The United States new farm bill, named the Food Security and Rural Investment (FSRI) Act, was signed by the President on 13 May 2002. The new Act will govern the farm legislation of the United States for the period 2002-2007. As a feature in this new bill, dry peas, lentils and small chickpeas have been added to the list of programme crops for the first time1/. Adding these crops to the commodity loan programme make them eligible for marketing loan benefits and loan deficiency payments (LDP)2/. Farmers are expected to take the new loan provisions into consideration in their planting decisions starting in 2003.
On a global scale, the United States is not a big producer of any of the pulses covered by the Farm Bill; however, it is a surplus producer and, thus, an exporter of all of them. The commodity loan programme is expected to have the least impact on the production of small chickpeas since the established loan rates are well below their producer prices.
However, the impact could be more favourable for lentils, since their loan rates are well above recent producer prices, which may induce higher plantings starting next year. If the additional lentil production could be exported, the effect on the international market could be significant, mainly because the volume of trade in lentils is relatively thin (1 million tonnes). Currently, the export share of the United States is only 8 percent, compared to 50 percent for Canada. Other major lentil exporters include Australia, India and Turkey.
For dry peas, even though the loan rates are below prices received by producers in recent months, the programme may lead to an expansion in area, especially in states with lower costs of production such as North Dakota and Montana. Dry pea production could also spread to nearby states in the Upper Midwest with comparable production costs. With a market share of no more than 5 percent, the United States is not expected to have a major impact on the world dry pea market, unless export supplies could expand significantly. However, dry peas also have the potential to become an important feed in domestic livestock production, which could absorb the additional domestic production. Canada is the world’s largest dry pea exporter, accounting for almost 70 percent of global exports, followed by Australia with a 12-percent share.
United States production and exports of selected pulses, averages for 1999-2001
|Production (metric tonnes)||Exports (metric tonnes)||Export share in production (%)||Share in global exports (%)|
|Dry peas||182 206||85 139||47||4.7|
|Lentils||125 664||92 375||74||7.6|
|Chickpeas||55 180||29 569||54||3.7|
Pulse producer prices and marketing loan rates
|Producer Prices (a)||Farm Bill Loan Rates(b)|
|(..... US$/metric tonne .....)||(..... US$/metric tonne .....)|
|Dry peas, whole green||131.17||150.80||139.55||137.13|
|Dry peas, whole yellow||130.51||151.68||139.55||137.13|
Source: United States Department of Agriculture, except (d) Agriculture and Agri-Food Canada.
(a) Prices are based on producer bids in Idaho/Washington quoted in $/cwt (100 pounds). (b) Equivalents in US$/metric tonne as loan rates were specified in US$/cwt in the Farm Bill.(c) For 2001/02, the data covers September through April.(d) Comparable Canadian farm prices for desi chickpeas.
1/ It should be noted that dry beans, of which the United States is a major producer and exporter, are not included in the 2002 farm bill. Also, the large kabuli type chickpeas, which represent the bulk of the United States chickpea production, are not covered by the new bill.
2/ Farmers can benefit from the marketing loan programme in two ways. They can opt to receive a loan from the government at a specified loan rate per unit of production by pledging production as loan collateral. At harvest, if market prices drop below the loan rate, farmers can pay the loan at a lower repayment rate, thus generating marketing loan gains. The second option is to benefit from the programme by directly taking loan deficiency payments (LDP). The LDP rate is the difference between the loan rate and the commodity price. The difference with the first option is that in the latter the farmer does not need to undertake the commodity loan and pledge production as collateral. For more information on the new farm bill, see http://www.ers.usda.gov/features/farmbill/