U.S. gov’t makes crop decisions
The United States is making much of its intention to target state trading bodies in the next round of world trade negotiations.
However, it seems little concerned about its own culpability in having the government influence markets in a much bigger way than the Canadian Wheat Board could ever hope to do.
This spring U.S. federal support programs are influencing what American farmers seed much more than the markets. The loan rate, that is the federally set floor price, for soybeans is more attractive than that for corn so in the U.S. Midwest, risk-shy farmers are going with the oilseed.
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The USDA March seeding intentions report forecasts soybean acreage will increase one percent to a record 73.1 million acres. This is despite falling prices for soybeans, which should tell farmers the market is amply supplied.
Of more concern is the planting report’s forecast of a 12 percent increase in durum acreage in the United States, the largest since 1982.
This is despite forecasts that durum will not fetch a premium to spring wheat in 1999-2000, and U.S. stocks at the end of the current crop year are forecast to be double the amount on hand at the beginning of the year.
There are expectations that Canadian farmers, well aware of market realities, will reduce durum acreage by 15 percent or more.
The reason U.S. producers are believed to be increasing durum acres is their crop revenue insurance program, which protects against both yield and price loss.
When first announced, the support level for durum was ridiculously high.
The U.S. Risk Management Agency eventually saw its error and reduced the support level. However, farmers still seemed influenced by it as they made their preliminary seeding plans.
Some believe that U.S. farmers misunderstand the revenue insurance plan and once it is better explained they will see that, as it stands, the program does not warrant higher durum acreage.
However, the insurance program had been effect since Jan. 1 and the reduction in the support level was announced Feb. 10. There has been plenty of time for farmers to figure it out.
If they stick with their seeding plans, it will lower the world price, directly hurting Canadian durum producers.
Such obvious market interference by Washington must be protested vigorously, both at the government-to-government stage and directly at the farm group-to-group level.
And it must be done promptly, before seeding, to prevent a surplus that will weigh on durum prices for more than one year.
