US to buy surplus wheat, donate abroad
12:51 p.m. Jul 18, 1998 Eastern
By Randall Mikkelsen
LITTLE ROCK (Reuters) - The U.S. government will buy $250 million worth
of surplus wheat and donate it to hungry countries to help shore up
falling U.S. crop prices, President Clinton said in his weekly radio
address on Saturday.
The president said the government will begin in the next few days buying
more than 80 million bushels of wheat (2.5 million tons). The action, he
said, could boost depressed prices for the crop by as much as 13 cents
per bushel, or about five percent.
The wheat will be donated to Ethiopia, Sudan, Eritrea, North Korea and
Indonesia. U.S. officials said those countries have been battered by
economic crises, drought or war and are unable to feed themselves or buy
wheat commercially.
''With the economic crisis in Asia weakening some of our best customers
for farm products, and with strong world crop production bringing prices
down, and with farmers facing floods and fires and drought and crop
disease, our farmers face a difficult and dangerous moment,'' Clinton
said.
The address was recorded on Friday evening during a visit by the
president to his native Arkansas.
Clinton said he was taking steps to enhance a ''safety net'' under new
U.S. farm legislation, which he reluctantly signed in 1996. The
legislation did away with traditional subsidies linked to crop
production and replaced them with guaranteed payments that decline over
time.
''Sooner or later prices were bound to fall so low that we would need
that safety net. That day has come,'' Clinton said. ''America's farm
families face a crisis, and we have an obligation to help.''
Overall, the income of American farmers has been forecast to drop five
percent this year to $52 billion, reflecting the global grain glut and
the problems caused by the Asian economic crisis.
It would be a far cry from 1996 when income crested at $60 billion on
depleted stockpiles worldwide. Income averaged $53.2 billion annually in
the first half of the decade.
The White House said the purchase announced by Clinton would amount to
about $250 million worth of wheat with transportation costs included.
Wheat prices closed on Friday in Chicago at $2.66 per bushel for July
wheat futures contracts, down from $3.29 a year ago.
The prospects for a record soybean harvest and near-record corn harvest
this year portend continued weak prices, the White House said.
Earlier this week Clinton signed into law a measure that exempted farm
export credits from congressionally-mandated sanctions imposed on India
and Pakistan for conducting nuclear tests.
The Senate this week also adopted a $500 million plan to aid farmers who
experience repeated crop losses, a measure House Speaker Newt Gingrich
later said he was inclined to also support. He also proposed legislation
to speed up $5.5 billion payments farmers are to receive under the
existing farm bill.
But the Republican-dominated Senate rejected, on a party- line vote,
Democratic proposals for hefty increases in harvest- time crop loans to
farmers that was the first major challenge to the 1996 farm bill.
In his radio address, Clinton reiterated his call for more generous
credit and crop loan terms for farmers. He also urged in his speech that
Congress approve stalled funding for the International Monetary Fund as
a way to bolster the purchasing power of countries receiving IMF
support.
Agriculture Secretary Dan Glickman told reporters in Washington the
purchases announced by Clinton may be followed by more as needed to cut
stockpiles, and could be expanded to other surplus commodities.
Brian Atwood, administrator of the U.S. Agency for International
Development, told reporters a total of nine countries were under
consideration for receiving food donations.
''For those of us in the humanitarian relief and emergency food
business, this has been one of the worst years on record,'' Atwood said.
''We have here a food surplus that is driving food commodity prices
down, and overseas we have serious starvation and famine and a real need
for the food that the American farmers can produce,'' he said.
Glickman said the purchases would not require additional appropriations
from Congress. He said the wheat purchases could also help boost prices
for corn.
Copyright 1998 Reuters Limited |
