Flight From New Farm Economy

1996 law removed much of safety net that saw small farmers through bad seasons.

In a year of Dutch-oven temperatures and a global crop glut, America's small farmers are vanishing at an alarming rate.

From the plains of North Dakota to the Texas Panhandle, many farmers who have worked the land for generations are selling their combines or facing the threat of foreclosure.

While many of the causes behind the latest woes are the normal vicissitudes of agriculture - fickle weather, depressed prices, global competition - another one isn't: a new policy environment.

Two years ago, when Congress passed some of the biggest agricultural reforms since the New Deal, it ended market controls on crops and eliminated many of the subsidies that had helped farmers through bad seasons for decades. Many across the Farm Belt have done well under the regimen of less government dependence, recording bin-bursting yields the past two years.

But the reforms have removed much of the cushion that helped farmers - particularly small farmers - survive in tough years, like 1998.

"The farm bill is putting a real crunch on the small farm with a low profit margin, say in the 2 to 3 percent range" says James Richardson, an agricultural analyst at Texas A&M University in College Station. "The larger operations, with a margin of 10 to 15, are able to absorb a hit like this in a bad year, but that's not true for the little guy."

Across the Dakotas and parts of the northern plains, where severe weather persists, as many as 3 in 10 farmers are expected to go under this year. In Texas, 1 in 5 farms is threatened.

"We had expectations about the 1996 farm bill that couldn't be realized," says Daryll Ray, a farm expert at the University of Tennessee at Knoxville.

Consider the plight of Blaine Faykus.

Mr. Faykus worked two full-time jobs just to get his farm. He had hoped that it would be his gift to his four-year-old son, Trenton, who has already become a fixture on his father's tractor any time there's work to be done. Now, he's not sure he'll even be able to hold on to the farm until the turn of the century.

"Oh, yeah, it's slipping away from me," says Faykus, who recently returned to his trade as a mechanic two days a week to cover the shortfall from his 800-acre corn, milo, and cotton crops. "I'm trying to hold on to half of my production acres, on the far-off dream that it does become profitable again."

According to many agricultural economists, two particular provisions of the Farm Bill are hurting farmers like Faykus. First, the legislation eliminated farm subsidies in years when crop prices fall below minimum target prices. Second, it drastically reduced the level of federal loan rates, which are used to determine the amount of federal money farmers may borrow to cover their operating costs during times of low prices.

Still, some help may be coming from Congress. Both Democrats and Republicans are hustling to bring various forms of election-year aid to farmers in the upper Midwest, where disease as well as inclement weather have wreaked havoc, and in Texas.

There's little dispute on Capitol Hill that many farmers need the assistance.

But there are differences over the roots of the problems - and thus the best way to help. Republicans blame the poor prices farmers are receiving this year for wheat, barley, and other commodities on weather and an export market softened by the Asian economic crisis. Democrats place much of the blame on the GOP-crafted 1996 farm bill. Thus they tried to increase government prices supports, but failed. Republicans would rather focus on boosting trade through such actions as replenishing the International Monetary Fund to help Asia recover.

Either way, lawmakers are rushing to pass some $500 million in farm aid, while the Clinton administration is buying commodities to donate to needy countries and eyeing improvements in crop insurance.

"We simply can't flourish if we let our rural roots shrivel and decline," President Clinton said in a recent speech broadcast to farm states.

Hardest hit are the small producers who make up 80 percent of the nation's 2 million farmers and produce 20 percent of the crops. In some areas, incomes are down as much as 35 percent this year compared to 1996. At present some 6,000 farmers a year are getting out of the business.

As for Faykus, he says he expect to go back to work full time soon. "But as long as the bank doesn't take it, I'll always keep farming on the side," he says. "It's as simple as that."

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