Statement of Gary Joachim, Soybean, Corn, and Hog Farmer, Claremont, Minnesota;
Board Member, Minnesota Soybean Growers Association;
and Member, Trade Policy and International Affairs Committee,
and Chair, Latin America Subcommittee, American Soybean Association

Testimony Before the Subcommittee on Trade
of the House Committee on Ways and Means

Field Hearing in Bloomington, Minnesota, on the
Benefits of Trade to the Medical Technology and Agriculture Sectors

May 14, 2001

I have been on the board of the Minnesota Soybean Growers Association since 1990 and on the board of the American Soybean Association since 1999. Currently I am a member of the ASA Trade Policy and International Affairs Committee and I chair the Latin America Subcommittee.

Thank you for this opportunity to testify on the importance of trade to the soybean farmer and soybean related businesses in the United States.

In 2000 the United States grew 2.77 billion bushels of soybeans. The May 10 2001 Supply-Demand Report estimates that the US will export 990 million bushels of whole soybeans, 1.4 billion pounds of soybean oil, and 6.9 million short tons of soybean meal. In whole soybean equivalents this is 1.243 billion bushels of exports in the 2000-2001 marketing year. This amounts to 45% of US production in the 2000 crop year. If you consider that the US is a net exporter of meat it is not an exaggeration to say that every other row of soybeans grown in the United States is destined for export.

World production and demand of soybeans has grown dramatically since 1990.

• US production up over 800 million bushels-43%
• Brazil production up over 500 million bushels-65%
• Argentina up over 425 million bushels-100%
• Total world production up by 2.2 billion bushels since 1990

Economic growth and trade liberalization have been the keys to increasing demand for soybeans fast enough to use up this increase in world production. For instance the North American Free Trade Agreement has allowed US farmers open access to the growing Mexican demand for protein and Mexico has become the equal of Japan as a market for US soybeans.

Market promotion efforts paid for by US soybean producers through their National Soybean Check-Off and in cooperation with the USDA Foreign Market Development Program and Market Access Program have been instrumental in seeing China go from zero in 1990 to become our largest buyer of soybeans in this marketing year with purchases to date of over 215 million bushels in the 2000-2001 marketing year. These programs seek to build on US advantages in quality, service, and technical support to build new markets and to maintain existing markets. The American Soybean Association urges that FMD and MAP be funded at a level sufficient to maintain their full effectiveness. In this time of low market prices increases in soybean price due to increased exports save the USDA that same amount in reduced Load Deficiency Payments.

The world of trade and trade agreements is not static and the United States is in danger of being shut out of markets as other countries form bilateral and regional trade agreements. For instance Columbia and Venezuela are a part of the Mercusor trade group. They can import soybeans from Bolivia a fellow member of the pact duty free. The situation for importation of US origination soybeans is complex. The combination of tariffs and value added tax imposed on US soybeans in that market is over 50% which has shut the US out of the bulk soybean market in these two countries. It is vital that the President of the United States be granted Trade Promotion Authority in order to effectively and expeditiously secure the benefits of open markets for the United States.

The American Soybean Association supports the safe and responsible use of biotechnology. The only widely planted biotech soybean has been shown to be the equivalent of soybeans produced from traditional breeding techniques. It has official acceptance by all of our major trading partners. We are opposed and believe that the United States should oppose using the Precautionary Principle or labeling rules in the Codex Alimentarius as a means of discriminating against soybeans and soybean products that come from the US. If the customer is willing to pay for the extra costs for Identity Preserved shipments the United States farmer is able to produce for this or any market segment.

Mr. Chairman I would stress the importance of the completion of China's accession to the World Trade Organization in a timely manner. I would also stress the importance of and the need for the start of meaningful negotiations on the next round of trade liberalization when the WTO meets in Qatar this November.

Finally I would like to comment on the effect that the strong US dollar has had on our ability to compete with our competition. In terms of Brazilian currency the producer in Brazil is getting more for his soybeans than he was 3 years ago when the price in US dollars was higher. This is perhaps a simplistic way of viewing the situation but in the short term the effect has been real. The strength of the dollar has worked at cross purposes with the market oriented philosophy of the Freedom to Farm Act.

Thank you and I would welcome any questions.