Release No. 0216.96 Johna Pierce (202) 720-4623 Bruce Merkle (202) 720-8206 USDA ANNOUNCES MARKETING ASSISTANCE LOAN RATES FOR 1996 CROPS AMARILLO, Tex., April 26, 1996--Agriculture Secretary Dan Glickman today said the U.S. Department of Agriculture would offer nonrecourse marketing assistance loans to producers with production flexibility contracts for the 1996 crops of wheat, feed grains, rice and upland cotton and to any producers of soybeans, minor oilseeds,(sunflower seed, canola, rapeseed, safflower, mustard seed, flaxseed) and ELS cotton. Both marketing loan and loan deficiency payments will be implemented for 1996 crops as they were for 1995 crops, except the Federal Agriculture Improvement and Reform Act of 1996 provides that producers of ELS cotton are not eligible for either marketing loans or loan deficiency payments. However, ELS cotton loans continue to be nonrecourse, allowing the producer to forfeit the commodity to USDA's Commodity Credit Corporation as full satisfaction of the loan if market prices are below principal plus interest. Marketing assistance loan rates for all commodities (except rice) may differ from year to year. The loan rate for rice is established by the 1996 Act at $6.50 per hundredweight for the 1996 through 2002 crops. Generally, loan rates for wheat, corn, soybeans, minor oilseeds and ELS cotton are to be no less than 85 percent of the simple average of prices received by producers during the immediately-preceding five years, excluding the high and low years. However, the 1996 Act also specifies a maximum level equal to the 1995 loan rates for wheat, corn and ELS cotton. The maximum levels specified for soybeans and minor oilseeds are $5.26 per bushel and $9.30 per hundredweight, respectively. Rates for grain sorghum, barley and oats are to be set considering their feeding value relative to corn. The upland cotton rate is based on the lower of either a domestic market average price or an international average price over certain periods but it cannot exceed the 1995-crop loan rate of 51.92 cents per pound. The marketing assistance loan rates for the 1996 crops are as follows: Wheat: $2.58/bu. Corn: $1.89/bu. Soybeans: $4.97/bu. Grain Sorghum: $1.81/bu. ($3.23/cwt.) Barley: $1.55/bu. Upland cotton: 51.92 cents/lb. Oats: $1.03/bu. ELS cotton: 79.65 cents/lb. Rice: $6.50/cwt. Minor oilseeds: $8.91/cwt. # QUESTION: How are the 1996 loan rates determined for loan commodities under the Federal Agriculture Improvement and Reform Act of 1996 ? ANSWER: WHEAT AND CORN: The marketing assistance loan rates for wheat and corn are to be set at not less than 85 percent of the simple average of prices received by producers during the marketing years for the immediately preceding 5 crops, excluding the years in which prices were lowest and highest, but not more than $2.58 per bushel for wheat and $1.89 for corn. The simple average prices of wheat and corn exceeded the respective maximum rates, so the 1996 loan rate for wheat was set at $2.58 and for corn at $1.89. If the Secretary estimates for any marketing year that the ratio of ending stocks of wheat to total use for the marketing year will be-- (A) equal to or greater than 30 percent, the Secretary may reduce the loan rate for the corresponding crop by an amount not to exceed 10 percent in any year; (B) less than 30 percent but not less than 15 percent, the Secretary may reduce the loan rate by an amount not to exceed 5 percent; or (C) less than 15 percent, the Secretary may not reduce the loan rate for wheat for the corresponding crop. The estimated stocks to use ratio for 1996 is less than 15 percent, so no adjustment is permitted. If the Secretary estimates for any marketing year that the ratio of ending stocks of corn to total use for the marketing year will be-- (A) equal to or greater than 25 percent, the Secretary may reduce the loan rate for the corresponding crop by an amount not to exceed 10 percent in any year; (B) less than 25 percent but not less than 12.5 percent, the Secretary may reduce the loan rate by an amount not to exceed 5 percent; or (C) less than 12.5 percent, the Secretary may not reduce the loan rate for wheat for the corresponding crop. The estimated stocks to use ratio for 1996 is less than 12.5 percent, so no adjustment is permitted. SORGHUM, BARLEY AND OATS: The loan rates for other feed grains (sorghum, barley, and oats) are to be established at such level as the Secretary determines fair and reasonable in relation to the rate that loans are made available for corn, taking into account the feeding value of the commodity in relation to corn. The rates established for sorghum, barley, and oats for 1996 are $1.81 per bushel, $1.55 per bushel, and $1.03 per bushel, respectively. Rates were established based on average market price relationships relative to corn because market prices reflect current feeding values of these crops. UPLAND COTTON: The loan rate for upland cotton is to be established at such level to reflect the base quality at average locations in the U.S., that is no less than the smaller of (1) 85 percent of the 5-year average price (excluding the high and low years) of the base quality of cotton as quoted in the designated U.S. spot markets, or (2) 90 percent of the average, for the 15-week period beginning July 1 of the year in which the loan rate is announced, of the 5 lowest-priced growths of the growths quoted for Middling 1 3/32" cotton C.I.F. Northern Europe (adjusted by the average difference during the period April 15-October 15 of the year in which the crop is planted between the average Northern European price quotation and the market quotations in the designated U.S. spot markets). However, the upland cotton loan rate cannot be below 50 cents per pound or greater than 51.92 cents per pound. Because both calculations exceed 51.92 cents per pound, the loan rate for the base quality of upland cotton for the 1996 crop will be 51.92 cents per pound. ELS COTTON: The loan rate for ELS cotton is to be set at no less than 85 percent of the simple average of prices received for ELS cotton during the immediately preceding 5 years, excluding the years in which prices were lowest and highest, but not to exceed 79.65 cents per pound. Because the calculated rate exceeds 79.65 cents per pound, the 1996 loan rate for ELS cotton is 79.65 cents per pound. RICE: The marketing assistance loan rate for rice is fixed at $6.50 per cwt. for each of the 1996 through 2002 crops. SOYBEANS: The marketing assistance loan rate for soybeans is to be set at no less than 85 percent of the simple average of prices received by producers during the marketing years for the immediately preceding 5 crops, excluding the years in which prices were lowest and highest, but not more than $5.26 per bushel or less than $4.92 per bushel. The formula calculation for 1996 is $4.97 per bushel, the level announced for the 1996 crop. MINOR OILSEEDS: The marketing assistance loan rate for minor oilseeds (sunflower seed, canola, rapeseed, safflower, mustard seed, and flaxseed) is to be set at no less than 85 percent of the simple average of prices received by producers of sunflower seed during the marketing years for the immediately preceding 5 crops, excluding the years in which prices were lowest and highest, but not more than $9.30 per cwt. or less than $8.70 per cwt. The formula calculation for 1996 for sunflower seed is $8.91 per bushel, the level announced for the 1996 crop of minor oilseeds. #