The New York Times
October 13, 1985, Sunday, Late City Final Edition
SECTION: Section 3; Page 2, Column 3; Financial Desk
LENGTH: 894 words
HEADLINE: THE U.S. SIMPLY NEEDS FEWER FARMS
BYLINE: By JAMES BOVARD; James Bovard writes frequently on agricultural policy.
BODY: BUYING votes is the only farm policy most Congressmen understand. With existing
farm programs, costs to taxpayers have soared, food prices have in some cases
doubled or tripled, crop exports have nosedived and farm income has fallen. Yet,
as the debate in Washington this last month has made painfully clear, most Congressmen
favor perpetuating the tangle of failed and contradictory programs or making them
even worse, by imposing manadatory production controls over millions of farmers.
American agricultural policies are a cruel joke. Sugar prices are pegged at four
times world prices. The dairy program drives cheese prices to double world price
levels. The wool program gave sheep ranchers far more in price-support payments
last year than the entire wool crop was worth. The dairy, sugar and peanut programs
alone add $7 billion a year to consumer food bills. The Government has spent the
equivalent of more than $70,000 per full-time farmer since 1981 - yet farmers
are not prospering.
The current farm recession stems largely from the 1981 Farm Bill, which presupposed
insatiable world demand for American crops - and that Congress could set price
supports wherever it chose, since foreigners would have to buy American crops.
Congress set high price supports - and foreign demand nosedived as it became cheaper
to buy elsewhere.
Since almost half of America's grain harvest is sold abroad, the 15 percent fall
in export sales since 1981 has devastated wheat farmers. As it became obvious
that price supports were too high, the Reagan Administration responded with the
Payment In Kind program, which paid farmers not to grow crops. With the $10 billion
P.I.K. Band-Aid, America tried to boost world prices by slashing its production.
But this only encouraged foreigners to plow more land, which both further reduced
America's share and kept world grain prices down.
American agriculture is also depressed partly because of continual barrages of
Government-sponsored cheap credit. Every time in past decades that farming was
on the verge of shrinking to a reasonable size, Congress rushed in with more easy
money. The result was soaring land values and continual overproduction.
Almost every farm group is complaining about persistent crop surpluses. Yet the
same lobbies are also demanding more cheap Federal credit. But agriculture is
heavily overcapitalized right now - which is why the Government is spending billions
annually to pay farmers not to sow on tens of millions of acres.
(c) 1985 The New York Times, October 13, 1985
Many Congressmen favor a special Federal boost for falling land values, one more
bad idea from Capitol Hill. But for most export crops, debt-servicing costs -
the result largely of high land prices - are a larger portion of production costs
than labor. High land prices have made American farmers less competitive on world
markets. Lower land values, though causing a temporary loan-servicing crunch,
would make American agriculture more competitive for the rest of the decade. MANY
Americans favor an agriculture policy designed to protect the small-sized, full-time
family farmer. But there is no way for farm income support programs to be both
equitable and effective. If Federal aid is to reduce crop sizes significantly,
it must go to big farmers, who don't need the money. Small farmers do not produce
a large enough share of the harvest to make a difference.
Most full-time farmers are wealthy compared with other Americans. The average
full-time farmer's net worth as of Jan. 1, 1984, was $790,000. The average net
worth of a ''small'' full-time farmer (those with net sales between $40,000 and
$100,000 a year) was $532,000. By comparison, the net worth of the average American
household is $136,000.
The best thing for the future of American agriculture would be for tens of thousands
of farmers to cash in their chips. This may seem unkind - but the alternative
is for the Government to perpetually pay farmers not to farm. Too much farmland
was brought into production during the booming 1970's and much of that farmland
- much of it low-quality acreage that is hard to work profitably - should be retired.
We need an agriculture policy that admits the existence of world markets. For
50 years, Congress has tried to manage agricultural supplies and prices by paying
farmers not to grow. Paid set-asides have always been used in conjunction with
higher-than-market price supports. Thus, Government first encouraged farmers to
grow, and then paid them not to grow. This is plain stupidity that we can no longer
Crop price supports should be slashed to between 75 percent and 80 percent of
world market prices. This would dampen grain prices in the short run and make
it too expensive for the European Economic Community to continue its lavish agricultural
subsidies. The bankruptcy of the E.E.C.'s agricultural programs -knocking out
the United States' biggest source of subsidized competition - would be one of
the best thing that could happen for American farmers.
Congress should get out of the agriculture business. The gold-plated farmer safety
net is raising production costs, sending the wrong signal to foreign competitors
and preventing farmers from reacting to market signals. Farmers can either endure
a couple more hard years with deregulation and then recapture lost export markets
- or become permanent wards of the state.