• U.S.

The New Grapes of Wrath

9 minute read
John Greenwald

“It’s too late. They already took it, you understand? My farm’s gone.”

Those words were spoken by a luckless grower in The River, one of a recent spate of Hollywood movies about hard times on the farm. But while those down- home films, which also include Country and Places in the Heart, are fiction, the dramas they depict are painfully true to life. Mired in perhaps the deepest farm slump since the Great Depression, American families are being driven from their land in growing numbers at a time when much of the rest of the U.S. is enjoying prosperity. Some 20,000 farms have been auctioned off since 1981, and the toll is rising. “There will be a bloodbath of farm foreclosures this year,” says Washington Economist John Schnittker, a former Under Secretary of Agriculture.

Among the most serious problems facing the American farmer is the strength of the dollar, which is making American agricultural products too expensive in world markets. U.S. farm exports last year were off 13%, to $38 billion, compared with a record $43.8 billion in 1981. Cargill, one of the world’s largest grain traders, has shown in recent weeks how topsy-turvy world agricultural trade has become. The company briefly considered buying Argentine wheat at $113 a ton and selling it to U.S. flour mills. Even with about $19- per-ton freight charges and $8-a-ton duty, the Argentine product would have been cheaper than U.S. wheat, which was selling for $150 a ton. After an outburst of protest in the farm belt, Cargill canceled the deal.

Hard-pressed farmers now face an additional worry–the prospect of the most sweeping shake-up of Government agricultural policies in half a century. Since the Depression, Washington has poured more than $115 billion into propping up agricultural prices through subsidies and related forms of assistance. Last year alone, federal farm programs cost $7.3 billion, and this year they could run as high as $15 billion. Next month the Reagan Administration will propose to Congress a drastic overhaul of the whole costly system of price and income supports for farmers. The policy shift would slash $7 billion a year from the federal budget deficit and would mean dramatic changes in American farming. Says Agriculture Secretary John Block: “We need to become competitive in pricing and selling our products and get away from controlled production.”

The Administration proposal, which would replace the Agriculture and Food Act of 1981 that expires next Sept. 30, would sharply pare back subsidies over the next five years. It would slash price-support levels and phase out payments that now bolster the earnings of producers of such major commodities as wheat and corn. In addition, it would cut federal outlays to growers who are paid to leave their land fallow in order to hold down the supply of crops and thus keep prices firm.

The controversial proposals have already ignited a fierce debate. Says Schnittker: “The Administration has laudable objectives in facing up to where we have to go, but it is incredibly naive to believe that you could jump there in a year or two.” Such major groups as the National Farmers Union and the National Farmers Organization are already calling for more, rather than less, federal aid.

American consumers have a direct stake in the unfolding farm debate. By setting price levels for farm produce, Government programs have prevented wide swings in food costs. Ending supports could result in more erratic fluctuations. Food prices rose a moderate 4% last year, a bit less than the consumer price index, and they are expected to show another mild gain in 1985. Americans spend only about 11% of their disposable income on at-home dining, the lowest amount for any major nation.

The origins of the lean years that now plague farmers go back to the fat ones of the 1970s. While that decade brought galloping inflation and uncomfortably high unemployment, it was nonetheless a golden age for agriculture. Farm exports, which amounted to just $7 billion in 1970, increased fivefold during the decade as the world developed a taste for American products. American farmland values zoomed as well. An average acre of Iowa land sold for $417 in 1970 but was worth $2,147 at the start of the ’80s. Increasingly prosperous farmers borrowed heavily to buy additional acreage and new equipment. “In the ’70s, you couldn’t do anything wrong in agriculture,” recalls Cliff Vrieze, 39, a hog farmer in Trimont, Minn. “You could do almost anything and make a profit.”

All that ended as the ’80s began. The 1981-82 recession hit farmers along with virtually everyone else. Their exports were then hurt by the strong dollar and stiff competition from growers in such places as Canada, Europe and Argentina. By 1983 U.S. agricultural sales abroad had tumbled, and land values, which serve as collateral for loans, were dropping fast. The price of Midwestern acreage fell 15% last year and is expected to decline an additional 8% this year. Notes George Irwin, chief economist for the Farm Credit Administration: “The security supporting farmers’ loans is disappearing at the same time as the income to repay those loans.”

