Des Moines Register
02-13-07
Soy producers call for increase in subsidy rate
By PHILIP BRASHER
REGISTER WASHINGTON BUREAU
Washington, D.C. - The nation's soybean growers want to boost a government
subsidy rate despite the recent increases in commodity prices and the fast
growth in the soy-based biodiesel industry.
The American Soybean Association is proposing that Congress increase the
rate, or target price, that triggers "countercyclical" payments that are designed to
protect them from a drop in market prices.
Ron Heck, a producer from Perry and a former president of the soybean group,
said Monday that farmers are looking to protect themselves in case of a market
downturn.
Farmers need "a safety net to kick in, particularly when our trading partners do
something that interferes with our soybean markets," he said.
The current subsidy rates are out of balance with rates for corn and other crops,
according to the group.
Congress is revising farm programs this year, and groups representing
commodities, including corn, soybeans, cotton and vegetables, are vying to make
sure their interests are protected.
The soybean growers' plan estimated the proposal would increase commodity
subsidies by 32 percent during the next six years, with most of that money going
to soybean growers.
But it's possible that soybean farmers won't receive any more in subsidies even if
Congress were to approve the group's idea, said Bruce Babcock, an Iowa State
University economist who has analyzed the soybean growers' plan.
Soybeans are selling at prices well above the subsidy rate, and the futures
market suggests they will remain relatively high, Babcock said.
Soybeans for March delivery were selling for $7.45 per bushel at the Chicago
Board of Trade on Monday afternoon, well above the proposed target price of
$6.85 per bushel. The March 2008 futures price was $8.02 a bushel.
The soybean growers oppose a plan by the Bush administration to increase the
fixed annual payments that farmers receive, instead of increasing the subsidies
that are based on fluctuations of market prices. The growers argue that fixed
payments often wind up going to landowners rather than farmers, because the
money is built into rental rates.
The soybean group also wants Congress to revive a program that would provide
subsidies for biodiesel production.
The organization says the subsidy is needed to encourage biodiesel makers to
use U.S. soybeans rather than imported vegetable oils.
That subsidy would come on top of a $1-a-gallon tax credit for which all biodiesel
is available.