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Feb 21, 2013
During this week’s meeting of the United Soybean Board’s Board of Directors in New Orleans, ASA President Danny Murphy spoke to members of the board, detailing progress made by ASA within each of the four strategic objective areas outlined in USB’s new operational structure: meal, oil, freedom to operate and customer focus.
The transcript of the speech is as follows:
Thanks very much, Jim, for the opportunity to present here today, and I’d like to welcome all of you to New Orleans. I hope you eat light and go to bed early. I’m Danny Murphy, ASA’s president, and I live and farm about three hours north of here in Canton, Mississippi. In researching for this update, I re-familiarized myself with USB’s long-range strategic plan as well as with the new checkoff structure launched this past year. Both are progressive steps toward tackling the world’s growing demand for protein, and the longer term need to feed a global population projected to pass 9 billion by 2050. This is a challenge that will require not only our individual best, but the effective coordination and cooperation of the soy industry’s two most significant and active representative groups. Your new structure, which addresses the needs of the meal, oil, freedom to operate and customer focus aspects of our industry is a measuring stick by which ASA can gauge our progress as well. We’ve seen some successes in the past few months that complement each of USB’s four strategic objective areas, all of which combine to help ASA and USB move the needle for soybean farmers together. Within the meal category, the objective is to increase the value of our soybean meal at all points in the value chain. We’ve seen a big victory in that area in the form of the reauthorization and funding of the Market Access Program, which received $200 million in funding, and the Foreign Market Development Cooperator Program, which received $34.5 million. These two programs, both of which were extended along with the rest of the 2008 Farm Bill at the end of the last Congress, are critical to the work done by the U.S. Soybean Export Council to open and expand foreign markets for U.S. soy, which represents the nation’s most significant agricultural export, and the majority of which either leaves our shores in the form of meal for animal feed, or goes to produce livestock domestically, which is then exported. MAP and FMD were among ASA’s top priorities with regard to the farm bill, and as we move forward to write a farm bill in the new Congress, we’ll look to ensure that these programs are protected and their good work is allowed to continue. Just last Friday we were informed by FAS of our FMD and MAP ceilings for FY13, and I’m pleased to inform you that the combined FMD and MAP ceiling is $11.95 million – about the same level as last year. Our soybean market development program was set to receive the largest increase of any cooperator, but USDA withheld about 10% from cooperators for sequester purposes. Biotechnology also plays a large role in the success not only of U.S. soybean meal, but of our oil as well, and the asynchronous approvals of new biotech traits here in the U.S., in the EU and in China pose a significant barrier to expanding this key part of our business. New traits such as herbicide tolerant and high oleic varieties hold the key to a better quality and higher yield, all while using fewer inputs, but are being held up in an approvals process that has ballooned to more than 40 months long. Through our Biotech Working Group and our relationships with USDA’s Animal and Plant Health Inspection Service (APHIS), ASA is working to ensure that the approvals process for new biotech traits becomes as streamlined and efficient as possible. With regard to oil, the goal is to increase the value of our oil to the entire value chain, and we know that the biodiesel industry plays such an integral role in the larger market for our oil. It is estimated that the industry supported more than 31,000 jobs in 2011, generated income of nearly $1.7 billion, and created more than $3 billion in GDP; however the tax credit expired at the beginning of 2012. In addition to the reauthorization of the MAP and FMD programs with the extension of the 2008 Farm Bill in early January, the package passed by Congress to avert the “fiscal cliff” also included an extension of the one-dollar-per-gallon tax credit for biodiesel producers retroactive for 2012 and through the end of 2013 that had been advocated by ASA. The credit, however, is only extended temporarily and ASA will continue its work to see the credit extended beyond the end of this year. Additionally, we’ve seen a significant barrier to the export of soybean oil for biodiesel production in Europe in the form of the EU’s Renewable Energy Directive, which subjects biodiesel made from our soybeans to inaccurate and unscientific environmental benchmarks. As many of you saw this past week, President Obama announced that he would move ahead with negotiations on a transatlantic