1994 Wheat and Feed Grain Acreage Reduction Programs and the 1994 Oilseed Price Support Rates

SUMMARY: The Commodity Credit Corporation (CCC) issued proposed rules

with respect to the 1994 production adjustment program for wheat on

April 6, 1993, and for feed grains on August 5, 1993, which is

conducted by the CCC in accordance with the Agricultural Act of 1949

(1949 Act), as amended. This final rule amends the regulations to set

forth the following determinations: the Acreage Reduction Program (ARP)

percentages for the 1994 crops of wheat, corn, grain sorghum, barley,

and oats will be zero percent; a paid land diversion (PLD) program will

not be implemented for the 1994-crop of wheat and feed grains;

producers of malting barley must, as a condition of eligibility for

feed grain loans, purchases, and payments, comply with requirements of

the zero percent ARP for the 1994 crop of barley; and the 1994-crop

price support rates per bushel will be $2.58 for wheat, $1.89 for corn,

$1.80 for grain sorghum, $1.54 for barley, $0.97 for oats, $1.61 for

rye, $4.92 for soybeans, and $0.087 per pound for canola, flaxseed,

mustard seed, rapeseed, safflower, and sunflower seed. These actions

are required by section 107B, in the case of wheat, section 105B, in

the case of feed grains, and section 205, in the case of oilseeds, of

the 1949 Act.

EFFECTIVE DATE: August 2, 1994.

FOR FURTHER INFORMATION CONTACT: Philip W. Sronce, Director, Grains

Analysis Division, Agricultural Stabilization and Conservation Service,

United States Department of Agriculture (USDA), P.O. Box 2415,

Washington, DC 20013-2415 or call 202-720-4418.

SUPPLEMENTARY INFORMATION:

Final Regulatory Impact Analysis

The Final Regulatory Impact Analysis describing the options

considered in developing this rule and the impact of the implementation

of each option is available on request from the above-named individual.

Executive Order 12866

This final rule is issued in conformance with Executive Order

12866. Based on information compiled by the USDA, it has been

determined to be ``economically significant'' because it would have an

annual effect on the economy of more than $100 million and would

materially alter the budgetary impact of entitlements, or loan programs

or rights and obligations of recipients thereof. Budget outlays for

1994-crop deficiency payments are expected to range from $1.3 billion

to $1.8 billion for wheat and from $2.5 billion to $3.0 billion for

feed grains. This final rule would not adversely affect in a material

way the economy, a sector of the economy, productivity, competition,

jobs, the environment, public health or safety, or State, local, or

tribal governments or communities; would not create a serious

inconsistency or otherwise interfere with an action taken or planned by

another agency; and would not raise novel legal or policy issues

arising out of legal mandates, the President's priorities, or

principles set forth in Executive Order 12866.

Federal Assistance Programs

The titles and numbers of the Federal Assistance Programs, as found

in the Catalog of Federal Domestic Assistance, to which this rule

applies, are as follows:

------------------------------------------------------------------------

Titles Numbers

------------------------------------------------------------------------

Commodity Loans and Purchases................................ 10.051

Feed Grain Production Stabilization.......................... 10.055

Wheat Production Stabilization............................... 10.058

------------------------------------------------------------------------

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is

applicable to this final rule because the CCC is required by sections

107B(o) and 105B(o) of the 1949 Act to publish a notice of proposed

rulemaking with respect to certain provisions of this rule. A Final

Regulatory Flexibility Analysis for the 1994 Wheat and Feed Grain ARP

was prepared as part of the Final Regulatory Impact Analysis. Copies of

this analysis are available from the above-named individual.

Executive Order 12778

This final rule has been reviewed in accordance with Executive

Order 12778. The provisions of this final rule do not preempt State

laws, are not retroactive, and do not require the exhaustion of any

administrative appeal remedies.

Environmental Evaluation

It has been determined by an environmental evaluation that this

action will not have a significant impact on the quality of the human

environment. Therefore, neither an Environmental Assessment nor an

Environmental Impact Statement is needed.

Executive Order 12372

This program/activity is not subject to the provisions of Executive

Order 12372, which requires intergovernmental consultation with State

and local officials. See the Notice related to 7 CFR part 3015, subpart

V, published at 48 FR 29115 (June 24, 1983).

Paperwork Reduction Act

The amendments to 7 CFR parts 1413 and 1421 set forth in this final

rule do not contain information collections that require clearance by

the Office of Management and Budget under the Paperwork Reduction Act

of 1980 (44 U.S.C. 35).

