Federal Deficiency Payments Should Not Be Made for Crops Not Grown

CED-77-77: Published: May 24, 1977. Publicly Released: May 24, 1977.

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The Commodity Credit Corporation is making an estimated $135 million in deficiency payments to rice farmers for the 1976 rice crop. These payments are based on the extent that the national average market price received by rice farmers was below a target price established by law.

About $5 million of the deficiency payments will be paid to farmers who had rice acreage allotments, but did not plant rice on some or all of their allotments, and thus did not have rice to market from such acreage. Similar deficiency payments based on the target price concept have been authorized for wheat, feed grains, and cotton since the 1974 crop year, but because market prices have been above their target prices for these crops so far, no deficiency payments have been necessary. However, the situation in which payments would be made on unplanted and unmarketed crops could arise under the 1977 rice, wheat, and feed grain programs and under future programs for these crops if current legislation is extended. For cotton, deficiency payments are specifically based on planted acreage within the allotment, so the same situation could not occur.

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