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  • From: Aozotorp AT aol.com
  • To: market-farming AT franklin.oit.unc.edu
  • Subject: American farmers still lean hard on government aid, and instead of rising export
  • Date: Tue, 1 May 2001 20:56:21 EDT


http://www.csmonitor.com/durable/2001/05/01/fp1s1-csm.shtml

TUESDAY, MAY 1, 2001



USA
Down on the farm, reforms failing

American farmers still lean hard on government aid, and instead of rising
exports they see falling crop prices.

By Laurent Belsie
Staff writer of The Christian Science Monitor


BISBEE, N.D.

The United States' bold program to wean farmers from subsidies and make them
more globally competitive appears to be failing.

Instead of becoming more competitive, America's farmers remain dependent on
government handouts. Crop prices have fallen so low that many producers
admit they'd be out of business without them. As a result, the US continues
to lose its position as the world's chief food exporter, and its hopes to
get government out of farming seem dashed.


A LEANER HARVEST: A lone truck is parked on a bare harvested wheat field in
Walla Walla, Wash. With prices down worldwide and less government aid, US
farmers are planting less wheat than at any time since 1973.
JEFF HORNER/WALLA WALLA UNION-BULLETIN/AP/FILE

Finding a solution presents knotty challenges, as free-market economics
bumps up against the political importance of farmers.

"There's no farmer who isn't seeding for the government programs," says Gary
Beckedahl, a farmer in Sherwood, N.D., who has downsized after a string of
bad years.

"The government is not going to be out of farming," adds Bruce Lewallen,
president of the US Durum Growers Association and a farmer here in Bisbee,
N.D. "If it happens, there will not be a farmer left from North Dakota down
to Texas."

Wheat offers the clearest example of how US policies are failing. Farmers
plan to seed fewer acres of wheat than at any time since 1973, according to
a recent survey by the US Department of Agriculture (USDA). Back then,
American agriculture stood on the verge of a long boom, fueled by the
surprise wheat purchases by the Soviet Union. Today, even with world wheat
stocks declining, farmers here are in no mood to gamble that prices will
rebound.

North Dakota, in particular, is cutting back its durum acreage (the
specialty wheat used to make pasta) despite its premium price. Although
abnormally high rainfall has played a role, ruining several durum crops and
increasing the risks of disease, government programs are also pushing
farmers to move out of durum.

For example, the federal government has cancelled special durum crop
insurance, making it more risky to plant. Also, subsidies for soybeans look
more attractive than those for wheat. So North Dakota farmers are switching
out of durum into soybeans.


"This used to be the No. 1 durum-producing county in the state," says Mr.
Lewallen of Towner County, N.D. But acreage has fallen by roughly half. He
predicts statewide acreage will fall by 25 percent or more.

Lewallen has cut his own durum acreage and will plant soybeans for the first
time. They cost more to raise, but government support means an acre of
soybeans in a normal year will return $150 to $160 an acre, he says, versus
about $120 for durum.

This year's cuts magnify the continuing decline of America's prominence in
the world's food picture. Three decades ago, the US produced 13 percent of
the world's wheat and accounted for more than one-quarter of world wheat
exports. By last year, the US accounted for only 11 percent of global
production, and exports had edged down to a 24 percent global share.


Soybeans offer an even starker picture. In 1971, the US grew two-thirds of
the world crop and 85 percent of exports. Last year, America's share of
production had fallen to less than half and its share of exports to 55
percent. Of major US crops, only corn and other coarse grains have boosted
their importance in world markets.

"The world has changed a great deal, and clearly there's a lot of production
occurring," says Edward Allen, a USDA grains analyst. More countries are
producing more food for their own use, crowding out US exports. Some, such
as India and the European Community, use internal subsidies that distort
grain markets.

When it passed the agricultural-reform legislation in 1996, Congress gave
farmers the freedom to plant whatever they wanted. In exchange, it
dramatically reduced crop subsidies. The idea was that farmers would produce
according to world market prices, not subsidies.

Instead, five years of good growing conditions worldwide have boosted stocks
and knocked prices down to unimaginable levels. With many farmers barely
hanging on with what they get from the marketplace, Congress has pushed
additional emergency aid into their hands year to year.

"The last two years have been pretty decent years for farm income," says
Andrew Swenson, an agricultural economist at North Dakota State University
in Fargo. But "we are still producing for the government." Last year, the
average farmer's entire profit could be attributed to a government payment
of one kind or another.

Even the government's share of total income (before expenses) is rising.
Five years ago, Lewallen figures, government payments accounted for 20 to 25
percent of his income. Last year, it was up to 55 percent. "The sad part of
it is, I needed every penny of it," he says.

Despite wide agreement about what's wrong with farm programs, solutions vary
widely. Lewallen, for one, doesn't want to return to government controls
that cut production to try to boost prices. "We cannot stop producing," he
says. "We just need to sell better."

Professor Swenson is ready to change course. "It certainly has not worked
out the way we intended it to," he says. "We have lost world market
share.... I think supply management has a role."




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