trade agreement with our partners in the EU and we remain dedicated to ensuring that any trade agreement established between the U.S. and the EU not only takes into account the unique nature of agricultural trade, but also treats U.S. biodiesel accurately and fairly under the RED. USB’s strategic objective area focusing on freedom to operate is where ASA contributed most, as every one of our policy priorities and the things we fight for every day in Washington are aimed at ensuring that our industry and its customers have the freedom and infrastructure to operate. As a farmer I know how many obstacles that are out of our control are standing between us and profitability, and we’re committed to eliminating the ones that we can. Already this year, the extension of the farm bill, while only temporary, provides us with at least some confidence of the programs in place for this crop year. What it doesn’t provide, however, is the long-term certainty that our farmers need to make decisions into the future. The extension is set to expire at the end of September, and we simply don’t have the freedom to operate if we’re looking ahead to the expiration of the next temporary fix. For that reason, we remain dedicated to passing a comprehensive, five-year farm bill or a long-term extension of the current farm bill that protects planting flexibility and strengthens the farm safety net in the form of practical risk management. One of the most significant victories of the last-minute rush at the end of the last Congress was the passage of a provision to provide a more practical solution to the estate tax. The estate tax was set to revert to a $1 million exemption and a 55 percent tax rate at the beginning of 2013. However, as part of the package passed to avert the “fiscal cliff”, the rate was permanently set at 40 percent, with an exemption of $5 million—a much more practical framework for the land-based and capital-intensive nature of farming operations. Again, this is a particularly big win for ASA and for soybean farmers, as the tax is indexed to inflation, meaning the exemption is projected to rise to $7.5 million by 2020. Each of us in this room knows the threat posed by burdensome overregulation, but it’s important to remember—and to remind our public-sector partners at the state and federal levels—that we have a vested interest in cooperating and following non-redundant, science-based regulations founded in practical modern farming practices. That’s why I and other ASA leaders met earlier this month with three different EPA divisions, including the Registration Division, Environmental Fate and Effects Division, and Biological and Economic Analysis Division, to address the need for new herbicide tolerant crop technologies to prevent and manage weed resistance. We conveyed to the directors of each division that our farmers have experience in managing the application of different chemistries and following label requirements, and we need timely action from EPA on these issues because we need these new technologies to prevent and manage weed resistance, and to produce abundant food for the U.S. and abroad. We were encouraged with EPA’s receptiveness to our concerns, and we look forward to more opportunities to provide feedback in the interest of creating smarter regulations, not more regulations. Equally threatening to our freedom to operate is the prospect that very soon we may be prevented from moving our soybeans down the Mississippi River due to reduced channel depth, or a potentially catastrophic failure within our network of locks and dams. Here in New Orleans, you don’t have to look very far to see the vitality and the economic impact of the Mississippi. The city depends on it, and to a certain extent our industry does too. Reductions in draft and channel depth mean fewer soybeans on each barge, higher transportation costs and less money back to farmers. A failure in our dilapidated lock and dam system could be much, much worse. ASA continues to press our leaders in Washington for a commitment to our waterways infrastructure. In his State of the Union, the president committed to addressing the nation’s ports as part of his “Fix-it-First” program, which is a good start, but we reminded him in our response that the rest of our waterways transportation system is in dire need of attention as well. We will continue to remind him and all those in Washington of the desperate need to maintain our ability to move product down this vital commercial artery. Conservation is another area that affects our collective freedom to operate. We as farmers, are stewards of the land, and many of us use reduced-till and no-till practices on our farms to reduce erosion and return vital nutrients to the soil. We also work closely within programs like the Conservation Security Program and Environmental Quality Incentives Program to ensure that our farms remain profitable while making the smallest possible impact on surrounding ecosystems. As we move toward a new farm bill in the 113th Congress, we’ll continue to support maintaining