Edamame: Costs, Revenues, and Profitability

Introduction

As Asian-inspired foods gain popularity in the United States, and margins for agricultural products shrink, an increasing number of farmers are considering growing edamame. Edamame refers to immature soybeans that are grown and marketed as a specialty vegetable crop. They are typically sold as individual pods or as beans. Edamame are known for their high nutritional value and are gaining traction among high-income, health- conscious American consumers. They have long been popular in East Asian countries, and Asian suppliers are having trouble keeping up with renewed demand from North America and fast-growing Asian countries. Thus, there is an opportunity for growers in Virginia to get involved with this high-value crop.

Researchers from the School of Plant and Environmental Sciences and the Department Agricultural and Applied Economics at Virginia Tech recently analyzed the production and profitability potential of edamame sold in both pod and bean form. Both product forms are harvested from the same field, as only 20-25% of edamame is suitable for pod marketing. The enterprise budgets for hand-harvesting and mechanical harvest can be found in the appendix of this publication.

When hand-harvesting edamame, labor is the largest part of the cost structure. The 2018 Virginia Adverse Effect Wage Rate of $11.46 per hour was used for budgeting in this publication (Department of Labor 2017). Labor accounts for about 62% of the total cost of pod production (fig. 1) based on initial VCE cost assumptions when edamame is hand-harvested. The majority of labor is expended during the harvest and postharvest handling phases, regardless of whether the crop is hand- or mechanically harvested, with preharvest labor being almost negligible. Under hand- harvesting, edamame production is not profitable.

Mechanical harvest enjoys lower labor costs (only about 28% of total costs) but loses a significant amount of yield to pod damage and bruising (Born 2006). Born estimated 24% yield destruction when using a commercial bean mower, although the VCE budgets use a more optimistic 20%. If harvest damage is less than 20%, mechanical harvest is profitable. However, the equipment needed to efficiently harvest edamame needs to be imported, or green bean harvesters — more common in Virginia — can be modified to harvest edamame (Miles 2000).

Harvest damage is due mainly to the mechanics of harvest (Ernst and Woods, 2001). Currently, most commercial edamame varieties are relatively short, bushy plants with a significant number of pods near the ground. Edamame pods are also more susceptible to damage than grain soybeans due to their immaturity. The harvester damages the portion of pods nearest the ground. Hand-harvesting takes longer but allows the pods to be handled more gently, resulting in less damage to the crop. Manual-harvesting also allows the field to be harvested multiple times because plants and pods mature at slightly different rates (compared to harvesting the whole field at once with a machine). Due to the time-dependent, labor-intensive nature of the crop, having affordable labor available at a moment’s notice during the harvest season is a must. The interplay between harvest damage and labor costs can easily make or break an edamame operation. Where edamame can be incorporated into a cropping system that fully utilizes labor across the season, returns on labor will improve.

It is worth pointing out that while labor costs must be accounted for, they either accrue to the operators (in the case of individual or family operations without hired labor) or represent an actual cost of hired labor that contributes to a return to owner management and risk (which most people know simply as profit).

Other costs have less of a defining impact on edamame profitability, especially if the farm is already engaged in marketing fresh, high-value crops. Pods and beans must both be refrigerated between harvest and retail. A charge for land must also be accounted for, but land’s agricultural rental rate is low compared to the top five expenses. Land rents in the budget can be selected in the VCE budgets using a drop-down menu, and they are drawn from 2017 USDA survey data on land rental rates (Groover and Bruce 2017). Irrigated rates were used where possible, although such data was not available for all localities.

So why does edamame matter to Virginia? It provides farmers with a potentially profitable crop alternative. Since edamame has relatively low startup costs, it is less capital-intensive. Edamame is a legume that can enrich the soil via nitrogen fixation and can be used to break up pest cycles (Halich and Kindred, 2015). Edamame are well-suited for farmers who are already engaged in producing fresh-market crops, who have established market channels that are receptive to edamame along with their other produce, and who can incorporate edamame into their cropping system to best utilize land and labor across the growing season. Once varieties with desirable height are developed to optimize mechanical harvest, the crop may become even more profitable for Virginia producers.

References

Born, H. 2006. “Edamame: Vegetable Soybean.” ATTRA Sustainable Agriculture Program, National Center for Appropriate Technology. https://attra.ncat.org/attra-pub/viewhtml.php?id=28.

Department of Labor. Employment and Training Administration. 2017. “Labor Certification

Process for the Temporary Employment of Aliens in Agriculture in the United States: 2018 Adverse Effect Wage Rates for Non-Range Occupations.” Federal Register 82, No. 244. https://federalregister.gov/ documents/2017/12/21/2017-27528/labor-certification-process-for-the-temporary-employment-of-aliens-in-agriculture-in-the-united.

Ernst, M., and T. Woods. 2001. Marketing Challenges for Emerging Crops in Kentucky: Vegetable Soybeans. University of Kentucky Cooperative Extension.

Groover, G., and L. Bruce. 2017. 2017 NASS Cropland and Pastureland Rental Rates. VCE publication AAEC-142NP.

Halich, G., and S. Kindred. 2015. “Fertilizer Price Calculator.” University of Kentucky Cooperative Extension.

Miles, C. A. 2000. “Edamame Harvesting and Marketing Potentials.” Washington State University Extension. http://mtvernon.wsu.edu/vegetables/crops/edhrv/.

Acknowledgements

The authors would like to thank the four reviewers of this publication who provided suggestions and edits to improve the publication. This work is supported by USDA-SCRI No. 2018-51181-28384.

Appendix

Table A1: Enterprise budget for hand-harvested edamame.

Table A2: Enterprise budget for mechanically harvested edamame.

Notes: Highlighted areas are estimates based on experimental data from Virginia Tech’s Kentland Farms. Tractor Operator Labor, Fuel, and Machinery and Equipment costs are estimates based on the 2015 Mississippi State Fresh Market, Snap Bean Enterprise Budgets.