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Apr 04, 2001
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:
“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.”