U.S. producers are projected to plant 76.7 million acres of soybeans in 2001, up 3 percent from last year, according to a recently-issued U.S. Department of Agriculture (USDA) report. If realized, this would be the largest planted area for soybeans on record. While some analysts have speculated that this increase is due to the level of the soybean loan rate in relation to other commodities, the American Soybean Association (ASA) believes such analysis is flawed and overlooks enormous changes in demand, planting flexibility, and other factors.

“Domestic and world demand for soybeans during the last decade has been far greater than for any other commodity,” said ASA President Tony Anderson, a producer from Mt. Sterling, Ohio. “Global usage of soybeans grew by 56 percent, compared to 27 percent for corn, 15 percent for rice, 7.5 percent for cotton, and only 6.2 percent for wheat. Even in the United States, soybean usage in the last decade outpaced every other commodity. U.S. usage of soybeans grew by 36 percent, compared to 27 percent for rice, 26 percent for corn, 16 percent for cotton, and a decline of almost 5 percent for wheat.”

ASA attributes soybean acreage growth to the following factors:

• Greater growth in world and U.S. demand for soybeans than for other commodities.

• Introduction in the 1996 Farm Bill of unrestricted planting flexibility and decoupled income support payments that allowed producers to shift to agronomically and economically preferable crop rotations. Prior to 1996, soybean acres were constrained by farm program provisions that required producers to plant their farms to “program crops” (wheat, feed grains, cotton, and rice) to receive income support from the federal government.

• Relatively high soybean prices between 1995 and 1997 that induced producers to plant more soybeans. The season average price received by farmers for the 1995 crop was $7.35 per bushel, declining to $6.45 per bushel in 1996 and $5.35 per bushel in 1997. Since 1997, prices for all major commodities have been depressed, so there has been no inducement for farmers to shift acreage to other crops.

• Development of new soybean varieties in maturity groups that are much better suited to northern and western climates. In recent years, new soybean varieties have made production possible in colder and drier states where few soybeans were grown 10 years ago. Last year, virtually all of the expansion in soybean plantings occurred in the northern and western states of North and South Dakota, Minnesota, Wisconsin, Michigan, Nebraska, and Kansas.

• Prevalence of scab and other diseases affecting wheat and other crops. In major wheat states such as North Dakota, moving out of wheat production has been the only way to avoid reoccurrence of scab. Soybeans and other oilseeds have been among crops producers have turned to as they have battled disease problems.
• Unusually high costs of natural gas and fertilizer that are constricting corn production in the Midwest. Additionally, the continuing disruption of foreign and domestic corn markets and rising corn stocks resulting from the StarLink® debacle may be contributing to this year’s projected decline in corn plantings and increase in soybean plantings. 

“A final factor useful in judging whether the loan rate for a commodity is out of alignment relative to other crops is its stocks-to-use ratio,” said Anderson. “Carryover stocks of soybeans this fall are expected to total about 12 percent of current domestic and export use. By comparison, corn stocks are projected at 20 percent of use, and wheat supplies will be 34 percent of use. Reducing the soybean loan rate would likely increase production of crops that are already in greater surplus.”

In recent testimony before the House Agriculture Committee, ASA proposed setting the current national soybean loan rate of $5.26 per bushel as a floor in the next farm bill. ASA indicated it opposes any reduction of the soybean loan rate, because it provides a vital income safety net for producers. ASA strongly maintained that expansion of U.S. soybean acreage during the last five years has less to do with the loan rate compared to planting flexibility, growth in demand and usage for soybeans, and various agronomic production factors.

“Lowering the soybean loan rate would severely hurt soybean producers and significantly reduce overall net farm income,” said Anderson. “Suggestions to lower the soybean loan rate are both ill-considered and ill-advised. A better course would be for Congress and the Administration to adopt policies to expand trade and domestic demand that will get prices for all commodities above current loan levels. ASA has identified a list of initiatives to bolster demand, ranging from food aid to commercial trade to use of biodiesel and other industrial uses for soybeans. We look forward to working with Congress and the Administration to implement this agenda.”