The Soybean Value Chain
An extensive industry value chain can be derived
from soybeans. First, soybeans can be made into a
variety of food products, including tofu and other
bean curd-based products, soy milk, and soy-protein
drinks. Second, oil can be pressed from soybeans.
Finally, the soybean oil extraction process generates
a byproduct, soybean residue, which contains abundant
proteins. Soybean residue is a main ingredient
in feed for livestock and poultry. Animal feed, in
turn, connects soybeans with livestock and poultry
production, another crucial component of the agricultural
industry.
Nowadays, foreign direct investment (FDI) has
mainly penetrated the soybean oil production process
(other than some attempts to be involved in upstream
production as noted earlier). What is the attitude of
other players in the soybean value chain toward FDI?
Consider Qinghe Technology,Ltd., a large animal-feed
producer. Because soybean residue represents 60% of
the raw materials used in production, the market price
of soybeans directly affects the company's production
cost. Obviously, the low price of imported soybeans
makes Qinghe happy. Therefore, managers in the
animal-feed industry are interested in more imported
soybeans.