ASA Calls for Improved Farm Safety Net, Biodiesel and Healthy Oils Incentives in 2007 Farm Bill

Apr 25, 2007

In testimony before the Senate Agriculture Committee today, American Soybean Association (ASA) First Vice President John Hoffman outlined the economic opportunities and challenges facing U.S. soybean growers, and called on Congress to ensure an adequate safety net for soybean farmers; support the growing U.S. biodiesel industry; and create an incentive for the production of soybeans with high-stability oil in the 2007 Farm Bill.

A soybean farmer from Waterloo, Iowa, Hoffman stated that "U.S. soybean farmers support the basic structure of the 2002 Farm Bill, with some minor adjustments. We believe the ‘three-legged stool’ that includes the marketing loan, the counter-cyclical program, and direct payments, combined with crop insurance and disaster assistance, can provide an adequate safety net for farmers in years of low prices and reduced production. However," Hoffman continued, "the 2002 Farm Bill established target prices and marketing loan rates at levels that do not provide an adequate safety net for producers of oilseed crops, and are out of balance with the support provided to other program commodities."

In addition, Hoffman said, "biodiesel provides a key new market for U.S. soybean oil, which has historically been in surplus, resulting in lower soybean prices. Efforts to establish biodiesel as a viable renewable fuel received a major boost when Congress enacted the biodiesel tax incentive in the JOBS bill, and extended the incentive in the Energy Act of 2005." However, he warned that biodiesel imports -- which do not face an offsetting tariff equal to the tax incentive and often benefit from government subsidies -- coupled with potentially volatile energy markets, threaten the emerging industry.

A third challenge facing U.S. soybean producers is the shift by food companies away from partially hydrogenated vegetable oils, which contain trans fats. Production of soybeans the yield high-stability oil, and other oilseeds that contain oil that does not require hydrogenation, offer healthy alternatives, but have higher initial production costs.

To address these challenges, ASA proposes the following:

  • Adjust target prices for all program crops to a minimum of 130 percent of the Olympic average of season average prices in 2000-2004. At 130 percent, the soybean target price would be increased from $5.80 to $6.85 per bushel. Subtracting the $0.44 direct payment, the effective target price would be $6.41.
  • Adjust marketing loan rates to a minimum of 95 percent of the same five-year Olympic price average. These adjustments would only marginally affect soybeans – the increase would only be one cent, from $5.00 to $5.01 per bushel.
  • Extend the biodiesel tax incentive which has spurred growth in the U.S. biodiesel industry.
  • Authorize a Biodiesel Incentive Program under which U.S. biodiesel producers would receive a commodity reimbursement from the Commodity Credit Corporation equal to subsidies paid to foreign biodiesel exporters.
  • Authorize a Healthy Oils Incentive under which CCC would cover up to one-third of the total premium paid to farmers by oilseed marketers for up to five years of commercialization.

In addition to these oilseed-specific provisions, ASA supports increased funding of a national Conservation Security Program, conservation programs directed toward working lands rather than land retirement, return of non-environmentally sensitive land currently enrolled in the Conservation Reserve Program to production, authorization and funding of permanent disaster assistance, and increased funding for the Market Access Program, the Foreign Market Development Program, and both Title I of P.L. 480 and the McGovern-Dole Food for Education Program.

For additional details, access ASA’s 2007 Farm Bill proposals.