and funding these types of programs that encourage effective conservation practices on working lands. We also thank USB for its support of the Conservation Legacy Awards Program, to be presented next week at Commodity Classic in Florida. Finally, within the customer focus area, we know that the industry remains dedicated to meeting customers’ needs with quality soy products and services to enhance and expand our markets. In addition to our advocacy of market-expanding programs like FMD and MAP in the farm bill, and our encouragement of the growth of industry sectors like biodiesel and animal agriculture, this is an area in which ASA and USB have collaborated very well in the last year. We all know that sustainability has become a hot topic for our industry and countless others, yet so many organizations still struggle to define what it means to be sustainable. Many of our customers have demands placed upon them to source “sustainable” products, yet in the absence of an agreed-upon definition, they are left wanting. Within the last several months, ASA, USB and USSEC have collaborated to launch the Soy Sustainability Assurance Protocol which will provide access to soy grown sustainably as verified by an independent third party. We’re proud to work alongside USB and USSEC on the Protocol. It’s a big step forward for the soy family and one that will help to establish us as a leader in the agriculture industry. We also want to thank USB for its wonderful support of the Soybean Leadership College. We wrapped up the 2013 edition early last month just up the river in Memphis, and as it is every year, the College is a great opportunity to reach up-and-coming leaders in the soy industry and convey to them the importance of approaching their day-to-day work with an eye to the customer’s needs. In addition to the Soybean Leadership College, we thank USB for its continued participation in the ASA Action Partnership, which enables ASA’s continued work on all of the important policy issues we’ve discussed today. We hope the success of that partnership will continue well into the future. We also thank you for your support of Commodity Classic. USB generously supports our What’s New sessions as well as our annual awards banquet. We’re anticipating a record-breaking show this year, and I’m excited to welcome you all to Florida next week. I’d also encourage each of you to join us on Thursday evening for the annual Soy Social and Auction. We’ve got some wonderful items up for bid, and the proceeds go to benefit the Soy Political Action Committee, or SoyPAC, which helps support soy-friendly candidates for office nationwide. A quick update on the status of the pension plan. ASA has been communicating with USB to provide all the additional reports and information requested by USB to verify that all calculations are correct and the funding provided by checkoff entities is compliant with the Act and Order as well as the agreement between ASA and USB for funding the shortfall for IM and GS employees. Since the additional information USB has requested contains confidential information on participant benefits, distributions and so on, ASA and USB have finalized a confidentiality agreement regarding the non-disclosure of this type of confidential information. ASA has already compiled this information, and as soon as USB receives USDA approval on the confidentiality agreement, ASA will provide the additional reports and information that USB has requested. Finally, as I’ve mentioned previously, we are beginning our work with the 113th Congress on crafting a new, comprehensive, five-year farm bill. The House and Senate Agriculture Committees passed bills last year, as did the full Senate, but the House failed to bring the bill to the floor for a vote. In lieu of a new bill, and with the sequester looming, it will be very important for all farmers to be as vocal as possible in opposing significant and disproportionate across-the-board cuts to farm programs. Last week, Senate Budget Committee Chair Patty Murray and Majority Leader Harry Reid announced the Senate Democrats’ plan to avert the sequester in the form of a bill cutting $110 billion, mainly from defense and agriculture programs. This bill included more than $30 billion in cuts to farm programs, all of which would come from the money set aside for direct payments. While we have, in the past, maintained that our farmers would be willing to absorb cuts of direct payments in exchange for a reinforcing of support for risk management and crop insurance, the lopsided cuts coming only from commodity crop programs is not a proportionate reduction. It is unlikely that the bill will pass, but it is also unlikely that an alternative plan advanced by the House will yield any fewer cuts. We will continue to advocate for balanced deficit reduction while protecting crop insurance and planting flexibility, and we will keep all farmers updated as the process moves forward. Thank you again for the invitation to speak, and I look forward to seeing you all at Commodity Classic next week.
