Posted on March, 17, 2022 at 07:23 am
Soybean is a promising crop for developing countries because of its elevated protein and oil content. In the past few decades humanitarian aid organizations and policymakers have promoted soybean-processing technologies such as the “soy cow,” which extracts milk from soybeans. But a new study from the University of Illinois-Urbana-Champaign shows that in many cases, soy cows aren’t economically viable.
Peter Goldsmith, a professor and director of the Soybean Innovation Lab at the University of Illinois, said that in 2016 the laboratory partnered with the U.S. Agency for International Development to study whether the soy cow was an appropriate technology for small-scale rural enterprises.
The consulting firm Palladium had established six soy-dairy operations in Malawi with funding through USAID’s Agricultural Diversification Activity. Soybean Innovation Lab researchers collaborated with Palladium to introduce financial and production recordkeeping to the six companies.
The USAID project donated the soy-cow equipment, including a grinder that can run on electricity or pedal power, a steam boiler, a pressure cooker, and a stainless-steel press. Operators also received the first batch of soybeans and supplies, and bicycles to distribute their products. Going forward they would pay their own operating costs, including rent, electricity, labor, transportation, and supplies such as soybean and sugar.
The soy cow converts soybeans and water into milk, which can be further processed into yogurt, cheese and ice cream to be sold at local markets and roadside stands. The process also yields okara, a protein byproduct used for animal feed or as a baking ingredient.
The technology appears sustainable when simply looking at operating margins. But proper bookkeeping methods reveal a more complete financial picture, Goldsmith said.
“You can convert soybeans into milk, sell it and pay for your costs, but that's not a sustainable business,” he said. “You also have an amortization cost of the $10,000 equipment with some sort of loan even if it’s a non-cash donation. And then you have depreciation costs – the equipment ages and you eventually need to replace it.”
The soy cow has the capacity to produce about 450 gallons of soymilk per month. But the operators were producing about 39 gallons on average. Some were producing as little as 20 gallons.
The soy cow enterprises are located in rural areas where wages are depressed and soy milk isn’t part of the regular diet. So there’s not a large market for the products, according to Goldsmith.
The soy cows also operate in makeshift spaces that aren’t food-safety compliant so the products can’t be sold in retail stores. Becoming food-safety compliant involves significant additional capital investments to upgrade physical infrastructure.
Good-quality packaging and labeling, which would help sales, are expensive, so entrepreneurs resort to poor quality but cheap single-use plastic sachets. They transport perishable soymilk products in a cooler box attached to a bicycle, so the sales radius is small.
“The soy milk is a great product but it's competing with other beverages that are much cheaper,” Goldsmith said. “The demand doesn’t match how much the soy cows can produce. The application to address poverty and malnutrition is lost because the enterprises can't sustain themselves.”
Source: AgUpdate