3.1. Introduction
3.2. Cereal production policy
3.3. Marketing and stock measures
3.4. Trade and food aid policies
3.5. Summary and conclusions
The new farm legislation (1995 Farm Bill) was passed at the end of December 1995 when the previous legislation expired, but was eventually signed into the law in April 1996 as the Federal Agricultural Improvement and Reform (FAIR) Act, effective for seven years from 1996 through 20024. On the whole, the FAIR Act reinforces market-oriented policies, which had been initiated in 1985 and seeks to reduce government intervention. Among its main features, FAIR decouples income support payments from farm prices, replaces deficiency payments by direct compensatory payments, eliminates area reduction obligations and provides for greater planting flexibility. It also modifies provisions for price support as well as for stockholding, export subsidies and food aid programmes. Among the variety of titles and programmes included in the FAIR Act, this chapter of the Review focuses on those most relevant to the cereal sector5.
4 In the past, Farm Bills were in place for 5 years.5 For more detailed description of the FAIR, readers are referred to Provisions of the Federal Agricultural Improvement and Reform Act of 1996, ERS, USDA, Agricultural Information Bulletin 729, September 1996; Agricultural Outlook Supplement, ERS, USDA, April 1996; For discussion of the previous Act, see Cereal Policy Review 1990-91.
3.2.1. Major changes to the farm income support policy
3.2.2. Elimination of area reduction programmes (ARP)
3.2.3. Modification to the conservation reserve programme (CPR)
The main feature of the new legislation is the suspension of the two most important elements of the farm income support policy in the United States: target prices and deficiency payments6. In the past, farmers participating in commodity programmes were entitled to receive direct government payments, known as deficiency payments, which were based on the payment rate, the area and programme yield of the specific crop7. The main objective of the deficiency payment was to make up for shortfalls between the target price and the market price (or loan rate if that were higher). However, with the Food Security Act of 1985 (FAS) and the Food, Agriculture, Conservation and Trade (FACT) Act of 1990, other, more market-oriented policies, began to emerge. Under the FACT Act, target prices of cereals were frozen at their 1990 level for the period 1990-95, which implied an annual decrease in real terms. In addition, the area and, hence, the volume of production on which farmers could receive deficiency payments were also reduced.
6 The FAIR ACT suspended for seven years certain, so-called, "permanent provisions" - provisions with no termination date - of the Agricultural Adjustment Act of 1938 and the Agricultural Act of 1949. This implies a return to 1949 law in 2002 unless Congress decides otherwise.7 The payment rate was the difference between the target price (established at levels which would provide optimal return to farmers) and the higher of the national average market price during a specific time period or the price support (non-recourse) loan rate.
While under the FACT farmers' payments were reduced if more than 15 percent of their base area was planted to non-programme crops or idled, under FAIR, farmers can plant 100 percent of their total contract acreage to any crop (with the exception of fruits and vegetables) without any loss in payments. However, the FAIR Act retains the loan rate as a major safety net, though maximum loan rates can not exceed the 1995 levels for programme crops (see section 3 below). To receive the payments, eligible farmers must follow conservation compliance obligations and keep the land in agriculture - while abiding by restrictions on planting fruits and vegetables8. Participating farmers would then receive Production Flexibility Contract (PFC) payments equal to 85 percent of their base area, multiplied by their established yield, multiplied by the contract payment rate. The amount of land eligible for contract areas is equal to a farm's base area for 1996 calculated under the 1990 Farm Act (which for wheat and coarse grains was equal to the average of area planted between 1988 and 1990), plus any returning Conservation Reserve Programme (CRP) base and less any CRP enrollment. Programme payment yields are frozen at 1995 levels. The contract payment rate would need to be recalculated each year as the annual contract payment rate is crop specific and equals the total authorized spending level for each commodity for the fiscal year divided by the sum of payment quantities for all contracts for any given fiscal year.
8 Eligible farmers are those with an established crop acreage base or an acreage base in a CRP contract that could be put in use by the beginning of January 1995.
