CEO Report December 2005

CEO Report To The Board & States
December 2005

This year’s projected soybean production of more than 3 billion bushels again highlights the importance of ASA’s policy efforts to increase demand and improve market access for U.S. soybeans and soy products. All time record exports were a major factor in moving domestic stocks in advance of this large crop, and the Association’s efforts have also resulted in substantial Federal funding for important research and monitoring systems to protect future crops. We moved a giant step closer to improving our nation’s inland water transportation system. Below are a few of ASA’s major achievements in these areas since the July Board of Directors meeting. –Stephen Censky, December 2005

Biodiesel Tax Incentive Extended to 2008 On July 29, ASA hailed Congress’s passage of the Energy Bill as a crucial step forward in establishing biodiesel as a long-term component of the nation’s energy supply. The legislation contains major ASA-supported provisions including an extension of the federal excise tax credit for biodiesel, creation of a new small agri-biodiesel producer credit, provisions for alternate fuel infrastructure and establishment of a 7.5 billion gallon renewable fuels standard. The tax incentive, established originally as part of the American JOBS Creation Act of 2004, would have expired in 2006. It will now be extended through 2008. Two of ASA’s top leaders were among the invited guests that witnessed the momentous signing of the Energy Bill by President George W. Bush. Thanks to the biodiesel tax incentive originally passed by ASA last year and then extended in this legislation, biodiesel production this year tripled to over 75 million gallons. This has increased demand for soybean oil and resulted in better prices paid to farmers for their soybeans.

Passage of Central American Free Trade Agreement ASA lobbied hard to gain Congressional approval of an historic trade agreement between the United States, the Dominican Republic, and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua (CAFTA-DR). Economists estimate the agreement could boost U.S. agricultural exports by $1.5 billion when fully implemented. This is great news for U.S. soybean farmers because CAFTA-DR will solidify the U.S. position as the preferred supplier of soybeans and soybean products to these Central American nations. CAFTA-DR would immediately eliminate tariffs on all soybeans and soy products with the exception of refined soy oil, where the tariff will be phased out over 15 years in equal annual cuts. CAFTA-DR will also benefit U.S. livestock and poultry producers because it provides the U.S. with sizeable quotas for exporting pork duty-free. Quotas will increase each year until they are eliminated in year 15. The six CAFTA-DR countries represent a growing region of 45 million people that imported $264 million in U.S. soy product during 2004.

$5 Million Provided for Legume Genomics Funding ASA celebrated a decision by the U.S. Department of Agriculture’s National Research Initiative (NRI) Competitive Grants Program to provide up to $5 million of funding for functional genomics and bioinformatics on legume crops such as soybeans. This announcement is the culmination of a four-year cooperative effort led by ASA. ASA Board members have chaired the Legume Crops Genome Initiative from its inception. This new $5 million in funding is an important investment in the future of U.S. soybean production that will help us better understand disease resistance in general, and identify genes that can be useful in other ways to protect the soybean crop.

$2.4 Million Provided for Continuation of Soybean Rust Management System ASA worked hard to secure USDA funding for a system that will provide for the early detection, diagnosis, and tracking of the spread of Asian soybean rust in the 2006 growing season. This nationally coordinated network also will help producers in making crop management decisions that reduce pesticide input costs, reduce environmental exposure to pesticides and increase the efficiency and efficacy of pesticide applications. This is an important victory for ASA, and is the result of ASA working closely with USDA, urging the need to again fund the soybean rust sentinel plots, mobile team monitoring program and online reporting system that provides producers with timely information that is essential to combating the disease. This year, U.S. soybean producers were very fortunate. The weather conditions throughout most of the year were about as unfavorable for soybean rust as they could be. However, based what we know about rust in other countries, we may not be that lucky every year.

House Passage of the Water Resources Development Act ASA congratulated the U.S. House of Representative for passage of H.R. 2864, the Water Resources Development Act (WRDA) of 2005. The legislation, which provides $1.72 billion in funding authorization for lock improvements and $1.58 billion for ecosystem restoration, was overwhelmingly passed in July, by a vote of 406-14. This is truly a victory for the ASA and for all water resources stakeholders. This legislation authorizes construction of seven new 1,200-foot navigation locks, small-scale navigation improvements, and ecosystem restoration on the upper Mississippi and Illinois Rivers. The WRDA has been passed reported out of Committee in the Senate, but awaits Senate floor action. ASA will place a priority on passage of WRDA in the next legislative session.

ASA Drives Soybean Exports To All-Time Record USDA confirmed U.S. soybean exports during marketing year (MY) 2004/05 exceeded 1.1 billion bushels (bil. bu). This year’s all-time record is more than 3 percent higher than the previous record of 1.063 bil. bu. set in MY2001. These results are a positive reflection on the efficiency of ASA’s international market development program, and the market-opening policy efforts carried out by ASA. Soybean exports have set records and exceeded 1 billion bushels in 4 out of the past 5 years, which is a credit to ASA and ASA IM. To no one’s surprise, this year’s largest buyer was China with purchases of 435 mil. bu., up 44 percent over last year. The European Union-25 was second with 168 mil. bu., Mexico was third with 127 mil. bu. and Japan was fourth at 115 mil. bu. Collectively, these four buyers represented 77 percent of all U.S. soybean exports last year.

ASA/USB Launch USSEC Beginning October 1, 2005, ASA and the United Soybean Board have formed the United States Soybean Export Council (SEC) that will implement the International Marketing program for U.S. soybeans. ASA has been working hard to make the SEC as successful as possible through a myriad of start-up and transition issues, while also asking that SEC and USB honor in good faith the financial commitments to ASA. The SEC board will consist of representatives from the American Soybean Association (ASA), the United Soybean Board (USB) and the U.S. soybean industry. The SEC will build upon ASA’s nearly fifty years of successful U.S. soybean export activities. SEC’s activities to expand international markets for U.S. soybeans and products are made possible through the American Soybean Association’s investment of cost-share funding provided by USDA’s Foreign Agricultural Service, and by producer checkoff dollars invested by the United Soybean Board and various State Soybean Councils.