Shelor Presents Sorghum Farm Bill Priorities

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National Sorghum Producers (NSP) Past President Greg Shelor of Minneola, Kan. today testified to the House Agriculture Subcommitteee on General Farm Commodities and Risk Management.

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Shelor said that sorghum producers are strong supporters of the 2002 Farm Bill because it significantly improved the equitable treatment given sorghum producers relative to other feed grains. He said NSP's priorities for the 2007 farm bill are to equalize the sorghum loan rate on the county level with other feed grains; maintain guaranteed direct payments because they are important in the semi-arid sorghum belt; and to preserve a safety net of LDPs and counter-cyclical payments for commodities because of the cyclical nature of agriculture.�

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Before the hearing, Shelor commented on the 2002 Farm Bill and sorghum's priorities for the next farm bill.�

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"We're looking at having the loan rate looked at again. We were pretty fortunate in the previous farm bill to get it equalized at the national level, but when it came back to the county level, it didn't happen so we need to do some more work and get it to where producers realize an equal loan rate at the county level."

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In 2006, the two largest sorghum-producing states of Kansas and Texas produced 75% of the U.S. grain sorghum crop. Yet, only 33 of the 359 counties in these states had loan rates equal to or above corn. In those 33 counties, the average sorghum loan rate was 3 cents per bushel more than corn. In the other 326 counties, the average sorghum loan rate was 15 cents per bushel less than corn. In an average loan rate situation, this difference costs a producer $10 per acre based on a 70 bushel yield. This is in spite of USDA reporting that sorghum market prices are on-target with corn. Fortunately, many producers can sell their sorghum today for double their loan rate, but the reality of the farm economy is that prices will drop again to loan rate levels. Most of the sorghum-growing region is in the semi-arid Great Plains region. Due to the extreme weather conditions of the area and all too common droughts, sorghum farms are vulnerable to significant yield variability. Because of this, the direct payment is important to sorghum growers.

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"In the past it looks like the direct payments have been really good for sorghum producers. We've also done well with the LDPs and the countercyclical. It wasn't less than a year ago we were utilizing that so we don't want to forget that in the future we may need that again. It's a good safety net for producers out there. That's one avenue that would be strongly supported by the sorghum industry."

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Ethanol is changing sorghum market dynamics and increasing the local cash price. Shelor will begin seeing ethanol's impact close-to-home as a 110 million gallon plant is constructed at Dodge City, Kan. He expects that half of the feedstock utilized in the plant will be sorghum because it is an economically viable alternative starch source that yields the same amount of ethanol per bushel as corn.

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If the Committee decides to address crop insurance, Shelor said that the price election mechanism for the sorghum industry is in desperate need of reform because it does not accurately reflect current market realities. For commodities that have a futures market, USDA utilizes a forward-looking price setting mechanism. But for commodities, like sorghum, that are not traded on a futures market, USDA relies on past prices.

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"Ethanol has given us another market. It's equalized our prices with corn just about every place there's an ethanol plant. We're in the process of getting more built in areas of the sorghum belt to help producers. It's really been positive for sorghum and that comes back to help us to try to promote our loan rate and crop insurance issues. We do have an equalized price that we can show to USDA and Congress. There needs to be some adjustments made."

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NASS Agricultural Prices monthly publication has shown the sorghum price equal to or above corn on a national basis since May 2006. NASS valued sorghum 16% higher than corn in January 2007, the time period in which RMA set price elections for this year. WASDE also reported a 10-cent per bushel higher price range for sorghum over corn in their last report in March. However, RMA set price elections for sorghum at 94.3% of corn for MPCI and 94.4% of corn for CRC policies. The MPCI price election for corn in 2006 was 2.5% higher than sorghum. The CRC price election for corn was 11% higher than sorghum.

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"It comes back to using history as a pricing to set crop insurance. Our whole market structure has changed the last year to year and half and they're not looking forward as they set prices, they're looking back and we've totally changed that. We need to get them aware of that. The pricing is really critical to producers when they go out and try to decide which crop to produce. We need to get that equalized and get a better price election on our crop insurance."

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As the Agriculture Committees write a new commodity title, Shelor said that maintaining equitable direct payments, loan rates and counter cyclical rates between all crops should be a high priority. He believes that Members of Congress are looking to sorghum to help meet the nations needs for food, feed and fuel.

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"I think its real positive for us. Everybody up here is aware of sorghum. They're interested in it. I think we can get some good results. The main focus, as long as were equitable with other crops, is that we don't want to have anybody singled out. If we can stay in there and keep the same prices that we've had or comparable to other crops, we'll have done well."

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NSP represents U.S. sorghum producers. Headquartered in Lubbock, Texas, in the heart of the U.S. Sorghum Belt that stretches from the Rockies to the Mississippi River and from South Texas to South Dakota, the organization works to ensure the profitability of sorghum production through market development, research, education and legislative representation. To learn more about NSP, visit www.sorghumgrowers.com .��

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Audio Files:

Audio with NSP Past President Greg Shelor (She-Lore) of Minneola, Kan.

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Cut #1 � :21�� O.C. "...at the county level."��

Link: http://sorghumgrowers.com/Portals/9601e447-03e0-4aad-9c41-e3f718fe1956/Shelor,%20Greg%20Testimony%20Clip%201%203-27-07.mp3

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Cut #2 :28�� O.C. ".. by the sorghum industry."

Link: http://sorghumgrowers.com/Portals/9601e447-03e0-4aad-9c41-e3f718fe1956/Shelor,%20Greg%20Testimony%20Clip%202%203-27-07.mp3

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