USDA Delays Loan Rate Announcement

January 7, 2002

USDA will wait for final Congressional action on the farm bill before determining annual loan rates for the 2002 crops. If Congress doesn't finalize a farm bill in time for this year's crops, USDA then will make a separate determination. The 1996 Federal Agriculture Improvement and Reform Act provides no statutory deadline for loan rate determination. Announcements in previous years have varied from as early as Dec. 18 to as late as April 23.

"We feel it is prudent and responsible to wait to announce loan rates until the intent of the Congress becomes more clear through the farm bill process in order to avoid confusion for farmers," said Agriculture Secretary Ann M. Veneman. "We urge the Senate upon their return to work in a bipartisan manner to complete a farm bill that is fair, responsible and helps a broader range of producers."

The House has passed its farm bill which applies to 2002 crops. The Senate is expected to resume consideration of a farm bill upon its return later this month. Timely completion of a Senate bill and a subsequent conference committee are likely to produce new authorities applicable to the spring planted crops and that would specify loan rates for the 2002 crops.

Marketing assistance loan programs for the 1996-2002 wheat, feed grains, oilseeds, upland cotton, extra long staple (ELS) cotton and rice crops are part of the FAIR Act. Loan rates for wheat, corn, soybeans, minor oilseeds, and ELS cotton are based on an Olympic average formula (85% of the average farm price during the last five years, excluding the highest and lowest years), constrained by maximum (grains, cotton and oilseeds) and minimum (upland cotton and oilseeds) levels. The 1996 act provides the Secretary some discretion in setting loan rates for these commodities.

Loan rates for the 2001 crops are as follows: Wheat $2.58 per bushel; rice $6.50 per hundredweight (fixed rate); cornc$1.89 per bushel; sorghum $1.71 per bushel; barley $1.65 per bushel; oats $1.21 per bushel; soybeans $5.26 per bushel; minor oilseeds $9.30 per hundredweight; crambe and sesame $8.77 per hundredweight; upland cotton $0.5192 per pound; ELS cotton $0.7965 per pound.

The decision to retain current loan rates for 2002-crop soybeans and cotton until final congressional action on the farm bill sends a positive signal to farmers, according to the American Farm Bureau Federation, and helps remove "a layer of uncertainty from current farm bill proposals." AFBF President Bob Stallman said, "Given the continued slump in the farm economy, signals of agricultural financing woes in the countryside and farm policy indecision for the 2002 crop, holding loan rates at the current level pending farm bill passage is a wise move." Stallman said the announcement helps "lower some stress levels in farm country and provides momentum for all sides to forge ahead with a balanced farm policy solution."