AROUND 3.5 MLN ACRES SAID TO BE IDLED BY 0/92

  A 0/92 program would have very
  little impact on U.S. acreage, prompting farmers to idle only
  an additional 3.5 mln acres of cropland every year, according
  to a report from the Agriculture Department.
      The savings resulting from the additional 3.5 mln acres
  idled would be a little over 400 mln dlrs in loan savings, 35
  mln dlrs in transportation and storage savings, and 10-20 mln
  dlrs per year in deficiency payment savings, the report said.
      The USDA report asssessed the impacts of the proposed 0/92
  acreage program for wheat, corn, cotton, sorghum and barley.
  Last year, almost 245 mln acres of those crops were harvested.
      "The likelihood that the 0-92 provisiion will cause very
  large acreages to be removed from crop production is quite
  small," the report said.
      "The returns on typical farms still favor participation in
  the usual acreage reduction programs and seeding the permitted
  acreage," the USDA report said.
      The 0/92 program, which would allow farmers to forego
  planting and still receive 92 pct of their deficiency payment,
  would be most used by producers in high production/high risk
  areas where cost of production is high, said Keith Collins,
  director of USDA's economics analysis staff.
      "In the heart of the corn belt, you would not get that much
  participation," Collins said.
      USDA estimated that an additional one mln acres of wheat
  would be ildled under 0/92, 1.5 mln acres of corn, 500,000
  acres of sorghum and barley and 500,000 acres of cotton.
      Production from these idled acres would be equivalent to 40
  mln bushels of wheat, 180 mln bushels of corn, 20 mln bushels
  of sorghum, 10 mln bushels of barley, and 500,000 bales of
  cotton, the report said.
      "In determining whether to participate, a producer would
  need to weigh the expected cash costs of production against the
  loan rate ... The risk that market prices may rise above the
  expected levels and reduce the deficiency payment also must be
  considered," according to the analysis.
      "What you're giving up under 0/92 is the difference between
  the loan rate and the cost of production," Collins said.
      For producers with low production costs, that difference is
  greater and can be applied to paying variable costs, he said.
  Under these cicumstances, farmers would not want to go along
  with 0/92. But for high cost producers, 0/92 would be more
  attractive.
      Also, as loan rates get lower, Collins said there would be
  more incentives to participate in a 0/92 program.
      "I would admit that its impacts would be very marginal at
  first, but it is a step towards the goal of separating
  production decisions from government payments," Collins said.
      In a speech earlier today before the National Grains and
  Feed Association, USDA Secretary Richard Lyng said it is too
  late to implement 0/92 for 1987 crops since program signup will
  be over by the end of this month.
  

