|
 |
|
The marketing loan rates
are below cost of production but provide some income protection. Farmers
can choose to get a payment that is the difference between the marketing
loan rate and the local cash price (posted county price) or take a loan
from the government, where the grain is collateral and the loan amount
is the number of bushels times the loan rate. The grain can then be
forfeited in lieu of loan repayment or it can be repaid using the posted
county price. In 1998 a $6.2 billion dollar
emergency aid package was disbursed to farmers. Currently, another large
emergency aid package seems imminent. Farming in North Dakota, Andrew Swenson, NDSU Extension Service, September 9,1999 |
The
1996 farm bill, called "Freedom to Farm," eliminated target
prices and deficiency payments, which served as a counterbalance to
farm income when market prices were low, and set-asides in favor of
a series of direct declining payments through 2002. Proponents of the
legislation believed that domestic acreage controls would not work in
a global free trade environment because any price enhancement could
not be sustains: it would encourage production elsewhere in the world.
Also, payments would be made regardless of crop grown, therefore producers
could better react to market signals when deciding what crops to grow.
At the time of the farm bill debate, exports and prices were strong.
However, successive years of high production around the world and weakened
demand from Asia caused prices to plummet below farm program marketing
loan rates.