Farm price supports: a grain trader argues against them
| Toledo, Ohio
Should the government increase its agricultural support programs to boost current depressed farm incomes?
Congressmen led by Kent Hance (D) of Texas and Thomas Daschle (D) of Iowa call for new legislation to turn the farm economy around. They say immediate action is needed to raise farm commodity prices and promote export sales. They argue that, historically, an economic recovery in the agricultural sector must come before the national economy as a whole can pull out of recession.
But not everyone agrees.
Along with the congressmen and many government and private experts, grain trader Richard P. Anderson says he expects farm bankruptcies to increase this year. Yet he adds that the result will be a more efficient agricultural sector.
Mr. Anderson is confident that this increased efficiency is the best guarantee that major customers such as the Soviet Union will return to buying from the United States rather than continue efforts to build up other countries such as Argentina, now in a battle with Britain, as alternative suppliers.
Kansas State University agricultural economist Barry Flinchbaugh argues that boosting farm exports depends more on policy shifts than on spending government money for export promotion. On top of problems caused by worldwide recession, he says, US farm exports have been limited by ''the heating up of the cold war between the United States and the Soviet Union.'' Now, he says, ''the time has arrived to cool the rhetoric and to work out a new grains agreement with the Soviet Union. That would go a long way toward strengthening the foreign market for our products.''
Gene Hemphill, assistant to Secretary of Agriculture John Block, explains that one problem with congressional attempts to pump more federal money into the farm sector is that ''there are many domestic industries that could all probably come up with the same arguments for special treatment.''
Grain trader Anderson sees no need for special treatment.
As general manager and a partner in the Ohio-based grain firm The Andersons, Mr. Anderson sees low grain prices continuing due to slack world demand at a time of steadily increasing US farm output.
Low grain prices and ''plateauing'' export sales, says Anderson, hurt everyone connected with agriculture. He knows: His own firm's profits plunged from 1980's $11.5 million to just $4.5 million for 1981.
But Anderson's answer to hard times is increased efficiency - not increased government support programs. ''If you can't produce at the world market price, '' he explains, ''you either get more efficient or you get out.'' Without this economic winnowing now, he argues, farmers and the national economy will simply store up more serious problems for years ahead.
Anderson himself has seen tremendous advances in efficiency. When he first started helping out on his father's dairy farm, the corn yield was 42 bushels an acre - on the same Ohio cropland expected to yield 117 bushels an acre this year. When he first pitched in with a shovel to help his four brothers and their father load rail cars with grain, ''if we got 15 cars off by night, we were doing well. Now we load a 100-car unit train in six hours at our Delphi (Indiana) elevator with two men working in an air-conditioned room.''
Dick Anderson is convinced that farmers and grain traders strong enough to survive a few more hard years will be well positioned to meet world demand for food and animal feedgrains.
Anderson sees the greatest threat to American agriculture not from selling US grain too cheaply but from overpricing it. ''If you raise the price of grain, artificially or otherwise,'' he warns, ''you are going to contract the market for your grain. . . . The minute we try to control the price of grain, we are going to be out of the market, sitting with a great big, efficient machine idle.''