News from the Minnesota Association of Wheat
Growers for Monday, October 4, 1999

USDA DOES NOT HAVE ENOUGH MONEY TO COVER 1999 30% REDUCTION IN CROP INSURANCE PREMIUMS
Paying crop insurance shortfall

Most 1999 crops are near maturity or already in the bin. Many farmers have already paid the insurance bill on those crops. But, a shortfall in the government subsidy for that crop insurance may mean farmers will get a second bill for their 1999 coverage, writes Successful Farming® crops editor Larry Reichenberger. Art Barnaby, Extension ag economist at Kansas State University, says the problem stems from the fact that the $400 million Congress allocated to reduce 1999 crop insurance premiums has fallen short. "The emergency funding was supposed to reduce crop insurance premiums by 30%, and insurance companies have billed farmers accordingly.

Now, after many farmers have already paid those bills, they've found that the $400 million only covers 27-28% of the premium. The USDA is $16 million short and they haven't decided how to make up the difference."
http://www.agriculture.com/scgi/AgNews/AgNews.cgi?FNC=Monse ntoDetail__ANewsindex_html___42107

 

SENATOR LUGER COMMENTS ON HIS CROP INSURANCE PROPOSAL THAT GO TO FARMERS INSTEAD OF CROP INSURANCE PROGRAMS
By Mr. LUGAR (for himself, Mr. McConnell, Mr. Fitzgerald, and Mr. Helms):

S. 1666. A bill to provide risk education assistance to agricultural producers, and for other purposes; to the Committee on Agriculture, Nutrition, and Forestry.

FARMERS' RISK MANAGEMENT ACT

Mr. LUGAR. Mr. President, I rise today to introduce legislation to help our nation's farmers cope with the risks inherent in production agriculture. My colleagues are familiar with the challenges facing American farmers. Prices are down world-wide. Exports are lower than expected, in large part due to the economic problems in Asia. Weather problems, from droughts to floods, have plagued large portions of our country.

The Senate has passed, and a conference committee is considering, an agricultural appropriations bill that contains emergency provisions to deal with these immediate needs. For the intermediate and long term, the Congressional budget resolution contains $6 billion for use in fiscal years 2001-2004 that can be used as direct payments or to help farmers manage risk. Given these available funds, the question for policymakers is how best to help farmers manage the risks that they face.

Some suggest that the entire $6 billion should be used to alter the subsidy structure of the federal crop insurance program. I believe that risk management is broader than crop  insurance alone. To keep U.S. agriculture competitive, farmers will have to consider a variety of practices including: engaging in sophisticated marketing practices; reducing debt; considering alternative crops; and purchasing crop insurance. An approach to risk management that focuses on the crop insurance program's subsidy structure is too narrow to address the many risks faced by farmers.

In crafting my own risk management bill, I was guided by four principles.

First, the greatest possible amount of the $6 billion should go directly to farmers. In the crop insurance program, private insurers receive substantial compensation for selling and servicing multi-peril policies on the government's behalf.

Overall, the insurance companies receive about one-third of the federal financial support of the program. Farmers get the remaining two-thirds. In my view, farmers should receive more of the new federal spending.

Second, the $6 billion should be provided in such a manner so that it does not distort planting decisions. Leading economists believe that crop insurance encourages the planting of crops on marginal and environmentally challenged acreage. Federal risk management spending should not inadvertently subsidize overproduction when world-wide agricultural stocks are already large. Subsidizing overproduction postpones the day when agricultural prices will rebound.

Third, the $6 billion should be distributed equitably among farmers and among regions. In terms of eligible 1998 acres insured, farmers' participation by state ranges from a low of 4 percent to a high of 93 percent. Clearly, farmers in some parts of the country do not view crop insurance as a useful risk management tool. By spending the bulk of the increased federal assistance on crop insurance, we are denying farmers in some parts of the country risk management help.

Fourth, farmers should be encouraged to pursue a variety of risk management strategies, including, but not limited to, crop insurance. Within broad parameters, farmers should be able to choose the risk management strategy that best meets their needs.

