ASA Statement regarding the National Soybean Checkoff

	Statement of the American Soybean Association regarding Checkoff Programs Operation & Oversight before the United States Department of Agriculture Research & Promotion Programs Joint Task Force Washington, D.C., March 9, 1999

The American Soybean Association appreciates the opportunity to present a statement regarding checkoff program operation and oversight. Checkoff programs are a vital means for farmers to invest their own money in strengthening market demand, improving productivity, and increasing profitability. The success of today’s commodity checkoff programs lays in the direction and control granted producers for establishing programs that meet the needs of a dynamic industry.

The Department of Agriculture’s role in providing oversight and guidance establishes a standard of accountability that has helped improve the efficiency and effectiveness of all commodity checkoff programs. For this reason, the American Soybean Association welcomes the review of this Task Force. While the discussion topics cited by the Task Force include nomination procedures, continuance referendum procedures, and financial management issues, ASA’s testimony focuses on the accountability built into the soybean checkoff—how producer input drives the development and implementation of checkoff funded programs. Equally important, our testimony will convey our strong belief in the effectiveness of the soybean checkoff in meeting the soybean industry’s vision for improved profitability.

On behalf of ASA’s members who contribute to the soybean checkoff, we would urge this Task Force to incorporate several key principles into its review. First, the Task Force must understand the heritage of our national checkoff programs as programs created and managed by farmers, for farmers. Second, checkoff programs have an identified history of effectively building consumer demand and improving industry profitability. And finally, farmers have demanded and put in place checkoff program management structures that provide for appropriate input, review and accountability. Additional information and examples will help demonstrate each of these three points.

The American Soybean Association is a national, nonprofit, trade organization with 32,000 members in twenty-six affiliated state soybean associations. Our programs and policies are developed with input and oversight from nearly 140 producers who serve as ASA’s Voting Delegates and the 45 producers who serve on ASA’s Board of Directors. As the trade association for the soybean industry, ASA represents soybean farmer interests in Washington, D.C. For fifty years, however, ASA has also served as an international marketing organization for the soybean industry. From 1956, when ASA opened our first international trade office in Japan as a market development cooperator with the USDA Foreign Agricultural Service (FAS) to today when ASA serves both as an FAS cooperator and as the international marketing contractor for the United Soybean Board (USB), ASA’s legacy has been continuously expanding exports of U.S. soybeans and soybean products.

Soybean checkoffs, on a state-by-state basis, were originally developed in 1968. In 1989, ASA’s Voting Delegates adopted a resolution calling for passage of a national soybean checkoff in the 1990 Farm Bill. ASA worked directly with Congress to develop the format and structure of today’s soybean checkoff program. Our organization’s goal was to develop a program that helped improve soybean industry profitability and was responsive to soybean farmers’ needs. Nine years after passage of the checkoff, ASA is proud of the work and accomplishments of the soybean checkoff and the work of the USB and the Qualified State Soybean Boards (QSSBs) that administer our checkoff funds.

The American Soybean Association maintains a diverse relationship with the United Soybean Board. While our organizations are independent, both under the law and in fact, soybean producers also recognize that the ASA and USB are interdependent partners in increasing soybean industry profitability. Our producer leaders and staff work closely with their USB counterparts to ensure effective coordination and implementation of our respective soybean industry programs. As stated, ASA also serves as a USB contractor providing international marketing services through our network of fourteen international offices and our St. Louis-based trade staff. This contracting relationship also extends, in a more limited manner, to ASA’s relationship with the 29 Qualified State Soybean Boards that provide additional checkoff support for international marketing programs implemented by ASA. Finally, ASA also serves as a USDA market development cooperator—allowing ASA to leverage soybean checkoff funds and USDA foreign market development funds to increase U.S. soybean exports.

Within all phases of ASA’s relationship with USB, producer input, thorough oversight, and professional accountability are the mainstays. As a soybean industry partner, ASA’s producer leaders have evaluated, endorsed, and actively supported the soybean checkoff program through resolutions, Congressional testimony, and producer communications. ASA’s Delegates affirmed their continuing support for the soybean checkoff last month by approving the following resolutions:

As a contractor, ASA’s international programs are reviewed and evaluated by USB’s producer leaders and the U.S. Department of Agriculture. The USB International Marketing Committee guides the development and implementation of ASA’s checkoff funded international marketing efforts. This oversight ensures program accountability. Lastly, as a USDA cooperator, USDA’s oversight of ASA’s international trade program activities provides another review of how ASA has leveraged producer checkoff funds with the Foreign Market Development funds ASA receives. The collective oversight and input inherent within this structure ensure that checkoff funds serve all producers in an ethical, efficient, and effective manner.

The American Soybean Association and the United Soybean Board share the common vision of increasing soybean farmer profitability. At a time when agricultural prices for all major commodities are striking twenty-thirty year lows, some may question our effectiveness in achieving this vision. Profitability is not merely a factor of price, however, but of market demand and cost of production as well. The global economic collapse suffered by our Asian trading partners, coupled with the devaluation of the Brazilian Real and a corresponding increase in Brazilian production and exports, have pushed soybean prices well below the soybean marketing loan rate. A look at other factors, however, demonstrates the checkoff program has been effective in helping maintain soybean industry profitability.