Thanks very much, Jim, for the opportunity to present here today, and I’d like to welcome all of you to New Orleans. I hope you eat light and go to bed early. I’m Danny Murphy, ASA’s president, and I live and farm about three hours north of here in Canton, Mississippi.
In researching for this update, I re-familiarized myself with USB’s long-range strategic plan as well as with the new checkoff structure launched this past year. Both are progressive steps toward tackling the world’s growing demand for protein, and the longer term need to feed a global population projected to pass 9 billion by 2050. This is a challenge that will require not only our individual best, but the effective coordination and cooperation of the soy industry’s two most significant and active representative groups.
Your new structure, which addresses the needs of the meal, oil, freedom to operate and customer focus aspects of our industry is a measuring stick by which ASA can gauge our progress as well. We’ve seen some successes in the past few months that complement each of USB’s four strategic objective areas, all of which combine to help ASA and USB move the needle for soybean farmers together.
Within the meal category, the objective is to increase the value of our soybean meal at all points in the value chain. We’ve seen a big victory in that area in the form of the reauthorization and funding of the Market Access Program, which received $200 million in funding, and the Foreign Market Development Cooperator Program, which received $34.5 million.
These two programs, both of which were extended along with the rest of the 2008 Farm Bill at the end of the last Congress, are critical to the work done by the U.S. Soybean Export Council to open and expand foreign markets for U.S. soy, which represents the nation’s most significant agricultural export, and the majority of which either leaves our shores in the form of meal for animal feed, or goes to produce livestock domestically, which is then exported. MAP and FMD were among ASA’s top priorities with regard to the farm bill, and as we move forward to write a farm bill in the new Congress, we’ll look to ensure that these programs are protected and their good work is allowed to continue. Just last Friday we were informed by FAS of our FMD and MAP ceilings for FY13, and I’m pleased to inform you that the combined FMD and MAP ceiling is $11.95 million – about the same level as last year. Our soybean market development program was set to receive the largest increase of any cooperator, but USDA withheld about 10% from cooperators for sequester purposes.
Biotechnology also plays a large role in the success not only of U.S. soybean meal, but of our oil as well, and the asynchronous approvals of new biotech traits here in the U.S., in the EU and in China pose a significant barrier to expanding this key part of our business. New traits such as herbicide tolerant and high oleic varieties hold the key to a better quality and higher yield, all while using fewer inputs, but are being held up in an approvals process that has ballooned to more than 40 months long. Through our Biotech Working Group and our relationships with USDA’s Animal and Plant Health Inspection Service (APHIS), ASA is working to ensure that the approvals process for new biotech traits becomes as streamlined and efficient as possible.
With regard to oil, the goal is to increase the value of our oil to the entire value chain, and we know that the biodiesel industry plays such an integral role in the larger market for our oil. It is estimated that the industry supported more than 31,000 jobs in 2011, generated income of nearly $1.7 billion, and created more than $3 billion in GDP; however the tax credit expired at the beginning of 2012. In addition to the reauthorization of the MAP and FMD programs with the extension of the 2008 Farm Bill in early January, the package passed by Congress to avert the “fiscal cliff” also included an extension of the one-dollar-per-gallon tax credit for biodiesel producers retroactive for 2012 and through the end of 2013 that had been advocated by ASA. The credit, however, is only extended temporarily and ASA will continue its work to see the credit extended beyond the end of this year.
Additionally, we’ve seen a significant barrier to the export of soybean oil for biodiesel production in Europe in the form of the EU’s Renewable Energy Directive, which subjects biodiesel made from our soybeans to inaccurate and unscientific environmental benchmarks. As many of you saw this past week, President Obama announced that he would move ahead with negotiations on a transatlantic trade agreement with our partners in the EU and we remain dedicated to ensuring that any trade agreement established between the U.S. and the EU not only takes into account the unique nature of agricultural trade, but also treats U.S. biodiesel accurately and fairly under the RED.
