In a move that means nearly $1 billion to U.S. soybean producers, Secretary of Agriculture Dan Glickman has set the loan rate for 2001 crop soybeans at $5.26 per bushel.
The American Soybean Association (ASA) and its 28,000 producer members have been working in Washington for the last five months to urge Secretary Glickman to maintain the soybean loan rate at $5.26 to help farmers and rural communities survive a continuing cycle of historically low commodity prices.
"We greatly appreciate that Secretary Glickman used his discretionary authority to maintain the loan rate for next year's soybean crop at $5.26," said ASA President Tony Anderson, Mount Sterling, OH. "This decision will have a positive impact on thousands of soybean producers, and there will be a beneficial economic effect that is felt throughout rural America."
Based on estimates by the U.S. Department of Agriculture (USDA) for 2001 soybean production of 2.8 billion bushels, ASA calculated that soybean producers would have lost $960 million, if the soybean loan rate had been decreased 34 cents per bushel.
"If the soybean loan rate had been reduced to the statutory floor of $4.92 per bushel, it would have devastated soybean producer income," Anderson said. "With only limited support provided under other programs, a 34-cent drop would shred the income safety net the loan program currently provides to U.S. soybean farmers."
Based on the soybean loan rate formula under the Federal Agriculture Improvement and Reform (FAIR) Act of 1996, the loan rate could have dropped to $4.92 for the 2001 crop. The formula uses a five-year "Olympic" average price, which disregards the highest and lowest years. The floor is set at $4.92 and the cap is set at $5.26. The prevailing rate for crop years 1997, 1998, 1999 and 2000 was $5.26.
"The loan rate is a vital income safety net for U.S. soybean farmers," Anderson said. "By using his discretionary authority, Secretary Glickman has effectively put $960 million back into the economies of soybean production states."