`Re-balancing' plan drawing attention

The beginning of a new administration and a new Congress has prompted a resurgence of interest in farm legislation.

The House Agriculture Committee announced hearings in February and March that could help members decide if they want to pursue writing the commodity provisions of a new farm bill in 2001.

The Senate Agriculture Committee was scheduled to hold a hearing on the report of the Commission on 21st Century Agriculture Jan. 30. Committee Chairman Richard Lugar of Indiana says he does not want to write a new farm bill in 2001.

But all of that was overshadowed by North Dakota Sen. Byron Dorgan's proposal to "re-balance" loan rates by raising them for some crops while keeping those for oilseeds at current levels. He would increase the loan rate for wheat, for example, from $2.58 to $3.14 per bushel while keeping soybeans at $5.26.

The intent: To persuade farmers to plant more wheat and feed grains and fewer acres of soybeans, which Dorgan and other observers feel are being pushed higher by the current farm bill.

Dorgan's argument might be difficult to follow in the South where farmers are moving away from soybeans because of falling prices.

In the Midwest and, to a lesser extent, the South, the marketing plan for many has become trying to pick the top for the loan deficiency payments rather than the top of the market.

In some cases, farmers have collected LDPs of $1 per bushel over what they received from the marketplace for their soybeans by timing the LDP. (The LDP is determined by subtracting the posted county price for a given date from the loan rate.)

With experts like Willard Sparks, chairman of the Sparks Companies, saying that soybeans could sell as low as $3.80 per bushel in 2001/02, LDPs could loom even larger this fall.

Dorgan included a sizable increase in the cotton loan rate - from the current minimum of 51.92 cents per pound to 58.21 cents per pound - ostensibly to win cotton industry support for his proposal.

As this issue went to press, the National Cotton Council was considering a proposal by the American Cotton Producers to raise the loan rate three cents to 55 cents per pound.

While most producers would be glad to receive another six cents, it wasn't clear the American Cotton Producers could muster the support needed for a three-cent increase in the loan rate from all seven segments of the cotton industry.

With analysts talking about the possibility of10 to 15 percent increases in acreage with no increase in the loan rate, merchants and some producers believe any jump in the loan rate could send cotton acres substantially higher in 2001.

Dorgan says he would rather see a new farm bill in 2001, but, if that has no chance of happening, he will push for re-balancing loan rates.

Last year, Dorgan's chances for either would have been nil. But, with Republicans holding an 11-vote majority in the House and split evenly with the Democrats in the Senate, some observers say Democrats are in a much better position to bargain in 2001.

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