The American Soybean Association (ASA) presented specific domestic farm policy recommendations to the House Agriculture Committee today in Washington, D.C., as Congress considers options for the next Farm Bill. ASA First Vice President Bart Ruth testified before the Committee on behalf of the 27,000 ASA members as well as the National Sunflower Association and the U.S. Canola Association.

Ruth’s testimony is based on months of analysis of farm policy alternatives. While citing incremental progress in enacting the economic, trade, tax, and regulatory agenda that was supposed to accompany the 1996 Farm Bill, most of the agenda is yet to be accomplished, Ruth said. As a result, prices for most major commodities are so low that farmers received 30 percent of gross farm income, and 60 percent of net farm income, in the form of government payments last year.

“The need to address agriculture’s unfinished agenda as a top national priority is evidenced by the desperate situation in the farm economy today,” said Ruth, a Rising City, Neb., soybean and corn farmer. “We believe agriculture’s long-term competitiveness and prosperity are integrally tied to expanded trade opportunities, enhanced demand for agricultural products, increased research, and tax and regulatory relief.” Ruth continued, “Even if major progress is made in the near future, it will be years before the economic and trade environment for America’s farmers and ranchers is substantially improved. As a result, we must approach writing the next Farm Bill with the assumption that conditions during the next several years could remain much as they are today.”

The oilseed producer organizations recommend that the next Farm Bill continue portions of the current bill. Those provisions include full and unrestricted planting flexibility, continuation of non-recourse marketing loans, no statutory authority to impose acreage reduction programs or set-asides, and no authority to establish government or farmer-owned reserves for oilseeds. “Providing these elements are continued, we support providing programs for oilseed producers that are equitable to programs for other major crops,” Ruth said.

Specific policy recommendations include:

Marketing Loans—ASA calls for maintaining the current oilseed loan rates for 2002 crops, while setting these rates as floors rather than ceilings in the next farm bill. ASA does not believe the current national average soybean loan rate of $5.26 per bushel has been responsible for most of the expansion in U.S. soybean production since 1996. Factors that did increase soybean production include producers shifting to agronomically and economically preferable crop rotations when the current Farm Bill introduced unrestricted planting flexibility, and decoupled income support payments. Other factors are relatively high soybean prices compared to other crops in 1995-1997, hardier soybean varieties, and the impact of crop diseases, such as wheat scab, that prompted farmers to grow soybeans.
Also, global demand for soybeans expanded by 55.7 percent in the 1990s compared to 26.9 percent for corn and 6.2 percent for wheat. As a result, carryover supplies at the end of the current marketing year are projected at 12 percent of use for soybeans, 20 percent for corn, and 32 percent for wheat.

Production Flexibility Contracts (PFCs)—ASA seeks baseline annual funding for PFC payments after 2002 be increased from $4.008 billion to $5.7 billion, with the additional amount distributed to farms that produced oilseeds during the 1997 to 2001 period. Annual soybean PFC payments would total $1.624 billion and payments for other oilseeds would total $68 million. The proposed increase in payments reflect the oilseed share (29.7 percent) of the value of crops included in an expanded PFC program.

Counter-Cyclical Income Support—ASA supports replacing ad hoc emergency economic assistance payments, which have included an oilseed payment, with a counter-cyclical income support program. Payments would be made when per-acre return for a crop falls below its average per-acre return in 1993-1997. Producers would receive the difference on 85 percent of their harvested acreage.

World Trade Organization (WTO) Commitments—ASA-proposed programs would allow the United States to remain well under the $19.1 billion Aggregate Measure of Support (AMS) level established by the WTO. Total program outlays would average $10.4 billion between 2002 and 2008, with the high point at $14.5 billion in 2002.

Conservation Programs—ASA endorses the Conservation Security Act that was introduced last year by Senator Tom Harkin (D-IA) and Representative JoAnn Emerson (R-MO). ASA also recommends providing $1.5 billion for conservation payments.

Agricultural Research—ASA supports $1.0 billion for agricultural research in 2002.

Foreign Market Development (FMD) Program—ASA calls for a minimum of $43.25 million per year to restore the adjusted FMD funding for U.S. agriculture to 1986 levels.

Market Access Program (MAP)—ASA recommends the MAP be authorized at a minimum of $200 million annually.

Food Aid—ASA recommends that funding for the P.L. 480 (Food for Peace) Program be substantially increased to at least the 1985 level of $2.2 billion.

Biotechnology—ASA seeks the creation of a Biotechnology and Agricultural Trade (BAT) program to address market access, regulatory and other issues related to biotechnology.