A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
proteines vegetales

The plant protein market: A promising sector

Momagri Editorial Board

The global output of soybean and soybean meal is doing well, driven by strong growth generated by an increase of allocated areas––a ten-fold rise in 50 years and a two-fold increase since 1997. Suffice to say that the market has become especially attractive and strategic for half a century.

The world soybean production is highly concentrated in the United States, Brazil and Argentina, which account for close to 80 percent of worldwide output and involve close to 80 percent of farmland worldwide. In addition, these regions benefit from significant reserves of farmland expansion.

These agricultural powers thus have a considerable influence in global agricultural markets, all the more so since there is a sustained global demand for soymeal. It multiplied by ten in 50 years and by two since 1997. In fact, the requirements for livestock farming are increasing, and so is food demand both in terms of quantity linked to population growth and in terms of quality linked to changes in consumption patterns.

This international business is expanding and mostly driven by Chinese demand:
    - China’s soybean imports reported a seven-fold increase between the late 1990s and 2014;

    - In 2014, China accounted for 75 percent of global soybean imports, against 20 percent in the early 2000s.
In addition, the restrictions on animal proteins––sluggish yields, input costs and the elimination of milk quotas––are also increasing the potential for plant protein development, and turning the sector into a promising major market.

Yet, the market is restricted by historically unstable and highly volatile prices. The survey of the structure of soybean price volatility shows that the price volatility recorded since the early 2000s is the highest ever: High volatility episodes grew by 65 percent during the 2004-2013 years when compared to the 1984-1993 years. During the same period, extreme episodes of volatility increased by 300 percent.

It is therefore essential to know if plant protein prices are on average more or less volatile, and above all if the scope of price variations will be, or will not be, more significant in the future, since such extreme events are responsible for the most important potential for disruption.

The issue of adapting to this market volatility thus becomes crucial for farmers, cooperatives businesses and agricultural and food operations, as well as for decision makers since it shapes the public policies implemented, and the nature, procedures and budgets allocated to market regulation mechanisms. The growing price hyper-volatility thus calls for an effective public management practice through specific tailored-made systems––coupled and counter-cyclical subsidies and insurance aid schemes.

This requirement is indeed well integrated by the major players involved in plant proteins, who are conducting active policies regarding market and risk management:
    - As a result, the United States and Brazil seek to secure national production by stimulating food and non-food demand, and also through coupled counter-cyclical systems and market risk insurance instruments;

    - China and India conduct policies based on guaranteed minimum prices that allow compensating the price gaps between domestic prices and global prices.
The plant protein market is thus a strategic promising market for which the world’s major players––producers as well as consumers––are implementing policies to regulate domestic prices and improve their international competitiveness. In this respect, it is crucial that the European Union does not fall behind its competitors, and that the CAP allows European farmers to improve their profiles, especially regarding investment.

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Paris, 10 December 2018