Common Provisions for the 1995 Wheat, Feed Grains, Cotton, and Rice Programs, and Cost Reduction Options

DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Parts 1405 and 1413

RIN 0560-AD86

Common Provisions for the 1995 Wheat, Feed Grains, Cotton, and

Rice Programs, and Cost Reduction Options

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: The Agricultural Act of 1949, as amended (1949 Act), sets

forth numerous discretionary provisions that may be implemented by the

Commodity Credit Corporation (CCC) with respect to the 1995 crops of

wheat, feed grains, upland and extra long staple (ELS) cotton, and

rice. The Food Security Act of 1985, as amended (1985 Act), permits the

Secretary of Agriculture to take certain actions related to nonrecourse

loans and acreage reduction programs if it is determined that they will

reduce total direct and indirect commodity program costs without

adversely affecting incomes of small- and medium-sized producers. CCC

proposes to make the following program determinations with respect to

the price support and production adjustment programs: (a) the

percentage of the estimated deficiency payments that should be made

available in advance to producers of the 1995 crop of wheat, feed

grains, cotton, and rice; (b) the types of crops that may not be

planted on ``flexible acreage''; (c) whether to permit targeted option

payments (TOP); (d) whether to allow the planting of designated crops

on up to one-half of the reduced acreage; (e) whether to allow the

planting of oats on wheat and feed grains acreage conservation reserve

(ACR); (f) whether to allow planting of conserving crops on ACR; (g)

whether to allow alternative crops on conserving use acreage for

payment; and (h) whether to implement cost reduction options. This

proposed rule sets forth CCC's proposed action regarding these

determinations.

DATES: Comments must be received on or before January 27, 1995, in

order to be assured of consideration.

ADDRESSES: Interested persons are invited to submit written comments to

Acting Deputy Administrator, Policy Analysis, P.O. Box 2415,

Washington, DC 20013-2415, telephone 202-720-7583.

FOR FURTHER INFORMATION CONTACT: James A. Langley, Consolidated Farm

Service Agency, U.S. Department of Agriculture (USDA), Room 3090-S,

P.O. Box 2415, Washington, DC 20013-2415 or call 202-690-0640.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be significant and was

reviewed by OMB under Executive Order 12886.

Preliminary Regulatory Impact Analysis

The Preliminary Regulatory Impact Analysis describing the options

considered in developing this proposed rule and the impact of the

implementation of each option is available on request from the above-

named individual. [[Page 4572]]

Executive Order 12778

This proposed rule has been reviewed in accordance with Executive

Order 12778. The provisions of the proposed rule are not retroactive

and preempt State laws only to the extent such provisions are

inconsistent with State laws. Before any judicial action may be brought

concerning these provisions, the administrative appeal remedies at 7

CFR part 780 must be exhausted.

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:

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Titles Numbers

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

Cotton Production Stabilization.............................. 10.052

Feed Grains Production Stabilization......................... 10.055

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

Rice Production Stabilization................................ 10.065

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Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not

applicable to this proposed rule since CCC is not required by 5 U.S.C.

553 or any other provision of law to publish a notice of proposed

rulemaking with respect to the subject matter of this rule.

Environmental Evaluation

It has been determined by an environmental evaluation that this

action will have no significant impact on the quality of 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

This proposed rule does not change the information collection

requirements that were previously approved by the Office of Management

and Budget (OMB) under provisions of 44 USC 33.

Background

This proposed rule would amend 7 CFR part 1413 to set forth the

determination of whether certain discretionary cost reduction options

of the 1985 Act will be implemented. Accordingly, the Secretary may

take the following actions if it is determined that they will reduce

total direct and indirect commodity program costs without adversely

affecting incomes of small- and medium-sized producers: (a) enter into

the commercial market to purchase commodities covered by nonrecourse

loans if the cost would be less than later acquiring the commodity

through loan defaults; (b) provide for settlement of nonrecourse loans

(including nonrecourse loans made to producers under the Farmer-Owned

Reserve Program) at less than full principal plus interest; or (c)

reopen signup to allow producers to submit bids for the conversion of

planted acreage to diverted acreage with payment in kind from CCC

stocks.