USB’s strategic objective area focusing on freedom to operate is where ASA contributed most, as every one of our policy priorities and the things we fight for every day in Washington are aimed at ensuring that our industry and its customers have the freedom and infrastructure to operate. As a farmer I know how many obstacles that are out of our control are standing between us and profitability, and we’re committed to eliminating the ones that we can.
Already this year, the extension of the farm bill, while only temporary, provides us with at least some confidence of the programs in place for this crop year. What it doesn’t provide, however, is the long-term certainty that our farmers need to make decisions into the future. The extension is set to expire at the end of September, and we simply don’t have the freedom to operate if we’re looking ahead to the expiration of the next temporary fix. For that reason, we remain dedicated to passing a comprehensive, five-year farm bill or a long-term extension of the current farm bill that protects planting flexibility and strengthens the farm safety net in the form of practical risk management.
One of the most significant victories of the last-minute rush at the end of the last Congress was the passage of a provision to provide a more practical solution to the estate tax. The estate tax was set to revert to a $1 million exemption and a 55 percent tax rate at the beginning of 2013. However, as part of the package passed to avert the “fiscal cliff”, the rate was permanently set at 40 percent, with an exemption of $5 million—a much more practical framework for the land-based and capital-intensive nature of farming operations. Again, this is a particularly big win for ASA and for soybean farmers, as the tax is indexed to inflation, meaning the exemption is projected to rise to $7.5 million by 2020.
Each of us in this room knows the threat posed by burdensome overregulation, but it’s important to remember—and to remind our public-sector partners at the state and federal levels—that we have a vested interest in cooperating and following non-redundant, science-based regulations founded in practical modern farming practices.
That’s why I and other ASA leaders met earlier this month with three different EPA divisions, including the Registration Division, Environmental Fate and Effects Division, and Biological and Economic Analysis Division, to address the need for new herbicide tolerant crop technologies to prevent and manage weed resistance. We conveyed to the directors of each division that our farmers have experience in managing the application of different chemistries and following label requirements, and we need timely action from EPA on these issues because we need these new technologies to prevent and manage weed resistance, and to produce abundant food for the U.S. and abroad. We were encouraged with EPA’s receptiveness to our concerns, and we look forward to more opportunities to provide feedback in the interest of creating smarter regulations, not more regulations.
Equally threatening to our freedom to operate is the prospect that very soon we may be prevented from moving our soybeans down the Mississippi River due to reduced channel depth, or a potentially catastrophic failure within our network of locks and dams. Here in New Orleans, you don’t have to look very far to see the vitality and the economic impact of the Mississippi. The city depends on it, and to a certain extent our industry does too. Reductions in draft and channel depth mean fewer soybeans on each barge, higher transportation costs and less money back to farmers. A failure in our dilapidated lock and dam system could be much, much worse.
ASA continues to press our leaders in Washington for a commitment to our waterways infrastructure. In his State of the Union, the president committed to addressing the nation’s ports as part of his “Fix-it-First” program, which is a good start, but we reminded him in our response that the rest of our waterways transportation system is in dire need of attention as well. We will continue to remind him and all those in Washington of the desperate need to maintain our ability to move product down this vital commercial artery.
Conservation is another area that affects our collective freedom to operate. We as farmers, are stewards of the land, and many of us use reduced-till and no-till practices on our farms to reduce erosion and return vital nutrients to the soil. We also work closely within programs like the Conservation Security Program and Environmental Quality Incentives Program to ensure that our farms remain profitable while making the smallest possible impact on surrounding ecosystems. As we move toward a new farm bill in the 113th Congress, we’ll continue to support maintaining and funding these types of programs that encourage effective conservation practices on working lands.