As far as payment limitations are concerned, the FAIR Act reduces the amount of maximum direct and indirect payments a person can receive per fiscal year. As in the past, a person can receive payments for up to three separate farms, or entities. However, the FAIR Act reduces the total payment to US$ 80 000 per person per year, down from US$ 100 000 under the previous legislation. The annual direct payment can not exceed US$ 40 000, but the person can receive up to another US$ 40 000 for two additional entities (i.e. US$ 20 000 on each entity). Moreover, the FAIR Act extends provisions limiting marketing loan and loan deficiency payments to US$ 75 000 per person per year.
While as a result of FAIR, US farmers would have to respond to market signals in their planting decisions, the suspension of income support measures coincided with a rise in cereal prices in 1995/96 season. This increase in cereal prices permitted farmers to benefit not only from the revenue through the PFC payments but also from higher farm gate prices. On the other hand, the effectiveness of FAIR in lowering budget expenditures, resulting from the suspension of deficiency payments, remains uncertain. Table 5 shows the projected amount of deficiency payments had they been continued through 2002, the total PFC budget per fiscal year and the annual payment per grain. It is clear from this table that PFCs are considerably higher than projected deficiency payments and it seems that, for the 7-year period, total PFC payments would exceed deficiency payments by more than three times. However, it can also be argued that because PFCs were designed to be terminated in 2002, the continuation of deficiency payments into the future was regarded as a more costly option over a longer term, while payments under FAIR were conceived as compensation to end farm programmes during a 7-year "transitional" period. Also, in years when prices are low, PFCs are expected to provide less protection than previous programmes, while producers would have more freedom in making planting decisions. It may be concluded that, should prices fall significantly during the life of the FAIR Act, especially to pre-1995 levels, the reinstatement of more costly legislation into future farm bills cannot be ruled out9.
9 For example, see Orden, David "The 1996 Farm Bill: How Much Change and How Permanent?" in The American Farm Bill: Implications for CAP Reform, (Colman David, Editor). The University of Manchester Center for Agricultural, Food and Resource Economics, School of Economic Studies, May 1997.
|
BOX 7: Calculating the FAIR Act Programme Payment The example below is related to a hypothetical maize farmer. The equation for calculating the Production Flexibility Contract payments or PFCt for each of the 7 years (t = 1996..., 2002) is: PFCTt = (Ba*YM*Pmt)*0.85 where Ba is the base area which can be entered into a Production Flexibility
Contract which is based on pre-1996 arrangements. For this farmer Ba is
equal to 80 hectares. Ym and Pm refer to yield coefficients and the contract
payments per ton. This farmer's proven programme yield is 6.3 tons per
hectare. The annual contract payments are based on USDA-projected estimates
shown below. Applying the above formula, this farmer would receive FAIR
payment of US$37 948 in total over the 7-year life of the contract. |
|||||
|
Fiscal Year |
Contract Area |
Payment Yield # |
Annual Contract Payment Rate@ |
Annual Payment* |
PFCP Per Year |
|
(tons per hectare) |
(US$) |
(US$) |
|||
|
1996 |
80 |
6.3 |
0.85 |
9.84 |
4 215 |
|
1997 |
80 |
6.3 |
0.85 |
18.11 |
7 758 |
|
1998 |
80 |
6.3 |
0.85 |
14.17 |
6 070 |
|
1999 |
80 |
6.3 |
0.85 |
13.78 |
5 903 |
|
2000 |
80 |
6.3 |
0.85 |
12.60 |
5 398 |
|
2001 |
80 |
6.3 |
0.85 |
10.24 |
4 387 |
|
2002 |
80 |
6.3 |
0.85 |
9.84 |
4 215 |
|
|
Total Payment |
US$ 37 948 |
|||
|
