[Congressional Record Volume 146, Number 38 (Thursday, March 30, 2000)]
[Senate]
[Page S1990]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAMS:
  S. 2332. A bill to amend the Agricultural Market Transition Act to 
permit a producer to lock in a loan deficiency payment rate for a 
portion of a crop; to the Committee on Agriculture, Nutrition, and 
Forestry.


              the loan deficiency payment flexibility act

 Mr. GRAMS. Mr. President, I rise today to introduce the Loan 
Deficiency Payment Flexibility Act. The idea for this legislation came 
from Peter Kalenberg, a producer from Stewart, MN, and is an example of 
how a good idea can be transformed into sound public policy. It is 
supported by such organizations as the Minnesota Corn Growers, the 
Minnesota Farm Bureau Federation, and the Minnesota Wheat Growers 
Association. These and many other groups have recognized the need for 
this legislation.
  As you know, Loan Deficiency Payments, otherwise known as LDPs, were 
a key component of the 1996 Farm bill and have helped cushion the blow 
of low commodity prices and restricted demand. However, producers in 
Minnesota and other northern states have questioned the fairness of how 
the LDP is administered. States farther south are able to begin harvest 
before farmers in states such as Minnesota and are therefore able to 
``lock in'' a more favorable LDP. This has the potential of impacting 
market signals and driving down the futures price before harvest has 
begun in northern states.
  Mr. President, by taking the approach I am about to outline, I have 
ensured that regions of the country that are currently able to utilize 
an earlier LDP are not placed at a disadvantage. The components of this 
legislation are simple, yet provide a common-sense approach to a 
problem faced by producers in states such as Minnesota.
  My ``Loan Deficiency Payment Flexibility Act'' would correct this 
inequity by directing the Secretary of Agriculture to announce that 
harvest has begun on a particular commodity (i.e. corn or soybeans) and 
that producers throughout the United States may now utilize the Loan 
Deficiency Payment. Essentially my bill does two things:
  It establishes an earlier, more flexible starting date when all 
producers would have the option of ``locking in'' that day's LDP. They 
would be able to do so once throughout the duration of the harvest 
season.
  Allows a producer to lock-in an LDP for up to 85% of his or her 
actual yield. Because the LDP is ``locked in'' on paper, no payments 
are actually made until the crop is harvested and we avoid the problems 
posed by the old deficiency payment system due to unanticipated high or 
low yields.
  Although there is no guarantee that the LDP will be better in the 
early summer versus the fall, my legislation will afford farmers the 
opportunity to evaluate the markets and base their decision on what 
best fits their management plan.
  I urge my colleagues to cosponsor and support this 
legislation.
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