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July 6, 2001

LDPs for wheat that is grazed out are based on the higher of the county average yield or the farm's established yield. LDP eligibility extends from the mechanical harvesting date for the county through Aug. 31, 2001.

Submit Form 633-Grazing, to the FSA before the cutoff date to collect the LDP. Of course, when prices are above the CCC loan, there is no opportunity for an LDP on graze-out acreage. That may well be the case for hard red winter wheat through Aug. 31.
Source: Doane's Management Planner; Vol. 64, No. 25, June 22, 2001

USDA: Market loss payments trade distorting
USDA recently announced to the World Trade Organization (WTO) that market loss assistance payments to agriculture producers in 1998 were trade-distorting and belong in the WTO amber box. According to the USDA, under WTO rules, market loss assistance payments must be classified in the amber box, rather than the green box, because the payments were made due to low prices.

WTO rules classify domestic supports as either amber box (if they are linked to price or production), blue box (if they are based on fixed production) or green box (if they are not linked to price or production). Only the amber box category imposes specific ceilings on the allowable level of supports. Developed countries are allowed to spend up to 5 percent of the total value of their agricultural production in the amber box without it counting against the cap. Blue and green box payments are not capped. AMTA payments are considered green box because they are non-trade distorting. They are decoupled, not based on price or production of that year. Amber box payments include market price support programs, loan deficiency payments and marketing loan gains under commodity loan programs.
Source: AFBF Speedline, June 22, 2001


Will gold be standard for Internet commerce?
While the world's central banks gradually abandon gold as backing for their nations' currencies, it's catching on fast as a global medium for Internet commerce.

Landowner archives showed that they've visited gold's role several times in their nearly 23 years of coverage—including the use of a "gold clause" in land contracts as protection against abrupt inflation or deflation of currency. Now, several Internet firms are setting up exchanges allowing buyers and sellers to specify payment in grams of gold—a medium honored around the world. Gold's freedom from fluctuating currency rates reduces risk and should cut transaction costs.
Source: Landowner, Vol. 23, No. 12, June 25, 2001

Farmland value tied to federal payments
At a hearing on farm credit policy in the next farm bill, USDA Economic Research Service, Market and Trade Economics Division Director Neilson Conklin testified that the overall financial health of farmers and their lenders remains solid despite low prices for major farm commodities. However, he noted that 25 percent of the value of farm land in non-urban areas is due to federal payments and both farmers and lenders are "vulnerable" to a drop in land values if the payments stop. ERS has calculated that the value of farm real estate rose 36 percent between 1992 and 2000 despite low commodity prices in recent years.

Sen. Richard Lugar said that the 25 percent value based on federal payments is "obviously an abnormal situation." He noted that the critics say farm payments lead to overproduction, but added that if the payments stop, the decision "would make everybody involved in the credit business less creditworthy."

Senator Tom Harkin said, "continuing on the same path blanks out the prospects for young farmers," but cutting off the payments would also be "wrenching...we've got to find a way out, a soft landing." He added that the payments "do the opposite of keeping the family-sized structure and healthy rural areas."

Neither Lugar nor Harkin mentioned the possibility that commodity prices could rise so that farm land would be worth its current value without farm payments. USDA economists have said commodity prices are expected to remain low.
Source: Washington Ag - DTN, May 21, 2001 & AFBF Speedline, May 2001

Monsanto sets new biotech seed pricing
Monsanto will eliminate technology fees for biotech corn and soybeans for 2002. Instead, seed companies that license Roundup Ready soybeans and YieldGard corn will make royalty payments to Monsanto. Technology fees will be embedded in the price paid for seed by the producer rather than paid separately. The new pricing policy does not apply to cotton and canola.
Source: Doane's Agriculture Report, Vol. 64, No. 25, June 22, 2001