Soybean slide is direct threat to other industries

The continued slide in Southern soybean production threatens to jeopardize the profitable poultry and swine industries in the region, cautions a past chairman of the United Soybean Board.

Harold Phillips, former chairman of the USB and a soybean producer from Stevenson, Ala., believes the decline in southern soybean production poses a direct threat to the health of the poultry and swine industries. He's calling for a renewed effort in research and Extension to solve the problems soybeans have in the South while increasing acreage and production.

While the South produces 79 percent the country's poultry and is among the leaders in swine, eggs and turkeys, the region only produced 10 percent of the soybeans used to feed this $15 billion industry last year. That, he says, is a recipe for disaster — and could force those industries out of the South. “It appears that the growth in the broiler and swine sectors is slowing down. A decline in the swine and poultry industries would have an enormous effect on the region. Chicken houses take the place of a part-time, off-the-farm job and keep them on the farm.

“It's apparent to me that much of the huge livestock and poultry sector of the South is increasingly in jeopardy because of the decline in soybean production in the South,” Phillips says.

“Almost all the soymeal consumed in the South must be transported into the region from the Midwest as either soymeal or as soybeans for processing,” Phillips says.

“Something must be done to restore Southern soybean production,” Phillips told a group of farmers at the Southern Soybean Conference held in Tunica, Miss.

Phillips, who farms in northeast Alabama, believes producers should focus on research and Extension and start growing high-value soybeans. In the short-term, Phillips believes a better crop insurance program for soybean producers must be developed and county loan rates for southern soybeans must be adjusted to take transportation costs into account.

For the long-term, Phillips calls for the establishment of a Southern Soybean Research and Extension Initiative to address problems specific to southern soybean production.

“The region's soybean growers and processors should enlist the help of the swine and poultry sectors, state farm organizations, local and state governments and others to establish and fund the initiative,” Phillips says. “State check-off boards and the United Soybean Board can help fund the effort. Funding also should be contributed by the poultry and swine industries.”

State and federal governments, augmented with funding from southern states, should carry the lion's share of the funding for the proposed initiative, Phillips says. “I believe $10 million per year for at least 10 years will go a long way toward addressing the problems soybeans face in the South.”

The funds should be used to hire soybean breeders to develop conventional and biotechnology varieties better-suited to the South, develop better cultural practices and show farmers how to grow high-yielding varieties at a lower cost, the Alabama producer says.

“I am convinced that we can grow soybeans competitively in the South,” Phillips says. “Brazilian farmers are getting high soybean yields in areas far closer to the equator than we are in the southern United States. However, the Brazilians have invested heavily in research on new soybean varieties and on agronomic practices that have allowed them to overcome their problems. I am convinced that we can do the same.”

A move to growing high-value soybeans would also benefit southern farmers. “One of the opportunities we may have in the South is to maximize our production of high-value soybeans such as the new low-phytate varieties to be released in 2002 and 2003, as well as other high-value varieties,” Phillips says. “The low-phytate varieties have very low levels of indigestible phosphorous and contain lower levels of indigestible carbohydrates. This means that swine and poultry consuming the meal made from these will be more efficient and leave lower levels of phosphorous in the manure. Lower phosphate levels in the manure allows higher applications of the manure on the land.”

In the immediate short-term, an improved crop insurance program for southern soybeans should be developed. Phillips points to USDA's Risk Management Agency plan to fund an actuarial analysis of soybean yields and losses as a positive step. “Hopefully, the information will lead to the development of a better crop insurance program for the South.”

In addition, Phillips suggests adjustments in the county loan rates for southern soybeans that would reflect the cost of transporting soybeans into the region from the Midwest. “The highest county soybean loan rates in the Southeast are less than 20 cents above the national average while the lowest loan rates in the upper Midwest are 59 cents per bushel below the national average,” Phillips says. “Higher loan rates would be a major incentive to expanding soybean plantings and production in the region. Some segments of the industry might believe this is out of line. I don't think so.”

The decline in soybean acreage and production has happened at a steady pace since the 1980s.

The 1970s could be called the glory days for southern soybean production. In 1970, the Southeast and Mid-South area harvested 13.8 million acres of soybeans and produced 317 million bushels. The growth of the soybean industry served as a catalyst for the poultry sector in the South during the 1970s, Phillips says.

Acreage and production in the South peaked in 1980 at 24.7 million acres harvested and 414 million bushels. By 1980, production had begun a slide that would soon follow on the acreage side, caused in part by diseases, nematodes, greater weed pressures and a lack of soybean breeders developing varieties specifically for the South.

“The highest county soybean loan rates in the Southeast are less than 20 cents above the national average while the lowest loan rates in the upper Midwest are 59 cents per bushel below the national average.”

In 1985, the new farm bill and the Conservation Reserve Program gave farmers more reasons to shy away from soybeans. The 1985 farm bill encouraged a shift out of soybeans to program crops such as wheat, cotton and rice. “The biggest reasons for the decline were low yields and low prices,” Phillips says.

“In my area, soybeans are viewed as a losing proposition,” Phillips says.

While acreage has declined in the South, the cost of shipping soybeans into the region has increased. Shipments of soybeans and soymeal to Southern ports from New Orleans, the Great Lakes or East Coast ports must be aboard U.S.-flag ships, making the cost prohibitive. For Georgia and the Carolinas, the only alternative is rail. “On two occasions in the last few years, however, Brazilian soybeans and soybean meal have been imported into the region to supply southern soymeal demand, mainly because it was cheaper to import the Brazilian soybeans and soymeal than it was to bring them in from the Midwest. We now understand that the large swine producers in North Carolina are joining with that state's ports authority to build a bulk unloading elevator at the Port of Wilmington. There is some talk of also building a crushing plant next to the port.”

In addition to the high costs of shipping, marketing options for southern soybeans have vanished, along with the closings of at least five crushing plants in the South. These five plants crushed close to 100 million of soybeans annually.

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