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Optimism Reigns at Commodity Classic

The nation's corn and soybean trade groups may have held separate member meetings yesterday morning, but they sounded like they were singing from the same hymn sheet after conducting separate press conferences yesterday afternoon.

Leaders of the National Corn Growers Association and American Soybean Association say they will push Congressional leaders to pass free trade agreements, improve the farm bill safety net, and commit to upgrading antiquated locks and dams on the Mississippi and Illinois Rivers.

The announcements came on the first day of the 2011 Commodity Classic in Tampa, Fl., where a record crowd of 4,743 gathered to talk optimistically about policy and profits amid a memorable bull market.

Alan Kemper, Indiana farmer and president of ASA, noted that 60% of U.S. soybeans were exported in the last marketing year, up from 55% the year before. China, the top U.S. soybean customer, now buys one of every four rows of U.S. grown beans. Even so, ASA plans to press Congress to maintain export programs, such as the $200 million authorized for the Market Access Program in the 2008 Farm Bill.

"For every billion of exports, 8,000 jobs are created and a lot of those are in rural areas," Kemper said.

Both Kemper and NCGA president Bart Schott, Kulm, N.D., say agriculture would benefit if Congress passed free trade agreements with Colombia, Panama and South Korea. Kemper believes all three will eventually get passed, but congressional debate so far has not fallen along party lines. 

"We need quick action on these three agreements, which have been languishing in Washington for years," says Schott. "These will help our economy and create jobs."

Both organizations say they have an uphill battle educating Congressmen and staffers on agriculture. "We have an awful lot of new faces on the hill and to find someone who really understands Ag is a real question mark," says Schott. "We need to launch a real serious education campaign."

Both groups note the need to make risk management in farm programs more effective. "In all our meetings the discussion so far has been, we need to improve the safety net," says Rob Joslin, ASA Chairman from Sidney, Ohio.

SURE, the farm bill's Supplemental Revenue Assurance program, did provide for losses that were not covered by crop insurance. However, SURE did not provide adequate disaster coverage in regions of the country where crop insurance is at low levels, says Joslin.

ASA does not support opening the 2008 farm bill for discussion. Nor does it support crop insurance reform in the next farm bill, he added. ASA will push to improve ACRE (Average Crop Revenue Election) to include prices at the county or crop district reporting level, to make the program more accessible and increase risk management opportunities for farmers.

"The takeaway point is, our younger generation needs real risk management tools, like crop insurance, so they can remain sustainable through the centuries," adds Kemper.

Commodity group leaders acknowledged they would have an uphill battle getting Congress to commit funds to improve the aging lock and dam systems on Mississippi and Illinois Rivers. Those waters allow grain producers to move corn and beans down river vastly more efficient than truck or rail. NCGA made a proposal to increase the diesel fuel surcharge to pay for some of the upgrades, but the proposal failed.

"We are continually fighting the issue of infrastructure needs," says Darrin Ihnen, Hurley, S.D. "Our economy is hanging in there but agriculture is humming, so why not do something that creates jobs and invest dollars in our country? We know transportation improvements will return dividends and keep us competitive in the world. That's the kind of message we need to keep hammering."

Separate battles

The two groups did have singular issues of concern, though both relate to biofuels. ASA first vice president Steve Wellman said ASA was negotiating with the European Union over their Renewable Energy Directive. The EU uses Brazilian production, processing, and transportation data to determine that soy-based biodiesel’s greenhouse gas (GHG) emissions reduction compared to petroleum diesel is only 31%, short of the 35% reduction required to be eligible for EU tax credits and usage mandates. Nearly all of the soybean oil processed from U.S. soybeans in the EU is used in biodiesel production; ineligibility jeopardizes $1 billion in annual sales of soybeans to EU markets. ASA's own data show soy biodiesel reduction rate at 52%, well above the 35% cut-off.

Schott said protecting the ethanol industry would be the number one goal for NCGA, but the news is mostly all positive – despite high corn prices that erode ethanol profitability.

"We have a great reason to be optimistic as we look forward to priorities this year," he said. "We have E15 (ethanol blended at 15% with gasoline) approved for 60% of cars and light trucks on the road today. We've also secured an extension of a key ethanol tax incentive. And, we're pleased with our NASCAR ethanol project, which will help educate 70 million NASCAR fans about the benefits of renewable ethanol."