Background

This final rule amends 7 CFR parts 1413 and 1421 to set forth

determinations of the 1994 production adjustment programs for wheat and

feed grains and the 1994 price support rates for wheat, feed grains,

and oilseeds. General descriptions of the statutory basis for the 1994

Wheat and Feed Grain Program determinations in this final rule were set

forth at 58 FR 17087 (April 6, 1993) and at 58 FR 41641 (August 5,

1993), respectively.

1994 Wheat Program

The public was asked to comment on whether the 1994 wheat ARP

percentage should be set at 5 percent, 10 percent, or 15 percent or

another percentage between 0 and 15 percent. Comments received during

the comment period are summarized as follows:

A total of 45 respondents commented on the ARP level. Table 1 shows

a breakdown of the comments received by type of respondent.

Table 1.--Summary of Comments on 1994 Wheat ARP Levels, by Respondent Type

----------------------------------------------------------------------------------------------------------------

ARP Percentage \1\

--------------------------------------------------------------

Item Other

No ARP 0% 5% 10% 15% >15% Total

----------------------------------------------------------------------------------------------------------------

Farm Organizations............................... 8.0 2.0 1.0 11.0

Agri-businesses.................................. 1.0 8.0 9.0

Individual Producers............................. 6.0 1.0 3.5 12.0 2.5 25.0

--------------------------------------------------------------

Total.......................................... 1.0 22.0 3.0 4.5 12.0 2.5 45.0

----------------------------------------------------------------------------------------------------------------

\1\A comment that gives a range is considered as half of a comment for each of the end points. For example, 0%

to 5% is counted as 0.5 for 0% and 0.5%.

Respondents favored lower ARP percentages for the following

reasons: (1) Wheat-sector net income is higher with lower ARP levels;

(2) the need to send a message to our competitors that the U.S. will

not unilaterally reduce production and abandon world markets; (3)

higher payment acres after flexibility; and (4) idling acres under the

conservation reserve program and annual programs hurt rural economic

activity.

Advocates for higher ARP percentages noted that higher ARP levels:

(1) result in higher wheat prices; (2) result in lower Government

costs; and (3) reduce concerns over stock-building.

After considering these comments, the Secretary of Agriculture (the

Secretary) announced, on May 28, 1993, an ARP of zero percent. The

Secretary was authorized to make adjustments in the 1994 ARP percentage

no later than July 31, 1993. No change was made because estimated 1994

wheat supplies did not change significantly (up 4 percent) from the May

1993 supply estimates. The Secretary determined that a zero percent ARP

for wheat would maintain U.S. competitiveness in world markets while

balancing the risks of excessive supplies and possible shortages,

signal U.S. competitors that the U.S. will not idle acreage to support

the world price of wheat, and signal to domestic and foreign customers

that the U.S. will be a reliable supplier.

The zero-percent ARP option is the only option under which U.S.

wheat supplies are estimated to increase over 1993 levels. Table 2

compares supply and demand estimates under four different ARP options

based on May 1993 estimates (the month in which the ARP decision was

made).

Table 2.--Comparison of 1994 Wheat Supply and Demand Estimates Under

Various ARP Options

------------------------------------------------------------------------

1994 ARP options

Item -----------------------------------

1 2 3 4

------------------------------------------------------------------------

ARP (percent)....................... 0 5 10 15

Participation (percent)............. 86 85 83 81

Planted Acreage (mil. ac.).......... 72.5 70.7 68.4 65.8

Production (mil. bu.)............... 2,414 2,355 2,281 2,200

Domestic User (mil. bu.)............ 1,225 1,210 1,190 1,170

Exports (mil. bu.).................. 1,250 1,240 1,230 1,215

Ending Stocks 8/31 (mil. bu.)....... 677 643 599 553

Average Market Price ($ per bu.).... 2.65 2.70 2.80 2.92

Deficiency Payments (mil. $)........ 2,343 2,096 1,763 1,431

Net Income to Wheat Producers (mil.

$)................................. 5,420 5,184 4,956 4,755

------------------------------------------------------------------------

The announced ARP level of zero percent is 15 percentage points

below the statutory maximum of 15 percent. The 1949 Act provides that

an ARP of not more than 15 percent may be implemented if the ending

stocks-to-use (S/U) ratio for the previous marketing year is equal to

or less than 40 percent. When the 1994 ARP was announced, the S/U for

the 1993 marketing year was estimated to be 27.0 percent. Because the

1993 S/U level is below 34 percent, the minimum 7-percent ARP imposed

by section 1104 of the Agricultural Reconciliation Act of 1990 does not

apply.

