Emergency assistance for 2000 already on its way
Emergency assistance for 2000 already on its way
The US Department of Agriculture reckons this year will be
worse than last for American farmers. So requests are
already being put in to Congress to provide
counter-cyclical aid. A whole heap of money is involved,
says Illinois based ag commentator Alan Guebert
ALTHOUGH the US general election will not be held until November, the race by politicians for the hearts, minds and wallets of Americas farmers is already roaring at full speed. The chief fuel? Money. Big, big money.
After spending $22.7b (£14.2b) of taxpayer money to support US farmers in 1999, the federal ante is already up to $17b (£11b) this year. And neither Congress nor the farmer-loving presidential candidates have even begun to focus on just how bad the US ag economy will be in 2000.
The US Department of Agriculture has, however, and its view is that 2000 will be just as profitless as 1999. Indeed, in releasing its 2000 "baselines" – estimates for crop production and prices – on February 24, USDA confessed this year will be worse for farmers than last.
For instance, the new baseline shows USDA expects a record 30m ha (75m acres) of soyabeans to be planted in 2000, an increase of 728,000ha (1.8m acres) over 1999. The additional plantings, it guesses, will cause soya prices to fall to an average of $175 (£109)/t , or $18.50 (£11.60)/t under last years sickly price.
The outlook for maize shows no improvement, either: planted area about the same as last years 31m ha (77m acres); season average price of $73 (£46)/t, a measly $2 (£1.25)/t more than 1999. Likewise the wheat baseline mirrors 1999: 25m ha (62m acres); $91.75 (£57.34)/t season average price.
If those forecasts are accurate, one can almost bet the farm that Congress will be under heavy pressure to come to farmers aid for the third consecutive year. The two previous bailouts, in 1998 and 1999, totalled a combined $15b (£9.4b).
The Clinton Administration, through secretary of agriculture Dan Glickman, already has played the first card in this game. On Feb 3, Glickman asked Congress to add $5.6b (£3.5b) to this years USDA budget for additional farmer payments he described as "counter-cyclical aid to help farmers through times of low prices."
Then Glickman raised the bar even higher – he asked that Congress budget another $5.6b (£3.5b) of counter-cyclical farm aid for next year, too! The Republican-controlled Congress is loath to hand such a fat plum to Democrat Clinton and his party in an election year.
And yet, like 1998 when the first farm bail-out passed Congress, Republicans might not have a choice. Two years ago, Democrats tied Freedom to Farm on Republican tails and ambushed them at the polls. After all, it was a Republican Congress that passed the untested farm policy many US farmers now feel is responsible for todays low prices.
If Democrats do this again – and why not, it worked perfectly in the past – expect the ante to grow fat fast.
In December 1999 USDA estimated direct government payments to farmers in 2000 would be $17.19b (£10.74b). That breaks down as $4.9b (£3b) for "transition payments" under the 1996 Farm Bill, a whopping $7.9b (£4.9b) for loan deficiency payments, $1.9b (£1.2b) for the land-idling Conservation Reserve Program, and $2.4b (£1.5b) in "emergency
assistance."
Glickman raised the latter figure by more than $3b (£1.9b) in his Feb 3 request. As such, total USDA aid – both appropriated and requested – now tops $20b (£12.5b). Critics of Freedom to Farm quickly characterised the additional money as window-dressing which does nothing to address Freedom to Farms fundamental flaws. Many want a complete re-write of US farm policy this year.
Political handicappers say that will not happen. Freedom to Farm, while it may not have worked well, is due to expire in two years and Congress does not have the stomach or the time to tackle such a massive undertaking.
Most Republicans are sticking to the party line that sold Freedom to Farm in the first place: cheap grain will boost exports and the extra exports will deliver higher prices to US farmers.
Trouble is, American ag exports are not increasing. In fact, total US ag exports in 1999 amounted to nearly $46b (£29b), 7% under the 1998 figure – and 1998 was lower than 1997, which was lower than 1996.
Additionally, net farm income nationwide fell again in 1999 to $48b (£30b) and is forecast to fall another $7.6b (£4.7b) in 2000. That 15% plunge has farmers wondering just how long they can hold out until the magic export bullet slays these poor prices.
And it has Congress wondering just how much it will cost taxpayers. The safest bet? A lot more. A whole lot more. More than last years record $22.7b (£14.2b).
Indeed, in
releasing its
2000 "baselines"
– estimates for crop production and prices – on February 24, USDA confessed
this year will be worse for farmers
than last
Net farm income
nationwide fell
again in 1999 to
$48b (£30b) and is
forecast to fall
another $7.6b (£4.7b) in 2000. That 15% plunge has farmers wondering just how long they can hold
out until the magic export bullet
slays these
poor prices