Bumper crops -- and bankruptcies
Election-year political handouts, good weather, and bumper crops ought to make life sweeter this year for America's 3.5 million farmers and ranchers.
Instead, many agricultural experts warn that mixing higher subsidies from government price support programs with bin-bursting corn, wheat, and soybean harvests could:
* Produce a record level of farm bankruptcies this year and next.
* Weaken the US farm sector over the long term, reducing the US share in supplying the world market with farm products.
The basic problem is economics. Ever-more-productive American farmers are delivering more goods than the recession-squeezed US and world markets can absorb.
US farmers entered the current crop year with grain surpluses already piled high in storage bins and elevators. Now the US Department of Agriculture (USDA) is forecasting a record-breaking 8.3 billion-bushel corn harvest, along with record soybean and near-record wheat harvests this year.
The result of producing bumper crops when world demand is depressed is ''like having a fire sale,'' explains American Agriculture Movement national director David Senter.
''Prior to 1973 when Russia came in and cleaned out all our granaries, we had allotments or certain amounts of acreage we could plant in different crops, and every year there were adjustments made in what you could plant to make that fit with what world and domestic usage was,'' he says. ''Now we are in the position of almost producing fence row to fence row and then trying to export it at whatever price we might get for it.'' There have been no paid land-diversion programs since 1979.
Mr. Senter insists that reviving ''mandatory supply management'' is the only way to avoid punishing US farmers for their success in increasing productivity year after year. ''With agriculture,'' he says, ''whether it be wheat, corn, or whatever, if you've got one more bushel than what is needed for the demand, you end up taking a surplus price for every single bushel that is for sale.''
Politics complicate the economic problems triggered when supply outdistances demand. Congressmen looking for more farm-belt votes have voted to increase farm price supports - effectively offering farmers an incentive to produce more just when supplies already are excessive. But a presidential veto is considered unlikely. Despite President Reagan's dislike of increased government spending to compensate for low farm commodity prices, both the White House and the USDA now accept the contention that America's farmers are in trouble and need extra financial support.
Still, over the long term, Agriculture Secretary John R. Block argues that increased farm exports can lead the way back to better times. He remains hopeful that the Soviets will accept his offer of a new grain-sales agreement and become a major customer for US grain once again.
American Farm Bureau Federation officials, however, doubt that exports will significantly reduce US surpluses even if the Soviets are won back. For US farmers saddled with bumper crops competing in a depressed world market against subsidized exports from Europe, Canada, and Argentina, ''next year is going to be tough,'' says Bruce Hawley, the Farm Bureau's Washington office director.
Mr. Hawley forecasts that ''this next year is likely to bring continued high interest rates as a major component of farm production expenses, continued depressed prices because of the major stock carry-overs, high expenses, and low income.''
To ease hard times on the farm, Hawley says, the Farm Bureau recommends ''a supply management program, called a paid land diversion, where farmers would be encouraged to idle a portion of their land in order to reduce total production, which would keep supplies from becoming so large and so unmanageable.''
Hawley argues that the government should ''assist farmers in easing out of this mess'' because it was government farm programs that mistakenly ''provided excessive subsidies to encourage agricultural production.''
Hawley says the Farm Bureau also calls for ''an aggressive export-subsidy program to show our allies and competitors that we will not stand by idly while they steal our markets in times of bountiful production.''