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Farm prices falling

August 03, 1999|By BRENDAN KIRBY

Tri-State area farmers who are getting pounded by the drought also are battling the problem of low prices.

As state and federal officials move to provide relief from the drought, several farmers contend they need more long-term help.

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Vaughn Harshman, who farms 800 acres in Frederick County, Md., told U.S. Agriculture Secretary Dan Glickman and other officials Monday that competitors from Third-World countries are driving down the price of crops like corn and soybeans.

"I feel, as an American farmer, I'm not on an even playing field," he said. "As an American farmer, I feel insulted by the price I'm getting for my commodity."

The reasons for the depressed grain prices are complex, but in a nutshell they are related to record food production around the world.

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"Farmers are suffering from horrendous market conditions," Glickman said as he announced low-interest loans would be available for farmers in West Virginia and parts of Maryland on Monday.

Glickman said worldwide food production has topped record levels for the last four years. The result, he said, is that some farmers work harder than ever and don't make minimum wage.

In addition to a worldwide glut of grain products, Glickman said weak economies in Asia and parts of South America have hurt American food exports.

But Glickman said low prices hurt the most.

"The volume of our exports has remained relatively the same," he said. "The value of our exports is down."

Donald Schwartz, a Washington County Agricultural Extension agent, said the United States has produced bumper crops of corn and soybeans the last few years. Countries in Europe and South America also have enjoyed record production.

Favorable weather conditions have helped wheat production in Australia, Schwartz said.

"El Nio gave Australia more moisture than it knew what to do with," he said.

At the same time, Schwartz said production gains have allowed countries like China, India and the Philippines to reduce imports.

Schwartz said grain producers form the third-largest segment of the county's farm economy behind milk producers and farmers who raise livestock.

Grain farmers have been hammered, Schwartz said.

The per-bushel price of corn, wheat and soybeans on the Chicago Board of Trade is about $2.30, $2.40 and $4 respectively. In 1976, those commodities went for $3.50, $5 and $9, Schwartz said.

"My father back in the '70s sold corn for $2 1/2. It's really ridiculous when you consider the cost of production continues to go up," said Jerry Ditto, who grows grain on a farm north of Clear Spring. "The price of seed and chemicals and everything else goes up on a yearly basis."

Lawmakers who accompanied Glickman on Monday addressed those concerns.

U.S. Sen. Paul S. Sarbanes, D-Md., said the drought is only part of the problem.

"The farmers face a double crisis," he said. "(Emergency aid) doesn't solve the crisis."

U.S. Rep Roscoe G. Bartlett, R-Md., concurred. "That's not going to do it," he said.

Bartlett said the average American spends about 10 percent of his income on food.

"When I was a boy, that was 25 percent," he said.

Farmers and politicians have agreed that the low-interest loans available to drought-stricken farmers are inadequate.

"How many years can guys continue to borrow? They've borrowed money on top of money on top of money," Schwartz said.

What to do about the low prices has garnered far less consensus.

Glickman placed the blame on the 1996 Freedom to Farm Act, which dismantled many of the subsidies and price controls that had been put in place over the last five decades.

Schwartz said the legislation was written during a time when farmers commanded high prices for their products.

"Everything was looking great. Nobody has that proverbial crystal ball," he said.

Schwartz said Congress should consider restoring some of the safety net. He criticized crop insurance, for instance.

Farmers can only insure crops based on the average level of production over the last three years. But three consecutive drought years have made those levels absurdly low, he said.

"Is it even worth paying the money to have the doggone insurance?" he said.

Fixing the problem is tricky. Livestock farmers, for instance, benefit from low grain prices because their feed costs are reduced.

A solution that increases grain prices might help some farmers while hurting others, Schwartz said.

He said he tells farmers to be as efficient as possible and plan ahead in order to ride periods of low prices.

"Make all of the little things that go into running a business work," he said.

Schwartz predicted the grain prices will not be low forever.

"This, too, will turn, but it's going to be bumpy along the way," he said. "It's going to take a while for that curve to smooth out."

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