I thought some might be interested in what is going on to the south...
http://www.magicvalley.com/agweekly/aggrain/
Loan rates start debate
By Cindy Snyder
Ag Weekly correspondent
IDAHO FALLS -- A new provision in the 2002 Farm Bill that provides different county loan rates for different classes of wheat has left some growers concerned that important southern Idaho wheat markets may be lost.
Hans Hayden, a wheat producer from the Arbon Valley, fears the new loan structure will put the U.S. Department of Agriculture -- not the marketplace -- in charge of planting decisions.
He uses Power County as an example of how he believes the loan differential will shift production away from soft white wheat. In 2001, a wheat producer in Power County received a loan deficiency payment based on the county loan rate of $2.53 a bushel regardless of whether the wheat was soft white or hard red spring. Under the provisions of the new farm bill, the loan rate for soft white wheat in Power County has improved to $2.64 a bushel, but the loan rate for hard red spring wheat is $2.96 a bushel.
With the new, improved hard red spring wheat varieties that are producing comparable yields to soft white wheat in the Arbon Valley, Hayden said flatly, the 32 cent differential would be enough incentive for him never to grow soft white wheat again.
"It's going to drive soft white out of our market," Hayden said. "One hundred percent of the soft white from Twin Falls to Idaho Falls is sold to a domestic market. We will destroy it (that market)."
But Gordon Gallup, a wheat producer from Ririe, does not believe the imbalance in loan rates will drive soft white wheat out of southern Idaho.
"If your local market is demanding soft white wheat, it will pay you to grow soft white," he said.
County loan rates are set based on a three- to four-year average price. A differential for transportation to the terminal, port or end user is applied to the average price.
Hayden argues that the county rates for southeastern Idaho were set based on the Portland market, when Ogden or Blackfoot -- not Portland -- is the final destination for much of the soft white wheat grown east of Twin Falls. He would like to see the Idaho grain industry lobby to change the loan rate structure.
"If everything else is equal, I will grow the wheat with the highest loan rate," Hayden said, pointing out that grain producers have received their greatest income from LDPs -- not the market place -- in recent years.
In Power County, the highest loan rate is for durum at $3.73 a bushel. But production costs and quality concerns do not make durum an easy substitute for soft white wheat in southeastern Idaho.
Steve Johnson, executive director for the Idaho Grain Producers Association, expects the improved loan rate for durum will encourage some producers, especially those in North Idaho, to plant more durum wheat. Loan rates for durum range from a low of $3.68 a bushel in Jefferson County to a high of $4.08 a bushel in Nez Perce County.
Some questions have also been raised about the county loan rates for barley. Evan Hayes, a barley grower from Soda Springs, points out that the loan rate in Caribou County increased by a dime over last year (from
$2.01 to $2.11 a bushel) but counties like Benewah, where very little barley is produced, saw a 29-cent increase ($1.77 to $2.06 a bushel).
"There is no rhyme or reason to the difference," Hayes said.
http://www.magicvalley.com/agweekly/aggrain/
Loan rates start debate
By Cindy Snyder
Ag Weekly correspondent
IDAHO FALLS -- A new provision in the 2002 Farm Bill that provides different county loan rates for different classes of wheat has left some growers concerned that important southern Idaho wheat markets may be lost.
Hans Hayden, a wheat producer from the Arbon Valley, fears the new loan structure will put the U.S. Department of Agriculture -- not the marketplace -- in charge of planting decisions.
He uses Power County as an example of how he believes the loan differential will shift production away from soft white wheat. In 2001, a wheat producer in Power County received a loan deficiency payment based on the county loan rate of $2.53 a bushel regardless of whether the wheat was soft white or hard red spring. Under the provisions of the new farm bill, the loan rate for soft white wheat in Power County has improved to $2.64 a bushel, but the loan rate for hard red spring wheat is $2.96 a bushel.
With the new, improved hard red spring wheat varieties that are producing comparable yields to soft white wheat in the Arbon Valley, Hayden said flatly, the 32 cent differential would be enough incentive for him never to grow soft white wheat again.
"It's going to drive soft white out of our market," Hayden said. "One hundred percent of the soft white from Twin Falls to Idaho Falls is sold to a domestic market. We will destroy it (that market)."
But Gordon Gallup, a wheat producer from Ririe, does not believe the imbalance in loan rates will drive soft white wheat out of southern Idaho.
"If your local market is demanding soft white wheat, it will pay you to grow soft white," he said.
County loan rates are set based on a three- to four-year average price. A differential for transportation to the terminal, port or end user is applied to the average price.
Hayden argues that the county rates for southeastern Idaho were set based on the Portland market, when Ogden or Blackfoot -- not Portland -- is the final destination for much of the soft white wheat grown east of Twin Falls. He would like to see the Idaho grain industry lobby to change the loan rate structure.
"If everything else is equal, I will grow the wheat with the highest loan rate," Hayden said, pointing out that grain producers have received their greatest income from LDPs -- not the market place -- in recent years.
In Power County, the highest loan rate is for durum at $3.73 a bushel. But production costs and quality concerns do not make durum an easy substitute for soft white wheat in southeastern Idaho.
Steve Johnson, executive director for the Idaho Grain Producers Association, expects the improved loan rate for durum will encourage some producers, especially those in North Idaho, to plant more durum wheat. Loan rates for durum range from a low of $3.68 a bushel in Jefferson County to a high of $4.08 a bushel in Nez Perce County.
Some questions have also been raised about the county loan rates for barley. Evan Hayes, a barley grower from Soda Springs, points out that the loan rate in Caribou County increased by a dime over last year (from
$2.01 to $2.11 a bushel) but counties like Benewah, where very little barley is produced, saw a 29-cent increase ($1.77 to $2.06 a bushel).
"There is no rhyme or reason to the difference," Hayes said.