@ 0.85 is a proportionate scaling down multiplier because under the previous Act, IS percent of the base area was not eligible for deficiency payment. * The 1997 PFC payments and rates are preliminary estimates from USDA News Release number 211.96 (April 26,1996). Note that the final or the actual payment rate would depend on the number of producers enrolling in the programme in each year and also CRP enrollment. For more information on PFC payments and rates see Appendix Table 1 in Provisions of the Federal Agricultural Improvement and Reform Act. For 1996, the estimated payments are adjusted downward to reflect payments still owed for 1994. Conversely, the 1997 payments are adjusted upward to reflect repayment of 1995 advanced deficiency payment. |
|||||
Table 5: Total Amount of Contract Payments, by Fiscal year, and Allocations to Cereals 1996-2002 (crop years) 1/
|
Fiscal Year |
Projected Deficiency Payments 2/ |
Total PFCs 3/ |
Wheat |
Maize |
Barley |
Oats |
Sorghum |
Rice 4/ |
|
Annual payment amount in billion US$ |
||||||||
|
1996 |
1.500 |
5.700 |
1.4627 |
2.5745 |
0.1203 |
0.0084 |
0.2846 |
0.4718 |
|
1997 |
0.500 |
5.380 |
1.4141 |
2.4889 |
0.1163 |
0.0081 |
0.2752 |
0.4561 |
|
1998 |
2.300 |
5.800 |
1.5231 |
2.6808 |
0.1253 |
0.0087 |
0.2964 |
0.4913 |
|
1999 |
2.400 |
5.600 |
1.4713 |
2.5897 |
0.1210 |
0.0084 |
0.2863 |
0.4756 |
|
2000 |
2.000 |
5.130 |
1.3471 |
2.3711 |
0.1108 |
0.0077 |
0.2621 |
0.4345 |
|
2001 |
1.500 |
4.130 |
1.0845 |
1.9089 |
0.0892 |
0.0062 |
0.2110 |
0.3498 |
|
2002 |
1.100 |
4.010 |
1.0525 |
1.8525 |
0.0866 |
0.0060 |
0.2048 |
0.3395 |
|
Total |
11.300 |
35.626 |
9.3553 |
16.4664 |
0.7695 |
0.0535 |
1.8204 |
3.0186 |
Sources: Hoffman in Provisions of the Federal Agricultural Improvement and Reform Act of 1996, USDA, ERS Agricultural Information Bulletin 729, September 1996; and Young and Westcott in The 1996 US Farm Act Increases Market Orientation. USDA, ERS, 1996.1/ Annual dollar amount shall be adjusted for refunds, payment limits, and contract termination.
2/ Source: Young and Westcott, 1996
3/ PFC total includes 4.14 billion U.S. dollars for cotton for the 7-year period.
4/ Rice shall receive an additional allocation of US$ 8,500 000 per fiscal year from 1997 to 2002.
Starting with the 1996 crop, the FAIR Act eliminated the "authority" for ARP and, thus, removed area set-asides as a condition for deficiency payments. Under the 1985 and 1990 Farm Acts, in order to be eligible for programme payments, participating cereal producers had to put a portion of their crop base area into either fallow or conservation uses. Since the main objective of the ARP was to control the production of surplus crops, the ARP levels were determined by the projected ending stocks-to-use ratio for individual grains. The extent to which the suspension of ARP could affect plantings between 1996 and 2002 depends mostly on the assumptions about how planting decisions were affected by ARP during the life of the previous legislation. ARP levels had already declined significantly in the decade before FAIR. Thus, as shown in Table 6, a zero-percent ARP was in effect for 1994 and 1995 for wheat, barley, sorghum and oats crops while maize and rice producers had to set aside 7.5 and 5 percent, respectively from their eligible 1995 crop land10.
10 Under the 1990 Act, a zero ARP for oats was mandatory between 1991 and 1995, while for other coarse grains ARPs were set separately
Table 6 - Acreage Reductions, 1989-1995
|
|
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
|
in percent |
||||||
|
Wheat |
5 |
15 |
5 |
0 |
0 |
0 |
|
Maize |
10 |
7.5 |
5 |
10 |
0 |
7.5 |
|
Sorghum |
10 |
7.5 |
5 |
0 |
0 |
0 |
|
Barley |
10 |
7.5 |
5 |
0 |
0 |
0 |
|
Oats |
5 |
0 |
0 |
0 |
0 |
0 |
|
Rice |
20 |
5 |
0 |
5 |
0 |
5 |
Source: USDA (various reports)
Results of several studies suggest that even if ARPs were to be continued through 2002, they would have most likely been kept at levels close to zero for most cereals, mainly because export demand for cereals from the United States, especially for wheat and maize, is expected to remain strong. The removal of set aside restrictions could be expected to increase the area planted with those crops which were under higher ARP levels in recent years, in particular maize.