We also thank USB for its support of the Conservation Legacy Awards Program, to be presented next week at Commodity Classic in Florida.
Finally, within the customer focus area, we know that the industry remains dedicated to meeting customers’ needs with quality soy products and services to enhance and expand our markets. In addition to our advocacy of market-expanding programs like FMD and MAP in the farm bill, and our encouragement of the growth of industry sectors like biodiesel and animal agriculture, this is an area in which ASA and USB have collaborated very well in the last year. We all know that sustainability has become a hot topic for our industry and countless others, yet so many organizations still struggle to define what it means to be sustainable. Many of our customers have demands placed upon them to source “sustainable” products, yet in the absence of an agreed-upon definition, they are left wanting. Within the last several months, ASA, USB and USSEC have collaborated to launch the Soy Sustainability Assurance Protocol which will provide access to soy grown sustainably as verified by an independent third party. We’re proud to work alongside USB and USSEC on the Protocol. It’s a big step forward for the soy family and one that will help to establish us as a leader in the agriculture industry.
We also want to thank USB for its wonderful support of the Soybean Leadership College. We wrapped up the 2013 edition early last month just up the river in Memphis, and as it is every year, the College is a great opportunity to reach up-and-coming leaders in the soy industry and convey to them the importance of approaching their day-to-day work with an eye to the customer’s needs.
In addition to the Soybean Leadership College, we thank USB for its continued participation in the ASA Action Partnership, which enables ASA’s continued work on all of the important policy issues we’ve discussed today. We hope the success of that partnership will continue well into the future.
We also thank you for your support of Commodity Classic. USB generously supports our What’s New sessions as well as our annual awards banquet. We’re anticipating a record-breaking show this year, and I’m excited to welcome you all to Florida next week. I’d also encourage each of you to join us on Thursday evening for the annual Soy Social and Auction. We’ve got some wonderful items up for bid, and the proceeds go to benefit the Soy Political Action Committee, or SoyPAC, which helps support soy-friendly candidates for office nationwide.
A quick update on the status of the pension plan. ASA has been communicating with USB to provide all the additional reports and information requested by USB to verify that all calculations are correct and the funding provided by checkoff entities is compliant with the Act and Order as well as the agreement between ASA and USB for funding the shortfall for IM and GS employees. Since the additional information USB has requested contains confidential information on participant benefits, distributions and so on, ASA and USB have finalized a confidentiality agreement regarding the non-disclosure of this type of confidential information. ASA has already compiled this information, and as soon as USB receives USDA approval on the confidentiality agreement, ASA will provide the additional reports and information that USB has requested.
Finally, as I’ve mentioned previously, we are beginning our work with the 113th Congress on crafting a new, comprehensive, five-year farm bill. The House and Senate Agriculture Committees passed bills last year, as did the full Senate, but the House failed to bring the bill to the floor for a vote. In lieu of a new bill, and with the sequester looming, it will be very important for all farmers to be as vocal as possible in opposing significant and disproportionate across-the-board cuts to farm programs.
Last week, Senate Budget Committee Chair Patty Murray and Majority Leader Harry Reid announced the Senate Democrats’ plan to avert the sequester in the form of a bill cutting $110 billion, mainly from defense and agriculture programs. This bill included more than $30 billion in cuts to farm programs, all of which would come from the money set aside for direct payments. While we have, in the past, maintained that our farmers would be willing to absorb cuts of direct payments in exchange for a reinforcing of support for risk management and crop insurance, the lopsided cuts coming only from commodity crop programs is not a proportionate reduction. It is unlikely that the bill will pass, but it is also unlikely that an alternative plan advanced by the House will yield any fewer cuts.
We will continue to advocate for balanced deficit reduction while protecting crop insurance and planting flexibility, and we will keep all farmers updated as the process moves forward.
Thank you again for the invitation to speak, and I look forward to seeing you all at Commodity Classic next week.
