 2013, USSEC started the International In Pond Raceway

industry is ramping up acreage of high oleic soybean

System (IPRS) technology outreach with industry in

varieties to meet growing needs for a sustainable,

China. Since that time, over 6,000 IPRS cells have been

consistent supply of high oleic oil.

constructed in that nation. As a result of this success, an official effort was launched to expand the technology

In June 2018, Iowa farmer John Heisdorffer, then-president

to other regions, including Southeast Asia, where the

of ASA and a former USSEC director, and Nebraska farmer

approach was taken to Vietnam to gauge the challenges in educating the aquaculture industry about IPRS. IPRS technology utilizing U.S. Soy as aquafeed was introduced in both southern and northern Vietnam that year, attracting attention to freshwater fish farms in northern Vietnam. By 2018, there had been over 140 cells constructed in seven provinces. A Gold Standard IPRS, sponsored by the Missouri Soybean Merchandising Council, demonstrates the performance of U.S. soy products in Vietnamese IPRS farming conditions. The operation was constructed and

USSEC consultant Pedro Gonzalez and past USB director Mark Caspers interacted with customers at the U.S. Soy booth at the Exphotel trade show in Cancun, Mexico in June 2018.

stocked with fish in February 2018. Vietnamese farmers can visit the Gold Standard IPRS to learn this application in a detailed and practical way.

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Experiences such as this broaden buyers’ knowledge “IPRS is a good solution for environmental issues – the fish waste is processed within the pond and no waste goes out because there’s no exchange of water. We have healthy fish living in flowing water with highly dissolved oxygen. I’m proud to be a pioneer with this modern culture technology.”

and make it possible to assure the stable supply of U.S. soybeans on which our customers rely.

-Lê Văn Viêt, Owner of Vietnam’s Gold Standard IPRS

Vietnam’s start has given USSEC significant insight into the issues and challenges of further expanding IPRS. USSEC has kicked off the promotion of IPRS in other SEA nations, starting with Thailand.

SUSTAINABILITY Sustainability is a key component of the U.S. Soy Advantage. Sustainability is a top priority for U.S. farmers who produce their crops as sustainably and efficiently as possible to feed a growing world. USSEC helps to make it a key differentiator in international markets. These featured

Ten members of Thailand Importers Group (TIG), all medium size feed mills, visited the U.S. in July. During the trip, the team learned about new soybean farming technologies at Johnson Farm in Minnesota, and also viewed a transloader at Gavilon in Iowa. Port visits to Temco and Grays Harbor were also a great experience for the team to learn about inland and ocean transportation to export U.S. soybeans. The team had interactive meetings with several exporters and one team member finalized a purchase order of U.S. soybeans and soybean meal with a total value of $22 million USD.

activities to improve and create markets for U.S. Soy are just a few samples of the work that USSEC performed worldwide in 2018.

TRADE TEAM FARM VISITS Trade visits are crucial to the progression of USSEC’s overall vision and mission to continually demonstrate U.S. soy farmers’ commitment to sustainability and to promote the U.S. Soy Sustainability Assurance Protocol (SSAP).

In 2018, 35 international trade teams visited the United States.

In June 2018, a team of Japanese food company executives visited the United States with an interest in learning more about sustainable methods of U.S. soy production and to better understand the U.S. soy supply chain.

International buyers are impressed with the overall organization and systematic structure of the U.S. soy sustainability system. Through farm and industry visits, trade team members were assured about the reliable supply of U.S. Soy in terms of sustainability.

One team member mentioned that until this visit, he had never realized the purpose of forests and trees around the soybean fields, although he had been visiting soybean farms for decades.

The 2018 China Swine Study Team visited the U.S. in June. Seventeen participants from soybean end users of swine integrators, feed mills, and swine farms learned about the advantage of U.S. soy products, swine management, nutrition, environment control, and animal health at Illinois State University, Nebraska State University, and South Dakota State University. During the training course, the team also visited soybean farms, the World Pork Expo, and university research pig farms. The trip provided the group with advanced knowledge of the U.S. agriculture and swine industry, and the Chinese visitors were impressed by the advanced production system.South Dakota Soybean Association director Marc Reiner shows soybeans growing at his farm.

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SUSTAINABLE U.S. SOY CERTIFICATION MARK Two years ago, USSEC rolled out the Sustainable U.S. Soy (SUSS) certification mark in a pilot program in North Asia and the Philippines. As more and more consumers around the world expect sustainable products, corporations are demanding supply chain sustainability, elevating sustainability from a “want” to a “need.”

