Wheat Growers Worry Over Aid Backsliding

May 15, 2000

The National Association of Wheat Growers is concerned that recent, "limited" gains in commodity futures markets will erode congressional support for a farmer assistance package included in the budget resolution. "A modest, two week gain cannot erase a three year slide in prices," says the NAWG.

In a letter to members of the Senate and House Agriculture Committees, the wheat growers said that even if Congress doubles the 1996 farm law transition payment this year, the total assistance would decline by more than 10 cents per contract bushel for wheat growers compared to last year’s assistance.

That’s because the $.637 per bushel payment last year declines to $.583 per bushel this year, NAWG notes. The association also wants Congress to establish a loan deficiency payment "or its equivalent" for wheat producers who harvest their wheat by allowing it to be grazed out by livestock.

Last year’s assistance package included a senate of the Congress resolution that supported that idea and called on USDA to establish such a payment. "Unfortunately USDA has failed to act on this provision despite its decisions to expand the LDP program to other non-traditional harvesting methods," said NAWG. The association asked that legislative language that would create a payment in lieu of a LDP be included in the agriculture assistance package.

"While agriculture commodity futures markets have gained some ground since mid-April, the price of most commodities, including wheat, remains well below both historical averages and the cost of production," the letter said. "Fortunately, most lawmakers understand that a modest, two week gain cannot erase a three year slide in prices."

Of even "greater concern," said NAWG, is the continued increase in interest rates. "Since most farmers are dependent on annual loans to cover their operational costs, agriculture bears the burden of higher interest rates inproportionately (sic.) to other sectors of the economy."