sorry ISH it was a PDF file. Here's a snip
ISSUE DEFINITION
Despite Federal efforts last year to curb production and dispose of
surpluses, record production and continued high carryover stock levels for
most commodities have depressed farm prices and significantly increased
expectea Federal outlays for agricultural price support programs. In an
attempt to bring supply in line with demand, President Reagan announced on
January 11, 1983, that the U.S. Department of Agriculture (USDA) would
implement a payment-in-kind (PIK) program for the 1983 wheat, rice, corn,
sorghum, and upland cotton crops. Recently, USDA announced a PIK program for
the 1984 wheat crop.
Under PIK, government payments in the form of Commodity Credit Corporation
(CCC)-owned commodities are given to farmers in return for additional
reductions in harvested acreage. At the time of implementation, the PIK
program created a number of issues. Particular concerns included the
potential short-term price impact of PIK, the more immediate problem of
ironing out certain technical details, such as the taxing procedure, and the
longer-term policy implications of initiating and maintaining such a massive
supply control and acreage reduction program. Concern has been expressed
over the eventual cost of the program and the impact it will have on retail
fooA prices in 1984. In addition, heavy participation in PIK left the
government short of stocks needed for payments, and the methods used for
acquiring and distributing PIK commodities has prompted criticism from
farmers and legislators alike. Furthermore, the program has come under
increasing criticism SeCaUSe of the large payments that have been made to
larger farmers. Some farmers are reported to have received payments valued
in excess of $1 million. A recent legal interpretation by GAO concluded that
payments in excess of $50,000 were a violation of Federal law.
BACKGROUND AND POLICY ANALYSIS
Supply and Demand Conditions Leading to PIK
In 1981, U.S. farmers produced record levels of wheat, corn and soybeans.-
However, both domestic and foreign demand for these commodities weakened over
the marketing year, causing U.S. stocks for grains and cotton to swell. In
an effort to reduce.supplies, the USDA implemented acreage reduction programs
for grains and cotton in 1982. Despite these efforts, U.S. farmers harvested
even larger crops of wheat, corn, and soybeans in 1982 than in 1981. The
record production, plus a large carryover, dramatically increased stock
levels of nearly all major commodities. USDA estimates that at the end of
the 1982/83 marketing year, the United States holds approximately 73% of' the
world's coarse grain stocks, 43% of its wheat stocks, 28% of global cotton
stocks, and 65% of world soybean stocks.
Demand for agricultural commodities has remained weak, with reduced
domestic usage and declining export levels. For the first time since 1969,
the value of U.S. farm exports has declined -- from $43.7 billion in 1981 to
$39.1 billion in 1982 -- with a further drop to $34.5 b.illion in 1983.
Large stock levels in the face of continuing weak demand depressed
commodity prices and lowered farm income. Net farm income fell to only $22.1 |
