Organic soy prices in the US hit record highs

Dive Brief:

• U.S. prices of organic soybeans have reached record highs following an 18% decline in imports that cannot be offset by domestic production, Reuters reported. Prices of conventional soybeans have also hit a seven-year high, jumping 25% to $33 per bushel in September from $25 per bushel in the 2014-15 season, according to commodity data firm Mercaris.
• The price hikes are trickling down to a wide range of products, including organic chicken and soy milk. Experts told Reuters that chicken feed prices — which account for 65% of the cost of the bird — will rise 40% by the end of the year.
• Soybeans mark the latest commodity to see price spikes and shortages in 2021, as poor growing conditions and rising demand challenge the supply of several food commodities, including oats, corn and durum wheat.   

Dive Insight:

The leap in organic soybean prices will have widespread effects on a variety of foods, and manufacturers and farmers will be limited in their ability to find cheaper alternatives. According to Reuters, the U.S. imports about 70% of its organic soybeans. Although the U.S. is the world’s No. 2 exporter of conventional soybeans, domestic production cannot currently attain sufficient levels to keep up with the growing demand for the organic commodity.

As a result, manufacturers are paying a premium for these organic raw materials. These could include soymilk manufacturers such as Danone, which has its organic Silk soymilk line, and SunOpta, which owns the shelf-stable plant-based Dream and WestSoy brands of plant-based milks. Poultry processors will be paying much higher feed costs, including Perdue Farms, which is said to be the largest producer of organic chickens nationwide.

Although making the switch to conventionally grown soy would help manufacturers save money, it would ignore rising demand for organic products. U.S. sales of organic food rose 12.8% in 2020 to hit $56.5 billion, compared to a 4.6% increase in 2019, according to data from the Organic Trade Association shared by Reuters. Organic’s share of total food sales reached 5.8% last year. 

Soybeans are not the only commodity experiencing price shocks. After the smallest harvest of oats in U.S. history, a shortage of the grain is raising ingredient costs for products like oat milk and cereal, Bloomberg reported. Corn prices hit their highest level in eight years, according to The Wall Street Journal. Durum wheat experienced a 90% price spike, with the potential for shortages of the grain threatening the supply of finished products including pasta.

Rising commodity and other costs are a top concern among food and beverage industry executives, according to a recent survey by tax, audit and advisory firm Mazars USA. That said, many manufacturers are choosing to push these inflationary pressures down to consumers. Danone, Unilever, Nestlé, Mondelēz International and General Mills are just some of the CPGs to announce price increases in recent months. It’s uncertain, however, how long that strategy can hold. More than four in five consumers said they had noticed price increases for commonly purchased groceries and household items over the past month, according to a July study from Numerator.