A PLD will not be implemented for 1994 wheat because it is

unnecessary given the supply and use conditions which led to an ARP of

0 percent.

1994 Feed Grain Program

The public was asked to comment on the appropriate 1994 ARP

percentage for corn, grain sorghum, and barley and on whether or not

malting barley producers, as a condition of eligibility for feed grain

loans, purchases, and payments, should be exempt from complying with

requirements of the feed grain ARP. The statutory range for

establishing the 1994 ARP percentages, based on the supply and demand

estimates published in the proposed rule, was 0 to 12.5 percent for

corn and 0 to 20 percent for grain sorghum and barley. The oats ARP

percentage is statutorily mandated at zero percent.

Comments received during the specified comment period are

summarized as follows:

A total of 34 respondents commented on the ARP percentage. Twenty-

nine of the respondents commented on the corn ARP percentage, 14 of the

respondents commented on the grain sorghum ARP percentage, and 17 of

the respondents commented on the barley ARP percentage. Table 3 shows a

breakdown of the comments received on the corn, grain sorghum, and

barley ARP percentage by type of respondent.

Table 3.--Summary of Comments on the 1994 Feed Grain ARP Levels, by Commodity and Respondent Type

----------------------------------------------------------------------------------------------------------------

ARP percentage

Item -----------------------------------------------------------------

0% 5% 7.5% 10% 12.5% >12.5%

----------------------------------------------------------------------------------------------------------------

Corn:

Farm Organizations........................ 1 0 1 0 1 0

Agri-businesses........................... 5 0 0 1 1 0

Individual/Producers...................... 1 0 0 0 1 0

Others.................................... 1 0 0 8 7 1

-----------------------------------------------------------------

Total................................. 8 0 1 9 10 1

Grain Sorghum:

Farm Organizations........................ 1 0 0 0 0 0

Agri-businesses........................... 4 0 0 1 0 0

Individual/Producers...................... 1 0 0 0 0 0

Others.................................... 1 0 0 5 0 1

-----------------------------------------------------------------

Total................................. 7 0 0 6 0 1

Barley:

Farm Organizations........................ 5 0 0 0 4 0

Agri-businesses........................... 4 0 0 1 6 0

Individual/Producers...................... 1 0 0 0 2 0

Others.................................... 1 0 0 5 65 0

-----------------------------------------------------------------

Total................................. 11 0 0 6 77 0

----------------------------------------------------------------------------------------------------------------

In general, most individual producers favored an ARP level of 10

percent or higher while most farm organization and agri-business

respondents favored an ARP level of 7.5 percent or less.

Respondents favoring the lower ARP percentages noted that the U.S.

needs to produce more to take advantage of export opportunities and

confirmed USDA's analysis that a lower ARP level results in higher

producer incomes. Advocates for a zero-percent barley ARP indicated the

need for adequate supplies to aggressively implement the Export

Enhancement Program for barley.

Respondents favored higher ARP percentages because feed grain

prices would be higher, Government costs would be lower, and the rural

economy would improve.

Two respondents commented on whether or not malting barley

producers should be exempt from the 1994 ARP requirement for barley.

One respondent favored and one respondent opposed the malting barley

exemption.

After considering these comments, the Secretary announced on

September 30, 1993, an ARP level of 5 percent for corn, and 0 percent

for grain sorghum, barley, and oats, and that malting barley producers

would not be exempt from complying with the 1994 barley ARP

requirements.

The Secretary was authorized to make adjustments in the 1994 ARP

percentages no later than November 15, 1993. On November 15, 1993, the

Secretary announced that the 1994 level for corn would be lowered from

5 percent to 0 percent. A change was warranted because 1994 feed grain

supplies had decreased 8 percent since the September announcement.

The Secretary determined that zero-percent ARP's for corn, grain

sorghum, and barley would maintain U.S. competitiveness in world

markets, provide adequate supplies of quality feed and food for

domestic and foreign utilization, and support farm income.

The corn ARP level of 0 percent is 12.5 percentage points below the

statutory maximum of 12.5 percent. The 1949 Act provides that an ARP of

0 to 12.5 percent may be implemented if the corn ending S/U ratio for

the previous marketing year is equal to or less than 25 percent. The

corn ending S/U for the 1993/94 marketing year was estimated to be 16.6

percent when the 1994 ARP levels were announced on September 30 and

11.4 percent when the corn ARP was lowered on November 15. In the case

of grain sorghum and barley, the 1949 Act provides for ARP percentages

from 0 to 20 percent. Section 1104 of the Agricultural Reconciliation

Act of 1990 provides for a minimum 7.5 percent ARP for the 1994 crop

unless the 1993/94 corn ending S/U ratio is less than 20 percent. Since

the 1993/94 corn S/U ratios estimated on September 30 and on November

15 were below 20 percent, the 7.5-percent minimum ARP does not apply.

