USDA'S MOVE in December to "single sorghum out" and decrease its loan rate for 2001 by 3 cents to $1.68 per bushel will only serve to decrease the choices producers have for managing risk and conservation issues on their operations and further limit already record-low acres planted to sorghum, says Tim Lust, National Grain Sorghum Producers (NGSP) executive director.
USDA's announcement that it was slashing the loan rate for sorghum yet again this year was made in an agency press release that kept loan rates for all other commodities at the maximum levels allowable by law. NGSP is reviewing its legislative and legal options in light of the decision, says Lust.
Sorghum loan rates started at $1.80 per bushel in 1995 and increased to $1.81 in 1996 under the discretion of the USDA secretary.
"Early last year, the secretary slashed the loan rate to $1.71 per bushel, then (Dec. 16) added insult to injury by cutting the loan rate to $1.68 for 2001 after reassuring our leaders in Washington, D.C., that he would not reduce loan rates for feed grains," says Lust.
Policies such as these favor other, higher-risk crops and result in added input costs for producers, both from a monetary and conservation standpoint, says Lust. He said researchers have found sorghum requires one-third the water as similar feed grains. Not only does this move impact producers negatively, but it could have devastating effects in irrigated areas with dwindling water supplies and record high prices for natural gas that directly affect irrigation costs.
Additionally, this decision will cost the government more money due to higher loan rates on other commodities and the probability that higher-risk crops planted in areas best suited to grain sorghum can result in added crop insurance costs.
NGSP was especially disappointed that Secretary Glickman chose to decrease the loan rate, despite his reasons for keeping loan rates for all other crops steady as cited in the USDA press release, saying, "Lower marketing assistance loan rates would weaken the safety net for producers of wheat, feed grains, and oilseeds during a critical period of financial need."
"I don't believe grain sorghum producers are in any less financial straits than other producers after a year like this one," says Bill Kubecka, NGSP vice president for legislation and producer from Palacios, Texas. "We are fairly certain USDA is not using policies such as these as a form of supply control, because that clearly is not the goal of the Freedom to Farm act, which was passed to ensure that government policies did not supersede producers basing their planting decisions on their own marketing, conservation and management plans.
"However, we are at a loss in trying to explain this latest move. This is especially ironic as it comes at a time when sorghum is trading at a premium in many places."
Kubecka notes that in some areas of the sorghum belt, the industry is enjoying new and emerging markets. He noted many processors are using sorghum for the first time ever.