The drought of 1988 has devastated crops but not the farm economy. In fact, its overall impact may be mild. ``If the drought had to come ... it was nice it came now,'' says John Marten, staff economist with the Farm Journal magazine. ``We clearly won't fall back to where we were in the trough of the early '80s.''
``It has just slowed recovery,'' says Terry Francl, an economist with the American Farm Bureau Federation. ``With the prospect for fairly strong prices next year, we could catch up.''
These conclusions don't begin to assess the serious straits that some farmers find themselves in. But on average, the agricultural recovery that began last year has not been jeopardized.
The United States Department of Agriculture (USDA), for example, now estimates this year's net farm income will total somewhere between $38 billion and $43 billion. That is down from last year's $46 billion, but the decline is minor compared with the drops in income that occurred during the drought years of 1980 and 1983.
Moreover, by selling crops leftover from last year, farmers are taking advantage of the higher market prices and should have large amounts of cash on hand, Mr. Francl adds. The added income should help buoy rural communities and farm-dependent businesses.
There are several reasons for the relatively mild impact of this year's drought, agricultural economists say.
For one thing, prospects of a smaller harvest have pushed crop prices higher, nearly doubling them since last year in some cases. So if farmers sell half as much at twice the price they come out even. Several analysts at the Chicago Board of Trade say those prices could go even higher in the long run.
On Monday, the USDA estimated this year's corn crop would total 4.46 billion bushels, down 37 percent from last year. And the soybean crop was pegged at 1.47 billion bushels, down 23 percent from 1987.
Eventually, higher crop prices will mean smaller crop subsidies from the federal government. But farmers won't feel the full effect of that adjustment until next year, says Andy Bernat, a USDA economist. In the meantime, they are slated to receive a record $4 billion or more in the form of drought-relief payments.
These overall averages don't tell the full story, of course.
Drought his hit some regions harder than others. A new USDA study on drought and farm finances concludes that the southeast and south central areas of the US are faring better than the Midwest.
On the high plains of Texas, the outlook is relatively good. ``We are probably in the best shape of any agricultural area in the state,'' says Kary Mathis, chairman of the agricultural economics department at Texas Tech University in Lubbock. Timely rains and high crop and livestock prices have helped.
But in northwest Missouri, drought has compounded an already difficult situation.
``It's just bad here. It's real bad,'' says Carl O. Smith, president of Gentry County Bank in Albany, Mo. The farm crisis of the early and mid-1980s had already sent farmers packing and helped cause eight bank failures within 32 miles of Mr. Smith's bank. Now the drought, which has shriveled the corn and soybean crops to half their normal size, will probably force another 5 percent of the farmers off the land. Even neighboring farms can be in vastly different circumstances, depending on this year's harvest and how well they weather the farm financial crisis.
``In the same typical county in Illinois or Iowa, it will be everything from `Had a great year' to `Almost written off,''' says Dr. Marten of Farm Journal.