Oilseed Farming
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Industry Overview
The oilseed farming industry includes about 350,000 farms with combined annual oilseed revenue of $21 billion. No major companies dominate. The average annual total revenue per farm is $125,000, which may include some non-oilseed revenue. The industry is highly fragmented: the top 10 percent of farms generate one-third of total industry revenue.
Oilseed farming is the growing and harvesting of soybeans, dry peas, beans, and lentils; and oilseed-producing plants such as sunflower, safflower, flax, rape, and sesame. Farms with less than half of total revenue coming from oilseed aren't included in this industry, nor are farms that grow fresh beans or peas.
Competitive Landscape
Demand is driven by consumer trends in food oil and meat consumption, and the federal push for corn-based ethanol. The profitability of individual companies depends on maximizing crop yield and minimizing disease risk. Large companies have advantages in highly mechanized operations and access to the latest in oilseed research. Small operations can compete effectively by specializing in organic and heirloom oilseeds. The industry is highly labor-intensive: among all farms that grow oilseed, the average annual revenue per employee is $50,000.
Oilseed farms compete with other food oils, especially palm tree oil. Since crushed oilseed is an important livestock food source, the industry also competes with corn and other feed crops. Oilseed competes with corn and other major crops for farm acreage, as farmers tend to plant and harvest crops with the highest yield and payout.
Products, Operations & Technology
Major products include soybeans (90 percent of the market) and cottonseed (5 percent). Other products include sunflower seed, canola, flaxseed, safflower, rapeseed, and peanuts grown for oil.
Soybeans are bushy, green legumes related to clover, peas, and alfalfa. Farmers plant seedlings in late spring after the danger of frost has passed. Most oilseed is grown on dry land in a crop rotation with corn. Planting the two crops in succession improves weed control, lowers pest and disease risk, and requires less fertilizer.
In summer, soybeans flower and produce 60 to 80 pods, each holding three pea-sized beans. Beans are harvested in late September or October, when the bean's moisture content is around 15 percent. A typical soybean farm yields 40 to 45 bushels of soybeans per acre (around 2,500 pounds). Other oilseeds yield around 1,000 to 2,000 pounds per acre.
Farmers use modern combines to harvest and thresh (separate) the beans from the pods, being careful not to break the beans or hulls. Threshed beans are either dried onsite or transported to an off-farm drying and cleaning facility. Naturally dried oilseed is spread out in thin layers on a drying floor and exposed to sunlight and air for two weeks. Beans must be stirred frequently and covered at night to ensure consistent drying. Artificial drying is common in farming regions that need to process large quantities, or in areas with high humidity. Soybean driers circulate warm air for about 30 minutes, which lowers the bean's final moisture content to around 10 percent.
Beans ready for processing are put into a cleaner-separator machine, where a hopper, fan, and vibrating sieve tosses and sifts them to remove dust, plant tissue, and pebbles. Cleaned oilseed is then transported to an oil processing facility. Oilseed processors crush and roll the seed, which removes the hull and extracts the oil from the meal. A 60-pound bushel of soybeans yields nearly 50 pounds of protein-rich meal, 10 pounds of oil, and two pounds of waste byproduct.
A small amount of soybeans are kept whole, which can be used for seed, sold to food manufacturers for snacks or fresh edamame, or sold to livestock farms that prefer whole bean feed. Whole beans can be stored for up to a year in bulk in storehouses or silos. Storage helps stabilize the supply and market price of beans.
Common inputs include seed, chemicals for weed control, fuel, electricity, farm supplies, machinery, and crop nutrients. Operator labor is a significant input, although 25 percent of all oilseed farms are run by an operator whose primary profession isn't farming.
Technological advances include heartier seed varieties, improved germination rates, advancements in fertilizer and pesticide applications, and development of genetically modified (GM) crops. An herbicide-tolerant soybean was the first bio-engineered product to gain wide acceptance in the US. Nearly 90 percent of all US soybeans are GM; other herbicide-tolerant GM oilseeds include canola and cottonseed.