The economic feasibility of soybean production in Oregon

Graduation date: 1978Commercial production of soybeans in Oregon has been limited. In\ud 1977, less than 1,500 acres were grown, primarily in the Columbia Basin\ud area. However, interest in soybeans as a possible "new crop" for Oregon\ud has arisen because of the (1) recent strong soybean price, (2) the high\ud cost of transporting soybean meal and oil to the Pacific Northwest,\ud (3) Oriental demand for soybeans, and (4) search for another crop alternative\ud for newly irrigated cropland.\ud The Oregon State University Agricultural Experiment Station has determined\ud that soybean production in Oregon is technically feasible. However,\ud information is lacking as to the economic feasibility of soybean production\ud in Oregon.\ud The agronomic feasibility of soybean production in Oregon was first\ud reviewed. General agronomic requirements for soybean production were compared\ud with typical weather conditions and soils found in the major agricultural\ud centers of Oregon. It was concluded that the Ontario, Columbia\ud Basin, and Willamette Valley areas possess the greatest agronomic potential\ud for soybean production in Oregon.\ud The irrigated crops considered to be soybeans' primary competitors\ud were identified in each of the three regions. Typical costs and returns\ud were estimated for the competing crops based on 1976 costs of production\ud and normal yields and prices.\ud Cultural operations and input requirements for soybean production in\ud Oregon were based on what typically has been done in the major soybean\ud producing areas of the United States. Costs of producing soybeans were\ud then estimated based on the same assumptions used for the competing crops.\ud Soybean yields were based on Agricultural Experiment Station variety\ud trials and the experience of the limited number of commercial growers in\ud Oregon.\ud The yield, price, and cost data along with agronomically sound crop\ud rotations were analyzed using linear programming models for a typical farm\ud in each region. An estimate of the minimum price necessary for soybeans to\ud compete with the other crop alternatives was determined. The results indicated\ud that for the successful introduction of, soybeans the price per bushel\ud could be no lower than $11.22, $10.15, and $8.25 in the Willamette Valley,\ud Columbia Basin, and Ontario areas, respectively.\ud Four potential marketing alternatives which may exist for Oregon-grown\ud soybeans were identified: (1) exporting raw soybeans to Japan; (2) exporting\ud raw soybeans to other regions of the United States; (3) processing\ud soybeans at Portland to meet the Pacific Northwest demand for meal and oil;\ud and (4) processing soybeans at Portland and exporting meal and oil to other\ud regions of the United States. The alternatives were evaluated using the\ud Decatur base-point pricing scheme to determine the maximum Portland soybean\ud price that could be offered. The results indicate that the variability in\ud the maximum Portland price may range from $2.69 to $10.07 per bushel based\ud on data for the past six years. The lack of data and current experience\ud limited the evaluation of two other potential marketing alternatives:\ud (1) on-farm use of raw soybeans and (2) processing soybeans at Portland and\ud exporting meal and oil to Japan.\ud The economic feasibility of soybean production was analyzed by (1)\ud subtracting the average transportation costs to Portland from each of the\ud three areas from the maximum Portland soybean prices and (2) comparing the\ud results with the minimum price required for soybeans to successfully compete\ud with the alternate crops in each of the areas derived from the linear\ud programming analyses.\ud Based on the assumptions and data used in this study, it was concluded\ud that soybean production in Oregon is not economically feasible at this time.\ud The minimum prices required by farmers to grow soybeans ranged from $0.65\ud to $3.36 per bushel higher than the average prices which would have been\ud offered over the past six years. Changes in energy costs for transportation,\ud irrigation pumping, and fertilizer production, as well as the development\ud of new, higher-yielding varieties suited to Oregon could improve the outlook\ud for soybean production