Dear Editor: We recently read with some concern the article "Donation program corporate welfare?" in Delta Farm Press regarding ASA's (American Soybean Association) soy food aid initiative, and we would like to share with you why our organizations support this program.
In the article [Oct. 20, 2000, pg. 4] it was suggested that the $1 billion that would be used to purchase soybeans, soybean meal, and soybean oil from the marketplace for donation or sale overseas might be better spent if it was just given to farmers outright. However, that suggestion ignores the numerous actions ASA and state soybean associations have successfully taken to provide direct income support to producers to help them cope with historically low prices. That suggestion also means that soybean farmers and ASA should abandon work on demand-building programs that will allow soybean farmers to earn more from the marketplace. We couldn't disagree more.
As a policy advocate for soybean farmers, ASA secured a 34-cent per bushel rate increase in the soybean marketing loan from $4.92 per bushel to $5.26 per bushel in the 1996 farm bill. This action alone has put over $2.6 billion in soybean farmers pockets over the past three years in the form of increased LDP payments and marketing loan gains. ASA also worked directly with Mississippi Senator Thad Cochran to get the special Oilseed Payment Program passed last year, which authorized a payment of about 14 cents per bushel to soybean farmers last year and again this year. ASA's success to amend legislation to include biodiesel made from soybean oil as an alternative fuel is estimated to also add another 11 cents per bushel to the price farmers are paid for their soybeans.
The value of just these three ASA legislative victories to a producer of 1,000 acres of soybeans yielding 30 bushels per acre was worth 59 cents per bushel or $17,700 total last year alone. ASA also championed legislation that doubled ANITA payments to producers, and doubled the payment limit from $75,000 to $150,000 on loan deficiency payments and marketing loan gains so producers had an opportunity to get maximum benefit from these programs. We believe these are very real and tangible and direct benefits that soybean producers probably would not have if not for the efforts of the ASA and its state affiliates.
ASA proposed the soy food aid initiative as a way to address the oversupply of soybeans, which is one of the underlying problems that is causing the current low prices. Record or near-record crop production during the last few years continues to add to the supply, and in spite of the fact that U.S. soybean exports were at record levels last year, there are still too many soybeans. Additional government payments directly to farmers will do nothing to remove these surplus beans from the market.
Another important aspect of the soy food aid initiative is that while it will help improve prices paid to farmers, it could also result in a net savings for the government. According to elasticity models developed by the Food and Agricultural Policy Research Institute (FAPRI) that is operated by Iowa State University and the University of Missouri-Columbia, and USDA's own estimates of projected LDP and marketing loan gain payments to producers, a comprehensive soy food aid program could boost soybean prices by 47 cents per bushel and therefore reduce U.S. farm program outlays.
The net result would be a $427 million savings for U.S. taxpayers. Most of the farmers I know would prefer to get a better price from the market rather than a bigger check from the government.
Beyond the immediate benefits, soy food aid will help maintain and reconstruct markets for soybeans and soy products that were either diminished or lost as a result of the global financial crisis that took place a couple of years ago, and it will also help develop new long-term markets for soybeans and soy products, including newly developed soy protein isolates and concentrates. It also provides the United States with a unique opportunity to assist the most needy countries in the world with food aid.
ASA and state soybean associations in the Delta agree that producers need direct income assistance during these times of historically low commodity prices, and we have been successful in delivering some much needed assistance. While working to deliver immediate assistance, we can't ignore the important work that will reduce burdensome stock levels and build long-term demand for agricultural products around the globe. The soy food aid initiative is designed to do just that. As such, the majority of soybean farmers believe the soy food aid initiative is a good idea.