If, after the comment period, no cost reduction options are

implemented under the final rule, the Secretary still reserves the

right to initiate at a later date any action authorized by section 1009

of the 1985 Act, including the right to reopen and change a contract

entered into by a producer under the program if the producer

voluntarily agrees to the change.

This proposed rule would also amend 7 CFR part 1413 to set forth

the determination of whether certain discretionary provisions of the

1949 Act will be implemented and, if implemented, the manner in which

implementation would be made. Accordingly, the following program

determinations are proposed to be made with respect to the provisions

that are applicable to the 1995 crops of wheat, feed grains, upland and

ELS cotton, and rice:

A. The percentage of the estimated deficiency payments that should

be made available in advance to producers of the 1995 crop of wheat,

feed grains, cotton and rice.

Section 114 of the 1949 Act requires that advance deficiency

payments be made available to producers of wheat, feed grains, upland

cotton, and rice if an acreage limitation is in effect. Section 103 of

the 1949 Act provides discretionary authority to provide such payments

for ELS cotton. Producers who participate in farm programs have the

option to request advance deficiency payments. Advance payments must be

between 40 and 50 percent of the projected payments for wheat and feed

grains and between 30 and 50 percent for upland cotton and rice.

Advance payment for ELS cotton, if offered, cannot exceed 50 percent of

the projected payment rate.

CCC intends to make available advance deficiency payments of 50

percent of the projected payments for the 1995 crop of wheat, feed

grains, rice, upland cotton and, if applicable, ELS cotton.

B. The types of crops that may not be planted on flexible acres.

Section 504 of the 1949 Act states that producers may plant on a

farm crops other than the program crop on an acreage not to exceed 25

percent of any crop acreage base enrolled in the applicable CCC price

support and production adjustment program. This acreage is known as

``flexible'' acreage.

Crops that may be planted on flexible acreage are: (a) any program

crop; (b) any oilseed crop; (c) any other crop, except any fruit or

vegetable crop (including dry edible beans, lentils, peas, and

potatoes); and (d) mung beans. The planting of certain fruits or

vegetables may be permitted if such crop is an industrial or

experimental crop, or if no substantial domestic production or market

exists for the crop. The planting of any crop on flexible acres may

also be prohibited.

CCC intends to permit the same crops to be grown on flexible

acreage in 1995 as were allowed in 1994. However, CCC will consider

adding or removing crops to the list of prohibited crops that is set

forth at 7 CFR part 1413.43(b)(6).

C. Whether to implement TOP.

Sections 107B(e)(3), 105B(e)(3), 103B(e)(3), and 101B(e)(3) of the

1949 Act, with respect to wheat, feed grains, upland cotton, or rice,

provide that if an acreage limitation program is in effect, the

Secretary may offer producers the option of increasing or decreasing

the acreage reduction level, within certain restrictions, with a

corresponding increase or decrease in the established (target) price of

the commodity. The target price may be increased or decreased by not

less than 0.5 percent nor more than 1 percent for each percentage point

change in the acreage reduction level. The acreage limitation

requirement cannot be increased by more than 15 percentage points or

above 25 percent total for wheat; by more than 10 percentage points or

above 20 percent of the total for feed grains; by more than 10

percentage points or above 25 percent of the total for cotton; nor by

more than 5 percentage points or above 25 percent of the total for

rice. The decrease in the acreage limitation requirement for all crops

cannot be more than one-half of the announced acreage limitation

percentage.

The Secretary shall, to the extent practicable, ensure that the TOP

option does not have a significant effect on program participation or

total production and will result in no additional budget outlays.

[[Page 4573]]

Comments on whether this provision should be implemented for the

1995 crops are requested.