While the SSAP provides third-party sustainability verification that helps businesses meet and document sustainability demand, SUSS adds value by helping businesses adhere to their corporate sustainability policies and supplier guiding principles, thus differentiating themselves from their competition. Companies who sign a licensing agreement with USSEC can use the sustainability seal on their packaging, as well as in internal brochures and videos, with customers, and at trade shows.

EXCEPTIONAL COMPOSITION Exceptional composition is a key component of the U.S. Soy Advantage. Year after year, U.S. Soy can be counted on by nutritionists and managers to consistently maximize animal performance and reduce production costs. These featured activities to improve and create markets for U.S. Soy are just

U.S. soy leadership, including USSEC vice chairman and ASA director Monte Peterson, ASA then-president and current chairman and former USSEC director John Heisdorffer, and USB immediate past chairman Lewis Bainbridge, attended the XXI International Oilseeds Producers Dialogue (IOPD) in Cuiaba, Brazil. The June conference provided participants with the opportunity to meet with other global oilseed producers to discuss common interests and to develop partnerships that can provide support for key market access issues. U.S. soybean farmers engaged with other oilseed farmers and delegates on key issues for the U.S. Soy industry – innovation, international market expansion, and trade dynamics. Bainbridge, Peterson, and Heisdorffer visited a farm in the Brazilian state of Mato Grosso. The U.S. soy delegation traveled to Sorriso, the heart of Brazilian soybean country.

a few samples of the work that USSEC performed worldwide in 2018.

COMPARATIVE ANALYSIS Dr. Gonzalo Mateos’ comparative analysis of soybean meal reveals that U.S. Soy delivers the best nutritional bundle. Mateos, Professor of Animal Science, University of Madrid, Spain, led a multiyear, comparative analysis of the nutritional bundle of soybean meal for swine and poultry.

Mateos and his team compiled data, gathered over eight consecutive years, to map out the nutritional value of soy using components such as essential amino acid content, energy levels and protein levels of samples of the world’s

convinces buyers and potential buyers of the U.S. Soy Advantage in this area.

ANNUAL QUALITY SURVEY Since 1986, USSEC has commissioned an annual study to analyze soybean samples from throughout the U.S. for protein, oil, and amino acid concentration. The study consistently yields scientific data that verifies U.S. Soy’s high quality and its unparalleled nutritional bundle and is currently conducted by the University of Minnesota Department of Agronomy & Plant Genetics.

largest exporters of soybean meal: the United States, Brazil,

In 2018, survey results showed that, across U.S. growing

and Argentina.

areas, overall protein levels were good to very good as

The researchers analyzed the samples and compared their relative nutritional bundles, which are attributes sought by swine and poultry nutritionists. The findings of this study?

The origin of a soybean plays a role in its nutritional density; soybean meal from the U.S. has a superior nutritional bundle compared to soy from other origins. USSEC’s challenge is now to communicate this information in a way that

compared to last year and the amino acid concentration continued to be strong. Over the years, while the annual survey indicates that crude protein has trended lower, the concentration of essential amino acids (EAAs) has increased. Although the industry continues to trade on crude protein, the stronger amino acid profile is what differentiates U.S. Soy from other origins. In short, U.S. Soy has superior feed value. USSEC is using data from this survey to identify varieties of soybeans that produce strong

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feed value and working with farmers and seed companies to

KOREA - U.S. FREE TRADE AGREEMENT

increase the consistency and competitive value of U.S. Soy

In Korea, USSEC programs leveraged with the Korea – U.S.

in international markets.

(KORUS) Free Trade Agreement have helped contribute to

The full value of U.S. soybean products is found when buyers consider total metabolizable energy, batch-to-batch consistency, essential amino acid profile, and digestibility.

This global research continues to demonstrate that soybeans and soy products can vary widely depending on their origin. Seventeen studies published in peer reviewed journals over fifteen years consistently show U.S. Soy has a better nutritional profile than soy grown in other countries and USSEC is rolling out that message.

