US farmers find economic weeds in '84 crop forecast
The American farmer is doing it again. After drought and federal programs curtailed harvests of major crops last year, United States farmers are producing what looks to be plentiful supplies of wheat, corn, and soybeans.
Weather problems could still play a role. But if conditions remain normal, corn production will total 7.67 billion bushels, soybeans will reach 2.04 billion bushels, and wheat will be 2.53 billion bushels, according to US Department of Agriculture forecasts released last week. Forecasts from private analysts were close to the government totals.
That adds up to a mediocre year for US agriculture, says Ross Korves, research economist with the American Farm Bureau Federation (AFBF). Supplies of the three major crops will be plentiful enough to meet the demand, he says, but not so burdensome that prices will go through the floor - as they did after bin-busting harvests in 1982.
It's ''not a great year, by any stretch of the imagination - but a year where there is some optimism in it,'' he says.
But US farmers are not particularly happy - about this year or forecasts for the foreseeable future. They have reentered an era of chronic overproduc-tion, observers say, where news of bountiful production nationwide is not good news down on the farm.
The immediate forecast, sums up one northern Indiana farmer, ''means we're in for some low prices.''
Wayne Longtin, who manages the Mahnomen Farmers Cooperative Grain Association in Minnesota, says that in the past year, wheat and barley prices have fallen 30 cents a bushel.
''The good news is we're going to have a decent crop,'' says Jay Mosher, an Iowa farmer. But ''I'm one that thinks (that) for the benefit of agriculture, nothing benefits from a drop in corn (prices).''
As a livestock producer, Mr. Mosher stands to benefit in the short run from lower prices for feed. He says his crops were so devastated by drought last year that he had to buy corn, which sold as high as $3.75 a bushel, to feed his hogs. When he bought more corn last week, the price was only $3.24.
But in the long run, low crop prices encourage farmers to switch to livestock production, he says. This would drive down the prices of his hogs, which he says are marginally profitable now.
The problem is that farmers are still producing for an export boom that no longer exists. In such periods, prices remain depressed during normal yields. But in short crop years, although some farmers may be hurt by drought, for example, ''in general farmers do better,'' says Richard C. Pottorff, manager of the agricultural service of Data Resources Inc.
Since such events are the exception rather than the rule, Mr. Pottorff predicts that food supplies will continue to outstrip demand. For many years, farm productivity has increased 2 to 2.8 percent annually, while demand has not kept up, he says. And he is gloomy about the future.
''The agricultural economy will continue to have problems for the rest of the '80s,'' he says.
Even globally, the food picture has changed to one of abundance, says Thomas N. Urban, chairman and president of Pioneer Hi-Bred International Inc., a major seed research company.
''Even the most sophisticated among us find it difficult to accept the fact that today, in my opinion, mankind has passed over an extraordinary threshold,'' he says.
This abundance poses a challenge to US agricultural policymakers.
Should farm production be curtailed by mandatory production limits? Or should the free-market reign, as the Reagan administration seems to think?
Many farm groups argue that the 1985 farm bill should allow them to recapture their foreign markets, which have been eroded in recent years by other food-exporting nations.
''If you want to have a healthy American agriculture, you're going to have to export,'' says the AFBF's Korves. The Farm Bureau is proposing its own measures for the '85 farm bill.
But unless and until that happens, observers say, agriculture will continue to labor under the changed economic picture of the 1980s. For some farmers, already struggling with the wrenching economic changes of the last few years, the outlook for this year is bleak.
''It's just a bad deal,'' says Allen E. Craig, a northwest Missouri farmer whose farm was foreclosed on last year. The prospect of lower prices is hard enough as it is. But unlike much of the rest of the country, his region is going through its second year of drought, he says.
If it continues,''it's going to clean a lot of people out.'' Even with good crops, some farmers' debts are too high to allow them to continue, he says.