Following enactment of the 2002 farm bill, USDA announced adjustments to the county loan rate structure for 2002 crops. Because adjustments in county loan rates had not been made for grains for several years, numerous disparities between loan rates and market prices had emerged, affecting producer benefits.
The restructured rates were intended to more clearly reflect market factors affecting each crop and minimizing distortions that work to the detriment of producers and industry.
A USDA spokesman said the 2004 county loan rates continue the market-oriented approach. “The relative levels of the county loan rates for each commodity reflect the most recent information available about price relationships around the country and will enhance the market orientation of the wheat, barley, oats, and other oilseed loan and loan deficiency payment program,” he said.
He noted that the farm bill mandated changes beginning with the 2004 national loan rates for some crops.
The 2002 Farm Bill established specific national loan rates for each commodity, with one level set for the 2002 and 2003 crops and somewhat lower levels for the 2004-2007 crops,” he said.
|Commodity||Crop Year||Change--2004 Relative to 2003|
|Each "Other Oilseed" ($/Cwt)||$9.60||$9.30||-$0.30|
Despite these statutorily mandated changes, 2004 national loan rates for wheat, barley and oats are still higher than their pre-2002 farm bill (2001-crop) levels, and those for other oilseeds are the same or higher than their respective pre-2002 farm bill (2001-crop) levels.
Wheat by Class Rates and Differentiation for Durum Loan Rates Continued
The 2004 county loan rates for wheat have been updated and remain differentiated by each of the five major classes of wheat (durum, hard red spring, hard red winter, soft red winter and soft white), continuing the precedent established with the 2002 rates. The varying supplies and changing demand patterns of these different wheat classes produce widely variable market prices.
By moving to the class-based system for wheat, the Commodity Credit Corporation now provides marketing assistance loans and LDPs reflecting actual market prices for each class, thus achieving a more equitable distribution of commodity program benefits among producers.
Loan rate premiums will again be available for all durum wheat that grades as amber durum or hard amber durum. This policy was established in 2003 to further improve the market orientation of the wheat loan program.
Beginning with the 2003 crop, the base level of the alternative loan repayment rate (or "posted county price," as it was commonly known) was announced daily for durum with corresponding premiums for durum, which grades as either amber durum or hard amber durum. The 2004 per-bushel premiums applied to the base level of the durum county loan rate will continue at 2003-crop levels:
|Hard amber durum||$0.30|
The CCC has updated the county loan rates for barley, oats and other oilseeds to reflect recent market price relationships among counties. This continues the policy initiated with the 2002 crop to increase the market orientation of the loan and LDP program by making county loan rates for these crops reflect recent county-to-county market price relationships.
In establishing this year's rates, the CCC continued to give special attention to reducing loan rate differences among neighboring counties that were not justified by current market forces.
USDA said the 2004-crop loan rates for corn, grain sorghum, soybeans and pulses will be announced early next year, thereby enabling producers to better utilize this information in their planting and marketing decisions.
The 2004-crop county loan rates for wheat, barley, oats and other oilseeds will be available on the Farm Service Agency Web site within four business days of this announcement. The Web site is located at http://www.fsa.usda.gov/dafp/psd/LoanRate.htm.