12/19/05 NAWG testifies on loan rates

Farm and Ranch December 19, 2005 That Pacific Northwest issue of the loan rate for soft white wheat versus red wheats came up at a congressional subcommittee hearing last week. Sherman Reese of Oregon, president of the National Association of Wheat Growers, was among those testifying at a House Subcommittee on General Farm Commodities and Risk Management hearing. The panel was reviewing technical procedures of USDA's establishment of Posted Country Prices. In his presentation Reese raised the subject of loan rate differentials by wheat class. Reese: "We have received complaints from soft white wheat producers about the differential in loan rates between hard red and soft white wheat in the Pacific Northwest. They contend that USDA decisions and adjustment factors result in a lower loan rate for soft white than would otherwise result and that in response farmers are shifting from soft white to hard red. Our response to those states has been consistent with what I just said. If the market is driving those differences free from subjective interference then the program is working properly. If there are subjective or arbitrary adjustment factors or policy decisions that are driving planting decisions it is not working properly and NAWG will support getting it fixed." Reese said NAWG suggests the subcommittee conduct a thorough review, confidential if necessary, of the exact formula and methodologies used by USDA. Reese: "NAWG is very happy to assist in that review. Once that information is known we will all have a better idea of appropriate remedies should they be necessary." As for how it is that USDA determines Posted County Prices, Reese said the perception among farmers is that there is a lot of voodoo economics involved. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.