A review of the recent increase in demand for soybean products explains why Cargill is making major investments into its production capacity. Global demand for the commodity has surged 145% since the 1990/1991 marketing year, according to data from the United Soybean Board.
A few regions are driving some of this demand, including India where soymeal consumption grew 238% between the 2006/07 marketing year and the 2010/11 marketing year. China also is driving demand and gobbling up a substantial portion of the U.S. soy crop through exports.
While population growth is part of the driving force behind more soy consumption, the rise of plant-based eating and meat alternatives is contributing to the increase. The plant-based food market will reach an estimated value of $74.2 billion by 2027, according to Meticulous Research.
Cargill’s investments will help it keep up with demand from food manufacturers for the popular soy ingredient while also supporting new product development, particularly around plant-based foods.
Soy is one of the most popular options for creating plant-based products. It was one of the first plants to serve as the basis for meat alternatives and has been a staple in the dairy alternatives segment for decades. It is relatively inexpensive compared to some of the other crops in plant-based product formulations such as peas, algae and hemp. It also offers an air of familiarity for consumers who may be leery of stepping outside of their culinary comfort zones.
At the same time, there’s a strong link between consumers’ interest in eating more plant-based foods for sustainability reasons. Cargill has found itself under scrutiny in recent years for contributing to deforestation through its soybean operations. In 2019, environmental watchdog Mighty Earth issued a widely circulated report naming Cargill the “worst company in the world.”
Since then, Cargill has worked to clean up its image, including the development of a Policy on South American Soy and vowing to make its soy supply chain deforestation-free. So far, Cargill has not indicated whether any of the new investments into its soy processing capacity are linked to improving sustainability.
For food manufacturers who want to preserve a sustainability halo around their brand, Cargill’s ability to offer responsibly grown soy is pivotal. Even during the pandemic, half of consumers said they are more concerned about the environment, while 11% reported changing their purchasing patterns to reflect their concerns in the last year.
The rise in demand is also spurring a new round of innovation around soy. Israeli startup Equinom is working on a non-GMO soybean that has more protein than its conventional counterpart. An estimated 94% of soybeans grown in the U.S. are GMO, according to the FDA. This clashes with many consumers’ distaste for GMO foods and increasing preference for non-GMO and organic offerings.
With many trends supporting the popular soybean, Cargill is smart to invest nearly half a billion dollars now to remain competitive as demand for the commodity grows.