Table 4 shows the three different 1994 feed grain ARP options that

were considered when determining the final 1994 ARP percentages.

Table 4.--1994 Feed Grain ARP Options

------------------------------------------------------------------------

1994 ARP Options

(percentages)

Crop --------------------------

1 2 3

------------------------------------------------------------------------

Corn......................................... 0 5 12.5

Grain Sorghum................................ 0 0 5

Barley....................................... 0 0 5

------------------------------------------------------------------------

Tables 5 through 7 compare the supply and demand estimates of three

different 1994 ARP options based on November 1993 estimates for corn,

grain sorghum, and barley.

Table 5.--Comparison of 1994 Corn Supply and Demand Estimates Under

Various ARP Options

------------------------------------------------------------------------

1994 ARP options

Item -----------------------------

1 2 3

------------------------------------------------------------------------

ARP (percent)............................. 0 5 12.5

Participation (percent)................... 74 71 65

Planted Acreage (mil. ac.)................ 79.5 77.5 74.7

Production (mil. bu.)..................... 8,870 8,645 8,325

Domestic Use (mil. bu.)................... 6,940 6,900 6,815

Exports (mil. bu.)........................ 1,420 1,400 1,360

Ending Stocks 8/31 (mil. bu.)............. 1,396 1,231 1,036

Average Market Price ($ per bu.).......... 2.32 2.40 2.50

Deficiency Payments (mil. $).............. 2,203 1,618 959

Net Income to Corn Producers (mil. $)..... 11,633 11,450 11,186

------------------------------------------------------------------------

Table 6.--Comparison of 1994 Grain Sorghum Supply and Demand Estimates

Under Various ARP Options

------------------------------------------------------------------------

1994 ARP options

Item -----------------------------

1 2 3

------------------------------------------------------------------------

ARP (percent)............................. 0 0 5

Participation (percent)................... 76 75 69

Planted Acreage (mil. ac.)................ 11.3 11.3 11.1

Production (mil. bu.)..................... 680 680 665

Domestic Use (mil. bu.)................... 413 418 403

Exports (mil. bu.)........................ 225 222 222

Ending Stocks 8/31 (mil. bu.)............. 120 118 118

Average Market Price ($ per bu.).......... 2.12 2.17 2.30

Deficiency Payments (mil. $).............. 230 203 125

Net Income to Sorghum Producers (mil. $).. 835 844 829

------------------------------------------------------------------------

Table 7.--Comparison of 1994 Barley Supply and Demand Estimates Under

Various ARP Options

------------------------------------------------------------------------

1994 ARP options

Item -----------------------------

1 2 3

------------------------------------------------------------------------

ARP (percent)............................. 0 0 5

Participation (percent)................... 79 75 76

Planted Acreage (mil. bu.)................ 8.0 8.0 7.8

Production (mil. bu.)..................... 430 430 420

Domestic Use (mil. bu.)................... 380 380 375

Exports (mil. bu.)........................ 85 84 84

Ending Stocks 5/13 (mil. bu.)............. 122 123 118

Average Market Price ($ per bu.).......... 2.10 2.15 2.25

Deficiency Payments (mil. $).............. 136 123 91

Net Income to Barley Producers (mil. $)... 631 641 639

------------------------------------------------------------------------

Malting barley producers will not be exempted from complying with

the barley ARP requirement because exempting them would increase the

complexity of the program and increase program outlays.

Acreage Reduction Percentage. In accordance with sections

107B(e)(1) and 105B(e)(1) of the 1949 Act, the ARP has been established

with respect to the 1994 crop of corn, grain sorghum, barley, and oats

at 0 percent. Accordingly, producers will not be required to reduce

their 1994 acreage of corn, grain sorghum, and barley for harvest from

the crop acreage base established for feed grains for a farm in order

to be eligible for price support loans, purchase, and payments for the

respective feed grain.

Paid Land Diversion. In accordance with sections 107B(e)(5) and

105B(e)(5) of the 1949 Act, a PLD program will not be implemented for

the 1994 crops of wheat and feed grains.

Malting Barley Exemption. In accordance with section 105B(e)(2)(G)

of the 1949 Act, producers of malting barley shall as a condition of

eligibility of feed grain loans, purchases and payments, comply with

the requirements of the zero-percent ARP for the 1994 crop of barley.

