The American Soybean Association (ASA) is challenging the United States Congress and the Clinton Administration to work together to stop the erosion of the federal safety net for U.S. farmers and ranchers. ASA President Mike Yost said, "American farmers agreed to accept reductions in income supports under the Federal Agriculture Improvement and Reform (FAIR) Act of 1996 based on Congressional assurances that policies to improve global competitiveness, enhance risk management, and bolster agricultural research would be expanded. We are now challenging Congress and the Administration to make good on those commitments by taking specific actions to boost agricultural exports and support farm income before the November mid-term elections.

"In May of this year, ASA stressed to Congressional leaders the critical need for a number of specific policies. Since that time, only minimal progress has been made," commented Yost. "Neither Fast Track trade negotiating authority nor replenishment of the International Monetary Fund has been enacted by Congress. The limited sanctions relief measures currently under consideration would not allow U.S. agricultural exports to resume to key markets. No action has been taken to expand export credit or foreign food assistance programs, or to either use or shift Export Enhancement Program funds to other initiatives. Increased support for agricultural research through the annual appropriation process is also in doubt. And there is no consensus that Congress will consider legislation providing tax relief for farmers and ranchers before adjournment in October.

"In the absence of substantial progress on the priorities, the prospect of continuing low prices in 1999 and future years will force ASA to consider alternative measures to support farm income. These would include changes in domestic programs to enhance income support and other forms of producer assistance under the FAIR Act," Yost stated.

"During the last four months, prices for 1998 crop soybeans on the Chicago Board of Trade have fallen from $6.10 to $5.18 per bushel as production forecasts have risen to a record 2.85 billion bushels," according to Yost. "If these projections are realized at harvest, the value of this year’s soybean crop will have declined by over $2.6 billion, or 15 percent. In addition, harvest pressures are likely to depress prices even further. Under these circumstances, it is imperative that Congress and the Administration take immediate action to increase soybean demand and provide a viable income safety net for U.S. soybean producers. ASA is asking for:

1. The Administration must expand the foreign food purchase and donation program announced for wheat and wheat products in July to include soybeans and soybean products. In addition, P.L. 480 (the Food for Peace Program) must be restored to its funding level of 1980, and reforms made to make more countries eligible, including Russia. ASA has identified ten appropriate foreign markets capable of receiving 110,000 metric tons of soybean, 119,000 tons of soybean oil, and 115,000 tons of soybean meal. Exporting these quantities through foreign food assistance programs would raise soybean prices by nearly 8 cents per bushel, adding $217 million in value to the projected 1998 U.S. soybean crop.

2. Congress must enact legislation to allow vehicle fleets regulated under the Energy Policy Act of 1992 to earn credits toward meeting EPACT requirements by operating on a 20/80 percent blend of biodiesel/diesel fuel (B-20). Versions of this legislation have been included in the Senate FY-1999 agriculture appropriation bill and approved by the House Commerce Committee. Use of B-20 blends by diesel-powered vehicles in EPACT fleets would add 11 cents per bushel to soybean prices.

3. Fast Track trade negotiating authority must be enacted and the full $18 billion replenishment for the International Monetary Fund (IMF) approved before Congress adjourns. Further delay in providing Fast Track authority will imperil the ability of the U.S. to advance its negotiating objectives – including the Level Playing Field for oilseeds and oilseed products and harmonized trade in agricultural biotech products – in the next WTO Round. Export of soybeans and soybean products to IMF-assisted countries in Asia are down by $182 million from last year’s levels. Restoring Fast Track and IMF funding are vital to ensuring U.S. soybean markets in both the short and long-term.

4. Trade sanctions restricting U.S. agricultural exports to Cuba, Iran, North Korea, and Iraq must be eliminated. There is no evidence that any of these embargoes has had any impact on the target countries. Instead, U.S. competitors have moved to take over these former U.S. markets. Based on historical sales levels and subsequent growth, lost U.S. exports of soybeans and soybean products total $71.8 million to Cuba, $53.8 million to Iran, $14.4 million to North Korea, and $4.7 million to Iraq.

5. The Administration must reactivate the GSM-5 Direct Export Credit Program and revise regulations for operating the Supplier Credit Program. Both of these credit tools could expand soybean sales to countries that lack sufficient creditworthiness, or where private sector entities have replaced government agencies as negotiating parties. In addition, the GSM-102 Export Credit Guarantee Program must be utilized to the full $5.0 billion authorized in the FAIR Act.

6. The FY-1999 agriculture appropriations conference report must include report language ensuring funding of the Foreign Market Development Cooperator Program at the current operating level of $32 million. The report must also provide $120 million to fund the agriculture research initiative authorized in the Research Title of the FAIR Act. Adoption of these provisions is essential if adequate funding of soybean market development activities abroad and soybean research programs is to be assured.

7. Tax legislation must be enacted that provides permanent authority for Income Averaging by farmers and ranchers, and establishes Farm and Ranch Risk Management (FARRM) Accounts to enable agriculture producers to better manage annual variation in their cash flow. The Joint Tax Committee has estimated the benefit of these provisions to U.S. producers would total over $100 million annually.