RELIABLE SUPPLY AND CONSISTENT DELIVERY Reliable supply and consistent delivery are key components of the U.S. Soy Advantage. USSEC works to develop and maintain market access for U.S. Soy by minimizing potential trade barriers while maximizing the U.S. Soy Advantage, which ensures our customers can continue to enjoy a reliable supply and consistent delivery of U.S. Soy.

an impressive increase in soybean oil exports. As a result, the U.S. share in Korea’s imported crude soybean oil market has continued to rise, reaching 85 percent in 2018, up from just 30 percent two years earlier. The import tariff rate became zero for U.S. refined, bleached, and deodorized (RBD) soybean oil in 2016 and the rate for crude degummed soybean oil from the U.S. was reduced to 1.6 percent in 2018 and will become zero in 2021, while tariff rates on soybean oil from other origins remain at 5 percent. USSEC hosted technical and marketing seminars and trade missions to the U.S. targeting Korean refiners’ soybean oil purchasing decision makers, providing target groups with information about the latest developments in the edible oil market along with the opportunity to develop concrete business relationships with U.S. suppliers. USSEC continues to educate target groups about the intrinsic and extrinsic values of U.S. soybean oil, and Korean buyers have actively utilized USSEC-provided information for their purchasing decisions.

These featured activities to improve and create markets

U.S. - COLOMBIA TRADE PROMOTION AGREEMENT

for U.S. Soy are just a few samples of the work that USSEC

From a country that was once seen as one of the most

performed worldwide in 2018.

dangerous places in the world, Colombia has shown tremendous growth potential and is now viewed as a key growth market for U.S. Soy.

Regional feed industry thought leaders, executives, and government officials met in July in Cartagena, Colombia for the regional buyers’ conference for the Americas. The event, which brought together roughly 150 of the region’s most distinguished industry leaders, provided a forum for buyers and sellers to engage in commerce. It was capped off by a “round-robin” style of speed meetings where importers and suppliers network and build relationships. Here, FAS Administrator Ken Isley gives the keynote address.

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The U.S.–Colombia Trade Promotion Agreement (CTPA),

China have included biotech approvals and foreign material

which took effect in 2012, eliminated import tariffs for U.S

(FM) content.

soybeans and soybean meal with a tariff-rate quota for soybean oil. USSEC leveraged the CTPA to promote and build preference for the quality attributes of U.S. soybeans

In late 2017, the U.S. cooperatively worked with China on an FM agreement. The agreement between the USDA

in that market.

Plant Protection and Quarantine (APHIS) and China’s

At one point, Colombia grew to the 11th largest market for

and Quarantine (AQSIQ) went into effect on January 1

U.S. soybeans; it now maintains the no. 15 spot. It is the third

and was the result of Chinese demands about certain

largest market for soybean meal, and the fourth largest

quality aspects, particularly weed seed content, of their

for soybean oil. Collectively, U.S. soy exports to Colombia

U.S. soybean imports. The Chinese agreed to a systems

in 2016/17 were more than 10 times the amount shipped

approach involving the entire U.S. soy supply chain

before the CTPA, at 1.7 million metric tons (MMT), valued at

from farm to exporter. USSEC has worked with groups

more than $740 million.

representing the U.S. grain trade such as the North

U.S. soybean exports to Colombia have certainly grown significantly and the trend is expected to continue as Colombian importers enjoy cost advantages from importing U.S. soybeans versus those from Argentina and Brazil. Port access to both the Atlantic and Pacific Oceans makes on-time delivery from the U.S. an added advantage.

The U.S. market share of Colombia’s soybean imports has risen from 49 percent in FY 2011 to essentially 100 percent in FY 2017. The U.S. also holds slightly over 70 percent of the soybean meal market and 28 percent of soybean oil imports.

MARKET ACCESS TO CHINA Market access maximizing the U.S. Soy Advantage and minimizing potential trade barriers to China has long been a focal point for USSEC. The recent tariffs are not the only market access issues on which the U.S. soy industry has worked. Other concerns in

General Administration of Quality Supervision, Inspection

American Export Grain Association (NAEGA) and the National Grain and Feed Association (NGFA) to make this a successful agreement that minimizes any uncertainty or disruption to trade and demonstrates to the Chinese our willingness to address their concerns. A new collaborative study on this FM/weed seed issue as well as China’s Decree 177 is planned for 2019.

Biotechnology is another matter in which the U.S. soy industry has been long engaged. For some time, new U.S.specific events have been approved only through U.S. government intervention. While the Chinese government endorses biotechnology, certain segments oppose biotech and the issue has become very politicized in China.

USSEC has engaged the Chinese industry to talk with their government about potential supply problems if the approval process doesn’t move expeditiously and is involved in the International Soybean Growers Alliance (ISGA) to work with like-minded countries.