D. Whether to permit the planting of designated crops on up to half

of the announced acreage reduction.

Sections 107B(e)(2)(F)(i), 105B(e)(2)(F)(i), 103B(e)(2)(F)(i), and

101B(e)(2)(F)(i) of the 1949 Act, with respect to wheat, feed grains,

upland cotton, and rice, provide that the Secretary may permit

producers to plant a designated crop on not more than one-half of the

reduced acreage on the farm.

The designated crops may be: (a) any oilseed crop; (b) any

industrial or experimental crop designated by CCC; and (c) any other

crop, except any fruit or vegetable (including dry edible beans,

lentils, peas, and potatoes), not designated by the Secretary as (i) an

industrial or experimental crop, or (ii) a crop for which no

substantial domestic production or market exist. Program crops may not

be planted on the reduced acreage on the farm.

If producers on a farm elect to plant a designated crop, the amount

of deficiency payments that the producers are otherwise eligible to

receive shall be reduced, for each acre that is planted to the

designated crop, by an amount equal to the deficiency payment that

would be made with respect to a number of acres of the crop that the

Secretary considers appropriate. Such reductions in deficiency payments

must be sufficient to ensure that this provision does not increase CCC

outlays.

CCC intends to permit the harvesting of designated crops on up to

one-half of ACR for the 1995 crops.

E. Whether to permit the planting of oats on wheat and feed grain

ACR.

In any crop year that it is determined that projected domestic

production of oats will not fulfill the projected domestic demand for

oats, CCC: (a) may provide that acreage designated as ACR under the

wheat and feed grains programs may be planted to oats for harvest under

sections 107B(e)(8) and 105B(e)(8) of the 1949 Act; (b) may make

program benefits (including loans, purchases, and payments) available

under the annual program for oats under section 105B of the 1949 Act

for oats planted on ACR; and (c) shall not make program benefits other

than the benefits specified in (b) available to producers with respect

to acreage planted to oats under this provision.

It is proposed that the planting of oats on wheat and feed grains

ACR for harvest not be permitted for the 1995 crops.

F. Whether to permit conserving crops to be planted on ACR.

Under sections 107B(e)(4)(B)(iii), 105B(e)(4)(B)(iii),

103B(e)(4)(B)(iii), and 101B(e)(4)(B)(iii) of the 1949 Act, with

respect to wheat, feed grains, upland cotton, and rice, producers may

be authorized to plant all or any part of the ACR to castor beans,

crambe, guar, milkweed, mung beans, plantago ovato, sesame, sweet

sorghum, rye, triticale, or other commodity, if the Secretary

determines that the production is needed to provide an adequate supply

of the commodities, is not likely to increase the cost of the price

support program, and will not adversely affect farm income.

CCC intends to permit the harvesting of the following conserving

crops on ACR: castor beans, chia, crambe, crotalaria, cuphea, guar,

guayule, hesperaloe, kenaf, lesquerella, meadowfoam, milkweed, plantago

ovato, and sesame. However, CCC will consider adding to or removing

crops from the list of eligible conserving crops that is set forth at 7

CFR part 1413.8.

G. Whether to permit alternative crops on conserving use acres.

Under sections 107B(c)(1)(F)(i), 105B(c)(1)(F)(i),

103B(c)(1)(E)(i), and 101B(c)(1)(E)(i) of the 1949 Act, with respect to

wheat, feed grains, upland cotton, and rice, producers may be

authorized to plant all or any part of acreage otherwise required to be

devoted to conserving uses as a condition of qualifying for payment

under the so-called ``0/85/92'' or ``50/85/92'' provisions of the price

support and production adjustment programs to castor beans, guar,

millet, mung beans, plantago ovato, sweet sorghum, rye, triticale,

commodities for which no substantial domestic production or market

exists but that could yield industrial raw material being imported, or

likely to be imported, or commodities grown for experimental purposes

(including kenaf and milkweed). The Secretary may permit these crops to

be planted on conserving use acres only if the Secretary determines

that the production is not likely to increase the cost of the price

support program, is needed to provide an adequate supply of the

commodities, or is needed to encourage domestic manufacture of

industrial raw materials derived from these crops.

