SOYBEAN LOAN PROGRAM FUNDING DISCUSSED

SOYBEAN LOAN PROGRAM FUNDING DISCUSSED

Funds for a new soybean marketing loan program would have to come from reduced spending on other traditional crop programs, House Agriculture Committee Chairman Kika de la Garza told reporters Wednesday.

Rep. de la Garza said at a news conference that there was a consensus on the Agriculture Committee "to do something" for soybeans, but it would be limited by budget pressures.''If we're going to help (soybeans), we'll to find money elsewhere," since the Bush administration has ruled out new taxes, Rep. de la Garza said. That means other major crop programs, like wheat and feedgrains, he said.

Soybeans are currently a non-program crop. Producers are eligible for government loans, which allow them the option of forfeiting their stocks to the government rather than repaying. However, most loans have been repaid in recent years since market prices have tended to remain above loan rates.

A soybean marketing loan would increase the potential for government outlays since the loan rate would no longer act as a "floor" for market prices. In fact, the whole point of a marketing loan is to increase the price competitiveness of a crop by letting producers repay their loans at a discount.

The House Wheat, Feed Grains and Soybean Subcommittee approved a soybean marketing loan that USDA estimated would cost about $4 billion. That program sets the loan level initially at $5.50 a bushel, and mandates a 5 percent increase to $5.78 in subsequent years if ending stock levels are less than 25 percent of use. The current soybean loan rate is $4.53 a bushel.