Farmers stagger under burden of high interest, low prices

"I can't sleep nights wondering whether the bills are going to come in too fast," says Mike Nielsen, a grain farmer from nearby Mapleton. In all his years of farming he cannot recall a time when production costs and the interest rate on borrowed money have been so high and commodity prices so universally low. To pay his more pressing bills, he plans by year's end to sell much of the corn crop he had intended to use as feed for his cattle and hogs.

Even at that the says his creditors will have to be extra patientd: "People and just going to have to wait in line longer for their money, or it's going to force farmers to sell out or take bankruptcy. . . . We just don't have any cash flow."

As spring planting season approaches and that cash flow problem intensifies, Mr. Nielsen and thousands of other farmers in Iowa and neighboring Midwestern states are pleading their case before almost anyone who will listen -- form state departments of agriculture to President Carter.

Most grain farmers blame the January embargo on grain shipments to the Soviet Union for many of their current money troubles. "It was the catalyst that really brought down the whole house of cards," says one. Most feel that help promised from Washington, and badly needed, did not come fully or fast enough.

Many farmers here in northwest Iowa, where the recent collapse of two regional railroads had added substantially to grain transportation costs, argue that their cash price for grain is lower than any place else in the country and that they are feeling the money pinch more than most.

Iowa Agriculture Secretary Robert Lounsberry estimates that s many as 20 percent of the state's farmers are in a "crisis" situation. In a letter to President Carter last month he described them as "hurting so badly" for credit that they are cutting back on seed and fertilizer purchases and dropping leases on rented land. "It may be the last farming year for these farmers," he says.

"We've been getting at least a dozen calls from farmers every day," says an aide in the Washington office of Congressman Berkley Bedell (D) who represents northwest Iowa on Capitol Hill. "They're all telling us there's no way they can make it with 20 percent interest on operating loans and that they're losing money on everything they do. . . They're almost past the point of being upset -- they use words like 'panic' and 'depression.'

"Farmers just feel they're bearing the brunt of everything these days," agrees Larry Clark, executive director of the Webster County office of the Agriculture Stablization and Conservation Service, which also receives a hefty share of daily complaints. "Most farmers wouldn't be complaining a bit if they could just get a reasonbale price on their commodities."

For added insulation for their own funds, some creditors are insisting on cash in advance. "No way am I sending out any seed this spring unless the money comes in here first," says one Iowa grain elevator operator. Some rural banks, short on money and catering only to regular customers these days, have urged farmers to use their loans for living expenses rather than planting the spring crop.

The concern of some agriculture experts is that the current economic squeeze on farmers could not force many to cut back on production but lead also to a drop in the value of their land. As it is, farm sales in northwest Iowa these days rarely draw a bid because few farmers have enough cash no hand or expected in to make an offer.

What kind of a rescue then do farmers want?

"We donht want any handouts -- we just want a fair price for our product," Mr. Nielsen insists.

The plea has a certain logic to it at a time when inflation is pushing the cost of producing a crop well above the price the farmer can expect to get for it in the marketplace. But it is a request more easily voiced than granted.

Washington has taken some steps to ease the farmers' plight:

* In addition to finally starting to buy up some of the embargoed grain -- so far 10 percent of the promised total has been bough -- President Carter has added $2 billion in loan funds for spring planting expenses to the exhausted supply of the Farmer's Home Administration, a lender of last resort to farmers in the most serious trouble.

* As one means of making more money available to farm- area banks, a new bank reform law allows those that are not members of the Federal Reserve System to use the system's discount window to get additional money at 13 percent.

* Congress which recently raised target prices on wheat and feed grains has also passed a bill allowing the Secretary of Agriculture to make price support loans availabel to all corn farmers -- not just the usually eligible who set aside a certain percentage of cropland last year. With that opening the great majroity of corn farmers may put their corps in storage as collateral and taken an advance loan on it to pay off bank production loans or other expenses.

Most agriculture experts, however, feel that something more must be done if most farmers are to stay in business -- particularly if the current situation worsens as is now expected. They argue that more financial help in the short run may pay off later. But President Carter appears committeed to making few or no exceptions to his anti-inflation program and his effort to balance the 1981 budget.There are several bills in Congress which would provide additional aid to farmers, but all are expensive and would call for a change in budget plans.

Many congressmen from farm states, including Representative Bedell, are eager to raise the price support loan rate on grain as a means of immediate relief for farmers in need of spring planting funds. They are likely to push that aid route and others this week with freesh vigor and determination as they retun to Capitol Hill from spring visits with their constituents. However, few if any of the bills now in the hopper are considered likely to pass.

One encouraging sign that could make a difference on the farmers' behalf is an incresingly sympathetic US Department of Agriculture, a government entity which some farmers lately have viewed as more of a hindrance than a help. is taking about affirmatively using the new authority Congress has given him. There is also encouraging talk of buying embargoed grain directly from farmers rather than through more expensive grain elevator operations.

You've read  of  free articles. Subscribe to continue.
QR Code to Farmers stagger under burden of high interest, low prices
Read this article in
QR Code to Subscription page
Start your subscription today