Representatives from U.S. soybean farmer-led organizations joined their counterparts from Brazil, Argentina, Paraguay, Uruguay and Canada to discuss the benefits of biotechnology with Chinese stakeholders during the ISGA mission trip to China.

Representatives of U.S. Soy included USSEC vice chairman and ASA director Monte Peterson, and USSEC and USB director Doug Winter as well as USSEC staff members.

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In April 2018, a U.S. delegation that included grower leaders

July 2018. The positive customer response to the U.S.-based

and USSEC staff participated in an ISGA mission trip to

training has prompted USSEC to make plans for members

China to discuss the benefits of biotechnology. ISGA,

of the 2018 class of Soy Oil Masters to receive a similar

formed in 2006, brings together farmers and industry

educational opportunity next year.

representatives from the United States and five other countries that supply over 95 percent of the world’s soybean production. The alliance helps to consolidate the voices of soybean producers in opposing market restrictions, excessive tariffs, and scientifically unsound non-tariff barriers regarding environmental, health, chemical residues, or biotechnology approvals. The alliance has visited China on several occasions to connect with Chinese stakeholders. Food security is a critical question facing today’s world, and this one-on-one engagement between soybean farmers and consumers helps to balance fear and misinformation with objective, evidence-based analysis.

LONG-TERM PARTNERSHIP USSEC demonstrates our commitment to long-term

SOY FOOD SYMPOSIUM In March 2018, more than 135 participants from across Southeast Asia involved in various aspects of the food industry such as research and development, product marketing, food technologists, nutritionists and health professionals, as well as representatives from the trading community and government ministries participated in USSEC’s 13th Southeast Asia Soy Food Symposium, “Science to Market: Sustainable Food Supply for Health in the Era of Transformation,” in Surabaya, Indonesia.

The event provided participants with research updates and issues related to soy and health benefits, from science to market focusing on the current socio-demographic trends and consumer preferences.

partnership through providing trade and technical services to customers of U.S. Soy. The trade services that USSEC provides to our customers around the world help to facilitate and ease trade, along with building strong relationships between buyers and sellers. These featured activities to improve and create markets for U.S. Soy are just a few samples of the work that USSEC performed worldwide in 2018.

U.S. SOY GLOBAL TRADE EXCHANGE The annual U.S. Soy Global Trade Exchange is USSEC’s signature networking event, and this year’s conference

Participants at the 13th Southeast Asia Soyfood Symposium

was no exception. 700-plus attendees from more than 53 countries gathered in Kansas City, Missouri for the 6th annual GTE in August 2018.

Each year, the conference and trade show focuses on exclusive access to qualified international buyers with a strong focus on relationship building.

SOY OIL MASTERS CLASSES The Soy Oil Masters certification classes are unique because they allow participants to gain accurate information about soybean oil in a systematic way. These classes in Japan and Korea are another innovative USSEC approach towards trade servicing.

To provide further insight about the reliability and sustainability of U.S. soy production, USSEC hosted seven of the 2017 graduates for training in the United States in

USDA Under Secretary Ted McKinney saw tempe being manufactured from U.S. soybeans during a USDA trade mission to Indonesia. Indonesia is the fourth largest market for U.S. soybean exports, where they are processed into tempe and tofu, staples of the local diet.

14 |

2018 USSEC Annual Report

TECHNICAL SERVICES The role of USSEC’s technical consultants includes

(AFAC) sees an opportunity to further develop the ruminant

customer service, person-to-person training, group

compound feed market in the dairy and overall ruminant

education, and technical advice in customers’ day-to-day

feed sectors in Morocco, which grew tenfold in the last two

operations.

decades, reaching one million tons in 2017.

In one example of technical training, USSEC conducted a

USSEC programs continue to better position U.S. soy

series of one-on-one workshops for dairy operations and

products in ruminant feed. Workshops conducted at key

feed producers in Morocco in March 2018.

partners’ operations help develop business opportunities,

The Moroccan dairy sector is composed of large regional dairy producers, cooperatives, and several smaller dairy coops with a total of 1.2 million cows. As the most important

ultimately resulting in an increased demand for U.S. soybean products, particularly in high production dairy herds.

and dynamic dairy market in the Maghreb region, Morocco imports all components of the U.S. soy complex (beans, meal, hulls, and oil). After poultry, dairy constitutes a key driver of soybean meal demand in the Moroccan market, which is the largest importer of U.S. soybean meal in the MENA region. As a result of the technical workshops, dairy producers and farm owners are more informed of the importance of a good feeding and nutrition program to achieve higher performance through the use of high quality ingredients such as U.S. soybean meal. Soy product usage is increasing in dairy feed sustained by a higher understanding of their nutritional supply in concentrates, as nitrogen correctors, and as part of total mixed rations (TMR).

