Soybean Program “More Equitable” in New Six-Year Legislation

The American Soybean Association (ASA) today congratulated House and Senate conferees on completion of the 2002 Farm Bill, and called for its quick enactment into law. ASA President Bart Ruth stated that “this legislation improves income protection for U.S. soybean farmers, and makes support for soybeans more equitable with other program crops.” Under the new farm bill, producers who have planted soybeans in the past will be eligible for both direct and counter-cyclical (target price) payments - top goals of ASA throughout the farm bill development process. Ruth also commended Senate Agriculture Committee Chairman Tom Harkin and House Agriculture Committee Chairman Larry Combest on increasing funding for trade, energy, and conservation programs important to U.S. Soybean producers.

Ruth’s comments followed release of the Conference Report on “The Farm Security and Rural Investment Act of 2002,” which will be effective for the 2002 through 2007 crops of soybeans and other major commodities. For soybeans, the bill establishes a loan rate of $5.00/bu., a direct payment of $0.44/Bu, and a target price of $5.80/Bu Producers will be able to include soybeans in their existing program bases, or to update bases to average crop production in 1998-2001. Direct payments will be determined using yields adjusted back to historical 1981-85 levels (the same period used to determine yields for direct payments for other program crops), while producers who update their bases will be able to use partially updated yields to determine counter-cyclical payments under the target price program. ASA strongly supported giving producers the option to update their acreage to include soybeans for direct payments, as well as the yield update provisions adopted by the Conference Committee.

ASA also expressed its view that the new Farm Bill moves the soybean program toward U.S. goals in the World Trade Organization (WTO) negotiations by reducing the amount of income protection received by U.S. Soybean growers under the soybean loan rate (which is tied to current production and classified by the WTO as trade distorting “amber box” payments), and replacing it with direct payments (classified by the WTO as non-trade distorting or “green box” income support) and counter-cyclical payments. Under the new Farm Bill, both the direct and counter-cyclical payments are totally decoupled from current production. Additionally, both the direct and counter-cyclical payments will be paid on only 85 percent of a producer’s base acreage. Finally, both the direct and counter-cyclical payments will be based on less than current average yields. “Some oilseed-producing nations have been complaining loudly about the amount of income protection received by U.S. Soybean growers that is tied to current production and received as LDP payments under the current soybean loan rate of $5.26 per bushel,” Ruth said. “Beginning with the 2002 soybean crop under the new Farm Bill, the portion of income protection received as LDP payments will be significantly reduced and replaced with payments that are classified as “green box” and counter-cyclical payments that are totally decoupled from current production.”

“ASA is very pleased with trade-related provisions in the new bill,” Ruth continued. “Increasing funding for the Foreign Market Development (FMD) program from $27.5 to $34.5 million, and for the Market Access Program (MAP) from $100 million to $200 million over six years, will strengthen ASA’s export promotion efforts abroad.” Ruth added that “we also commend Conferees on doubling funding for the Food for Progress Program to $308 million, and for including $100 million for the Global Food for Education Program.” Ruth said “expanding food aid, including increasing the use of soy protein in humanitarian assistance programs, is one of ASA’s most important marketing activities.”

The ASA leader from Rising City, Nebraska, noted that the new energy title in the bill provides funding for a new biodiesel education program and continuation of the Commodity Credit Corporation (CCC) Bioenergy program. Ruth also pointed to authorization of a new $2 billion Conservation Security Program in the legislation, which will provide much needed resources to producers applying conservation practices on working lands. Ruth also lauded Conferee action to quadruple funding for the Environmental Quality Incentives Program (EQIP), which helps livestock producers comply with environmental regulations and helps crop farmers with water conservation and other improvements.

“I want to commend Chairmen Harkin and Combest and their colleagues on completing an arduous process in time for programs to be implemented for 2002 crops,” Ruth stated. “ASA would also like to thank Senate Majority Leader Tom Daschle and Senator Thad Cochran for their assistance in negotiations on soybean program provisions.”

“The completion of a new Farm Bill that provides adequate funds for market development, food assistance, conservation, energy, and rural development, and producer income support provides an important leg of the stool for U.S. agriculture,” Ruth continued. “But it is just one leg of the stool. Adequate agricultural research and other funding through the appropriations process, and legislation that facilitates and encourages demand expansion are two other important legs. The Senate last week voted on a comprehensive energy bill that will stimulate demand for soy through a biodiesel tax incentive, a renewable standard for motor fuels, and other provisions. Soybean farmers now call upon the House of Representatives to accept these provisions in Conference. ASA also knows that global demand expansion and worldwide income growth brought about by trade liberalization is critical to soybean farmers’ future. We therefore now call upon the Senate to pass Trade Promotion Authority.”