Farming: US farmers once turned grain to gold; today full silos seem like lead weights

WHEN his farmhand left last August after 16 years, Skee Rasmussen didn't replace him. It was his son, Dan who recalled the anniversary at the breakfast table a few months ago. ``Dad, we made it.''

``Made what?''

``We made it on our own for a year.''

The Rasmussens' cost-cutting is one example of what is going on throughout the agricultural United States. Five years into the worst farm downturn in half a century, no grand solution to the farm problem has emerged. At least, a majority of policymakers cannot agree on one. Instead, the farm sector is making piecemeal adjustments.

``Well, we're getting along,'' says Mr. Rasmussen of his South Dakota cattle ranch. The squeeze is subtle here. His newest tractor, an International Harvester, is 15 years old. His hilly grazing land, which might have brought $150 an acre five years ago, would probably fetch half that now.

``We don't know what land is worth now because nothing is moving'' on the real estate market, he says. ``I think if you wanted to buy land and were really serious about it, you could buy half of Mellette County right now.'' Leaving the cattle business

Indeed, other ranchers in Mellette County, just east of the Badlands, are leaving the cattle business.

Three years ago, 13 ranchers took part in the local branding run, a spring get-together where friends and neighbors pitch in to brand new calves. That year they branded 5,000 head. This spring, only five ranchers and 1,200 calves were there.

``We have looked for this fall to be the turning point, thinking that we'll lose a lot of people who are hanging by their finger tips,'' says Rasmussen, who is president of the South Dakota Stockgrowers Association. ``Our concern is that if even half of them go, then our banks are going to go. And we can't operate without banks.''

This month, just 11 days before election day, the Reagan administration announced that it was stepping up subsidies to feed-grain farmers. Participating corn farmers, for example, will be paid $2 a bushel not to produce 15 percent of their expected crop next year -- an attempt to help financially strapped farmers and cut back the nation's huge grain surpluses.

But the program will probably not reduce surpluses, only slow the increase, economists predict. Nor does the program account for the fact that many farmers and ranchers are not hurting financially.

When researchers at North Dakota State University interviewed some 700 farm families last spring, they found that financial problems were concentrated among a minority. While some 36 percent of the families fell below the poverty line -- that is, earning $10,900 or less for a family of four -- 26 percent had incomes of $30,000 or more.

The telling factor is debt. ``For those who have quite heavy debt loads, the situation is basically deteriorating,'' says Larry Leistritz, an agricultural economist involved in the study.

With roughly a third in debt trouble and another third relatively debt-free, a substantial number of farmers and ranchers find themselves on a shaky middle ground.

For three years this middle group of farmers has drifted closer and closer to financial trouble. Now, most agricultural analysts appear optimistic that the worst is over.

``I think it's fair to say we're going to be able to muddle through,'' says Kenneth Farrell, director of the national food center at Resources for the Future, in Washington, D.C.

The evidence points both ways. In Iowa, the slide in land values has slowed, according to a survey by the Federal Land Bank of Omaha. In Montana and most of North and South Dakota, it continues unabated, the survey shows. Help from state governments

State governments have moved to alleviate the situation. Some have set up loan programs to help stretch out debts. Iowa has hired specialists to mediate the sometimes bitter negotiations between farmers facing foreclosure and lenders. In communities, formal and informal networks have sprung up, offering free legal advice, counseling, and financial support to troubled farm families.

Farmers and ranchers themselves have made adjustments by selling some of their land, taking on a second job, or quitting the land completely. Some businesses have also helped.

When Contract Freighters of Joplin, Mo., needed drivers last spring, it offered to hire and help train displaced farmers.

The company paid room and board, while the State of Missouri kicked in the $2,130 tuition at a nearby driving school. When the course was completed, the trucking company gained 80 former farmers.

``They did make excellent drivers,'' says Harold Bone, safety supervisor at the trucking company. Some of the farmers' wives took the course and now drive trucks with their husbands, he says.

These piecemeal efforts have not turned the tide, however, because the current agricultural squeeze is the result of large and powerful forces. Several points about the farm situation have now come clear:

The farm problem is international. ``We're looking at a global oversupply problem,'' says Bob Wisner, an economics professor at Iowa State University. ``For 50 years now, we're tried to be the balancing wheel [between world food supply and demand]. It's being signaled to the world that the US can't continue to play that same role.'' Somehow, the US, the European Community, and other industrialized nations will have to work out of the surplus that each has been guilty of producing.

The US farm economy is undergoing a dramatic restructuring. The growth of international trade and advances in technology are changing the way US farmers do business. Some have built such large operations that their local banks can no longer serve them. Most economists expect fewer commercial farms, larger and more financially strong, although they will still be run by families.

US farm policies are probably outmoded. After helping bring a large rural population out of poverty during the 1930s and '40s, farm programs began to lose their relevance in the '70s, many economists and policymakers now say. Instead of aiming subsidies to help certain needy farmers or for specific purposes, current policies encourage all farmers to overproduce by guaranteeing that, if all else fails, they can sell it to the government at a specific price. The result is a surplus that is depressing prices and proving nearly impossible to control.

``The problem is [that] it's always easier to increase agricultural production than it is to reduce it,'' says Edward Schuh, director of agriculture and rural development at the World Bank.

Last year Congress took a step in reversing the direction of farm programs. It slashed price supports, letting the price of major US crops fall to near world levels. But lawmakers balked at reducing aid to farmers in the midst of the farm-debt crunch. Instead, they propped up producers' incomes with record farm-program spending.

The approach faces pressure from two fronts. Taxpayers may get upset at the $25 billion to $27 billion the government says it spent on farm programs in fiscal 1986. And foreign allies are angry because the price of their farm exports has fallen sharply in response to US policies. Taxpayer revolt?

``You can't rule out a [taxpayer] revolt on farm programs,'' says Martin Abel, president of Abel, Daft & Earley, a Washington, D.C., consulting firm. ``But if you come up to the average citizens in Boston, New York, or the streets of Washington, they wouldn't even know what farm programs cost. It's not a burning issue.''

Dr. Schuh wants Congress to reduce income supports the same way it cut back farm-price supports, because both encourage farmers to overplant.

But Congress is unlikely to do more than tinker, policy analysts say.

One forecasting group, the Food and Agricultural Policy Research Institute, has tried to predict the impact of keeping the current policy in place for 10 years. Its findings are bleak:

Annual farm prices for major grains and cotton will continue falling for the next few years and not recover to 1985 levels until the early or mid-1990s. The 1985 prices were already considered low, compared with the 1970s.

Government spending on all farm programs will remain high, above $20 billion, until 1990, when they begin a slow decline.

Net farm income will also remain relatively high until 1990, when it begins to fall.

Some cooperation among food-exporting nations would help the situation, analysts say, especially some agreement by the US and the European Community to cut back farm subsidies and agricultural trade barriers. ``The progress is going to be very, very difficult,'' Mr. Farrell says, not only because of European intransigence, but also because of political pressures in the US. ``All things considered, we're going to flail around, but we'll stay with what we have.'' THE National Issues Forum is an annual project of the Domestic Policy Association, a nationwide network of more than 200 colleges and universities, libraries, civic organizations, and other groups devoted to raising the level of public discussion about important policy issues. Throughout the fall, the participating institutions will convene public meetings in their areas to consider this year's three NIF topics--the farm crisis, immigration, and crime. Later, the Domestic Policy Association will sponsor meetings with government and other national leaders where selected NIF participants will share the results of the citizens' discussions.