The CRP is one of the three principal conservation programmes under the Environmental Conservation Acreage Reserve Programme, a voluntary crop land retirement programme, established under the 1985 Act. By placing highly erodible cropland into the CRP for 10 years, participating land owners were guaranteed an annual rent and partial cost of establishing conservation practices in addition to tax benefits from the Government and other entity programmes11. By 1996, an estimated 14.7 million hectares had been enrolled in the programme12, of which around 58 percent included land once under cereals, as shown in Table 7. Under FAIR, the maximum CRP is set at 14.7 million hectares but the land can be withdrawn from the CRP before the original contract expires and be eligible for PFC as long as the land has been enrolled for at least 5 years.
11 For more details see, The Conservation Reserve Program, USDA, ERS, Report Number 626, 1990.12 Out of an estimated 41 million hectares of highly erodible cropland which could be eligible for CPR enrollment.
Table 7 - Cereals under Conservation Reserve
|
|
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
|
in million hectares |
|||||||
|
Wheat |
4.2 |
4.2 |
4.3 |
4.4 |
4.4 |
4.4 |
4.3 |
|
Maize |
1.5 |
1.6 |
1.7 |
1.7 |
1.7 |
1.7 |
1.6 |
|
Sorghum |
1.0 |
1.0 |
1.0 |
1.0 |
1.0 |
1.0 |
1.0 |
|
Barley |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
1.1 |
|
Oats |
0.5 |
0.5 |
0.6 |
0.6 |
0.6 |
0.6 |
0.6 |
|
Rice |
0.005 |
0.005 |
0.005 |
0.005 |
0.005 |
0.005 |
0.0 |
|
Total |
8.301 |
8.423 |
8.625 |
8.827 |
8.827 |
8.827 |
8.498 |
Source: USDA (various reports)
In the past, an increase (decrease) of CRP area would have decrease (increase) ARP levels only over the medium term, since ARP levels were adjusted from year-to-year. With the elimination of ARP and the shortening of CRP enrollment obligations from 10 to 5 years, the potential role of CRP as a supply control measure influencing the size of the planting area has increased. However, its effectiveness will be largely determined by the level of market prices and the criteria for programme eligibility. By capping the total CRP at a fixed 14.7 million hectares, a significant amount of land could leave CPR if cereal prices rise to such an extent that it becomes more attractive to expand planting rather than to receive rents on the land in the conservation reserve. However, while price levels could affect the size of land under the CPR, the Act does not indicate the precise criteria for programme eligibility. Thus, for example, if priority is to be placed on water quality criteria, this would favour release of the CRP land in grain producing regions, whereas, if the highest priority is on soil erodibility and wildlife, rents would have to be increased to keep the land in the CRP13. Although roughly 14 percent of wheat land is under the CPR, the eventual size of the wheat area which could be withdrawn from the conservation reserve and put back into cultivation of wheat, rather than of other crops, would depend on programme criteria as well as relative crop prices.
13 For more detailed discussion on this issue see V.H. Smith and J.W. Glauber "The Effects of the 1996 Farm Bill on Feed and Food Grains" in The American Farm Bill: Implications for CAP Reform.
Furthermore, the land in the CRP which is returned to production will continue to be subject to conservation compliance rules. However, under the previous legislation, eligibility for programme benefits such as deficiency payments hinged on compliance with soil conservation practices. This meant that the effectiveness of the conservation provisions also depended on the attractiveness of the Government support measures in inducing farmers to participate in the commodity programmes. With the elimination of deficiency payments, the PFC payments will be linked to conservation practices by farmers but PFCs are fixed-declining payments and, in any case, can only be paid to those producers already enrolled under the one-time sign-up, which was in August 1996.
The FAIR Act largely retains the safety net of the original non-recourse commodity loans and marketing loans assistance provisions for the crop years 1996 through 2002, subject to maximum loan rate14. Except for rice and rye, the basic loan rates continue to be based on 85 percent of the previous 5-year average of farmgate prices, excluding the highest and lowest years. The basic rates could be reduced at the discretion of the Secretary of Agriculture by up to 10 percent, based on an ending stocks-to-total use criterion15. However, the Secretary's authority to set an additional 10 percent discretionary adjustment is repealed16. Unlike previous legislation, loan rates can not exceed their 1995 levels; thus, for wheat and maize, maximum loan rates are US$ 95 per ton and US$ 74 per ton, respectively. For barley, oats and sorghum, the level of loan rates continue to be set at levels considered "reasonable" in relation to maize loan rates. For rice (paddy), the rate is fixed at US$ 145.6 per ton, while for rye loan rates are no longer in effect. Marketing loan provisions are retained for wheat, coarse grains and rice. Marketing loans were made discretionary for wheat and coarse grains since 1985 but this possibility has never been used to-date.
