USDA’s Commodity Credit Corp. announced new marketing assistance loan rates for 2006 crop rice that, as expected, are only a few cents above or below the CCC marketing loan rates for 2005 crop long and medium grain rice.

But the agency also took the unusual step of including a statement in a press release advising rice producers that it will announce 2007 loan rates next spring that are “more reflective” of current market relationships.

The 2006 national average marketing loan rates for farm-stored rice, rough basis, announced by CCC on March 27, are 2 cents per hundredweight lower for long grain rice and 3 cents per cwt higher for medium grain rice than in 2005. The national average loan rate for short grain rice is also 3 cents per cwt higher than in 2005.

Early last month, officials with the Farm Service Agency, which administers the CCC nonrecourse loan program, told growers and representatives of the two rice industry organizations they were considering reducing the loan rate for farm-stored long grain rice by 39 cents per cwt and raising the medium grain loan rate by $1.17 per cwt.

After the USA Rice Federation’s Rice Producers Group and the U.S. Rice Producers Association complained the change would cost rice farmers, some of whom had already planted their 2006 crops, thousands of dollars, FSA officials agreed to drop the change – for 2006.

“We recognize the loan rate announcement comes at a time when some producers have already planted rice, and others are in the final stages of arranging operating loans,” said Teresa Lasseter, FSA administrator in a letter to USA Rice Federation Chairman Lee Adams.

“Adjustment in rice loan rates could affect some of those operating loans. Because of this, we will make only those adjustments in 2006 rice loans that reflect average milling quality, maintaining the $1 per cwt difference between long grain and medium/short grain whole kernel loan rates.”

Program commitment

Lasseter also said USDA is committed to providing marketing assistance loan programs that reflect recent market relationships, which, she said, was the intent of Congress in the 2002 farm bill.

“Our goal is for producers to focus on market returns when making planting decisions, rather than loan program parameters. To that end, you can expect USDA to work with industry participants to implement 2007 rice loan rates by class and region that are more reflective of current market relationships.”

The Farm Security and rural Investment Act of 2002 or 2002 farm bill specified the national weighted average loan rate for rough rice at $6.50 per cwt for the 2002-2007 crops. Each year, CCC determines loan rates by class of rice to reflect historical production and milling quality. CCC reviews the discount schedule relative to class, grade and smut each year.

For rice stored in commercial warehouses, the whole kernel milled rice loan rates for the 2005 crop are $10.52 per hundredweight for long grain and $9.52 per cwt for medium/short grain. The broken kernel loan rate for all classes is $5.26 per cwt. CCC computes milled rice loan rates by using average milling yields and production percentages by class, thus ensuring that the production-weighted national average rough rice loan rate equals the $6.50 per hundredweight required by statute.

Discounts for lower grade and smut content were unchanged for 2006.

In their discussions with rice farmers, Farm Service Agency representatives said they have already adjusted regional and class loan rates for several commodities, including wheat, feed grains, oilseeds, dry peas and lentils, to reflect market relationships.

The 2002 farm bill required USDA to establish marketing loan rates for minor oilseeds, dry peas, lentils and other non-program crops for the first time.

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