
          Pulling Farms Out of the Hole
          By Hightower, JimJim Hightower
          Vol. 10, No. 2, 1988, pp. 5-8
          
          The good news for American farmers in 1988 is that the farm crisis
has officially been declared "over" by the Reagan Administration. The
bad news is that their good news is a lie.
          With the national media's attention recently riveted on Wall
Street's problems, the Administration is trying to spread the
propaganda that the 1985 Farm Bill has worked and that prosperity is
just around the corner-for U.S.  agriculture.
          That is going to come as a surprise to the 235,000 farmers who have
been squeezed out of agriculture as a result of the price-busting,
surplus-generating 1985 Farm Bill, and it is going to offer mighty
cold comfort to the 130,000 other farmers forecast to go under in
1988.
          The Administration bases its rosy assessment of agriculture's
prospects on the fact that net farm income rose in 1987 for the first
time in years and that the volume of our farm exports increased. That
would be happy news, indeed, except that the small increase in farm
income last year came out of the taxpayer's pocket rather than from a
healthy increase in commodity prices, and while export volume went up,
the dollar value of those exports went down.
          This Administration is proving again that figures don't lie, but
liars do figure.
          Our nation's farm economy still is a wreck. Last year was not quite
as bad as 1986 or 1985, but it was not a year to celebrate, and 1988
looks even worse. Farmers will know that the farm crisis is "over"
when they start getting a-fair market price for their commodities and
a warm smile from their bankers. That day will not come until we do
away with Washington's ill-conceived farm program.
          The Reagan Administration promised that the 1985 

Farm Bill would
accomplish four goals: (1) increase farm income; (2) reduce taxpayer
costs; (3) increase agricultural exports; and (4) lower crop
surpluses. When Reagan signed the bill, he was quoted in the
New York Times as saying the legislation "provides new
hope for America's hard-working farmers and our rural
communities.'"
          After two years, we can see that the 1985 Farm Bill has failed
miserably on each point. Just consider this:
Net farm income rose by an average of $500 Million between
1985 and 1987, when adjusted for inflation, which is an increase of
less than 2 percent. Every penny of this very small increase was due
to record high taxpayer subsidies, which, for many producers, must now
account for two-thirds of their gross farm income. The prices which
producers were paid for most of their crops continued to fall, just as
they have since 1981, often to only one-half of 1987's actual
production expenses.As bad as prices were in 1987, they will get even worse in
1988. Under the Budget Reconciliation Act just signed by President
Reagan, target prices this year will drop an additional 1.4 percent on
top of the 2 percent reduction already mandated by the 1985 Farm
Bill.Taxpayer costs increased an additional 27 percent to support
these failed farm policies in 1987,when compared with 1985. The
projected three-year price tag of the current farm bill is now over
$68 billion--about $16 billion more than first estimated. Between
1981-88, this Administration will spend a whopping $122 billion on
failed farm programs, the third largest U.S. expense behind defense
spending and Social Security. This Administration has also spent
nearly $50 billion more on its farm program than all that was spent
for U.S. agriculture in the previous forty years.U.S. farm exports have declined by about one-third in the last
seven years, dropping from $44 billion in 1981 to $31 billion in 1985
to $28 billion last year. The decline between 1985-87 was over 10
percent. If you subtract the Export Enhancement Program, which allowed
Russian livestock producers to buy wheat at 36 cents a bushel less
than the U.S. price, the decline in farm exports since 1985 was nearly
12 percent. Even forecasters at the U.S. Department of Agriculture now
predict that the value of U.S. farm exports will decline by 2 percent
in 1988.Crop surpluses have not been reduced either, as the amount of
U.S. wheat and feedgrains in storage is up by 10 percent over the past
two years.
          The results are as ugly as you would expect. The 1985 Farm Bill
forced another 235,000 farmers out of business, not because they were
bad producers or bad managers, but because they had to fight bad farm
policy. It's the same policy which, since 1981, has caused us to lose
over 600,000 productive U.S. farmers--20 percent of our farmers shut
down in a stunningly brief time.
          According to the latest projections from the American Bankers
Association, well continue losing 2,504 U.S. farmers per week in
1988.
          These bad policies have stuck U.S. farmers with debts of nearly
$175 billion, while farmland values have dropped by another 19 percent
nationwide. In some parts of the Midwest. good, rich farmland is now
worth less than one-third of what it was in 1981. Farm lenders now
hold eight million acres in foreclosed farmland--property which they
cannot sell--of which the U.S. Farmers Home Administration possesses
1.6 million acres. Sixty-seven percent of the farmland sold by FmHA
was sold to speculators and agribusiness concerns which fall outside
the mandate of the agency.
          Both FmHA and the Farm Credit System are eager to sell only to
those who can pay cash. No family farmer has the cash money to plunk
down on farmland for a son or daughter, but an investment syndicate
does. A real estate.  developer from Mesa, Ariz., has purchased dozens
of farms in Iowa. He told the New York Times that he
rents the farms, sometimes to former owners, and gets up to 12 percent
in return on his investment in cheap, foreclosed farmland.  Since
1981, the number of acres managed by farm management companies has
increased by an area the size of Colorado. The twelve largest
land-owning insurance companies hold three million acres of farmland
worth $2.3 billion, while commercial banks hold about 400,000 acres
worth $350 million.
          The misery is compounded when you consider that the 1985 Farm Bill
has produced another 25 percent decline in tractor sales, has prompted
the layoff of another 8,800 farm implement workers, has forced another
700 farm implement dealers to close, and has caused over 100
agricultural banks to shut their doors.
          While we are now selling 28 percent fewer John Deere tractors than
in 1981, sales of Mercedes Benzes in this country have skyrocketed by
57 percent. While farm prices were falling, food-processing profits
were going through the roof, and the power of the food industry was
being concentrated at a dizzying pace. Five companies now control
two-thirds of the U.S. beef industry, and one of those companies,
Cargill, also is one of five multinationals which dominate 80 percent
of the world's grain trade. These are the companies that benefit from
a farm policy which saw the United States, in 1986, stockpile 250
million tons of unsold grain when only 40 million tons of grain would
have averted the famine taking place in Africa.
          If there is any good news for American farmers for 1988 

