- MOTHER NATURE, FEDERAL POLICIES MAKE ECONOMIC SURVIVAL
DIFFICULT FOR FAMILY FARMERS
- FARMS UNABLE TO SURVIVE ON AG INCOME
- FARMERS FOREGO HOUSEHOLD EXPENDITURE
- FAMILY FARMERS TURN TO OFF-FARM JOBS
- "FARM CRISIS" FAR FROM OVER
MOTHER NATURE, FEDERAL POLICIES MAKE ECONOMIC SURVIVAL
DIFFICULT FOR FAMILY FARMERS
"What's wrong with our government?" asked a Minnesota grain and
livestock farmer last weekend during a town meeting with new
Consolidated Farm Service Agency head Grant Buntrock. "Why are
farmers being asked to repay 1993 deficiency payments this year
when we can't even cover our household bills?"
Farmers who received advanced deficiency payments in 1993 have
until March 16 this year to make repayment or face interest charges
on their debt. The amount farmers are being asked to repay ranges
from 8 to 36 cents per bushel of their 1993 crop. Because the flood
and drought that year pushed some market prices up above
anticipated levels, farmers are required to repay a portion of their
advanced deficiency payment. Likewise, farmers who received
disaster payments for a portion of their lost crop, must repay their
deficiency subsidy in full.
Many family farmers, however, are in too weak a financial condition
to afford repayment. Farmers have seen their income drop over the
past decade as input prices have continued to rise disproportionately
to farmgate prices. Most family farmers have relied on off-farm
work to make ends meet. However, many farm families,
approximately 32,500 each year, have been forced to quit farming
largely because of financial difficulties. These trends are expected to
continue in 1995 for most of the nation's family farmers who are in
severe economic distress.
FARMS UNABLE TO SURVIVE ON AG INCOME
The KIPLINGER AGRICULTURE LETTER notes that on average small
farmers, with gross annual sales of less than $50,000, "lose money
on their farms." This is largely due to the combination of rising input
costs and declining real commodity prices.
A recent survey by the American Bankers Association shows that the
decline in commodity prices and farm income has put farmers in an
increasingly weak financial condition. Nearly 60 percent of the 246
agricultural lenders surveyed reported a decline in the number of
credit worthy borrowers in the past year.
"There is a lot of financial vulnerability in the ag sector," said Robert
Jolly, ag finance professor at Iowa State University, in a recent news
Agribusiness will tell you family farmers are losing money because
they are inefficient. Family farm groups, however, have shown that
the true inefficiencies exist in the corporate farm sector where land
stewardship and crop diversification inherent in family farming are
often given little attention. Unfortunately, the marketplace and the
federal government have placed little value on family farm
production techniques and instead have chosen to subsidize agri-
chemical companies, international grain traders and giant food
Federal income support and export programs, for example, have
created an unnatural price floor in the market below farmers' cost of
production. The USDA reports that the index of prices received by
farmers from 1982 to 1993 rose only 7.5 percent while input costs
rose over 23 percent. In effect, federal farm policies have subsidized
our nation's equipment, seed, fertilizer, pesticide and herbicide
dealers. Federal farm policies have failed.
FARMERS FOREGO HOUSEHOLD EXPENDITURE
Family farmers have been struggling to cover basic household
expenses for the past decade largely because failed federal farm
policies have prevented them from earning a decent living from the
A recent report on Iowa's farm sector, "A Financial Profile of Iowa
Farm Businesses, 1993," shows that the average farm family's living
expense was $23,697 in 1992, while average net farm income was
$22,225. Similar comparisons exist for other farm states.
According to " Iowa Farm and Rural Life Poll," many of Iowa's farm
families made the following financial adjustments during 1992 to
Used savings to meet living expenses ........................41%
Postponed major household purchases ..................54 %
Changed food shopping/eating habits ..................38 %
Changed transportation patterns ............................34 %
Reduced household utility use ...............................33 %
Postponed medical care ............................................22 %
Farmers continued dipping into their family's savings to cover farm
and living expenses in 1993 and 1994; many were forced to use
much of their total savings to make it through these financially
FAMILY FARMERS TURN TO OFF-FARM JOBS
Nationwide, 90 percent of all farm operator households rely on off-
farm sources to supplement their farm income.
"For the majority of farm operator households, off-farm income is
critical," says the USDA in its 1994 AGRICULTURE FACT BOOK. "Most
U.S. farms are small (less than $50,000 in gross sales) and are run by
households which depend mainly on off-farm sources of income."
"FARM CRISIS" FAR FROM OVER
Despite claims from agribusiness leaders and some government
agencies that the "farm crisis" of the 1980's has ended, family
farmers continue being forced from their land at a rate of 32,500
each year or 600 farm families each week. Rising input costs and
cheap farmgate prices have made it impossible for farm families to
cover their commodity production costs. The crisis is not over.
The USDA reports that "the decline in farm numbers continued
unabated between 1987 and 1992 ... farm numbers are expected to
fall to about 1.7 million by 1997 and to 1.5 million by 2002." This
means over the next eight years more than 400,000 farm families
are in danger of losing their farm.
In fact, there are so few farmers left in the U.S. that the U.S.
government is reportedly considering removing "farming" as a
category on the national census.
"This 'laissez-faire' attitude toward the providers of America's food
supply, is unacceptable," says FARM AID President Carolyn Mugar.
"The conditions creating severe financial stress for our nation's
family farmers need urgent attention."
"Farm Numbers Continue to Drop," AGRICULTURAL OUTLOOK, January
-February, 1995. $42.00 per year. ERS-NASS, 341 Victory Drive,
Herndon, VA 22070. (800) 999-6779.
"Iowa Farm and Rural Life Poll: 1994 Summary Report," IOWA
STATE UNIVERSITY EXTENSION, August, 1994. Free. Iowa State
University, 3030 East Hall, Ames, IA 50011. (515) 294-6481.
For ABA survey information contact: John Blanchfield, AMERICAN
BANKERS ASSOCIATION, (202) 663-5100.
"Kiplinger Ag Letter: Farm and Food Facts," August, 1994. Kiplinger
Washington Editors, Inc., 1729 H St. N.W., Washington, D.C. 200006-
3938. (202) 887-6400.
"A Financial Profile of Iowa Farm Businesses, 1993," Alan Vontaglge,
Robert Jolly, IOWA STATE UNIVERSITY EXTENSION. $4.00. Extension
Distribution Center, Room 119, Printing and Publications Building,
Iowa State University, Ames, IA 50011.
"Agriculture Fact Book, 1994" USDA, October, 1994. $8.00. U.S.
Government Printing Office, (202) 512-1800.
Next edition of Farm Aid News: Natural disasters further stress
family farmers' financial condition.
We welcome comments and suggestions: contact Harry Smith at
FARM AID, (617) 354-2922. We encourage the reproduction of
FARM AID NEWS. Produced by The Institute for Agriculture and
Trade Policy (IATP) for FARM AID. Editors: Gigi DiGiacomo and
Harry Smith. For information on other agriculture bulletins, contact
IATP: (612) 379-5980. Fax: (612) 379-5982. E-mail: