Mohair Ranchers Defend Subsidies As Market Slides

Staking out a lean livelihood, ranchers berate bad press and deficit-cutting pressures

RIDICULE in the news media recently over mohair subsidies has West Texas ranchers wound up like rattlesnakes ready to strike.

"The press has been so terrible on this," says Jack Wardlaw, who runs 10,000 Angora goats on 20,000 acres outside Sonora in Sutton County, Texas. Sutton is one of a cluster of 10 waterless, peopleless Texas counties that account for nine-tenths of United States mohair production - and precious little else.

To ranchers, it is bad enough that, at a time when the country is clamoring for deficit reduction, they hear the wool and mohair incentive program blasted as "one of the most wasteful government subsidies there is" by Rep. Charles Schumer (D) of New York, or as "a boondoggle par excellence" by James Bovard, an author critical of US farm policy.

They are also frustrated by stories which disapprove of ranchers who have the most goats (and expense and risk) receiving their corresponding share of the overall incentive money; which gasp at six-figure government payments as though those were pure profits; and which speak scornfully of mohair production as an obsolete industry kept afloat by taxpayers. Worst downturn ever

Contributing to the public relations disaster is the coincidence of anti-deficit mania with the worst cyclical downturn in the history of the industry, which relies on export markets for 90 percent of its sales. Producers are leaning on Uncle Sam more than they ever have since 1954.

That year the Wool Act established a 7-cent-per-pound tariff on imports of wool products to provide revenue to the US Treasury and to fund subsidies for wool and mohair producers. As of 1991, the tariff had generated $7.4 billion, of which Washington kept $5.1 billion. Mohair producers had received $337 million of the remainder.

For the first three decades of the Wool Act, US mohair earned an average of $1.30 per pound in the marketplace, to which Washington added 18 cents. Goat ranchers got no subsidy at all in 18 of those years.

But by 1986, everything that could go wrong, did. There was a spate of warm winters. China raised a tariff barrier against mohair. Russia ran out of cash. South Africa, the world's other major producer, accumulated a stockpile of 8 million pounds of mohair, which is equal to a quarter of the world's production. The flat, smooth look in fabrics came into style, and mohair's fluffy look went out. Oil remained cheap, giving synthetic fibers a cost advantage over mohair.

And consumers in Japan, Europe, and the US were pinched by never-ending recession. "When people are out of work or think they're going to be, they don't buy $1,000 suits," says John Lawler, an Agriculture Department economist specializing in mohair.

The result: Over the past seven years producers received an average of $1.68 per pound from sales and $3 per pound from subsidies. And the situation is not improving. Mohair now sells for 70 cents per pound, down from last year's average of 86 cents and 1979's record of $5.10.

American production peaked at 32.4 million pounds in 1965, shrank to just 8 million pounds a decade later, and recovered to 17.3 million pounds by 1988. Subsidies have not prevented production from again declining, which in turn has brought down the government's mohair payout. The subsidy peaked in 1990 at $59.4 million, when production was 16.3 million pounds. Last year Washington paid $47 million to producers for under 14 million pounds of mohair, preliminary government data show.

Brian May, executive director of the Mohair Council of America in San Angelo, Texas, hopes the industry has hit bottom. Funded by $750,000 from producers, the council is trying to persuade yarn mills that the North American Free Trade Agreement would make it worth their while to set up shop in mohair counties. Deficit cutters see red

Meanwhile, the producers' admitted dependence on Wool Act money has deficit-cutters smelling blood. Rep. Dick Armey (R) of Texas regards the act as "an income transfer from ordinary people who buy sweaters and pay taxes to a privileged special interest group."

Reporters took the cue and came calling this spring. Many ranchers who gave interviews say that their words were twisted to achieve a sensational and inaccurate effect. "We've had so much negative publicity," one member of the industry says. "We're trying to get it died down."

Mr. Wardlaw is one of the few ranchers still willing to talk to a reporter. His family has ranched for 75 years, and Wardlaw has been in the business for more than 30. The way he tells it, ranchers are not getting rich off the government. "To me it's paradise," he says of his semidesert surroundings. Sure he has land - he owns half of his acreage and leases the rest - but the land would be worthless if goats could not survive there.

At today's depressed price, Wardlaw earns $14 per goat but has $17 in costs. The incentive payment gives him an extra $6 per goat - the difference between a $30,000 loss and a $30,000 profit. Mohair earnings provide most of his income, he says, not much return for the dark-to-dark working hours put in by him, his wife, and three sons.

If Congress cuts the mohair subsidy, he says, "from the corner drugstore to the school, this region is going to be devastated." Data from the 1990 US census bear him out.

Edwards County - the most angora-dependent in Texas - had a per capita income of $7,537 in 1989 for its 2,266 people. A third of families lived below the poverty line, and more than 6 percent of homes lacked complete indoor plumbing.

Val Verde County had 13.8 percent unemployment in 1990, compared with 7.1 percent for the state. In Mason County, one home in three was built before 1939, and one in 12 lacked complete kitchen facilities.

Not one of the 10 largest mohair counties reached the state average per capita income of $12,904 in 1989. Two attained the state's 14 percent poverty rate, while the others had double that rate or more. Native American ranchers

A change of program would be felt beyond Texas. Of the nation's 11,300 mohair producers, 5,200 are Native Americans, mostly from the Navajo tribe in New Mexico and Arizona. Last year 25,000 families representing 180,000 Navajos received 36 percent of their $2,150 annual income from wool and mohair.

Wardlaw regards the five-year farm program in 1990 as a contract between the government and the agriculture industry. If Congress changes it halfway through, "they're going to bankrupt lots of people," he warns.

Several bills in Congress would kill it outright, but the powerful House Agriculture Committee wants merely to accelerate the 1990 farm bill's phased reductions in the amount of subsidy a mohair producer can receive. Wardlaw dislikes the idea of bigger producers feeling all the cuts.

"To me, the American dream is the harder you work, the more you get. This [proposed payments cap] is taking it all away."

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