Business & Finance: Farmers’ Billions

Last week statistical experts at the American Institute of Food Distribution sat down with their slide rules to answer a question which has troubled businessmen all summer: How much will drought reduce the income of U. S. farmers? As if unable to believe what it had discovered, the Institute tucked its findings into the inside pages of an obscure food pamphlet. Hardly had it been published before the Wall Street Journal and Dun & Bradstreet hastened to confirm the Institute’s opinions, and huge, conservative Standard Statistics Co. Inc. rumbled into print with facts and figures. Off the slide rules of all four popped the same startling answer: U. S. farmers will actually have more money to spend this year than last.

As to whether it would be a few pennies or a few billion dollars more, there was a difference of opinion. Dun & Bradstreet announced an increase of 20% to 25% over last year, when, according to some estimates, U. S. farmers received $6,383,000,000. Standard Statistics, by comparing the estimated value of this year’s crop at current or average prices with the value of last year’s crops, fixed the 1934 farm income including bounties and relief payments at $8,250,000.000—up nearly $2,000,000,000 from 1933. The U. S. Government, although it presented different totals, unofficially estimated an increase of $1,000,000,000.

To farmers in and out of the drought area, the reasons were as plain as a pig’s snout. For corn farmers will get double last summer’s prices. For livestock, poultry and dairy products, which constitute the bulk of farm income, they can expect to realize nearly $700,000,000 more than last year.

Farmers whose crops have been ruined by drought will nonetheless receive a small income from relief funds plus their normal share of the $500,000,000 crop reduction payments.

Finally, according to the Institute of Food Distribution, the drought damage is most severe in areas which are the least populated—the Dakotas, most of the Southwest, parts of Montana, Wyoming, Arkansas, Minnesota and Wisconsin.

Classic example of the prosperity which other farmers may enjoy is the State of Iowa. Last year her 450,000,000-bu. corn crop, at an average price of 31¢ a bu., was worth $136,385,000. This year’s crop, estimated at not more than 261,000,000 bu. will sell, experts agree, at above 62¢—a total net gain for the State of some $25,000,000 over last year. With last week’s hog prices up to $6.65 a cwt. against $2.80 in June, the Des Moines Register & Tribune’s able Farm Editor J. S. Russell estimated that Iowa’s hog income would be as great as last year’s, excluding $70,000,000 to be paid by the AAA for pigs & corn that were not raised. Forecasts of income from cattle, chickens, eggs and milk were bullish.

Finally there was a good chance for Iowa farmers to cash in on last year’s corn crop. Under seal on Iowa farms are 100,000,000 bu. against which AAA made loans at 45¢ a bu. Farmers may regain title to this corn by paying off the loans. With corn selling currently in Iowa at 65¢, they can realize a 20¢ per bu. profit, or a total of $20,000,000.