Even with record harvests, the average U.S. farmer has his back against the wall. Here's why — and the reason it concerns us all.
A whole generation of American farmers is being swallowed up by huge debts and falling crop prices. Those who survive the current problems may face even tougher problems in the near future. How did this crisis come about?
A Lesson to Farmers
In the 1970s, American agriculture charged confidently into the world grain trade. Lucrative Soviet and East Bloc markets opened their near-empty storage bins to U.S. food exports. With governmental encouragement, U.S. wheat yields alone rose from 1.546 billion bushels in 1970 to 2.045 billion bushels in 1980 to meet the demand. At the same time, total U.S. agricultural exports zoomed from seven to $45 billion worth from 1970 to 1982. With sales of $145 billion last year, agriculture is the largest business and the largest contributor to the U.S. balance of payments. But in 1980, then President Carter embargoed food exports to the Soviet Union. This cost the U.S. farmer an estimated $11 billion. Under the Reagan administration, exports to the Soviets have resumed, but the wary Russians, not risking putting all of their eggs in one basket, have diversified their trading partners. This gives the U.S. farmer only a portion of the market he once ruled. Nevertheless, record or near-record harvests in the U.S. continue to swell storage bins whose unsold contents are depressing prices. To make matters worse, high interest rates are pushing the value of the dollar up, making food cost more in the export market. This makes it more difficult for the U.S. to hang on to the markets it already has, as in the case of European Common Market, which is the biggest U.S. agricultural export market. In fact, U.S. farm exports to the Common Market have dropped in value from $2.2 billion worth in 1975 to $1.7 billion in 1981. This has represented a net decline of 5 million tons of agricultural goods. Some export commodities such as soybeans and corn gluten feed have risen to the extent that they have caused concern in Europe. But others have declined. This is especially true of coarse grains such as wheat, barley, oats and corn. The drop has caused the U.S. to question the European Community's price support system outlined in their Common Agricultural Policy (CAP). So the American farmer, chest deep in grain, faces a pre carious export market.
Hidden Cause of the Crisis
The enviable growth of American agriculture has not been without a price. The U.S. government's call for expanded farm output in the '70s required more land, more equipment and more money. Typically, U.S. farmers borrow money each year to buy seed, fuel and fertilizer, the cost of which they pay back after their crops have been sold. Many farmers, however, expanded their operations too quickly. They imprudently borrowed in the hope of selling their increased productivity at higher prices, and are now suffering the consequences. Some are now forced to pay more than 25 percent of their income in interest alone! For them, the only way to keep from financially going under is to produce as much as they can and hope prices for their crops somehow go up. As for the reality of produce prices, most farmers wince at the thought of them. Soybeans that sold for $9 a bushel in 1974 now go for less than $6 a bushel. Wheat prices have dropped more than 12 percent and corn more than 26 percent since 1974. Together, high interest rates and low produce prices have combined to push U.S. farm debt up from $136.1 billion in 1979 to a staggering estimated $195 billion by the end of this year. James Plaxico of Oklahoma State University predicts that net U.S. farm income, in real terms, for 1982 may be less than the record low of 1933. In 1980, the average farm family in the state of Georgia had a net income of just $705. Last year, net income for farm families in southwestern Minnesota was only $1,059. By comparison, United States per capita income in 1980 was up to $9,521. Unless conditions improve, and soon, a growing exodus of American farmers will join the 37,000 in 1980 and the thousands more in 1981 and 1982 who have left the farm. Why ought a Russian or a Nigerian, for instance, be concerned about the plight of the American farmer? The answer is simple: self-interest. Even with depressed market conditions, U.S. agriculture is still the largest supplier of export foodstuffs in the world. According to the U.S. Department of Agriculture, each American farmer grows enough food for 70 people. This means that the U.S. is able to export more than one-third of its yearly farm output to markets in more than 150 countries. However, many of these countries, such as Nigeria, have become dependent on cheap American food (cheaper by comparison) to the extent that their over-regulated domestic farming community has become almost nonexistent. Any interruption in the supply of American food could spell disaster. So too for the U.S.S.R. in the event of a repeat of the catastrophic 1975 Soviet harvest. In the sense of past U.S. ability to fill the shortfalls in other nations' agriculture, the crisis in American agriculture is becoming a worldwide crisis.
For those American farmers who manage to survive the current depression in agriculture, the future holds still more problems. Problems which threaten the U.S. farmers' ability to meet even domestic needs. To expand their operations in the '70s, U.S. farmers began pressing marginal lands into service. Lands once planted with trees and grass to prevent soil erosion after the Dust-Bowl days of the 1930s — a government service paid for with tax dollars — have now been plowed up and planted with wheat. Conservation practices like crop rotation, crop diversification, terracing, shelter belting and contour plowing have been significantly abandoned in favor of fence-to-fence mono-crop production. This has aggravated an already serious erosion problem. According to a 1980 National Agricultural Land Study, more than five billion tons of fertile top soil is lost each year in the U.S. due to erosion. That amount of loss could cover Belgium and The Netherlands with nearly one foot of soil. What kind of future is in store for the present 2.5 million U.S. farmers? Unless the problems of too-high production, unsound farming practices motivated by quick profit, soil erosion and market insecurity are addressed, the future is not bright. And for young farmers the future holds no promise whatsoever. Land
... net U.S. farm income, in real terms, for 1982 may be less than the record low of 1933.... Unless conditions improve, and soon, a growing exodus of American farmers will join the 37,000 in 1980 and the thousands more in 1981 and 1982 who have left the farm.
values, propelled out of reach by land speculation, make ownership a remote possibility for most younger would-be farmers. Yet the problems facing American agriculture go beyond physical and financial obstacles. The crisis in American agriculture touches on immutable spiritual laws. The U.S. government's desire to "get" farmers to produce more food to help balance the country's trade deficit led to too much expansion, too quickly, for too long. The brinkmanship practices employed by many an American farmer to "get" more out of the land are destroying the very soil that is his livelihood. It is this selfish way of "get," spoken of frequently by Editor-in-Chief Herbert W. Armstrong that has led to the present circumstances in American agriculture. Instead of continuously forcing the land year after year to "get" more out of it, God said we should "let it rest and lie still" (Ex. 23:10-11) on specified occasions. The farmer should "give" the land a rest. The biblical land Sabbath anciently occurred once every seven years. It held the promise of not only giving the land (and the farmer) a rest, but the special blessing of an increase in harvests on the sixth year (Lev. 25:2-4, 20-21). By letting his land lie fallow after planting, for example, a leguminous cover crop, the farmer would be allowing nature to begin to restore the humus, as well as other nutrients, in the soil naturally. This ancient biblical law, when properly administered, simply amounts to sound land management. The Creator of the universe has given us a basic formula for successful agriculture in his instruction manual, the Bible. God said: "If ye walk in my statutes and keep my commandments, and do [emphasis ours] them; then I will give you rain in due season and the land shall yield her increase and the trees of the field shall yield their fruit" (Lev. 26:3-4). But God also warned of the consequences of disobedience. "And if ye shall despise statutes, or if you should abhor my judgments, so that ye will not do all my commandments, but that ye break my covenant: I also will do this unto you... ye shall sow your seed in vain... and I will make your heaven as iron, and your land shall not yield her increase, neither shall the trees of the land yield their fruits" (Lev. 26:15-16, 19-20). Unless the problem of transgressing God's laws and statutes is addressed no amount of quick-fix economic solutions will prevent an even greater future crisis in American agriculture. Instead of the present economic crisis of plenty that is driving American farmers out of business, it will be a crisis of famine with worldwide impact.