AROUND 3.5 MLN ACRES SAID TO BE IDLED BY 0/92
A 0/92 program would have very
little impact on U.S. acreage, prompting farmers to idle only
an additional 3.5 mln acres of cropland every year, according
to a report from the Agriculture Department.
    The savings resulting from the additional 3.5 mln acres
idled would be a little over 400 mln dlrs in loan savings, 35
mln dlrs in transportation and storage savings, and 10-20 mln
dlrs per year in deficiency payment savings, the report said.
    The USDA report asssessed the impacts of the proposed 0/92
acreage program for wheat, corn, cotton, sorghum and barley.
Last year, almost 245 mln acres of those crops were harvested.
    "The likelihood that the 0-92 provisiion will cause very
large acreages to be removed from crop production is quite
small," the report said.
    "The returns on typical farms still favor participation in
the usual acreage reduction programs and seeding the permitted
acreage," the USDA report said.
    The 0/92 program, which would allow farmers to forego
planting and still receive 92 pct of their deficiency payment,
would be most used by producers in high production/high risk
areas where cost of production is high, said Keith Collins,
director of USDA's economics analysis staff.
    "In the heart of the corn belt, you would not get that much
participation," Collins said.
    USDA estimated that an additional one mln acres of wheat
would be ildled under 0/92, 1.5 mln acres of corn, 500,000
acres of sorghum and barley and 500,000 acres of cotton.
    Production from these idled acres would be equivalent to 40
mln bushels of wheat, 180 mln bushels of corn, 20 mln bushels
of sorghum, 10 mln bushels of barley, and 500,000 bales of
cotton, the report said.
    "In determining whether to participate, a producer would
need to weigh the expected cash costs of production against the
loan rate ... The risk that market prices may rise above the
expected levels and reduce the deficiency payment also must be
considered," according to the analysis.
    "What you're giving up under 0/92 is the difference between
the loan rate and the cost of production," Collins said.
    For producers with low production costs, that difference is
greater and can be applied to paying variable costs, he said.
Under these cicumstances, farmers would not want to go along
with 0/92. But for high cost producers, 0/92 would be more
attractive.
    Also, as loan rates get lower, Collins said there would be
more incentives to participate in a 0/92 program.
    "I would admit that its impacts would be very marginal at
first, but it is a step towards the goal of separating
production decisions from government payments," Collins said.
    In a speech earlier today before the National Grains and
Feed Association, USDA Secretary Richard Lyng said it is too
late to implement 0/92 for 1987 crops since program signup will
be over by the end of this month.
 Reuter
