U.S. GRAIN CERTS SAVE 50-100 MLN DLRS - AMSTUTZ

  The use of generic commodity
  certificates, or "certs," for fiscal years 1986-88 will save
  the government 50 to 100 mln dlrs, Department of Agriculture
  Undersecretary Daniel Amstutz said.
      Speaking at a House agriculture subcommittee hearing on the
  use of the certificates, Amstutz said that the issuance of 8.5
  billion dlrs of certificates during fiscal years 1986-88 could
  result in government outlays of up to 400 mln dlrs.
      However, the use of certificates preclude the need for 450
  to 500 mln dlrs in storage and handling costs, resulting in net
  savings for the government of 50-100 mln dlrs, he said.
      Without the use of certificates, Amstutz said nearly the
  entire 1985 crop which had been put under loan would have been
  forfeited to the Commodity Credit Corporation, CCC.
      In addition, 260 mln bushels of grain that have been
  redeemed from CCC inventory through certificate exchanges would
  have remained in the goverment inventory, he said.
      When asked to comment on a recent study by the General
  Accounting Office that concluded certificates result in a net
  cost to the government, Amstutz said, "GAO underestimated the
  benefits and overstated the costs" of the certificate program.
      Amstutz said while certificates encourage more loan
  entries, they also encourage heavier loan redemptions rather
  than forfeitures.
      GAO underestimated this net loan activity, Amstutz said.
      "There is no question in the mind of the Department of
  Agriculture that these certificates have been very useful,"
  Amstutz said.
      Immediate benefits of certificates include greater market
  liquidity, improved market price competitiveness, higher farm
  income, and improved debt situation and decreased carrying
  costs, he said.
      Certificates are an integral part of USDA's long-range
  market-oriented farm policy, he said.
      Amstutz told subcommittee Chairman Rep. Dan Glickman,
  D-Kans., that USDA is in the process of preparing an official
  response to the GAO study on certificates and will submit it to
  the subcommittee when completed.
  

