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Amendment could come back to haunt Grassley

At USDA’s Agricultural Outlook Forum in Washington, Feb. 21-22, agricultural economists seemed to agree that corn had the brightest prospects of any of the row crop commodities in 2002.

Keith Collins, USDA’s chief economist, put a positive spin on corn in his opening comments: “When all is said and done, the 2002/03 corn market appears to be the strongest among major crops.”

Later, USDA’s grain and oilseed experts forecast that U.S. corn farmers would receive an average of 15 cents more per bushel this marketing year ($2.00) and another 10 cents in 2002/03 ($2.10). That’s unusual for a market where a 2- to 3-cent move constitutes a rally.

The USDA economists and industry analysts said they expect stronger prices even though corn plantings could increase from 2 million to 2.7 million acres from last spring when Midwest farmers were kept out of their fields by weather.

What none of the experts talked about was the possibility that southern farmers could increase their corn plantings by 2 million to 3 million acres if Grassley/Dorgan remains in the final farm bill passed by the House and Senate.

“I think we could easily see a 25 percent reduction in cotton acreage in the Mid-South and a 15 to 20 percent drop in the Southeast if the Grassley Amendment becomes law,” said the National Cotton Council’s Mark Lange, who also spoke at the Forum.

Lange said cotton acreage in California and Arizona could be cut in half if members of a House and Senate Conference Committee do not remove the Grassley Amendment from the final farm bill.

“I think the acreage shift in the Mid-South and Southeast would be split 50-50 between corn and soybeans,” he said. “In California, most of the acreage would go to grain crops and to tomatoes and garlic. I don’t anticipate there would be much change in the Southwest because of the lack of alternatives.”

Using the NCC’s acreage numbers, growers in the Mid-South and Southeast could plant an additional 900,000 acres of corn and a like number of soybeans in 2002. That’s on top of the 1 million to 2 million acres of corn that were already being forecast for the southern states before the Grassley Amendment passed on Feb. 7.

While another 2 million to 3 million acres of corn could take the bloom off the rose in the corn market, 1 million more acres of soybeans could be devastating to an already bleak outlook.

In their presentations in Washington, USDA analysts forecast that soybeans would average only $4.25 a bushel in 2002/03, down nearly 30 cents per bushel from the average for 2001. That was with farmers planting only 400,000 more soybean acres in the U.S. this year than last.

So far, Senators Grassley of Iowa, Dorgan of North Dakota, Johnson of South Dakota and Lugar of Indiana are claiming they have the support of farmers in their states for tighter payment limits. Those claims could come back to haunt them if corn and soybean prices plummet.

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