A32-Lancaster Farming, Saturday, October 21,1989
UNIVERSITY PARK (Centre
Co.) Pennsylvania wheat far
mers planted more than 225,000
acres in 1989; however, only
36,759 acres were in the ASCS
wheat program according to
George Greaser, Penn State
research associate in agricultural
economics. “Wheat farmers
should take a serious look at the
program,” says Greaser. “On the
average, Pennsylvania farmers in
the program received $lO more
per acre than the non-participants;
that translates into a potential loss
for non-participants of more than
$l.B million dollars. Wheat far
mers should take a serious look at
the program.”
The 1989-1990 government
wheat program has two options.
Greaser says that farmers should
take time and determine whether
or not to be in the program. Far
mers also should select the prog
ram option that offers them the
largest net returns.
Option 1 includes planting this
year’s acreage allotment, which is
95 percent of the CAB or Crop
Acreage Base. The program pays
95 percent of the government
wheat program payments or defi
ciency payments.
Option 2 allows a producer to
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ASCS Program On ARP Wheat Program
plant 10 percent additional wheat
or 105 percent of their CAB. A
farmer must be willing to deduct 1
percent of government deficiency
payments for each 1 percent
increase in production from 95 to
105 percent
The rules of both programs are
as follows:
1. The farmer must sign up for
either option during the sign-up
period, which is Jan. 16, 1990 to
April 13. 1990.
2. Options can be changed only
during the sign-up period.
3. A farmer who exits the prog
ram after the sign-up date must
pay the penalties.
4. The forms used to sign up
are;
a. CCC-477 regular form for
the 95 percent planting option.
b. CCC-477 addendum for
the additional planting program.
5. The soybeans and sunflower
replacement option is not applic
able for option 2.
6. The transfer of wheat CAB to
oats is not applicable for option 1.
7. Other non-program crops
may not be credited for wheat
P&CP, or Planted and Considered
And
Planted acreages for option 2.
8. Normal advance deficiency
payments will be paid to modified
contracts if a request is made dur
ing the sign-up period.
9. Limited cross compliance
provisions will apply to both
options, but the modified option
for wheat is limited to 105 percent
of CAB.
Using a computerized spread
sheet, Greaser can analyze the
three possibilities for farmers
participating in option 1 or 2, or
not participating in the program.
“There are two main reasons
not to participate in the program,”
says Greaser. “If there is not
enough available land to increase
production or if a farmer has
decided to increase the CAB.
Greaser says that in the follow
ing example there is little question 4
that the largest net return of the
three options is participating in
option 2 at the 105 percent level.
He prepared the following
hypothetical analysis of the gov
ernment set-aside program on
wheat.
1. ASCS yield per acre 34
2. Expected yield 60
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20.8-38, 8 Ply $660.60
18.4-38, 8 Ply $453.73
16.9-38, 6 Ply $343.78
15.5-38, 6 Ply $277.11
18.4-34, 8 Ply $396.44
16.9-34, 6 Ply $316.27
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FRONT TRACTOR F-2
9.5LX15 SL, 6 Ply $65.82
11U1S SL, 8 Ply $88.72
544.56
.$48.24
.$63.65
.$95.09
11.00x16 SL, 8 Ply... $133.95
600x16 SL, 6 Ply.
650x16 SL, 6 Ply
750x16 SL, 8 Ply
10.00x16 SL, 6 Ply
3. Expected Pa/hational
price $3.60
4. Percent of CAB
planted
5. Cost to cover barren
ground $0.50
6. Cost to maintain barren
ground $0.50
7. Variable cost per
acre
Using the above information
yields the following analysis
according to Greaser.
8. Target price $4.00
9. Projected Pennsylvania
loan rate $2.29
10. National loan rate SI.9S
11. Deficiency payment per
bushel
12. Payment level as a
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17545
percent of CAB 85%
13. Total variable
costs
105%
At $3.60 the net income for a
non-participant would be $121.00;
At $3.60 the net income for a par
ticipant 105 percent would be
$132.00; At $2.29 the net income
for a non-participant would be
$39.00; At $2.29 the net income
for a participant 105 percent
would be $87.69.
More information about this
program is available from your
Penn Slate Cooperative Extension
county office, an ASCS office, or
George Greaser, 204 Armsby
Building, University Park, Pa.
16801, (814) 865-7656.
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UG R-l TUBETYPE
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