USDA announced the 2003 national and county loan rates for wheat, barley, oats and other oilseeds. The release of the marketing loan rates for these commodities is the earliest in recent history.
The Farm Security and Rural Investment Act of 2002 restructured national loan rates, thus requiring changes in county loan rates. Guidance also was provided by the congressional conferees suggesting that the department use the generally upward change in national loan rates to revise county loan rates. Since adjustments in county loan rates to reflect changing market conditions had not been made for grains for several years, numerous disparities between loan rates and market prices had emerged over time, affecting producer benefits. Almost immediately upon passage of the new act, the department announced the most comprehensive adjustments in more than 15 years to the county loan rate structure for 2002 crops. The restructured rates were intended to reflect the market factors affecting each crop to the fullest extent possible and thus avoid distortions that work to the detriment of producers and industry.
The 2003 county loan rates are in keeping with this market-oriented approach. The relative levels of the 2003 county loan rates for each commodity reflect the most recent information available about price relationships around the country. The 2003 rates will enhance the market orientation of the wheat loan and loan deficiency payment (LDP) program, with special reference to durum wheat. Furthermore, extra efforts were made to end potential market distortions detected along some State borders after the 2002 county loan rates were announced.
Wheat by Class Rates Continued - Further Differentiation for Durum Loan Rates
The 2003 county loan rates for wheat have been updated and remain differentiated by each of the five major classes of wheat (durum, hard red spring, hard red winter, soft red winter, and soft white) - continuing the precedent established with the 2002 rates. The varying supplies and changing demand patterns of these different wheat classes produce widely variable market prices. By moving last year to this class-based system for wheat, the Commodity Credit Corporation (CCC) now provides marketing assistance loans and LDPs that reflect actual market prices for each class, thus achieving a more equitable distribution of commodity program benefits among producers.
For 2002, county loan and loan repayment rates for durum were established with no differentiation in value for the various subclasses of durum recognized by the market. To further improve the market orientation of the wheat loan program, loan rate premiums will be available for durum wheat that grades as amber durum or hard amber durum.
Beginning with the harvest of the 2003 crop, the base level of the alternative loan repayment rate (or "posted county price" (PCP) as it is typically known) will be announced daily for durum, with corresponding premiums for durum which grades as either amber durum or hard amber durum. The 2003-crop premiums per bushel from the base level of the county loan rate for durum currently are:
· Amber durum $0.20
· Hard amber durum $0.30
This differentiation of the 2003-crop of durum into three subclasses for county loan and loan repayment rates reflects the Department's extensive discussions with numerous wheat producers and industry and grain trade representatives.
Barley and Oats Loan Rates Updated
The Department has updated the county loan rates for barley and oats to reflect recent market price relationships among counties. This continues the policy initiated with the 2002 crop to increase the market orientation of the loan and LDP program by making county loan rates for these crops reflect recent county-to-county market price relationships. In establishing this year's rates, the department also paid special attention to reducing notable loan rate differences among neighboring counties that were not justified by current market forces.
2003 Oilseed Loan Rates Differentiated Based on Historic Price Relationships
National loan rates for the 2003 "other oilseed" crops are differentiated by several different oilseed types: sunflower seed; flaxseed; canola; rapeseed; safflower; and mustard seed.
After careful review of the market situation for each of these oilseeds, the department announces individual loan rates for 2003 crop: sunflower seed, flaxseed, canola, rapeseed, safflower, and mustard seed. Oil-type and other-type sunflower seed will have a single county loan rate with the loan repayment rate based on the oil-type sunflower seed price.
By establishing loan rates based on historic price relationships among the different oilseeds, the department is continuing its policy of reducing loan program distortions, which, in the past, limited the influence of market forces on producer planting decisions.
2003-crop national loan rates are based on five-year average price relationships among the oilseeds and are production weighted to equal the statutorily mandated "other oilseed" loan rate of $0.096 per pound. The 2003-crop national loan rates per pound are:
· Sunflower seed $0.0960
· Flaxseed $0.0720
· Canola $0.0978
· Rapeseed $0.0976
· Safflower $0.1292
· Mustard seed $0.1019
County loan rates for the "other oilseeds" also are being updated to reflect recent market price relationships among counties.
County Loan Rate Differences Along State Borders Reduced
Despite the reduction in significant market distortions following last year's county loan rate announcement, notable cross-border differences in county rates remained. The announcement of the 2003-crop county loan rates responds to producer comments and suggestions regarding these differences. While some cross-border differences were and continue to be justified by market conditions, today's actions reduce and, in some instances, eliminate differences that do not reflect market price relationships.
Other 2003 Crops
The 2003-crop loan rates for the remaining crops (corn, grain sorghum, soybeans, pulses, etc.) will be announced early next year, so producers can better utilize this information in their planting and marketing decisions.
Accessing 2003-Crop County Loan Rates
The 2003-crop county loan rates for wheat, barley, oats and other oilseeds are available on the Farm Service Agency Web site. The Web site is located at www.fsa.usda.gov.