Bumper Crop, Low Prices Bolster Farm Aid Programs
DESPITE a record yield of corn on his Illinois farm this fall, Jim Robbins expects to take advantage of the federal price-support system. And if agricultural experts are right, the bountiful harvest could make it more likely that farm subsidy legislation will survive in Congress next year.
The severe shift in crop yields and prices between 1993 and '94, the experts say, dramatizes the need for these federal programs, which are aimed at stabilizing crop prices and detering financial ruin for farmers. Last year, fields were ravaged by floods. This year, good weather has resulted in a surfeit of corn and soybeans.
Mr. Robbins grows corn and soybeans with his father and brother on 2,700 acres near Manhattan, Ill. His yield of 170 bushels of corn per acre is 20 percent more than usual.
``We couldn't have watered the land any better, everything fell into place, and the weather was ideal,'' he says.
But if the Robbins family were to sell its grain now, its net income would be below that for 1993. Like many farmers, the Robbinses say they plan to store grain in the hope of higher prices later and use the federal support program.
Some members of Congress would like to trim back the price-support program. The farm lobby must overcome this opposition by justifying the price supports if the Farm Bill, which expires next year, is to be renewed. The lobby says it plans to point to the erratic yields as part of this effort.
``The big harvest is dramatizing the importance of a safety net for US agriculture, and it should help farmers politically,'' says Neil Harl, an agricultural economist at Iowa State University in Ames, Iowa.
When Congress revamps the Farm Bill next year, some lawmakers are likely to complain about the high cost of price supports to taxpayers after the barn-breaking '94 harvest, farm experts say.
But advocates of farm assistance have a comeback: Repeated budget cuts have roughly halved the bill for such programs from $26 billion in 1986.
The crop gluts this year have pulled down the price of corn and soybeans by more than 20 percent since June to lows unseen in several years. Prices for beef, milk, and especially pork have also fallen.
The low prices help rein in inflation and benefit consumers. But they vex many farmers: The Department of Agriculture recently cut its estimate of net farm income for 1994 by 9 percent to $49 billion. (The new figure still represents a 13 percent increase over 1993.)
Farmers trying to handle the dizzying decline of commodity prices caught President Clinton's eye during the recent midterm election campaign. In an effort aimed in part at winning the farmers' votes, the president on Nov. 3 announced at a Des Moines rally the opening of the federal granary known as the Farmer-Owned Reserve.
The government is offering to pay farmers to store up to 900 million bushels of corn, sorghum, barley, and oats for as long as 27 months. The reserve has been put into action four times during the past decade, giving farmers a financial incentive to withhold their grain from the market until depressed prices rise. The program thereby aims to ensure long-term, stable prices for grain consumers.
The government has also said it will pay farmers involved in its price-support program to let 7.5 percent of their land lie fallow next year. This year, trying to build up reserves after the paltry harvest of 1993, the government didn't give farmers an incentive to idle land.
As renewal of the Farm Bill approaches, some members of Congress have stepped up their efforts to cut farm subsidies. They argue that the US should rely on increases in global grain trade rather than on government intervention to stabilize prices.
Indeed, US exports of corn, soybeans, and other crops are expected to steadily rise because of increasing demand from abroad and freer trade regimes negotiated under the General Agreement on Tariffs and Trade and the North American Free Trade Agreement.
``By virtue of the fact that we've opened up international markets, we'll moderate highs and lows on our price fluctations,'' says Terry Francl, senior economist and commodity specialist at the American Farm Bureau Federation, in Park Ridge, Ill.
For now, as US farmers top off their grain bins, low prices have dimmed an otherwise radiant harvest. ``The mood of farmers is good because of the exceptional yields, but there is deep concern about the low prices,'' says Dr. Harl of Iowa State University.
``Everybody is putting grain away in storage and hoping that sometime after the first of the year prices, will rally,'' Robbins, the Manhattan, Ill., farmer adds.