Price Support Rates. In accordance with sections 107B(a), 105B(a),

and 205 of the 1949 Act, the price support rates have been established

with respect to the 1994 crops of wheat at $2.58 per bushel, corn at

$1.89 per bushel, grain sorghum at $1.80 per bushel, barley at $1.54

per bushel, oats at $0.97 per bushel, rye at $1.61 per bushel, soybeans

at $4.92 per bushel, and canola, flaxseed, mustard seed, rapeseed,

safflower, and sunflower seed at $0.087 per pound.

List of Subjects

7 CFR Part 1413

Acreage allotments, Cotton, Disaster assistance, Feed grains, Price

support programs, Reporting and recordkeeping requirements, Rice, Soil

conservation, Wheat.

7 CFR Part 1421

Grains, Loan programs--agriculture, Oilseeds, Peanuts, Price

support programs, Reporting and recordkeeping requirements, Soybeans,

Surety bonds, Warehouses.

Accordingly, 7 CFR parts 1413 and 1421 are amended as follows:

PART 1413--FEED GRAIN, RICE, UPLAND AND EXTRA LONG STAPLE COTTON,

WHEAT AND RELATED PROGRAMS

1. The authority citation for 7 CFR part 1413 continues to read as

follows:

Authority: 7 U.S.C. 1308, 1308a, 1309, 1441-2, 1444-2, 1444f,

1445b-3a, 1461-1469; 15 U.S.C. 714b and 714c.

2. Section 1413.54 is amended by:

A. Revising paragraph (a)(1)(iii) and adding paragraph (a)(1)(iv),

B. Revising paragraphs (a)(2)(iii)(B) and (a)(2)(iii)(C) and adding

paragraph (a)(2)(iv),

C. Republishing paragraph (d)(4) introductory text, and adding

paragraphs (d)(4)(i) and (d)(4)(ii), and

D. Revising paragraph (e) to read as follows:

Sec. 1413.54 Acreage reduction program provisions.

(a) * * *

(1) * * *

(iii) 1993 wheat, 0 percent; and

(iv) 1994 wheat, 0 percent.

(2) * * *

(iii) * * *

(B) Grain sorghum, 5 percent

(C) Barley and oats, 0 percent; and

(iv) For the 1994 crop: corn, grain sorghum, barley, and oats, 0

percent.

* * * * *

(d) * * *

(4) For the 1994 crop:

(i) Shall not be made available to producers of wheat,

(ii) Shall not be made available to producers of feed grains.

* * * * *

(e) With respect to the 1991, 1992, 1993, and 1994 crop years, in

order to receive feed grain loans, purchases, and payments in

accordance with this part and part 1421 of this title, producers of

malting barley must comply with the acreage reduction requirements of

this part.

* * * * *

PART 1421--GRAINS AND SIMILARLY HANDLED COMMODITIES

3. The authority citation for 7 CFR part 1421 continues to read as

follows:

Authority: 7 U.S.C. 1421, 1423, 1425, 1441z, 1444f-1, 1445b-3a,

1445c-3, 1445e, and 1446f; 15 U.S.C. 714b and 714c.

4. In Sec. 1421.7, paragraphs (b)(1)(iv), (b)(2)(iv), (b)(3)(iv),

(b)(4)(iv), (b)(5)(iv), (b)(6)(iv), (b)(9)(iv), and (b)(10)(iv) are

added to read as follows:

Sec. 1421.7 Adjustment of basic support rates.

* * * * *

(b) * * *

(1) * * *

(iv) 1994 Wheat--$2.58 per bushel;

(2) * * *

(iv) 1994 Corn--$1.89 per bushel;

(3) * * *

(iv) 1994 Barley--$1.54 per bushel;

(4) * * *

(iv) 1994 Oats--$0.97 per bushel;

(5) * * *

(iv) 1994 Grain sorghum--$1.80 per bushel;

(6) * * *

(iv) 1994 Rye--$1.61 per bushel;

* * * * *

(9) * * *

(iv) 1994 Soybeans--$4.92 per bushel;

(10) * * *

(iv) 1994 Canola, flaxseed, mustard seed, rapeseed, safflower, and

sunflower seed--$0.087 per pound.

* * * * *

Signed on July 20, 1994 at Washington, DC.

Bruce R. Weber,

Acting Executive Vice President, Commodity Credit Corporation.

[FR Doc. 94-18656 Filed 8-1-94; 8:45 am]

BILLING CODE 3410-05-P