Helping farmers

The United States is proud of its agriculture. The government's latest crop forecasts suggest ''amber waves of grain'' again, following last year's drought across the Great Plains: corn 84 percent ahead of last fall's crop, soybeans up 30 percent, wheat, less affected by drought, up a modest 4 percent.

Thus it's cause for some embarrassment and a lot of concern that a large number of America's farmers are in deep financial trouble.

Financially speaking, US farmers are in much the same debtor straits as the third-world nations who have recently sought relief from their debt burdens.

For the US farmer, falling crop prices, dropping land values, continuing high interest rates, and a market outlook dimmed by a strong dollar and good crops among competing grower nations suggest a tightening financial squeeze in the year ahead.

Sadly, many of these farmers are among the best managers, not the worst. These are the farmers who survived last year's drought and the grain embargo and escalating production costs of previous years. They deserve help.

One solution worth a close look is a debt restructuring proposal designed by agricultural economist Neil E. Harl and introduced in the House in June by Iowa Republican Rep. Jim Leach. The Harl-Leach bill would stretch out the period of time for repayment, including a waiver of up to three years of interest and principal. The purpose of the bill is to encourage farmers not to go the bankruptcy route. Banks would have to agree to give up a percentage of principal on the debt, up to 20 percent, as the price for getting the loan into the federal guarantee program. Farmers would have to submit an economic feasibility plan, showing realistic cash flow projections, to qualify.

If Congress and the administration cannot come up with something better when they get back to work on the farm bill, up for renewal in 1985, they should enact it. So far, the debt-restructuring proposal is the only feasible plan in sight for keeping farmers in business.

Just how many farmers face foreclosure?

In Iowa this spring, some 10 percent of the state's farmers had a 70 percent debt-to-asset ratio. According to economists like Mr. Harl, these farmers appear likely to fail in two years without some change in their basic economic equation. Another 28 percent of Iowa's farmers have an over 40 percent debt-to-asset ratio; they are losing net worth. Wisconsin's farmers are worse off than Iowa's. Another assessment is expected shortly for Minnesota.

Nationally, 25 percent to 30 percent of the $215 billion in US farm debt is held by farmers caught under a 70 percent debt-to-asset ratio. This puts the debt at risk at about $50 billion. Possibly half these farmers are already in such trouble that they could not qualify, so the amount of debt to cover is about $25 billion.

The overall cost of the program would depend on variables such as interest rates, the dollar's strength, weather, and commodity prices. It could be zero if covered by the 20 percent write-down. Or it could range from $1 billion to $5 billion a year.

The main point is that the squeeze continues to tighten on farmers. The Federal Land Bank has just raised rates on borrowers by 1 percent. The Congressional Budget Office projects interest rates holding about steady for the next three years. The dollar is expected to stay strong through next year. Grain demand is sluggish.

Except for new purchases by the Soviet Union recently, with more to come, the markets are described as quiet. While Canada's wheat prospects fell off, the crops in nations like India and China have been good.

The bullish crop forecasts have been anticipated in commodity prices. Soybean prices have fallen 33 percent since May, corn 10 percent, wheat 8 percent. The PIK (payment in kind) program will help corn farmers, with a little over half of the corn acreage still under the support program; there is no PIK program for beans.

Not all farmers are in trouble, of course. But for those who have had to borrow the most because of drought, or who are in debt for land, machinery, or livestock, a further wringout lies ahead. The next six to 12 months will be critical.

It is simply not necessary to let these farmers fail, or the vendors and small businesses that depend on their survival.