Mr. President, the bill I am introducing today complies with my four principles. First, of the $6 billion in available new spending, over $5 billion is sent directly to farmers. Second, because the money is sent directly to farmers and is based on historical production, it is far less likely to distort planting decisions. Third, because it is not limited only to one form of risk management--crop insurance, it is more equitable among regions. Fourth, in order to better meet farmers' individual needs, it lets farmers choose risk management strategies from a menu of options. The bill directs the Secretary of Agriculture, for the 2001-2004 crops, to offer to enter into a contract with a producer in which the producer receives a risk management payment if the producer performs at least 2 of the following risk management practices each applicable year:

RUSSA OFFICIALLY REQUESTS MORE FOOD ASSISTANCE
USDA Secretary Dan Glickman announced this week he received an official request from Russia for additional food assistance, and that a team of USDA and State Department officials are currently in the process of reviewing said request.  Glickman indicated their response to the request will be based, to some degree, on their experience with the current 3.1 MMT food-aid package distribution.  According to a news wire story, the original agreement allows Russian officials to sell most of the commodities in the open market and deposit the proceeds into the country's pension fund.  At this time Glickman said the food aid distribution and pension fund deposits were proceeding properly and within the confines of the agreement.  Industry sources suggest the Russian Agriculture Ministry has requested the following: 1.0 MMT milling wheat; 1.5 MMT feed wheat; 1.5 MMT corn; 0.5 MMT soybeans; 0.5 MMT soybean meal; 100 TMT soybean oil; 15 TMT seeds

SENATOR BAUCUS D-MT INTRODUCES BILL TO INCREASE EXPORT SPENDING TO TARGET EUROPE
One state Senator feels the US has not adequately challenged EU farm export subsidies, and on Tuesday proposed legislation to increase spending on US agricultural export incentives if the EU does not halve its subsides by 2002.  Senator Max Baucus, D-Mont., wants the US government to spend more than the currently allocated $500 million for the Export Enhancement Program, and furthermore, feels the USDA should target these monies at important EU grain markets.  According to a recent news wire article, Baucus feels the US should "flex" its economic muscle if it wants to get serious about lowering agricultural export subsidies worldwide.

US CUSTOMS SERVICE WILL BEGIN COLLECTING PRICE DATE ON WHEAT IMPORTS
A news wire article suggests the US will begin an investigation in October to conclude whether Canadian wheat is being "unfairly" dumped in the US market or not.  Responding to comments from Senator Kent Conrad, D-N.D., who suggested shipments of Canadian durum wheat have grown dramatically ever since the US lifted its quota on durum in 1995, US Trade Representative Charlene Barshefsky said the US Customs Service will begin providing pricing data on shipments of Canadian wheat.  In addition, Barshefsky indicated the US Agriculture Department is conducting a study to determine why users of durum wheat in the US are buying from Canada.

ANTI-BIOTECH ACTIVISTS PLAN LAWSUITS
By Associated Press

Opponents of genetic engineering have come up with a new tactic to stop the spread of altered crops: anti-trust lawsuits against  the companies responsible for the technology.

The lawsuits, to be filed in 30 countries later this year, will accuse the companies of using the technology to gain control of world agricutlure, said antibiotech activist Jermy Rifkin, director of the Foundation on Economic Trends.

Major grain traders and processors also will be named in the lawsuits. 

Until now, biotech opponents have focused their efforts on persuading food manufactures not to buy genetically modified crops and getting governments to require the labeling of altered foods.

The antitrust actions will force governments to consider curbing the power of a shrinking number of giant agribusiness companies, Rifkin predicted Monday.

Eight major antitrust law firms have agreed so far to handle the lawsuits, he said.  In addition to Rifkin, the plaintiffs will include indivdual farmers and the National Family Farm Coalition.

Biotech companies are genetically manipulating plants to make fruits and vegetables more attractive, speed the growth of crops or make them resistant to insects, disease and weedkillers.

The companies control the spread of the technology by patenting the seeds and then leasing them to growers, rather than selling them, to prevent the farmers from reproducing the seeds.

While the crops have grown quickly in popularity with American farmers, the technology has had trouble getting accepted by consumers in Asia and Europe.  

Defenders of the technology say it can increase yields while reducing the need for pesticides and eventually will lead to nutritionally enhanced crops.