14 The loan provisions provide for all cereal producers participating in a PFC to receive a marketing assistance loan from the Commodity Credit Corporation (CCC) using their production (including those from noncontract areas) as collateral. They are called non-recourse loans because if the borrower decides to forfeit the grain to the CCC rather than paying back the loan, the Government has no recourse but to accept the commodity as full payment of the loan. The Secretary of Agricultural may also offer cereal producers the option to repay price support loans at a rate lower than the announced price support level, mainly to maximize potential loan forfeitures and to minimize the accumulation of stocks.15 For example, loan rates for wheat and maize could be reduced by 5 percent if the stocks-to-use ratio were between 15 to 30 percent and 12.5-25 percent, respectively. For more details and examples see Cereal Policy Review, 1990/91.
16 Just and Laslie in Provisions of the Federal Agricultural Improvement and Reform Act of 1996 USDA (1996).
The importance of the loan rate mechanism mainly as a tool to support market prices has diminished considerably since the mid-1980s. However, with high loan rates mainly responsible for the build-up of government-held inventories and, hence, high storage costs, loan rates were already reduced in 1990 by about 40 percent compared to their 1985 levels. Under the FAIR Act, the importance of loan rates as a income support policy tool would be even less pronounced considering that the maximum rates are frozen at their 1995 levels while market prices may continue to be well above these rates, as witnessed during the past two seasons.
The FAIR Act also suspended the authority for the Farmer-Owned Reserve (FOR) through the 2002 crop. Under the previous legislation, wheat or coarse grain producers holding regular 9-month loans from the Commodity Credit Corporation (CCC) could, subject to certain criteria, receive FOR non-recourse loans for up to 33 months and receive additional monthly storage payments and a loan. Traditionally, the FOR played a price-stabilizing role as it encouraged grain storage when prices fell below a minimum level and triggered a release of stocks when they moved above a ceiling. Nevertheless, because of several modifications since 1985, including the reduction of loan rates and more restrictive entry criteria, the importance of FOR had already been largely diminished. In another change affecting stock levels, FAIR amended the Agricultural Act of 1980 and created the Food Security Commodity Reserve. The 1980 Act had established the Food Security Wheat Reserve which represented a reserve of up to 4 million ton of wheat only, set aside for meeting the requirements of United States emergency food aid programmes in the developing countries. Under the FAIR, the 4-million-ton reserve will now include maize, sorghum, and rice in addition to wheat17.
17 FAIR raises the release for urgent humanitarian relief in disasters from 300 000 ton to 500 000 tons in the case of unanticipated need and allows for an additional release of 500 000 tons of eligible commodities.
The United States is the world's largest cereal exporting country and changes in its cereal policy have, therefore, global implications. While the 1996 Act introduces minor modifications to cereal export programmes through 2002, its longer-term implications could be more significant. In the past, exports of grains, particularly of wheat and maize, greatly benefited from government assistance programmes. For example, in years prior to the FAIR Act, an estimated 80 percent of wheat exports from the United States were shipped under some form of Government assistance18. Among the various programmes, those which have particularly affected cereal exports include the Export Enhancement Programme (EEP), export credit guarantee programmes (GSM) and food aid programmes.
18 More details can be found in Agricultural Export Programs: Background for 1995 Farm Legislation, USDA, ERS, Agricultural Economic Report 716, June 1995.
Under the FAIR, total expenditures for the EEP are capped below the levels permitted under the Uruguay Round Agreement on Agriculture (URA) from 1996 through 1999 and then brought up to the maximum URA-permissible levels from 2000 through 200219. For nearly all years, however, the annual EEP expenditure allowed under the FAIR would be lower than under the previous legislation. The 1990 FACT Act established a minimum annual funding level of US$ 500 million. In 1994, EEP expenditure rose to a record US$ 1.5 billion before being capped at US$ 800 million in 1995. It should be noted that EEP subsidies have not been used since July 1995, mainly due to the surge in international grain prices during the 1995/96 season and their generally firm levels through 1996/97.