it is
contained in the farm credit rescue package that Congress passed and
sent to the President shortly before Christmas. This legislation is
good news for farmers for two reasons.
          First, it is real, tangible help for farmers who have been
struggling to pay old debts while trying to survive on less
income. Secondly, passage of this legislation is a victory that nobody
believed farmers could win until the American Agriculture Movement,
the National Farmers Union, the National Farmers Organization and the
Save-the-Family-Farm Coalition stood shoulder to shoulder and demanded
that the Farm Credit Act of 1987 address their credit problems as well
as their bankers'.
          This legislation includes debt restructuring and interest rate
write-down provisions. Additionally, Congress provided up to $500,000
per state for mediation services that can help farmers work through
their debt problems.
          Benefitting most from this legislation are the 150,000 farmers
nationwide who have been fighting for seven years with the very
federal agencies that were instructed by Congress to help them.
          With a victory under our belts, the farm community 

again has its
work cut out. Priorities for 1988 include:
          Election of a Democratic President. No farm
program is better than the people who administer it. This
Adminstration has used its discretion to hurt family
farmers at every opportunity, by lowering target prices to the maximum
allowable, by failing to comply with court orders on farm lending
practices, and by refusing to implement disaster programs authorized
by Congress. Without a President who is committed to helping farmers,
new farm legislation will be an impossibility.
          Strengthen the Democratic majority in the
Senate. By retaining the Democrats we now have, such as
Sen. Lloyd Bentsen from Texas, and winning contested seats in
Missouri, Minnesota, Washington, Pennsylvania and Nebraska, farmers
can gain additional clout for passing an effective successor to the
1985 Farm Bill.
          Tinker with the '85 Farm Bill. An example is
eliminating penalties for farmers who try to cut production costs and
protect the environment by reducing pesticides.
          Develop rural economic development
legislation. The federal government has a role to play in helping
farmers diversify production into new cash-value alternative crops and
become processors of their commodities as well as producers. Such
federal assistance should include federal loans and insurance for
alternative crops; financing for producer-owned and -operated
processing operations; research funding for the production and
marketing of alternative crops; and dissemination of market
information on alternative crops.
          Ultimately, there are three basic policy approaches to tackling the
farm crisis: (1) let the family farm system go, leaving control of our
food supply in the hands of investment syndicates and conglomerates;
(2) stick with some version of heavy taxpayer subsidization of
commodity producers and shippers; or (3) replace expensive tax
subsidization with some form of effective supply management.
          It is that third alternative that best serves American taxpayers
and American farmers.
          By strictly limiting our production of certain commodities to the
known demand, U.S. farmers will eliminate price-busting, tax-eating
surpluses. They will produce to meet the actual demands of the
domestic market, world cash and credit markets, and world hunger
needs. In return for matching their production with real demand, a
realistic and fair price floor would be established for these
commodities at roughly the cost of production, thus preventing price
busting by monopolistic purchasers.
          By selling America's farm commodities in the marketplace, instead
of to the government, we can "zero out" the humongous sums that
taxpayers have been forced to pay in the form of crop subsidies to
farmers, conglomerates and syndicates. In 1987, crop and storage
payments cost U.S. taxpayers over $22 billion. A supply-management
approach would eliminate all crop subsidy payments to farmers, saving
taxpayers $18 billion in its first year and $22 billion
thereafter. Under this approach, the only taxpayer outlays are to
combat world hunger, to create a conservation reserve, and to
establish a crop disaster program.
          Simply stated, this is the single best approach that exists for
pulling good farmers, overburdened taxpayers and the rural economy out
of the hole.
          
            Jim Hightower is serving his second four-year term as the
elected Texas commissioner of agriculture. His comments are excerpted
from an address to the ninth annual convention of the American
Agriculture Movement, which met in January in Wichita,
Kansas.
          
        