Growers Reap Benefits Even in Good Years

This reduced the stockpiles and made U.S. farm products a better buy abroad. But few foresaw where the program would end up, according to Arkansas Secretary of Agriculture Richard E. Bell, who lobbied for the change as president of the state's largest rice cooperative.

When corn prices fell in the late 1990s, the cash payments to farmers soared.

'Location, Location . . .'

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Roger Richardson's experience with his corn farm in Maryland's Worcester County illustrates one way farmers take advantage of the LDP.

After harvesting his corn last summer, Richardson stored 190,000 bushels in silos that he owns with other farmers. He then waited for prices to rise. He had reason to be hopeful because the corn-dependent Delmarva poultry industry pays a premium to lock up local supplies for chicken feed.

Meanwhile, in the Midwest, prices briefly dropped to their lowest level in five years after Hurricane Katrina. The storm stalled grain barges up and down the Mississippi. Huge yellow piles lay in fields outside stuffed grain elevators, and a sign outside one elevator said, "Blame it on Katrina."

The drop in prices brought the government's safety net -- the LDP -- into play.

In DeKalb County, Ill., the subsidy had reached 46 cents a bushel one day in September. (The LDP for each county is calculated by subtracting the USDA's daily estimate of the local market price from the government's floor, which is set each year and was $1.98 a bushel in DeKalb.)

Yet in one of the oddities of the system, across the country on the Eastern Shore, where corn market prices were much higher, the subsidy was about the same: 48 cents. It hovered around that level for the next two months.

To book the subsidy being paid on a particular date, Richardson simply had to walk into the local USDA office in Snow Hill, Md., with the ability to prove that he owned a harvested corn crop. He applied for the subsidy for different portions of his crop on several days throughout the fall.

By December, feed mills on the Eastern Shore had begun running short, and prices were rising. Richardson began selling for an average $2.60 a bushel. That was about 50 cents more than the price quoted in Chicago, the national benchmark. Richardson cashed in because of his ability to store grain until it was needed and his proximity to the mills.

"It's like real estate," he said. "It's location, location, location."

The LDP subsidy that he had already booked would bring his total take to more than $3 a bushel -- he made $75,000 from the LDP alone.