Uncertain Harvest Farm Cuts Could Stem Cash Flow Spokane Merchants May Feel Pinch If Farm Families Slash Their Spending
Mary Kaye Klein, an Edwall farmer and school secretary, follows a simple rule before driving 45 minutes to shop in Spokane:
If you can’t spend $100 in a couple of hours, don’t go.
Klein pulls into Spokane, to the cheer of local merchants, two or three times a month.
Completing a recent dash through Spokane stores, Klein dropped $160 for boxes of candy, light bulbs, flour, potato chips and a floor mop needed at the Christian Heritage School in Edwall and her family farm.
“There’s really not a lot to buy today,” the cheerful shopper said as she held out a fist of cash to a Costco clerk. “But most of what we spend is spent in Spokane.”
Inland Northwest farmers such as Klein may be declining in numbers, but they are still some of the best customers the Spokane economy has.
Yet for the first time in 50 years, there’s uncertainty about whether farmers will possess that same spending power in the future. The U.S. Congress is considering a plan to wean farmers from direct farm subsidies by the year 2003, leaving them to survive the open market without government assistance.
For the Inland Northwest that assistance equals $100 million a year or more.
While the change could save U.S. taxpayers billions, it also might alter the spending patterns of thousands of families who regularly trek to Spokane to see a feature film, buy a pickup truck or meet with a medical specialist.
Fluctuations in sales also can affect the tax revenue that keep police on the streets and city parks open.
A Spokesman-Review survey earlier this year found that more than half of all farmers in the 11 surrounding counties come to Spokane to do most of their family shopping. Moscow, Lewiston and Colfax were runner-ups in the survey of 1,000 farmers.
No one knows for sure how much farmers spend in Spokane, but the potential is staggering.
Remote farm houses, which dot the plush carpet of Inland Northwest grain fields, represent highly productive food factories that own millions in assets and keep expense accounts at dozens of stores, dealerships and banks throughout the region.
According to the U.S. Census, farmers in five fertile agricultural counties - Adams, Latah, Lincoln, Spokane and Whitman - spend $450 million each year just on production inputs such as labor, fertilizer, fuel and machinery.
That money, together with the creation of secondary jobs and state and local taxes, pumps $668 million into the economy, Washington State University economists estimate.
But until this year, the annual subsidy check from the U.S. Department of Agriculture was the difference between profit and loss for most farmers, according to two surveys of Inland Northwest farmers.
That’s why farmers - and some Spokane merchants - worry that those subsidies, which garner up to $100,000 for some farm households, might be difficult to replace and could change consumer spending habits.
“We’re not making big bucks,” says Don Phillips, president-elect of the Washington Association of Wheat Growers. “If we do make big bucks, we turn it right back into the economy with investments in machinery, equipment and land.”
Spokane business owners share concerns about farmers having less to spend. Some say they experience a shift in revenue whenever commodity markets change.
“We can tell the difference when wheat is up and farmers have money to spend,” says Tony Wilson, manager of Big R Supply in the Valley. Wilson says about 30 percent of the annual $4 million in sales at the hardware store comes from farmers.
Michael O’Brian, general sales manager at Camp Chevrolet in Spokane, also covets his rural customers. As small-town dealers have closed their doors over the years, O’Brian says Camp and other Spokane dealers have picked up an increasing number of farm customers.
“Farm sales are very important to us,” he says. “It’s been good for us to take care of them.”
Spokane’s health care industry is another benefactor. Patients residing outside Spokane and Kootenai counties spend $150 million a year at the city’s four acute-care hospitals, says Marilyn Thordarson, spokeswoman for Sacred Heart Medical Center.
Coincidentally, grain farmers have more to spend this year than they’ve had in two decades. Capitalizing on the soaring price of wheat and feed grains, farmers are snapping up equipment and supplies that they postponed buying for years.
That’s made it easier to sell the politically charged proposals to do away with $10 billion a year in farm subsidies. Farmers agree that they almost always fare better when crop prices are so high there’s no need for the government’s farm-subsidy safety net to catch them.
But it hasn’t always been that way. Throughout most of the 1990s, farmers skimmed by on thin profit margins, or they lost money.
In The Spokesman-Review’s survey, that three out of four farmers said they could not make enough money without farm subsidies or taking a job off the farm.
Cutting as little as 10 percent from federal supports would ruin some dryland wheat farmers, according to a separate study done by LeMaster & Daniels, a Spokane-based accounting firm. Analyzing tax returns of 131 Whitman and Spokane County farmers, the firm found that subsidies accounted for 91 percent of the average wheat grower’s net income.
“Past history has shown us that we can have some pretty drastic market swings and things can change rapidly in a couple of years,” warns Keith Townsend, LeMaster & Daniels farm management consultant and a former USDA official.
In a rare peek at one farmer’s business records and income tax statements, Phillips showed The Spokesman-Review how farm subsidies in 1994 enabled his family to spend more money.
According to the records, Phillips, who owns and leases 6,200 acres of wheat land outside of Harrington, Wash., would have posted a $30,000 loss last year without government payments. The subsidy payment guaranteed him $4 a bushel on a portion of his wheat crop.
But as it was, the $85,000 he collected from the government resulted in a year-end profit of $55,000 for the business.
Phillips says his farm is larger than average, and the financial results might reflect a more positive picture than some Lincoln County growers. Some, he says, lose money in bad years even with government support.
Eric Zakarison, a Pullman wheat and cattle farmer, says the loss of government money probably wouldn’t affect how much he spends. The father of three children, Zakarison says his family drives 75 miles each month to buy cold cereal, soap, grease, air filters and other goods in Spokane.
But Fairfield wheat and bluegrass grower Glenn Leitz thinks the loss of government subsidies would make a difference. Leitz, who spends up to $300 a month for groceries at Albertson’s and Fred Meyer in the Valley, says that if he earned less, he would spend less.
“The ag sector is awfully important to Spokane, and there’s tremendous change in the offing,” says Leitz, a 65-year-old wheat and bluegrass farmer who is retiring this year.
As for Klein, the Edwall farmer, she doesn’t think changes in the farm program will deter her from making Spokane her top shopping destination. At $100 a pop, she’s counting on many more trips.
“When we break down and need something, which is pretty often, this is where we come,” she said, closing her car trunk over a mountain of groceries.
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