U.S. Loan Deficiency Payments Rising

WASHINGTON - Dec 16/05 - SNS -- The USDA is reporting a significant increase in the amount of money being paid to field pea and lentil growers this season by the Farm Services Agency as posted county prices for dry peas and lentils remain below loan rates.

In the case of field peas, the 2005-06 crop loan deficiency payment rate has averaged $2.37 per cwt (100 pounds) since the crop year began, with payments through December 5 totaling $27.4 million, reports Gary Lucier, of the USDA's Economic Research Service in the December edition of the USDA's Vegetables and Melons Outlook.

"This compares with program payments of $31.5 million for the entire 2004 dry pea crop, which had an average payment rate of $2.38 per cwt," Lucier said. In 2005, LDPs for dry peas have been made in 16 States, led by North Dakota with 61% of the total. CCC loan activity for dry peas remains minimal with virtually all producers opting for LDPs. More than 83% of the production reported by NASS has already entered the LDP program.

The larger lentil crop in 2005 has led to lower market prices and increased loan deficiency payments. For the 2004-05 crop, LDPs were minimal at $100,000 as market prices remained above the loan rate for most of the season. For 2005-06 crop through December 5, about $4.0 million in LDPs were disbursed in 5 States, with unit payments averaging $1.60 per cwt. Lentil growers are also actively taking nonrecourse loans. After taking $6.7 million in loans during 2004-05, growers have taken out $1.5 million in nonrecourse loans through December 5 for 2005-06 lentils.

Although small, the volume of 2005-06 small chickpeas receiving LDPs through December 5 is more than double that of 2004-05 at 146,725 cwt. Per-unit payments for chickpeas have averaged $1.68 per cwt, compared with $2.25 for all of 2004-05.