Despite rain, Southern harvest and farmers' futures are bleak. The farming business once ran entirely on handshake credit - now that has stopped

The rains finally came in late August to the drought-weary Southeast. But harvest results this fall are bleak after the worst Southern drought on record. And it is not clear how many farmers will quit.

But it is clear that the drought came as a staggering financial and moral blow to debt-ridden Southern farmers and is leaving its mark on rural communities.

Soybean crops are so poor, and prices so low, that many farmers are simply leaving them in the field. The cost of running a combine is more than the harvest is worth on some acreage.

Farm supplier Andy Purvis in Jefferson County, southwest of Augusta, Ga., lost half of his large-volume farming customers during the last two years.

In a business that was once run entirely on handshake credit from harvest to harvest, the credit has stopped.

``It's going to have to be cash now,'' says Wynder Smith, a supplier, cotton ginner, and large-scale farmer in the southern end of the county. ``You can't trust a man any more. He'll go bankrupt on you.''

If farmers here looked at their balance sheets ``like a banker looks at them, or like you and I look at them,'' says county agricultural extension agent Johnny Dekle, then as many a third or a half might quit farming after this year.

``But farmers are optimistic,'' he adds. ``Otherwise they wouldn't be in it now.''

The states hardest hit by the drought were Georgia and South Carolina. North Carolina state officials, though, are estimating that 1,000 to 2,000 farmers face foreclosure or reorganization of assets.

Georgia had the nation's highest delinquency rate with the Farmers Home Administration before the drought became serious. Post-drought figures will not be in for another couple weeks, but the picture is certainly worse.

Roughly half of this year's crops have been harvested. The Georgia agricultural commissioner is estimating the corn yield statewide to be off 40 percent from last year, cotton off 47 percent, soybeans off 20 percent, and peanuts off 18 percent. The drought cost to Georgia farmers altogether is $239.65 million.

In South Carolina, the state agriculture department estimates $117.6 million in crop losses and $35.4 million in horticulture losses.

The harshness of the drought impact is spotty, however. In Georgia, the weather was driest in the northeast, where few of the farm operations are full-time or afford the sole household income.

In the southwest, many farmers irrigate their fields, and peanuts are one of the few crops where the Southeast actually controls the market, so a low yield means prices go up to compensate.

For most Southern crops, low yields are coupled with low prices because of bumper harvests in the Midwest.

The hardest hit region is probably here in the eastern part of middle Georgia. While more men get jobs in kaolin (clay) mines or commute to factories every year, farms are still the heart of the economy. Yields this year are off much more than the statewide average. Soybeans, for example, are coming in at less than half of normal.

``We're hurting,'' says Mr. Smith. ``It's terrible.''

Even Jimmy Blocker, who runs a clothing store in Wadley, is seeing business fall off 20 percent from last year. And last year was a bad year. Fortunately, he runs the store with his wife and daughter. ``If we had to have outside help, we'd have trouble,'' he says.

With farmers and farm suppliers, the frustration is palpable.

Much of it is directed toward government farm policy. Farmers here almost universally feel that government farm loans were too easy for the wrong people to get, that farm products should not be used for diplomatic leverage, and that government should not be sending agricultural loans to third-world countries that could be helping family farmers survive.

``You see the terms on that?'' says Mr. Purvis bitterly as he discusses a newspaper clipping of an 8.5 percent, 15-year World Bank loan to a Latin American country with a three-year grace period.

Some of the best farm managers in the area are pulling out now, says Purvis - farmers who grew up on farms, have college degrees and ``good basic gut feelings'' for farming.

He talked to one family recently who owes no money on its land but must decide whether to borrow on it next year to continue farming.

``Frankly, they're not going to do it,'' Purvis says.

Not just farm supply stores like Purvis's are closing down here; the larger distributors are, too. IMC Corporation closed its shipping and storage facility in Augusta in September. Columbia Nitrogen will either sell out or shut down by the end of the year.

Now Purvis must go well over 100 miles to Savannah or Americus, Ga., to distributors.

Many around here feel that the medium-size farm is on the way out. Mr. Dekle, the agriculture extension agent, is not so pessimistic. ``Agriculture will stay,'' he says, although the farmers may change. Even after foreclosures, ``land will go back on the market. Somebody will buy it.''

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