The OBRA-93 reestablished crop years 1993-95 minimum ARP's outlined in OBRA-1990. The OBRA-93 though, does eliminate the minimum ARP levels for the 1993-95 crops of grain sorghum and barley. Minimum ARPs do not apply if market conditions indicate stock-to-use levels would fall below triggers established in OBRA-90. The OBRA-1993 reduces cotton's ratio of carryover to total disappearance from the current 30% for 1993-94 crop years, to 29.5% for the 1995-96 crop years, and 29% for the 1997 crop year. The stocks-to-use ratio remains the same, as specified in the OBRA-90, for wheat, feed grains, and rice. For the 1993 crops, acreage reduction requirements were 10% for corn, 5% for grain sorghum and 0% for barley, 0% for oats (mandated level through 1995), 5% for rice, 7.5% for upland cotton, 20% for ELS cotton and 0% for wheat. The ARP requirements for the 1994 crops are 0% for wheat, 0% for corn, 0 % for grain sorghum, 0% for barley, 11% for upland cotton, 15% for ELS cotton and 0% for rice. The Secretary is also authorized to make land diversion payments to assist in adjusting the acreage of commodities to desirable goals. These payments may be made in cash, in kind, or in generic certificates which may be redeemed for CCC-owned commodities. No diversion programs were in effect for the 1993 and 1994 wheat, feed grain, cotton and rice crops. The FACT Act provides for planting flexibility, in which producers can choose to plant up to 25% of the crop acreage base with any CCC-specified crop without a reduction in the program crop acreage base on the farm. The OBRA-90 amended the 1949 Act to reduce the acreage on which deficiency payments would be paid by an amount equal to 15 percent of the crop acreage base for the 1991-95 crops to be known as normal flex acreage. The remaining 10 percent is known as optional acreage. This program remains the same under the OBRA-93. Certificate Programs The 1985 Food Security Act authorized, and the FACT Act continues, a number of programs that allow for payments to be made in generic certificates. These programs include the Market Promotion Program (formerly known as the Targeted Export Assistance Program), the Export Enhancement Program and the Dairy Export Incentive Program (DEIP), all designed to maintain and expand export markets for U.S. agricultural commodities and counter unfair trade practices by foreign competitors; CCC discontinued certificate issuance during fiscal year 1993 for all programs except the Upland Cotton User Marketing Program. The total CCC value of certificates issued in fiscal year 1994 for all purposes was $56.8 million. The table below itemizes CCC certificate payments by program for fiscal years 1993 and 1994: Actual CCC Value of Certificates Issued (thousands of dollars) Note: The Upland Cotton User Marketing Program was the only active certificate program in fiscal year 1994. Disaster Assistance The Emergency Supplemental Appropriations for Relief from the Major, Widespread Flooding in the Midwest Act of 1993, P.L. 103-75, signed August 12, 1993, appropriated funds for 1993 crop losses due to damaging weather and related conditions. Funds for 1994 crop losses were made available by the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1995, P.L. 103-330, which was signed September 30, 1994. Disaster payments for 1993 and 1994 crop losses are made available under terms and conditions specified in Title XXII of the FACT Act of 1990, P.L. 101-624. Under these provisions, program crop losses are made at 65 percent of the target price of the commodity, while non program crop losses are made at 65 percent of the market price of the commodity. Eligibility for assistance is limited to producers with gross revenues of less than $2 million, and payments to any person cannot exceed $100.000. Funding for the 1993 and 1994 disaster assistance programs is provided through the use of CCC funds to allow for losses to be paid in an amount equal to 100 percent of each eligible claim. The Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994, P.L. 103-354, was signed October 13, 1994. The reform provisions remove the authority in the Agricultural Act of 1949 for disaster payments and expand current crop insurance authorities to provide for catastrophic coverage at 50 percent yield protection at a flat fee for crops currently covered by insurance programs. Farmers will be able to pay an additional premium to increase coverage. Crop insurance coverage, where available, will be mandatory for participants of the price and income support programs. Where crop insurance coverage is not available, producers of crops for food and fiber and certain other crops will be covered under a Noninsured Assistance Program. The program will reimburse producers at the same rates and terms as the catastrophic program in areas where assistance is triggered by area wide disasters. 90-803 0-95-23 Grain Reserves The Farmer-owned Reserve (FOR) program allows eligible producers to store wheat or feed grains under loan and receive annual storage payments. The FOR is available for producers only for years when prices are low and stocks are high. A determination as to whether the FOR will be opened for a crop is made for wheat by December 15 of the year in which the crop is harvested and for com and other feed grains by March 15 of the year following the year in which the crops are harvested. Grain must have been under 9-month loan until maturity before it is eligible for the FOR. The maximum FOR term is 27 months. Producers may redeem their grain at any time without penalty. The FACT Act of 1990 provides specific triggers which must be met before the FOR is opened. If prices for the 90 day period preceding the FOR announcement date average below 120 percent of the loan rate and the projected ending stocks-to-use ratio for the marketing year is more than 37.5 percent for wheat (22.5 percent for corn), the FOR must be opened for the crop. If only one of the triggers is met, the FOR may be opened. If neither trigger is met, the FOR may not be opened. The FOR was opened for the 1990 crop of wheat, the 1992 crops of com, grain sorghum, and barley, and the 1994 crops of corn, grain sorghum, barley, and oats. It was not opened for the 1991, 1992 and 1993 crops of wheat, and the 1990, 1991 and 1993 crops of feed grains. FOR storage payments are made the end of each quarter at an annual rate of 26.5 cents per bushel. Storage payments stop when the market price for a commodity reaches 95 percent of the target price. Interest charges may begin when the market price reaches 105 percent of the target price. Commodities in the farmer-held grain reserve as of December 20, 1994, are as follows: A food security wheat reserve of 147 million bushels was established on January 16, 1981, under the provisions of the Agricultural Act of 1980. Wheat may only be released from the reserve by special authorization. Once released, the wheat may be used only to meet urgent humanitarian food needs in developing countries under Public Law 480. CCC shall be reimbursed from Public Law 480 funds at the lower of actual costs incurred or the export market price of the wheat subsequent to its release. Dairy Program The FACT Act of 1990, as amended by the Omnibus Budget Reconciliation Act of 1990 (OBRA-90) continued price support for milk at $10.10 per hundredweight for the period January 1 through December 31, 1993. The fiscal year 1994 OBRA savings were achieved through a deduction of 10.12 cents per hundredweight on all milk marketed from January 1 through January 31, 1994, 11.25 cents from February 1 through April 30, 1994, and 19.28 cents from May 1 through December 31, 1994. Sugar Program The FACT Act required a sugar price support loan program for the 1992 through 1995 crops. The OBRA-93 extended the requirement through the 1997 crops. Under this program, the Secretary of Agriculture supports the price of (1) domestically grown sugarcane through nonrecourse loans at not less than 18.0 cents per pound for raw cane sugar, and (2) domestically grown sugar beets at a level that is equitable in terms of the 5-year weighted average ratio or return to sugarcane growers plus fixed marketing expenses. The national average loan rate for refined beet sugar is .2362 cents per pound for the 1993 crop, and .2386 cents for the 1994 crop. The FACT Act, as amended by OBRA-90, requires the first processor of sugarcane and sugar beet to remit to the Commodity Credit Corporation a nonrefundable marketing assessment. The marketing assessments on domestically produced sugar has been increased. For fiscal year 1994, the raw cane sugar assessment remains at $0.0018/pound, and the beet sugar assessment remains at $0.00193/pound. For fiscal years 1995 through 1998, the raw cane sugar assessment is increased to $0.00198/pound, while the beet sugar assessment rises to $0.002123/pound. Wool and Mohair Program. Payments made during fiscal year 1994 on 1993 wool marketings totaled $133.856 million. Payments made on mohair marketings during fiscal year 1994 totaled $67.943 million. The program is discussed further under the National Wool Act elsewhere in these Explanatory Notes. Prompt Payment Act Interest Payments The Rural Development, Agriculture and Related Agencies Appropriations Act for Fiscal Year 1988 (P.L. 100-202) requires CCC to pay a late payment interest penalty on all types of payments, including price support loans if CCC fails to make a payment by the required due date for obligations incurred after January 1, 1988 (payments for the 1988 crop year). Because of this statutory mandate, CCC established payment due dates for farm program payments. Previously, CCC paid interest only on late payments made for the procurement of property or services. Based on provisions in the Prompt Payment Act Amendments of 1988 (P.L. 100-496), beginning with obligations incurred on or after January 1, 1989 (payments for the 1989 crop year), all CCC payments are subject to provisions of the Prompt Payment Act. Total interest paid on late payments during fiscal year 1994 was $.612 million. |