The USDA forecasts that farmers will plant 73.5 million acres of soybeans in 1999. During the first year of the checkoff, only 59 million acres were planted. Furthermore, USB reports a 20% increase in yields over the past ten years. Increased yields—partially driven by checkoff funded research, have helped lower farm production costs. Increased demand—particularly from overseas export demand stimulated with checkoff funds—has provided for the consumption of 10 million additional acres of soybeans. The growth in the U.S. soybean industry since passage of the checkoff has been unparalleled. While the variables involved in global agricultural economics make it difficult to isolate the effect of the checkoff, the growth in demand and the decrease in production costs are solid figures that demonstrate continuous movement toward greater soybean industry profitability.

One example of where our market demand growth has come from may help demonstrate the effectiveness of the soybean industry checkoff. ASA opened an international trade office in Beijing in 1982. State checkoff funds, contributed by producers in various soybean producing states, were used to fund the opening of this office. In 1989, ASA began promoting feed-based aquaculture in China. At that time, the use of soybean meal in aquaculture feeds was practically non-existent. The rapid growth of the aquaculture industry, combined with the official adoption and promotion of ASA’s technologies by the Ministry of Agriculture, has led to the use of over four million metric tons of soybean meal in aqua feeds in 1997. With the continued adoption of ASA’s technologies, particularly the emphasis on protein-based diets developed by ASA, SBM consumption in aqua feeds is forecast to double in the next decade. ASA has used checkoff funds to conduct seminars and workshops, develop practical technical literature, and conduct on-farm feeding demonstrations throughout China as the primary methods for reaching target audiences.

United States soybean exports to China have increased dramatically since the advent of the soybean checkoff. For example, U.S. soybean exports to China in 1994 were 34,000 metric tons. By 1998, government estimates project the U.S. will export 1.75 million metric tons to China. Soybean meal exports went from zero in 1994 to 869,000 metric tons in 1998; soybean oil exports went from 137,000 metric tons to a projected level of 395,000 metric tons. This dramatic growth has made China one of the world’s largest markets for U.S. soybeans.

Since 1994, USB and State Checkoff Boards have contributed $3.163 million in support of ASA’s aquaculture program in China. Today, 78% of ASA/China's funding comes from U.S. soybean farmers’ checkoff dollars. The ASA is leveraging this checkoff investment with financial assistance from the Chinese Ministry of Agriculture that invests over $12 million in promoting ASA’s feed-based aquaculture technologies on a national scale. The dramatic growth in U.S. soybean exports to China, stemming from the aquaculture project and other ASA checkoff funded initiatives, demonstrates that the soybean checkoff is effective in expanding international market demand and helping producers maintain farm profitability.

The Chinese example also demonstrates another critical point regarding the value of checkoff programs. ASA’s, and subsequently USB’s, investment in a soybean trade promotion office in Beijing is a long-term investment that is slowly beginning to pay big dividends. A private, for-profit corporation, focusing only on quarterly returns to shareholders, would be extremely reluctant to make the type and level of investment soybean producers have made to open the door to the Chinese market. Producers, investing their own money in the future of their industry, are already reaping the rewards of their early and steadfast commitment toward developing the Chinese soybean and soy meal export markets. Understanding this critical role that checkoffs play is critical to evaluating and appreciating the importance of these farmer-funded, farmer driven programs.

As the trade association that first supported, developed and lobbied for the soybean checkoff program, ASA worked directly with Congress to pass a workable soybean promotion and research fund. While refinement of the soybean checkoff continues today, ASA supports the original design and mechanics of the soybean checkoff. The resolutions passed by ASA’s Delegates effectively assert the maxim—if it ain’t broke, don’t fix it. ASA members are proud of the soybean checkoff and the checkoff’s history of accomplishments. Accordingly, we support the comments of the United Soybean Board and urge the Department not to create unnecessary or burdensome guidelines or procedures that will impede the effectiveness of the checkoff. While ASA is not involved directly in the administration of the Checkoff, there are two issues—checkoff referendum and financial management—we would like to address.

The Soybean Promotion, Research & Consumer Information Act is unique in mandating a periodic producer review of the checkoff. A mandated five year poll of producers that determines the need for a referendum on the checkoff was accepted by ASA during the 1990 Farm Bill debate. This mechanism provides an excellent barometer of soybean producer satisfaction with checkoff investments and results, without the cost of a full-blown referendum. ASA would echo USB’s comments regarding the lack of need for, high cost of, and detrimental effects of a mandated referendum process.

The American Soybean Association, as a USB contractor, maintains strict financial controls and oversight that guarantee the proper investment of soybean checkoff dollars. Our international trade staff in St. Louis and our international marketing offices follow delineated accounting procedures that meet USB and USDA requirements. ASA works closely with a USB consultant who is familiar with USDA checkoff program regulations to ensure that ASA’s checkoff program invoices comply with ASA’s USB contract. ASA also works closely with the USB’s auditors who verify that ASA’s use of checkoff funds complies with our USB management agreement. And finally, ASA’s own auditors perform a complete annual financial audit of reviewing all of ASA’s funding sources. ASA’s auditors evaluate and affirm our financial internal controls and gauge our compliance with Generally Accepted Accounting Principle (GAAP). The essential point is that the layers of separation and review within our structure provide thorough oversight regarding the use of checkoff funds.

On behalf of the American Soybean Association, I would like to thank the Task Force for this opportunity to make a statement regarding the soybean industry checkoff. Our checkoff is effective in helping producers maintain profitability and expand world soybean markets. Our checkoff is also accountable—providing thorough opportunities for input, review and oversight of programs and financial management. Most importantly, our checkoff represents farmers investing in their industry and in their future. We hope the Department will continue to support our efforts to improve our future opportunities in the soybean industry.