Subsidize Us Or Devalue The Dollar

Agriculture is in trouble, which is why farmers across America talk of a “conspiracy to eliminate farmers” and of fears that every farm will be auctioned off.

The world’s farm prices aren’t particularly high in comparison to the cost of production, and a recent index of food prices was down 12 percent. Do you realize how much money a 12 percent reduction is to world farm income?

There was a short spurt of high grain prices, but less than 15 percent of U.S. farmers benefited. It was totally devastating to the livestock industry.

Nothing spurs production like the hope of higher prices. But recently, wheat prices were back under $3 a bushel, corn prices were $2.25 a bushel and soybeans $6.

Agriculture could survive with lower prices if not for one severe problem: an increased cost of production. For the last six years it has increased 7 to 9 percent annually.

Can’t be, you say? Ask any Midwest accountant or bank.

Take a good look at what has happened to machinery costs. The average row-crop tractor costs around $100,000 new. A corn or soybean planter is over $40,000, and new combines are priced at nearly $250,000. New feed trucks are over $90,000. Ten years ago, the costs were about half of these lofty figures.

Everyone supplying agriculture passes on his increased cost of production. But America’s farmers end up going to the bank and borrowing more money.

Living expenses on the farm are dramatically higher. Cash rents for farmland are at all-time highs, reaching over $200 an acre in large areas.

Labor cost are soaring, if you can find anyone actually willing to work on a farm.

American farmers are truly caught in a horrible position. Subsidies are nearing an end. Exports are pathetic. Our Asian friends are too scared to buy anything, and Third World countries are closer and closer to supporting themselves.

Boatloads of imports are coming to the United States, but the boats are turning around and going home empty. This is not a good scenario.

I am not a proponent of farm subsidies. But why were they started 60 years? Someone back then must have seen no other way.

Washington wants U.S. farmers to be competitive in the world markets, but won’t let us be. The government has a strong-dollar policy, but that by itself is stopping us from being competitive and from being able to support ourselves without taxpayer support.

Is it time for Washington to write another subsidy program? I hope not.

There is talk today about the great potential for potato growers, livestock people and grain producers to expand their global markets. That’s nothing new. We have been working on that for 50 years.

The health of America’s farms still gets down to one thing: Devalue the dollar and agriculture will survive without the government.

It’s an old Catch-22. If Washington devalues the dollar, the country will no longer be able to import its way out of inflation for the general population. Prices for everything will rise, and rapidly.

My son and daughter will graduate from high school in the classes of 1999 and 2002, the fifth generation of our family raised in Nebraska. We are encouraging them to go to college, not to take agronomy or animal science but rather to study business, marketing and management.

In some ways, America’s farmers would be better off had they invested in the stock market instead of in agriculture. I have been blessed to have several mentors, good ones. I have learned that to survive in agriculture today, you need to practice risk management and timing.

But the markets are not giving us the opportunity to make a profit because of high input costs. What is the answer? Washington has three choices.

Make equipment and input prices fall so we can survive with lower prices, subsidize all of agriculture or drop the value of the dollar so we can be truly competitive in the world markets.

It really is quite simple. Pay us now or, later on, pay us much more.