No LDP Reforms For This Year

August 20, 1999

Reforms to the loan deficiency program will not be ready for the 1999 crop and marketing season, a USDA official said. It will be 2000 before any reforms become effective, starting with the winter wheat crop to be harvested next year.

Agriculture Secretary Dan Glickman had hoped to have the Federal Register notice ready for 30 days of comment during August, then have the reformed program kick in for the start of the marketing year Sept. 1. Obviously those deadlines have slipped, the official acknowledged.

USDA has been reworking the proposal to comply with Office of Management and Budget requirements, but it still calls for one national LDP rate, the official said. The rate will be determined by looking at the primary terminal markets; from that USDA will construct a "national" posted county price (PCP). Subtract that from the national average loan rate and you have the national LDP. That would apply to a give crop in every county on a given day. Had this been in effect for the 1998 crops, the additional cost would have been $400 million on top of the $3.5 billion paid out in LDPs. For 1999, the extra cost would have amounted to $600 million beyond the $7 billion or so expected to be paid out.