Bundy is right overall. The lDP is the most price depressing program the US government ever had. The efecy of countercyclical payments is small in comparison. lets not forget why lDP's were created. It started back in the debates on the 1996 farm bill.There had been provisions in earlier farm laws for loanson stored grains. The farmer needing money could borrow direct from the government against the amount of grain he had currently in storage. If the market price dropped, instead of bankrupting the farmer, the gov would let him pay back the loan at the later lower price. Basically help just enough to kep him in business. FF to 1995. Farm Buereu was among several groups who lobbied congress that the loan program was not fair to all (READ the diffinition of "FAIR" as in George Orwell's "Animal Farm"). So to make it fair the loan Deficiency Program was appended to the farm bill. So now we can make a loan, pay it back at the lower market grain price , and make the government pay us the difference, all in the same visit to the FSA office. Although it was not intended to be so publicly, the lDP is in effect a government price guarentee. Any thing of this sort causes a huge price depression in the market place. lets review crop prices. For 5-8 years before the 1996FB we had corn runing at or above $3_bu. Wheat was beter than $6, and soybeans ran from $7.50-10.50 solid. After the passage of the 1996 farm bil those prices continued for about 6 months. Then we had the asian market collapse. All crop prices dropped below lDP rates. Within 6-9 more months the asian currencies had regained nearly all of thier value compared to the dollar. They were again able to buy the same levels of crops they had before. BUT something had changed. Suddenly the carryover levels were considered by grain buyers as too high when before they had been considered low. The US government has been paying us farmers lDP's throughout almost every year since 1997.