CCC intends to permit the harvesting of the following alternative

crops on conserving use acres: castor beans, chia, crambe, crotalaria,

cuphea, guar, guayule, hesperaloe, kenaf, lesquerella, meadowfoam,

milkweed, plantago ovato, and sesame. However, CCC will consider adding

to or removing crops from the list of eligible alternative crops that

is set forth at 7 CFR part 1413.8.

Accordingly, comments are requested with respect to these foregoing

issues.

List of Subjects

7 CFR Part 1405

Loan programs/agriculture, Price support programs.

7 CFR Part 1413

Cotton, Feed grains, Price support programs, Rice, Wheat.

Accordingly, it is proposed that 7 CFR parts 1405 and 1413 be

amended as follows:

PART 1405--LOANS, PURCHASES AND OTHER OPERATIONS

1. The authority citation for 7 CFR part 1405 is amended to read as

follows:

Authority: 15 U.S.C. 714b and 714c; 7 U.S.C. 1308a.

2. Part 1405 is amended by adding a new Sec. 1405.6 to read as

follows:

Sec. 1405.6 Cost reduction options.

With respect to the 1995 crop, no cost reduction options specified

in section 1009(c), (d), or (e) of the Food Security Act of 1985, as

amended (the 1985 Act), will be initially included in the program.

However, the Secretary reserves the right to initiate at a later date

any action not previously included but authorized by section 1009 of

the 1985 Act, including the right to reopen and change a contract

entered into by a producer under the program if the producer

voluntarily agrees to the change.

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. In section 1413.54, paragraph (f) is revised to read as follows:

Sec. 1413.54 Acreage reduction program provisions.

* * * * *

(f) Producers may plant designated minor oilseeds, soybeans and

mung beans on up to 50 percent of the designated ACR acreage,

* * * * *

3. In Sec. 1413.64, the introductory text of paragraph (c) and

paragraph (d) are revised to read as follows: [[Page 4574]]

Sec. 1413.64 Nationally approved cover crops and practices for ACR and

CU for payment acreages.

* * * * *

(c) Producers may plant designated oilseeds, soybeans and mung

beans on up to 50 percent of the designated ACR acreage;

* * * * *

(d) Acreage designated as ACR or CU for payment under the 1995

wheat, feed grain, upland cotton and rice programs may be planted to

IOCs.

* * * * *

4. In Sec. 1413.66, paragraph (c)(2) is revised to read as follows:

Sec. 1413.66 Use of ACR and CU for payment acreage.

* * * * *

(c) * * *

(2) IOCs or designated crops planted on ACR and IOCs planted on CU

for payment acreage.

* * * * *

5. In Sec. 1413.105 paragraph (d) is revised to read as follows:

Sec. 1413.105 Timing and calculation of deficiency payments.

* * * * *

(d)(1) For the 1994 and 1995 crops of wheat, feed grains, upland

cotton, ELS cotton and rice, if an acreage limitation program is in

effect, CCC shall make available 50 percent of the projected final

deficiency payments, made in accordance with Sec. 1413.104, as an

advance payment to producers in the manner determined and announced by

CCC.

(2) For the 1996 and 1997 crops of wheat, feed grains, upland

cotton, ELS cotton and rice, if an acreage limitation program is in

effect, CCC shall make available 40 percent of the projected final

deficiency payments made in accordance with Sec. 1413.104, as an

advance payment to producers in the manner determined and announced by

CCC.

Signed January 19, 1995 at Washington, DC.

Bruce R. Weber,

Acting Executive Vice President Commodity Credit Corporation.

[FR Doc. 95-1778 Filed 1-19-95; 4:32 pm]

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