WASHINGTON, Jan 5: The US Agriculture Department said on Friday it would await instructions from Congress on wide-ranging farm policy before announcing marketing loan rates for producers of wheat, corn, soyabeans, upland cotton and other commodities for 2002.

But USDA Undersecretary J.B. Penn told reporters that if the farm bill becomes further bogged down in Congress this year, the USDA will go ahead in early March and announce this year’s loan rates.

If it appears that the Congress is not going to complete a farm bill that is applicable to this year’s crops, then we’ll announce the loan rates for this year’s crops, Penn said.

But if Congress moves a bill quickly with instructions for 2002 crops, Penn said USDA could add “more uncertainty” to farmers’ decisions by prematurely announcing loan rates.

Loan rates provide a major support for farm income by setting a minimum price for grains, cotton and oilseeds.

Penn, who said he was optimistic about Congress writing a bipartisan farm bill, indicated that the department thinks the 2001 soyabean loan rate, at $5.26 per bushel, was too high.

But he did not say what the soybean rate should be.

Asked whether the 2001 soybean loan rate was out of balance with other commodities, such as corn, Penn responded that USDA had not taken that decision.

But he added: Virtually every analyst that I know, even those that are in the commodity organizations, admit there is a disparity in the loan rates and that it’s causing distortions in planning decisions and it’s causing distortions in the market.

USDA Chief Economist Keith Collins noted that under current law, the lowest the soybean loan rate can fall is to $4.92 per bushel.

You would like to get relative loan rates more reflective of market prices, he said.

The 2001 loan rate for corn was $1.89 per bushel.

Asked about the impact on US spring plantings if the soybean loan rate remains at $5.26 per bushel, Collins responded, The economic consequence would be that you would get more soyabean acreage planted than would otherwise be the case and a lower soyabean price than would otherwise be the case.

At the end of 2001, the Senate was stalemated in its debate on a bill that would generally raise crop supports. The House passed a bill on Oct. 5, that would hold the line on crop supports, but give farmers larger guaranteed annual payments.

Both the House and Senate bills would release additional payments whenever returns from sales and subsidies fall below targets set by law.—Reuters