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AndNow
U.S.FA
FACEA
NEWCRISIS
Even with record harvests, the average U.S. farmer has his back against
the wall. Here's why- and the reason it concerns us all.
A
whole generation of
American farmers is
being swallowed up by
huge debts and falling ·crop
prices. Those who survive the
current problems may face
even tougher problems in the
near future.
How did this crisis come
about?
A Lesson to Farmers
In the 1970s, American agriculture
charged confidently into the world
grain trade. Lucrative Soviet and
East Bloc markets opened their
near-empty storage bins to U.S.
food exports.
With governmental encourage–
ment , U.S. wbeat yields alone rose
from 1.546 billion busbels in 1970
to 2.045 billion bushels in 1980 to
meet tbe demand. At the same
time, total U .S. agricultural
exports zoomed from seven to $45
billion worth frorn 1970 to
1982.
With sales of $145 billion last
year, agriculture is the largest busi–
ness and the largest contributor to
the U.S. balance of payments.
But in 1980, then-President
Carter embargoed food exports to
the Soviet U nion. This cost the
U.S. farmer an estirnated $ 11 bi l–
lion.
Under tbe Reagan administra–
tion, exports to the Soviets have
resumed, but the wary Russians,
September/ October 1982
by
Dan Taylor
not risking putting all of their eggs
in one basket, have diversified
their trading partners. This gives
the U.S. farmer only a portion of
the market he once ruled.
N evertheless, record or near–
record barvests in the U.S. contin–
ue to swell storage bins whose
unsold contents are depressing
prices.
To make matters worse, high
interest rates are pusbing tbe value
of the dollar up, making food cost
more in the export market. This
makes it more difficult for the U.S.
to hang on to the markets it already
has, as in the case of European
Common Market, which is the big–
gest U.S. agricultura) export mar–
ket .
In fact, U.S. farm exports to
the Common Market have
dropped in value from $2.2 billion
worth in 1975 to $1.7 billion in
1981.
This has represented a net
decline of 5 million tons of agri–
cultura) goods. Sorne export com–
modit ies such as soybeans and
corn gluten feed have risen to the
extent that they have caused con–
cero in Europe. But others. have
declined. This is especially true of
coarse grains such as wheat, bar–
ley, oats and corn. The drop has
caused the U .S . to question the
Eu ropean Community's price sup–
port system outlined in their
Common Agricultural Policy
(CAP). So the American farmer ,
chest deep
in
grain, faces a pre-
carious export market.
Hídden Cause of the Crisis
T he enviable growth of American
agriculture has not been without a
price.
The U.S. government's call for
expanded farm output in the ' 70s
required more land, more equip–
ment and more money. Typically,
U.S. farmers borrow money each
year to huy seed, fuel and fertil –
izer, the cost of whicb they pay
back after their crops have been
sold. Many farmers , however,
expanded their operations too
quickly. They imprudently bor–
rowed in the hope of selling their
increased productivity at higher
prices, and are now suffering the
consequences.
Sorne are now forced to pay
more than 25 percent of tbeir
income in interest alone! For
them, the only way to keep from
financially going under is to pro–
duce as much as they can and
hope prices for their crops some–
how go up.
As for the reality of produce
pric~es,
most farmers wince at the
thought of thern. Soybeans that
sold for $9 a bushel in 1974 now go
for less than $6 a bushel. Wheat
prices have dropped more than 12
percent and corn more than 26 per–
cent since 1974.
Togetber, high interest rates and
low produce prices bave combined
to push U.S. farm debt up from
$136.1 billion in 1979 to a stagger-
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