"Biotechnology is being adopted at an unprecedented rate by American farmers because it's giving them more choices that ever before in how they grow their crops.  It's producing benefits for them in terms of higher yields and less use of pesticides," said Carl Fedbaum, president of the Biotechnology Industry Organization.

GRAINS STOCKS NATIONAL AGRICULTURAL STATISTICS SERVICE USDA WASHINGTON, D.C.
Released September 30, 1999, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, U.S. Department of Agriculture.
For information on "Grain Stocks" call (202) 720-2127, office hours 7:30 a.m. to 4:00 p.m. ET.

Corn Stocks Up 37 Percent from 1998, Soybean Stocks Up 74 Percent , All Wheat Stocks Up 3 Percent

Old crop corn stocks in all positions on September 1, 1999 totaled 1.80 billion bushels, up 37 percent from September 1, 1998. Of the total stocks, 807 million bushels were stored on farms, up 26 percent from a year ago. Off-farm stocks, at 989 million bushels, were up 48 percent from a year ago. The June - August 1999 indicated disappearance is 1.82 billion bushels, 5 percent above the disappearance of 1.73 billion bushels during the same period a year earlier.

Old crop soybeans stored in all positions on September 1, 1999 totaled 348 million bushels, up 74 percent from September 1, 1998. On-farm stocks totaled 145 million bushels, up 72 percent from last September. Off-farm stocks at 203 million bushels, are 76 percent above the previous year. Indicated disappearance for the September 1998 - August 1999 marketing year totaled 2.60 billion bushels, 1 percent below disappearance during the comparable period a year earlier. The 1998 soybean production was revised to 2.74 billion bushels, down15.8 million bushels from the previous 1998 estimate. Acreage planted and harvested was decreased by 350,000 and 370,000 acres to 72.0 and 70.4 million acres, respectively. The 1998 yield per acre, at 38.9, remained unchanged from the previous 1998 estimate. A State table with the revised acreage, yield, and production estimates can be found on page 18. Revisions were made based upon an analysis of end-of-marketing year stock estimate and disappearance data for exports and crushings. All available administrative data on exports were used.

Old crop grain sorghum stored in all positions on September 1, 1999 totaled 65.1 million bushels, up 33 percent from a year ago. Off-farm stocks, at 51.3 million bushels, are up 46 percent from last year and account for79 percent of the total stocks. On-farm stocks, at 13.8 million bushels, are up 1 percent from last year. The June - August 1999 disappearance from all positions is 51.0 million bushels, up 8 percent from last year.

All wheat stored in all positions September 1, 1999 totaled 2.46 billion bushels, up 3 percent from a year ago and the highest September 1 level since the 1987-88 marketing year. Farm stocks are 903 million bushels, up 2 percent from last year. More than 20 percent of the stocks on farms were standing infields at the time of data collection; North Dakota and Montana had the majority of the unharvested production. Off-farm stocks, at 1.56 billion bushels, are up 4 percent. Wheat disappearance for the first quarter of the marketing year is 825 million bushels, down 10 percent from the same period in1998.

Durum wheat stored in all positions September 1, 1999 totaled 147 million bushels, up 17 percent from a year ago to the highest September 1 level since 1986. Farm stocks are 107 million bushels, up 22 percent from last year. More than 60 percent of the stocks on farms were standing in fields at the time of data collection, mostly in North Dakota. Off-farm stocks, at 39.9 million bushels, are up 5 percent from last September. Durum disappearance for the first quarter of the marketing year is 24.5 million bushels, down 5 percent from the same period in 1998.

Barley stocks in all positions on September 1, 1999 are estimated at 297 million bushels, 9 percent below last year. Of the total barley stocks on hand, 167 million bushels are stored on farms, 14 percent below a year ago. Off-farm stocks, at 130 million bushels, are only 2 percent below 1998. Indicated disappearance during the June - August 1999 quarter totaled135 million bushels, 11 percent lower than the same period a year earlier.

Oats stored in all positions on September 1, 1999 totaled 148 million bushels, 8 percent below the stocks on September 1, 1998. Of the total stocks on hand, 97.5 million bushels were stored on farms, 12 percent below this time last year. Off-farm stocks totaled 51.0 million bushels, 1 percent below a year earlier. Indicated disappearance during June - August 1999 totaled 102 million bushels, 24 percent more than the same period a year ago.