The use of generic commoditycertificates, or "certs," for fiscal years 1986-88 will save
the government 50 to 100 mln dlrs, Department of Agriculture
Undersecretary Daniel Amstutz said.
    Speaking at a House agriculture subcommittee hearing on the
use of the certificates, Amstutz said that the issuance of 8.5
billion dlrs of certificates during fiscal years 1986-88 could
result in government outlays of up to 400 mln dlrs.
    However, the use of certificates preclude the need for 450
to 500 mln dlrs in storage and handling costs, resulting in net
savings for the government of 50-100 mln dlrs, he said.
    Without the use of certificates, Amstutz said nearly the
entire 1985 crop which had been put under loan would have been
forfeited to the Commodity Credit Corporation, CCC.
    In addition, 260 mln bushels of grain that have been
redeemed from CCC inventory through certificate exchanges would
have remained in the goverment inventory, he said.
    When asked to comment on a recent study by the General
Accounting Office that concluded certificates result in a net
cost to the government, Amstutz said, "GAO underestimated the
benefits and overstated the costs" of the certificate program.
    Amstutz said while certificates encourage more loan
entries, they also encourage heavier loan redemptions rather
than forfeitures.
    GAO underestimated this net loan activity, Amstutz said.
    "There is no question in the mind of the Department of
Agriculture that these certificates have been very useful,"
Amstutz said.
    Immediate benefits of certificates include greater market
liquidity, improved market price competitiveness, higher farm
income, and improved debt situation and decreased carrying
costs, he said.
    Certificates are an integral part of USDA's long-range
market-oriented farm policy, he said.
    Amstutz told subcommittee Chairman Rep. Dan Glickman,
D-Kans., that USDA is in the process of preparing an official
response to the GAO study on certificates and will submit it to
the subcommittee when completed.
 Reuter
