93 



A-l 



APPENDIX TO THE STATEMENT OF 



SECRETARY MIKE ESPY 



U.S. DEPARTMENT OF AGRICULTURE 



Commodity Data (see attached tables) 



For the major program crops, the 1993 outlook will be shaped 

 to a large extent by 1992 's unusually large harvests and record 

 disappearance levels. Even though disappearance is estimated to 

 be up in 1992/93 due to higher domestic use and exports, stocks 

 going into the 1993 season will be higher for most crops. 

 Average weather in 1993 and yields returning to trend will mean 

 somewhat smaller crop harvests in 1993. 



From the very low levels of a year or two ago, our crop 

 stocks have risen but not to burdensome levels. In the most 

 dramatic case, the 1992 record corn crop will cause corn stocks 

 to about double from a year earlier. But corn stocks as a 

 percent of total use will be below the average of the previous 

 10 years: 27 percent compared with 35 percent. U.S. wheat 

 stocks are tight historically but global stocks are ample. 



No major swings in crop prices are expected for the 1993 

 season. Wheat prices could be marginally lower over the year 

 ahead given the announced acreage reduction program (ARP) of 

 percent, compared with 5 percent in 1992. And corn prices are 

 likely to average marginally higher as average yields and a 

 higher ARP reduce stocks somewhat by the end of the season. 



The commodity provisions built into the 1985 and 1990 Farm 

 Bills helped balance the markets for field crops. Various 

 planting provisions, notably the flexibility provisions of the 

 1990 Act, give producers more room to adjust the volume and mix 

 of products they produce as market conditions change. In 1992, 

 producers switched about 8 million acres of program crop base to 

 other program and nonprogram crops. As we look to 1993 in the 

 case of corn, for example, the increase in the ARP to 10 percent 

 from 1992 's 5 percent, together with some shift out of corn on 

 flex acres, will likely lower production and help support 

 producer prices. 



In addition to the flexibility provisions of the 1990 Farm 

 Bill, frozen program yields since 1985 have also caused producers 

 to depend more on market developments. Loan rates, greatly 

 reduced since 1985, have helped our position in world markets. 

 Also, unlike the mid-1980's, nearly all of the current stocks are 

 available to the market since they are held in the private 

 sector. At the start of this fiscal year, Commodity Credit 

 Corporation inventories totaled $1.7 billion compared with nearly 

 $6 billion in 1988. 



