The farm situation is tough and getting tougher

by Steve Johnson

This article was reprinted from the March 8, 1997 issue of the People's Weekly World. For subscription information see below. All rights reserved - may be used with PWW credits.

The conditions for rural America, including farmers, small businesses and workers, continues to get tougher as time goes on. As farm operating expenses continue to escalate, the prices received for grain, livestock, milk and everything else have been in a freefall. For example, wheat was $6 per bushel one year ago and is now $4, milk was $16 per 100 pounds in August and is currently at $13 and beef cattle, $1 per pound three years ago, is frozen at $.65.

As a result, 50 cow dairies are failing right and left and are being replaced by 1000 cow or larger mega-farms. Thousand-acre grain farms are now "small potatoes" as are beef herds with 100 cows. It takes hundreds of beef cows now to support one family on such low profit margins. Farmers are in the equivalent of a work-speed-up situation in a factory, because of the need for more and more units of whatever they are trying to make a living at. This results in people running themselves haggard, working 100 plus hours per week at times. Such a schedule inevitably results in a higher incident of accidents.

The largest and most powerful farms are getting bigger and bigger, and are doing quite well. As a result, quoted statistics from the government show average income per farm looking pretty good, as does total farm income. One must remember, however, that these figures include 'farms" such as Tyson and Perdue. So they are quite deceiving. You know the old saying, "figures don't lie, but liars can figure."

Because of the uninviting economic environment, young people are hardly entering farming at all. The average age of a U.S. farmer is close to 60. People who grow up on a farm get it right in their blood. If they want to be even close to the production of food and fiber, about the only choice for them is to go to school and get a job for a large chemical or seed company.

Typical of the paradoxes and contradiction in the economy is this: The equipment on the farms of the nation is for the most part worn out and not technologically up to date. On the other hand, the equipment manufacturing plants have downsized, consolidated and experienced layoffs. All that would be needed to reverse and positively change these two intertwined situations is a fair income for the family farmer of the United States.

The takeaways continue. Even though the financial safety net in the past has been inadequate, envision now a net about one inch above a concrete floor. Splat! The 1996 farm bill gutted almost every aspect of this net. It took away the disaster program totally, so farmers are on their own if a natural disaster comes along and wipes out the crops. "Buy insurance from the free enterprise insurance companies," they say. There goes another piece of farm income. Also, subsidies used to be based on the market prices of grain. When the prices were up, farmers got less, and vice-versa. Now the "Freedom to Farm" bill, called by many the "Freedom to Fall" bill changes all that. A seven- year program is intended to put an end to all subsidies - forever. The subsidy started its first year at less than it had been and drops steadily until it disappears totally after year seven. This will cut net farm income by 30 to 40 percent.

One hopeful development has been the establishment of value-added co-ops. Everyone has always known that the real money in the food chain lies in the processing of the foods raw materials into a finished product. Farmers, for instance, receive about $.05 of a loaf of bread, about the same as the cost of the wrapper. Companies like General Mills, Hormel and Kellogg's make profits that bring returns on investment of up to 100 percent, while on the farms the number is about 3 percent. The value added co-ops are taking raw materials such as wheat, corn and cattle and processing them into items like pasta, bread, sweeteners and steak. This greatly enhances the income of the members of these co-ops. The big problem with this is that the farmers who need these advantages the most do not have the substantial capital required to invest in the co-ops. Therefore, and unfortunately, the rift between the poor and the well to do farmers is getting wider. Sounds familiar, doesn't it?

Fundamental change is necessary now. That change has to come from Washington in the form of progressive legislation. The disaster program must be reinstated so that a natural disaster beyond the control of the farmer does not wipe the operation off the map. Dump the Freedom to Farm plan and return to a program based on the fluctuations of the market which makes more sense to everyone.

For farmers who are swimming in debt, write down their loans to a level they can pay, along with low interest rates and long terms. This is only part compensation for the income they should have received from the marketplace, but were deprived of. Affordable, decent housing is a problem in rural America like the rest of the country. Accessible credit on favorable terms is a very much needed reform out here to provide a roof over the heads of the people who are feeding the entire nation plus a portion of the rest of the world.

Last, but certainly not least, a program with a revolving loan pool, generously funded, to allow farmers to borrow money to invest in value added co-ops. This is where the real money is and will allow the best chance for long term stability in the farm sector. If these items are made the law of the land, the rapid demises of the family farm can be brought to a standstill and that would be good for everyone, both economically and morally.

-Steve Johnson is a Minnesota farmer.