Acquiring high quality ingredients in adequately balanced feed and a good forage program allows optimization of dairy performance. The Feed Manufacturers Association

USSEC consultant Dr. Frank Delfino (center) provided technical assistance to Moroccan dairy operators and feed producers in March. Moroccan consumption of dairy products is expected to continue to rise, providing further opportunity for U.S. Soy.

The U.S. Soy Producers Mission (USSPM) is a market access initiative designed to provide a team of U.S. soy grower leaders with the opportunity to learn and gather knowledge, as well as experience firsthand some of the ongoing investments that the U.S. Soy family has made in a major U.S. soy destination. The USSPM was scheduled to coincide with one of USSEC Southeast Asia’s regional business development conferences, the AG Supply Chain Asia 2018. This helps the U.S. soy delegation to engage and connect with regional customers and the agriculture industry. Members of the USSPM were also invited to participate in the U.S. ag producers’ forum during the event to take questions and share on matters concerning U.S. soy production. The team consisted of grower leaders and staff from Illinois, Iowa, Michigan, Minnesota and Ohio.

The Ambassador to Indonesia hosted a reception for the USSPM at his residence, extending the invitation to over 70 industry representatives and U.S. cooperators.

2018 USSEC Annual Report

| 15

Soy crushing expert Greg Lofstedt and USSEC consultant – Pakistan R.S.N. Janjua visited six crushing plants situated in various locations in Pakistan’s Punjab province to provide technical assistance to help improve soybean meal and oil produced using U.S. soybeans. The Pakistani crushing industry historically crushed canola and sunflower seed until 2015, after which soybean imports into the country began to increase. The manufacturing system used for crushing oil seeds in Pakistan was historically focused on “Crush for Oil” because oil was considered a primary product, while soybean meal was always viewed as a by-product. USSEC has identified that a strategy is required to help the industry recognize soybean meal as a co-product in demand by the poultry industry rather than a by-product.

“Eye-opening” is the word most used by grower leaders and other U.S. Soy family participants for the annual Aquaculture Educational Opportunity (AEO) event held in Campeche, Mexico, in January 2018. The International Soy in Aquaculture team gathered from around the world to provide updates of aquaculture production in their regions, challenges to industry growth, and opportunities to increase the use of U.S. Soy in global aquaculture feeds.

Gunnar Lynum, Ohio Soybean Association consultant, and Dr. Iani Chihaia, USSEC regional consultant, promoted U.S. Soy in a series of meetings with main Romanian feed mills equipped with soy extrusion equipment in June. USSEC consultant Dr. Jan van Eys joined the team to stress the quality of U.S. Soy to Romanian end users. The U.S. soy team was welcomed by Dr. Ovidiu Irimia at Nutriva Feed Mill.

Sharon Covert, USSEC and Illinois Soybean Association director; Derek Haigwood, USSEC chairman and USB director; Dawn Scheier, USSEC and South Dakota Research & Promotion Council director; and Kevin Scott, USSEC and ASA director, listen to a presentation at Italcol, a Colombian company that manufactures, distributes, and sells concentrated feed, raw materials, and premixes for animals in Colombia, Panama, and Ecuador.

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2018 USSEC Annual Report

USSEC FINANCIALS INTERNALLY MANAGED FUNDS (IMF)

SOURCE

TOTAL ($)

IMF Revenue Collected through 9/30/18

$922,884

Expenses through 9/30/18

$739,297

APPROVED FUNDING FOR 2018

FUNDING SOURCE

TOTAL ($)

QSSB

2,854,343

USB

27,136,149

Total checkoff

29,990,492

FMD

6,380,931

MAP

5,989,585

QSP

73,000

Total FAS

12,443,516

CHECKOFF & FAS TOTAL

42,434,008

30,000,000

Dollars ($)

25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0

QSSB

USB

FMD

Funding Source

MAP

QSP

2018 USSEC Annual Report

| 17

FUNDING BY ALLOCATION 2018

REGION

TOTAL ($)

