14 February 1997

Farm Bill puts squeeze on USA cereal farmers

LOWER commodity prices coupled with the reduction of federal aid following the introduction of the US Farm Bill is leading to demands from American farmers for state intervention to help them survive.

The Bill, which effectively abolished set-aside and offered farmers decreasing cash payments decoupled from production until 2002 and capped at a maximum £31,250 ($50,000) a farmer, is already hitting thousands of small cereal farmers in the US.

Richard Barnes, US agricultural attache to the London embassy, said that while the Bill would reduce public spending, eliminate supply management and give farmers greater flexibility, state governments were already drawing up plans to aid farmers.

Speaking to more than 200 farmers at De Montfort University, Lincoln, Mr Barnes said states such as Iowa were looking to give support to provide a safety net for arable farmers through a degree of resubsidisation. Wheat prices have fallen by at least £45/t since last April in the US.

"I think it would be fair to say there is serious concern about the safety of farmers with prices vacillating wildly from one year to the next.

"But the US government is very reluctant to get back into export subsidies, and although wheat farmers would like to see subsidisation, the Secretary of State for Agriculture has said this is not the time to do so. However, it is in the arsenal and could be used at some stage."

Despite the decision to retain, at least until 2002, 15m ha (36.4m acres) of land in the conservation reserve programme (CRP) – equivalent to the area of wheat under cultivation in the EU-15 – the abolition of set-aside has enabled farmers to follow market trends more closely.

As a result, more maize and in particular more soya, due to demand in the Pacific Rim countries, has been cultivated, and interest in genetically modified organisms in the US is huge.

Mr Barnes said there were numerous advantages of biotechnology to the US farmer, as he was able to use less inputs and improve the quality of the crop.n