Producer-leaders of the American Soybean Association (ASA), the American Farm Bureau Federation (AFBF), the National Corn Growers Association (NCGA) and the United Soybean Board (USB) today released an independent study that provides steps to help improve the competitiveness of U.S. soybeans, corn and other grains in the Southeast United States. The study, "Southeast U.S. Feedstuff Imports: Causal Factors and Recommended Response," was commissioned by ASA, AFBF, NCGA and USB to determine the main factors behind recent and projected imports of feedstuffs, what they mean for the future of U.S. agriculture, and what producers can do to improve their competitiveness in the Southeast U.S. market.

According to the study, hog and poultry production has grown dramatically in the Southeast over the past decade, while the region's production of soybeans and grains has stagnated. This has resulted in a widening gap between demand for poultry and livestock feed and what is locally available, prompting some livestock producers to import feedstuffs from foreign sources.

"Keeping U.S. soybean producers competitive is the top priority of the soybean checkoff," said USB Chairman David Durham, a producer from Hardin, Mo. "This report recommends that we focus our efforts on increasing feed ingredient production in the Southeast, reducing the cost of moving Midwest feedstuffs to the region, and pursuing relevant policy changes in Brazil and Argentina."

The study indicates that production of feed grains and soybeans in the Southeast can be boosted through higher plantings, higher yields, or both. To achieve higher plantings, either more land must be available or these crops must improve their attractiveness to producers relative to other commodities. The study also suggested more land could be made available through the expiration of Conservation Reserve Program (CRP) contracts in the region.

Reducing transportation costs will also help improve U.S. competitiveness in the region. The study found situations where particular companies are not being well served in the Southeast by the railroads. It concluded that the main path to lower rail transportation costs is greater utilization of unit trains of 50 or 75 cars or more. This will require additional investment in unloading and storage facilities, and in Cornbelt loadout capability, but freight savings of several dollars per ton are achievable in many cases.

"This study points out we have a number of challenges we must meet if we are to remain competitive in selected areas in our own market, including an improved transportation system," said AFBF President Bob Stallman. "We need to look at all impediments to our competitiveness, such as increased regulatory costs, and address them. This study will help us in that task."

Concerning marine shipments, the study suggested an exemption from the Jones Act for bulk feed ingredients could be helpful, and recommended that producers explore a negotiated solution with the affected maritime groups. The Jones Act requires all water transportation of goods between U.S. ports be conducted on U.S. flag vessels made in the United States and manned by U.S. seamen. This makes their cost higher than foreign flag vessels.

"This study gives corn growers a much better understanding of the situation in the Southeast and the role the Jones Act plays in moving agricultural commodities," said NCGA President Fred Yoder. "It also confirms the importance of maintaining and improving our transportation system. NCGA has worked hard on this issue, especially by supporting the modernization of our lock and dam system. We will continue this effort and explore other ways to improve our entire system."

The major import threat from South America is soybean meal, the study said. U.S. farmers need to encourage the U.S. government to pressure Argentina to levy the same export tax rate on both soybeans and soybean meal. Argentina's differential export tax structure for the soybean complex clearly subsidizes crushing margins and has the effect of depressing their soybean meal export prices. The study also recommends the United States pressure government regulators in both Brazil and Argentina to enforce the relevant intellectual property laws to prevent the piracy of Roundup Ready® soybean seed and other biotech-enhanced crop seed, which is giving South American growers a cost advantage over U.S. producers.

ASA President Dwain Ford, a producer from Kinmundy, Illinois, said, "The study confirms that Brazil and Argentina's intellectual property violations for Roundup Ready soybean seed are hurting U.S. farmers. We are paying $9.30 to $15.50 per acre to the seed company for technology royalties that our South American competitors evade. This puts U.S. producers at a big disadvantage, and ASA is already working to put an end to this piracy of intellectual properties."

The commodity groups intend to explore all possible opportunities to better serve U.S. livestock customers in the Southeast.