01/03/06 Beneficial interest and risk managment

01/03/06 Beneficial interest and risk managment

Farm and Ranch January 3, 2006 The National Grain and Feed Association, NGFA, is encouraging the USDA to modify its so-called "beneficial interest" rules to enable producers to take advantage of new risk management tools to maximize income from the market. Under USDA's beneficial interest rules, producers are required to maintain title, control and risk of loss in a commodity to be eligible to receive loan deficiency payments or marketing loan gains. John Fletcher of Missouri representing the NGFA told a U.S. House subcommittee that's out of kilter with various kinds of new generation cash grain contracts. Fletcher: "We think there is something amiss when a government farm program that is designed to avert forfeitures, encourage stocks enter market channels, and maximize farm income has the unintended and perverse affect of limiting the marketing options available to producers." Fletcher described opportunities corn producers had this year. Fletcher: "We talk about getting a decent price for a crop. We bought a lot of corn this year for $2.30, $2.40 back in the spring when they would forward contract. December corn was 2-60, 2-65. But a lot of guys simply won't pull the trigger because there is risk of not being able to delivery the grain when he knows he has the loan rate to back him up. And I am not encouraging this in any way, shape, or form, but if the loan rate wasn't there, he'd be more aggressive in forward selling his crop." NGFA thinks USDA has the legal authority to administratively make changes. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.
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