Return to TFB Main Page
Return to Texas Agriculture Archive

August 3, 2001

Kansas State University estimates the CRC harvest price for hard red winter wheat was $3.09 per bushel based on last month's closing prices for Kansas City July futures. The estimate for soft red winter wheat is $2.47, based on the Chicago July wheat futures average in June.

The threshold amount of insurance for CRC policies is determined by the higher of the planting price or the harvest price. The planting price was $3.31 for HRW and it was $2.97 for SRW, so those levels will be used for the 2001 winter wheat crop to determine whether the CRC policy holder is eligible for an indemnity payment.

Indemnity payments are triggered if harvest revenue (CRC harvest price x actual yield) drops below the policy coverage level. For example, a wheat producer with 70 percent coverage and a 40-bushel APH would have locked in a minimum revenue of $92.68 per acre at planting (40 x 0.70 x 3.31). If that producer harvested only 10 bushels per acre, his harvest revenue would have dropped to $30.90 per bushel (10 x 3.09) based on the June average price for Kansas City July futures. In this example, he will receive an estimated indemnity payment of $61.78 per acre (92.68 - 30.90). Actual payments may vary slightly from the early estimate, pending final publication of the June average prices by USDA.
Source: Doane's Management Planner Vol. 64, July 6, 2001

Will mushroom decision impact all check-offs?
In its decision in United States vs. United Foods, Inc. issued June 25, 2001, the U.S. Supreme Court has invalidated the Mushroom Promotion, Research and Consumer Information Act (related story pages 18-19).

The Act mandated that fresh mushroom handlers pay assessments used primarily to fund advertisements promoting mushroom sales. The Court held that the assessment requirement of the Mushroom Promotion Act violated the First Amendment free speech protection.

The Court stated that when considering whether a check-off program violates the free speech clause of the First Amendment, they would look at the entire regulatory program involving check-off programs.

How will this case affect the other agricultural check-offs? It is dangerous to guess how the Court will decide a particular case. The particular facts of each case may make a major difference in the final decision. It does appear that those opposed to the other check-off programs (pork, beef, milk—which has two check-off programs (one for producers and one for processors), eggs, soybean and cotton) will be encouraged to try to challenge the validity of these programs.

On the other hand, the mushroom case does not necessarily mean that the other check-off programs violate the free speech clause of the First Amendment. If the programs can show that the main purpose is not advertising, that the industry is regulated and that the promotion of the product does not force the objecting producer to say something that they do not want to say, then the check-off program would probably have a good chance of being declared legal.
Source: American Farm Bureau Federation Public Policy Bulletin, July 16, 2001

Dollar's strength should be addressed
The American Farm Bureau Federation and the National Association of Manufacturers have urged President Bush to make currency realignment a top priority at the upcoming G-8 Economic Summit, saying the dollar's overvaluation has caused "economic hemorrhaging."

Overvaluation of the dollar is one of the most pressing international economic problems facing America's agriculture and manufacturing sectors. The dollar has risen nearly 30 percent against major currencies in the last four years and is having a major negative impact on agricultural and manufacturing exports, production and employment.

Industry leaders say the effects were lost sales and lost jobs at home. They urged Bush to take steps to ensure that the value of the dollar is "consistent with economic reality and market conditions" and work with the industrialized nations to "address the disparities in exchange rate markets."
Source: American Farm Bureau Federation Executive Newswatch, July 18, 2001