Tough times on America's farms

Over iced tea and cookies, June Wattjes stares at the kitchen table. She and her husband Dick work the land his grandfather bought more than a century ago in southern Illinois. He barely avoided losing it in the 1980s farm crisis. But the recent collapse in grain prices may bring real ruin this time.

"It's starting all over again," says Mrs. Wattjes.

Agricultural America has sunk into a thoughtful gloom. Low crop prices, a spreading drought, and weak farm exports have precipitated the immediate crisis.

But the funk reaches far deeper than that. Many experts now say that segments of America's farm sector - the world's prime food producer - may not immediately pull out of the worst price crunch in decades.

Even more worrisome, rural Americans are concerned that the cornerstone of rural life - the family farm - may not survive long in the new century.

Congress's rush to pass emergency aid could ease the short-term crunch. But a growing number of farm groups and policymakers are pushing for a reexamination of the underlying structural issues.

"Producers are saying: 'Why am I doing this? ... Why am I working for this kind of uncertainty?' says Bob Young, co-director of the Food and Agricultural Policy Research Institute at the University of Missouri in Columbia.

"It's kind of the Wal-Marting of [agricultural] America," adds Ron Warfield, president of the Illinois Farm Bureau in Bloomington. "Some see it as an opportunity. Some see it as a process that they don't want to be a part of. And the feelings are strong on both sides."

Watch those skies

The immediate question mark remains the weather. Drought in the mid-Atlantic states has shriveled crops in West Virginia and parts of surrounding states. Agriculture Secretary Dan Glickman has declared drought-disaster areas in a swath of states reaching from parts of Ohio into Virginia.

The dryness is less severe in the nation's main grain producing areas. But it has hurt the soybean and corn crops in Illinois and Indiana, according to the US Department of Agriculture's latest report.

Drought, plus continuing low crop prices, is pushing Congress to take speedy emergency action. Democrats announced Aug. 2 a $10.8 billion aid package. Republicans have countered with a smaller $6.7 billion in emergency assistance. This marks the second year in a row that low commodity prices have forced Congress to give farmers additional aid beyond normal farm-program subsidies.

On the flip side, weather concerns are helping boost grain prices after they hit lows in recent weeks that, in some cases, had not been seen in decades. But prices would have to rally even more to push farmers into the black.

In Iowa, for example, the average farmer who rotates between corn and soybeans spends $2.47 to plant a bushel of corn, estimates Mike Duffy, an agricultural economist at Iowa State University in Ames. Corn prices would have to rise roughly another 20 cents a bushel for that farmer just to break even.

The situation is even more dire for hog producers. Last winter, prices briefly touched lows of around 8 cents a pound (a price never seen this century when adjusted for inflation). The crunch forced thousands of family farmers to sell their livestock at a huge loss. But while they were cutting back, the evidence suggests that huge corporate farms continued to expand, says Chris Hurt, agricultural economist at Purdue University in West Lafayette, Ind.

The continuing glut has meant that hog farmers have gone 19 months without a sustainable period of profits. Thus, while farmers spend an average of 36 to 38 cents to raise each pound of pig, they'll likely get only 32 to 34 cents at the marketplace during the next year, Mr. Hurt says.

Positive signs

From a strictly financial viewpoint, America's farm funk has run too far, argues Luther Tweeten, an agricultural economist at Ohio State University in Columbus. America's commercial farmers enjoyed several excellent years this decade, their debts are relatively low, and farmland isn't overvalued the way it was at the beginning of the 1980s farm crisis.

And the major cause for the recent price collapse - the Asian financial crisis - shows signs of ameliorating. Although low farm prices could persist another couple years, "it's not a chronic problem, it's a temporary problem," he says.

Consolidation's reach

But the restructuring of farming represents a deeper fear. The rise of corporate hog farms and the consolidations and mergers among seed companies and grain processors has left many farmers fearing that they're next to be gobbled up.

"It leaves the majority of them feeling that they're going to end up tractor drivers" for some huge corporate outfit, says Mr. Duffy of Iowa State.

"There's going to be significant turnover in farm operations regardless of what the farm economy does," says Paul Lasley, sociology professor at Iowa State University. So "there's at this point in the farm community a lot of disillusionment. Where do we go now? Do we go back to government-administered agriculture? I think this is a real quandary that Congress faces."

Of course, consolidation has been going on in fits and starts for decades. Already, the top 20 percent of farms produce roughly 80 percent of the nation's food and fiber. And the US now has fewer farms than at any time since 1850.

Will the new round throw the Wattjeses off their third-generation operation? The signs aren't good. Along with their two sons, they farmed some 1,100 acres of ground. But bankruptcies and other reverses have thrown both sons out of farming and the Wattjeses themselves now own only 160 acres.

"It's not that bad yet," says Mr. Wattjes. But if prices don't improve by the end of next year, their situation - and that of many other farmers under stress - will be much worse.

(c) Copyright 1999. The Christian Science Publishing Society