Kansas

Greg Shelor, a sorghum producer from Minneola, and Vice-president for Legislation for the National Sorghum Producers (NSP), testified on behalf of the nation's sorghum producers recently at a hearing of the House Agriculture Committee's Subcommittee on General Farm Commodities and Risk Management. The hearing was called by Subcommittee Chairman and Kansas Representative Jerry Moran to review the technical procedures of the United States Department of Agriculture's (USDA) establishment of Posted County Prices (PCPs) which determine Loan Deficiency Payments (LDPs) to farmers.

At the hearing, Shelor said that USDA's implementation of the LDP program is of utmost importance to sorghum producers. He said that changes in the LDP has generated more inquiries to the NSP office than any other issue this year.

"Our members are saying that they are frustrated because they do not understand how USDA determines LDPs and it seems arbitrary to them. They are especially frustrated when they see large changes in the LDP when the market did not change." Shelor said that LPD changes are due primarily to a switch from a county-level LDP system to a regional LDP system.

Shelor testified that on Oct. 20, the LDP was the same for a broad region of the Sorghum Belt which produced 95 percent of last year's crop. "This area is too large for one single LDP level set by USDA."

To illustrate the problem, Shelor presented data for two geographically-close Kansas sorghum markets. "On Oct. 20, the cash price for sorghum in Dodge City and Russell was the same at $1.52 per bushel. The LDP was also the same at 30 cents per bushel. However, the loan rate in Russell is 15 cents per bushel less than the loan rate in Dodge City. This means there was a 15 cent per bushel discrepancy in the LDP. Dodge City was 11 cents per bushel too low and Russell was 4 cents a bushel too high. The Russell market is influenced by a local ethanol plant and this is reflected in its cash price. As currently implemented, a regional LDP system cannot accommodate such variations in local markets and weakens farmers' confidence in the system."

Shelor said that cash flow is an issue this year for farmers who are facing low commodity prices and high energy prices. "The errors in the LDP rates add up to a large cash flow issue for farmers. Just as recently as yesterday, my cash price plus LDP was 7.5 cents per bushel less with the regional system."

According to Shelor, USDA has been receptive to working with producers in correcting LDP problems in the Sorghum Belt. "Last week, NSP's national staff met with FSA staff asking that the regional LDP system be revisited and that the regions used to determine LDPs be changed to smaller regions. We look forward to working with USDA to help them better understand the dynamic changes occurring in the sorghum market."

Shelor said that NSP is committed to working with USDA, as well as Members of Congress, to ensure proper implementation of the Farm Security and Rural Investment Act of 2002.

NSP represents U.S. sorghum producers nationwide. Headquartered in Lubbock, Texas, in the heart of the U.S. Sorghum Belt that stretches from the Rockies to the Mississippi River and from South Texas to South Dakota, the organization works to ensure the profitability of sorghum production through market development, research, education and legislative representation.