One of the most worrisome aspects of the farm slump is its impact on American banking. Farmers owe public and private lenders some $200 billion. Of the 79 U.S. banks that failed last year, 25 were agricultural lenders. Says C. Todd Conover, the Comptroller of the Currency: “One of the big problems banks are going to face in 1985 is agriculture, and it’s going to impact a lot of them.”

The financial squeeze has been greatest on the families that run medium- size farms. These growers, whose annual sales typically range from $40,000 to $200,000, operate about 23% of America’s 2.4 million farms and take in about 40% of total cash receipts. They are suffering on two fronts. On the one hand, their farms are less efficient than those run by larger agribusiness operators. On the other hand, most medium-size farms require full-time work, so their owners cannot easily supplement their income with other jobs. Troubles on the family farm are exacting a heavy psychological toll. When U.S. farm bankers gathered in Kansas City in November, one of the most well attended sessions was titled “Stress: Dealing with the Emotional Customer.”

Signs of hardship abound throughout rural America. In Unionville, Mo., Bud and Hazel Hirst have decided to give away their 476-acre cattle ranch, which is $200,000 in debt. “You can’t sell land here,” says Bud, 53. “Nobody is going to buy it.” The Hirsts have hit on a unique way to lay their burden down. They have collected poems by Hazel, 52, in a booklet titled Bitter Harvest, and are selling copies for $8 each (sample verse: “But hope won’t clothe your children/ It can’t their hunger salve/ It will not pay the mortgage/ And hope is all we have”). Proceeds from the sales will be used to repay the Hirsts’ IOUs, and each purchaser will receive a ticket for a drawing to be held on July 4. The person with the winning number gets the farm.

Things are little better in California, which produces nearly half of America’s fruits and vegetables. The Golden State’s farm exports dropped 28% from 1981 to 1983, to $3 billion. Bob and Kathleen Hamada, who grow plums and seedless grapes for raisins on 100 acres in Kingsburg in the San Joaquin Valley, are typical of hard-pressed California farmers who have decided to call it quits. The Hamadas have been trying to sell their farm since mid-1983 but so far have attracted only nibbles. Kathleen, 23, has taken a part-time job as a cashier in a movie theater, and her 30-year-old husband is looking for sales work. Both are resigned to losing their farm. Says Bob: “Now I’m just waiting for it all to be over with.”

Elsewhere in the Sunbelt, farm woes have cast a cloud over otherwise sunny economies. In Georgia, some 60% of the loans issued by the Farmers Home Administration are delinquent. “We’re not out of the woods yet,” warns Larry Snipes, a statistician for the Georgia Crop Reporting Service. “In fact, I’m not even sure that we’ve seen the worst.” In Texas, farmers went out of business last year at a rate of more than 100 a week. State officials see an equally bleak 1985.

Frustration is leading some growers to adopt militant new tactics. About 170 farmers in Iowa agreed two weeks ago to join forces with the International Brotherhood of Teamsters. In this unusual arrangement, the Teamsters will lobby state and federal officials for a moratorium on farm foreclosures and will provide legal aid to fight bankruptcies; meanwhile, the farmers will help push for the repeal of Iowa’s right-to-work law. In Washington, Iowa, more than 150 friends and supporters of Roger Escher, 38, took a different tack. They stood silent last month and refused to bid in the auctioning of Escher’s machinery by the United Central Bank & Trust of Kalona. Near by, some 45 crosses in the frozen ground commemorated the Washington County farmers who left the business last year.

The plight of farmers like Escher makes it unlikely that Congress will swallow the Administration’s cutbacks in aid without major changes. In the short run, the sweeping policy reforms would turn farming into an even riskier business and further reduce farm income. But the bill’s defenders insist that increased competition would make U.S. agriculture healthier over the long haul. Some new approach certainly seems worth trying, since the expensive policies of the past have not solved farming’s woes. Says Agriculture Secretary Block: “I am encouraged that there is a majority that supports the need for a dramatic change in farm policy in the direction that this Administration is proposing.” Block, though, admits that there is going to be a “great debate on the details” before the U.S. comes up with a new farm program.

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