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Soy Dairy Technology Not Profitable in Developing Countries Says Recent Study

by Editor CTS
Image: Eurasia Review
Soybean is a viable crop for developing countries due to its high protein and oil content. Soybean processing technology like the “soy cow,” which produces milk from soybeans, has been supported by humanitarian relief organisations and governments for decades. However, according to a recent study from the University of Illinois, soy cows are not always economically feasible and do not deliver the perceived benefits.
Peter D Goldsmith, professor and director of the Soybean Innovation Lab (SIL) at the University of Illinois says, “The soy cow was promoted as a way to increase soybean utilization and address poverty and malnutrition. However, no research had been published to address whether this is a sustainable business concept for the developing world.”
In 2016, SIL collaborated with the United States Agency for International Development (USAID) on large-scale research to see if the soy cow is a viable technology for small-scale rural businesses. With assistance from USAID’s Agricultural Diversification Activity, the consulting firm Palladium created six soy dairy farms in Malawi in southeastern Africa. The six enterprises were introduced to financial and production records by SIL researchers working with the Palladium team.
The soy cow equipment was provided by the USAID project, which included an electric or pedal-powered grinder, a steam boiler, a pressure cooker, and a stainless steel press. The soy cow turns beans and water into milk, which may then be processed into yogurt, cheese, and ice cream and sold at local markets and roadside shops. The method also produces okara, a high-protein byproduct that may be utilized in animal feed or as a baking component.
“You can convert soybeans into milk, sell it, and pay for your costs, but that’s not a sustainable business. 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 is getting older and you eventually need to replace it. The soy cow has the capacity to produce almost 1,700 liters of soymilk per month. But these operators were producing about 147 liters on average, and some of them were producing as little as 75 liters. You’ve got a big piece of equipment that’s idle about 81% of the time, based on a single operating shift benchmark,” says Goldsmith.

When looking at operational margins alone, Goldsmith believes the soy cow technique is viable. Proper bookkeeping practices, on the other hand, provide a more comprehensive financial picture and a different outcome.

The soy cows also work in makeshift locations that aren’t food-safe, so the goods can’t be sold in supermarkets. Complying with food safety regulations necessitates a large increase in capital expenditures to improve the physical infrastructure. Similarly, proper packaging and labeling, which would aid sales are costly, so businesses turn to low-cost single-use plastic sachets of inferior quality. The very perishable soymilk products are transported in a cooler box mounted to a bicycle, limiting the sales radius.
The authors believe that soy cow technology is better suited to urban environments, where capital expenditure is higher but capacity is matched to demand.

Contributed by: Mithun Sukesan

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