Soybean growers would prefer that adjusted loan rates and target prices anchor the new farm bill, but are willing to consider a "revenue protection" alternative if the current crop support system cannot be rebalanced, American Soybean Association (ASA) leaders said on Feb. 12.
If Congress cannot find the money to rebalance crop support rates, "an alternative safety-net structure based on revenue should be considered,” said ASA president Rick Ostlie in a teleconference with reporters.
Under an ASA farm bill proposal made public on Friday, corn, wheat, soybeans, barley and oats would have higher loan rates and target prices. Cotton, rice and sorghum would stay at current levels.
Ostlie said the ASA plan would cost an estimated $890 million more per year than projected costs for the 2007 farm bill. However, he said it would be less expensive than the revenue protection plan proposed by the National Corn Growers Association.
The ASA proposal would base loan rates and target prices in the 2007 farm bill on an Olympic average (throwing out the low and high years) of 2000-2004 season average prices. Marketing loan rates would be 95% of that average and target prices would be 130%.
“With our proposal, producers will make their planting decisions based on the market and not the farm program payments,” Ostlie said. “In the past when markets were low farm program payments were better for some crops than others and that actually shifted acres … We feel that the market should determine the planting decisions farmers make and not the farm program.
Bart Ruth, head of the ASA task force on farm policy, and Ostlie described revenue protection as an interesting concept. But they said there are many questions over how to structure a revenue protection plan, how to control its costs and whether it would meet World Trade Organization limits on market distorting crop subsidies.
"I'm sure it will be the main topic of conversation" at a convention of corn, soybean and wheat growers in early March, said Ruth.
"We've had $4 and $5 (a bushel) corn before and we cycle back to the $2 range," said Ruth. "We need a safety net."
Editor’s note: Richard Brock, The Corn And Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.
To see more market perspectives, visit Brock's Web site at www.brockreport.com.