American Soybean Association (ASA) President Rick Ostlie today told Members of the House Agriculture Subcommittee on General Farm Commodities that "the current Farm Bill doesn’t provide an adequate safety net for oilseed producers, that the soybean target price is out of balance with the support provided to other commodities, and must be increased." ASA is proposing that the soybean target price be increased to $6.85 per bushel.

The Subcommittee had asked Ostlie to provide ASA’s views on changes needed in the Commodities Title of the 2007 Farm Bill. During a more than year-long process, ASA collected grower input and developed economic analysis on various farm policies.

"Oilseed producer organizations support the current structure of the 2002 Farm Bill," Ostlie said. "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."

The problem is that the 2002 Farm Bill established a target price for soybeans at a level that does not provide an adequate safety net for soybean producers. The soybean target price of $5.80 per bushel triggers counter-cyclical payments only when season average soybean prices fall below $5.36. The difference reflects the soybean direct payment of $0.44.

"We believe that $5.36 per bushel is inadequate in protecting soybean producer income," Ostlie said.

ASA is proposing to adjust target prices for all program crops to a minimum of 130 percent of the Olympic average of season average prices in 2000-2004. This period was selected because it includes years of both lower prices and higher prices for most commodities. The 130 percent level was selected because it would increase income support for all crops except cotton and rice. Since target prices for these crops under the 2002 Farm Bill are higher than 130 percent, they would not be affected.

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.

"Considering the target prices for other program crops, we consider this to be an adequate and reasonable level of income support for soybean producers," Ostlie said.

Details of ASA’s 2007 Farm Bill proposals, title by title, are available here.

American Soybean Association President Rick Ostlie, a soybean producer from Northwood, N. Dak., testified before the House Agriculture Subcommittee on General Farm Commodities. (ASA photo by Karen Edwards)