Farmers reap a bitter harvest
All across the United States the lights of family farms are going out, and the streets of the little country towns are deserted. In 1950 there
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5.4 million farms; in 1970 there were less than 3 million. Farmers are ing their crops. This is the problem of about 300,000 farmers. They are the middle-sized operators who expanded in the boom years. Unless they get help, most of them will be out of business this year or next.
The help they have been getting from the Reagan administration is obviously not helping the family farmer. One reason is that the bulk of the benefits go to the few big agribusinesses that farm thousands of acres and produce crops worth millions of dollars. Fifteen giant super-farms got 23 million dollars in farm benefits in 1983. The family farmers, who diversify their crops, get only a small payment on part of their production.
There is a conflict between the family farmer and agribusiness. The family farmers want high prices for their products and are willing to limit their production to get it. The agribusiness farmer is more interested in the world market, and sees the need for a competitive price. They are less willing to cut production to keep prices up.
Farm interests who definitely do not want to see cutbacks in production are the farm equipment salespeople, the fertilizer interests, and the dealers in grain and other crops like the giant Cargill Corporation.
Legislators with urban constituencies question the wisdom of spending 10-20 billion dollars a year to keep farm prices up. Reagan, who listens to big-business, has come down on the side of agribusiness and its industrial associates.
The new Reagan budget proposes to gradually lower and eliminate price-support payments and let market forces operate freely. This is like throwing the drowning farmer a rock.
Farm prices will drop, but it may not guarantee increased sales abroad. The highly protective European Common Market will resist further competition, and the less developed countries are trying to build up their own farms. Meanwhile more American farmers will be forced into bankruptcy.
The distressed farmers are reacting in the way their parents did in the Great Depression. They are taking to the country roads with their tractors and driving to state capitals and to Washington. Their most immediate demand is a halt to foreclosures.
In Minnesota they are asking for a 120-day moratorium to be renewed every three months until prices give the farmer the cost of production plus 15%. They also want an emergency loan program to buy seed for spring planting and a one-year moratorium on debts to equipment dealers and other creditors. At other farm rallies there are calls for raising price supports and halting the spread of corporate farming.
Some people question the wisdom of trying to save these distressed farmers. The family farm is going the way of the horse-drawn plow, they say. But the American farmer is the most efficient
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Hayden PERRY The farmers are being forced off their land by staggering debts that they cannot pay. Today American farmers owe 214 billion dollars to banks and other credit institutions. With falling farm prices the average family farmers do not earn enough to even pay the interest on their debts.
Small country banks cannot collect on their loans and are closing their doors. Even bigger banks are caught in the wave of farm bankruptcies. The giant Bank of America has lent 2 billion dollars to farmers. They expect to write off at least 15% of this as uncollectable.
The family farmer is caught in the contradiction between advancing technology and the anarchy of capitalist economics. Farming is not like factory production, where you shut down an assembly line when sales drop. When sales and prices fall, the farmers are inclined to plant more to maintain their income.
While the farmers can increase their production, they cannot increase their domestic sales beyond a certain point.
Meanwhile, production on the farm has risen year by year as new seeds and new machines are developed. In 1900 a farmer could raise enough to feed ten people. In 1963 the average farm produced enough for thirty people; and productivity has increased at an even faster rate in the last twenty years.
But increased production without a larger market spells disaster for the farmer. In the Great Depression farm prices fell far below the cost of production, and farmers lost their land through foreclosures just as they are doing today.
President Franklin D. Roosevelt came to the rescue of the farmers by guaranteeing them a minimum price for their crops. He did this this either by lending the farmers money for their crops, or by buying them outright and putting them in storage. Price-support programs have been extended by all administrations for the last fifty years.
When oil prices shot up in 1973, the United States decided to push for more farm sales overseas. Bankers recycled OPEC dollars into loans to Third World International Viewpoint 25 March 1985 countries so they could buy more from the US. This strategy succeeded as farm exports rose from 8 billion dollars in 1970 to 43.8 billion dollars in 1981. Farm prices rose, and there were promises of big profits to be made in farming.
With rising farm prices the cost of farmland also rose, but this did not stop the farmers buying more. The government urged them to expand production to fill foreign orders. Bankers, flush with OPEC deposits, were eager to lend farmers money at 12% interest. Almost a decade of seeming prosperity hit the farm belt. The growth of agribusiness
Then in 1982 the bubble burst. Many debtor countries became insolvent. They had to cut their imports just to pay the interest on their foreign debts. At the same time the dollar rose in value, making American products more expensive on the foreign market. As a result farm exports fell from 43.3 billion dollars in 1981 to 36.1 billion dollars in 1983.
Down on the farm the effect was devastating. Crop prices fell and the farmers' income slid from 186 billion dollars in 1979 to 139 billion dollars in 1983. Land values dropped, reflecting the drop in farm prices. The farmers' net worth has dropped but their debts have soared. Aggregate farm debt was 50 billion dollars in 1970. Today it is 214 billion dollars. The yearly interest on this debt amounts to 20 billion dollars.
Farmers' debts are high for two reasons: high-priced land and high-priced machinery. Farming today is as capital intensive as many factories. A 400-acre farm may be valued at 500,000 dollars, but the farmer may clear as little as 10,000 dolars when all the expenses are paid. At today's prices many farmers are operating at a loss.
This is where the crunch is coming at the country banks. Even the most warm-hearted banker will turn down a farmer if they see no chance of repayment. When farmers owe sums equal to 40% of the value of their farms, they have to pay more in interest than they get from sell-
producer of food in the world.
The best of them farm with the long view in mind, conserving the soil and maintaining its fertility for seasons to come. Agribusiness exploits the soil for short-term profits, leaving it less productive or eroded, then moving on to exploit more cropland, often overseas.
The family farmers' immediate financial plight must be relieved by halting foreclosures, by guaranteeing them at least the cost of production. Government aid must be concentrated on the small farmer and the truly impoverished part-time farmers who number nearly two million. No more million-dollar payoffs to agribusiness. Farm production must be planned to match market demand at home and the needs of hungry people overseas.
The small farmer's natural ally in the struggle for an effective farm program is the American worker. Both are exploited by the food conglomerates who squeeze the farmer at one end and the consumer at the other. The wheat farmer gets only 11% out of a one dollar loaf of bread. Consumers suffer far more from profiteering by grocery chains than by a rise in the prices paid to the farmer.
Farmers should get their message to organized labor and to consumer groups. Already many unions have joined the farmers in rallies and protest actions across the country. Together with millions of allies in the cities, the embattled farmers can hammer out a program that will benefit the real producers in the mines, mills and on the farms - the working people and the working farmers.
### Ronald Reagan (D.R.)
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