Agricultural Economic Report No. (AER-712) 54 pp

April 1995

Wheat: Background for 1995 Farm Legislation

This report address considerations in the 1995 farm bill debate for wheat, including market conditions, policy proposals, trade agreements, and the interactions between policy and markets for selected commodities. Surplus wheat stocks disappeared under the Food, Agriculture, Conservation, and Trade Act of 1990. The aggregate U.S. wheat sector appears in balance due, in part, to acreage reduction programs, the Conservation Reserve Program, and the Export Enhancement Program. However, some industry participants wonder whether wheat carryover levels are optimal and whether the public will approve a continuation of government expenditures near current levels, while others want to maintain low carryover stocks. Exports will likely be the largest source of demand growth for U.S. wheat for the remainder of the 1990s. Global wheat trade is expected to expand steadily through the 1990s at a rate higher than the 1980s, but well below the rate experienced in the 1970s. The U.S. market share is expected to drop slightly over the next decade to about 31 percent as competition increases in a growing world market. Issues for the 1995 farm legislation include levels of program benefits and costs, methods for calculating deficiency payments, the future of the Conservation Reserve Program, farm program cost containment, planting flexibility, wheat imports, marketing loan provisions, targeting benefits to producers, environmental quality, and the future of the Export Enhancement Program.

Keywords: wheat, production, domestic use, world trade, prices, costs and returns, farm programs, program effects

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