Soy Program Designed to Increase Prices

September 27, 2000

Oilseed producers and processors believe a soy food aid program presented to USDA could increase soybean prices 47 cents per bushel and reduce federal farm program costs. Program savings could total $427 million. The initiative could be implemented immediately administratively with no new congressional authorization.

The American Soybean Association and the National Oilseed Processors Association presented the proposal to Agriculture Secretary Dan Glickman. More soy could be included in future food aid shipments, the groups say, that are regulated by USDA.

Soybeans this year are supported by a $5.26 per bushel loan rate, and the crop is expected to total 2.9 million bushels. USDA projects about $2.5 billion in soybean loan deficiency payments and soybean marketing loan gain payments, because prices are well below the loan rate.

The total cost for using the recommended 170 million bushels of surplus soybeans, soybean meal and soybean oil for food aid is slightly more than $873 million including freight, according to aSA and NOPA. At that level of use, USDA would support an increased market price for soybeans that would lower soybean loan program payments by $1.3 billion, they add.

Subtracting the cost of the soy products and freight from the soybean loan program savings, ASA projects that its soy food aid program would result in a net benefit not only for farmers and needy people worldwide but also would result in a net savings of $427 million for U.S. taxpayers.