19 The FAIR Act limits total EEP expenditure to US$ 350 million during the US fiscal year (FY) 1996; US$ 250 million in FY 1997; US$ 500 million in FY 1998; US$ 550 in FY 1999; US$ 579 million in FY 2000; and US$ 478 million in FYs 2001 and 2002.
As regards export credits, the discussions on international discipline in this area are underway, but no decision has yet been taken. The FAIR Act continues the short-term (up to 3 years) export guarantee programme (GSM-102) and the intermediate (3-10 years) export guarantee programme (GSM-103) and mandates annual programme funding levels at US$ 5.5 billion through 2002, but allows flexibility in how much could be available for each programme. The Emerging Democracies Programme under the FACT Act is also authorized through 2002 but was renamed the Emerging Markets Programme (EMP) under which at least US$ 1 billion worth of direct CCC credit or credit guarantees could be provided in order to promote US agricultural exports to "emerging democracies". The FAIR Act also replaces the Market Promotion Programme (MPP) with the Market Access Programme (MAP) and limits its annual funding to US$ 90 million, compared to the minimum US$ 200 million authorized under the FACT Act.
The 1996 Act also extends the authority for Public Law 480 food aid programmes and Food For Progress (FFP) agreements to 7 years, but places more emphasis on their market development aspects. The US food aid programme, commonly known as the Food for Peace Programme or P.L. 480, is governed primarily by the Agricultural Trade Development and Assistance Act of 1954. The 1990 Act already made several major changes to PL 480s, such as establishing a new bilateral grant programme, direct management responsibilities and debt forgiveness. Among its most important modifications, the FAIR Act amends Title I, i.e. the concessional credit programme, which finances sales of US agricultural commodities to developing countries, by including private entities in addition to the government bodies of the recipient countries and also by eliminating the minimum repayment period of 10 years and reducing the maximum grace period from 7 to 5 years. It also increases the maximum level of funding available under Title II and adds intergovernmental organizations, such as the World Food Programme, to the list of organizations eligible to receive these funds. In addition, it amends Title IV to expand the range of commodities available for programming under the Public Law 480 programme. Finally, it extends the authority for the FFP agreements through 2002 and the authority to make sales on credit terms to all eligible countries, not only to the newly-independent states of the former USSR.
The FAIR Act removes the link between income support payments and farm prices; it eliminates the Area Reduction Programme; suspends the Farmer Owned Reserve; and also makes some modifications to the loan mechanism and to export and food aid programmes. The Act replaces deficiency payments, which were linked to the level of farm prices with fixed, but declining, production flexibility contract payments for seven years (1996-2002). Under these, participating farmers will receive government payments independent of movements in farm prices and irregardless of production levels. This provision, combined with the ending of the Area Reduction Programme, will permit producers to plant 100 percent of their total contract area plus an additional area to any crop (with limitations on fruit and vegetables) with no loss of payments. As a result, producers are expected to rely more heavily on the market as a guide to production decisions.
The Act retains the basic non-recourse loans, under which producers may either repay the loan and regain control of the pledged commodity or forfeit the commodity to the Government. In general, annual loan rates will continue to be based on 85 percent of the preceding 5-year average of farm prices (excluding the highest and lowest years) but subject to maximum loan rates. The Agricultural Act of 1980 has been amended to establish a Food Security Commodity Reserve under which the limitation to wheat authorized for the 4-million ton reserve would be widened to include maize, sorghum and rice, in addition to wheat. The Act also suspended, through the 2002 crop year, the authority granted earlier to the Secretary of Agriculture to allow entry of wheat and coarse grains into the Farmer Owned Reserve.
The FAIR Act also makes several changes to export and food aid programmes. It limits expenditures for the EEP for the period 1996 through 2000 to levels below the maximum permitted under the Uruguay Round Agreement. The CCC Export Credit Guarantee Programmes have also been streamlined while food aid programmes have been amended to increase the private sector role and to expand commodity coverage.
If through cutting support and reducing export subsidies, the FAIR Act achieves its main objective, which is making the US agriculture more market oriented and efficient, then the United States could become a more competitive exporter of cereals. Should the US increases its market share as a result, international trade and prices would become more influenced by supply developments in the United States.