WW - Worldwide

16,889,824

NA - North Asia

8,086,754

AM - Americas

4,980,524

SA - Southeast Asia

4,864,144

EU - European Union

3,322,476

ASC- Asia Subcontinent

1,965,992

MENA - Middle East / North Africa

1,582,395

WISHH

741,899

TOTAL AVAILABLE FOR INVESTMENT

42,434,008

18,000,000 16,000,000 14,000,000

Dollars ($)

12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0

Worldwide

North Asia

Americas

SE Asia

EU

Asia MENA Subcontinet

WISHH

Funding By Allocation

Non-Discrimination Statement In accordance with Federal civil rights law and U.S. Department of Agriculture

at (800) 877-8339. Additionally, program information may be made available in

(USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and

languages other than English.

employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity in any program or activity conducted or funded by USDA (not all bases apply to all programs).Remedies and complaint filing deadlines vary by program or incident.

Persons with disabilities who require alternative means of communication for program information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA’s TARGET Center at (202) 720-2600 {voice and TTY) or contact USDA through the Federal Relay Service

To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at How to File a Program Discrimination Complaint and at any USDA office or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632-9992. Submit your completed form or letter to USDA by: (1) mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights,1400 Independence Avenue,SW,Washington,D.C.20250-9410; (2) fax: (202) 690-7442;or (3) email:program.intake@usda.gov.

USDA is an equal opportunity provider, employer, and lender.

USSEC MEMBERS Ag Processing Inc. Agniel Commodities, LLC Alabama Soybean Producers Anderson International Corp Archer Daniel Midland Arkansas Soybean Promotion Board Bayer Crop Science Bluegrass Farms of Ohio Brushvale Seed, LLC Bunge North America Cargill Ceres Commodities LLC CGB Enterprises, Inc. CHS, Inc. Citizens LLC Clarkson Grain Company Inc. CME Group CoBank Commercial Lynks Commodity and Ingredient Hedging LLC Corteva Agriscience DuPont Nutrition & Health Enerfo USA, Inc. Fornazor International, Inc. Gavilon Group LLC Global Processing, Inc. Grain Millers Specialty Products Healthy Food Ingredients (SK Food International, Inc.) Huron Commodities Inc. USA Illinois Soybean Association Indiana Soybean Alliance Inland Empire Milling Company, LTD Insta-Pro International

International Feed International Grains Program Institute INTL FCStone IOM Grain LLC Iowa Farm Bureau Federation Iowa Soybean Association JB Global Kansas Soybean Commission Kentucky Soybean Promotion Board KG Agri Products, Inc. Knewtson Soy Products LLP Landus Cooperative Lansing Trade Group, LLC Leland Farmers Company Michigan Soybean Promotion Committee Midwest Ag Enterprises Inc Midwest Shippers Association Minnesota Department of Agriculture Minnesota Soybean Research and Promotion Council Mirasco Inc. Missouri Department of Agriculture Missouri Soybean Merchandising Council Montague Farms, Inc. National Oilseed Processors Association Nebraska Soybean Board Neco Seed Farms Inc New York Corn & Soybean Growers Association North Carolina Dept of Agriculture and Consumer Services Marketing Division North Carolina Soybean Producers Association North Dakota Soybean Council Northern Crops Institute

Northwest Grains International, LLC Ohio Soybean Council Owensboro Grain Company Pennsylvania Soybean Board Perdue Agri Business, Grains and Oilseed Division LLC R. J. O’Brien & Associates, LLC Richland IFC, Inc. Rogers Grain Inc. Russell Marine Group SB & B Food, Inc Schwartz Farms Scoular Company -Specialty South Dakota Soybean Processors, LLC South Dakota Soybean Research and Promotion Council Soyko International , Inc. Stone Arch Commodities SunOpta Grains and Food Group Syngenta T. Parker Host, Inc. Tennessee Soybean Promotion Council The Delong Company, Inc. The Redwood Group, LLC Thionville Laboratories U.S Commodities US Nisshin Shokai Virginia Department of Agriculture and Consumer Services Wenger Manufacturing Wheaton Grain Inc. Wisconsin Soybean Marketing Board World Food Processing, LLC Zeeland Farm Services Inc.

U.S. SOYBEAN EXPORT COUNCIL 16305 Swingley Ridge Road, Suite 200 Chesterfield, MO 63017 - USA Phone: (636) 449-6003 | Fax: (636) 449-1292 ussec.org | ussoy.org