Hit by the harshest summer in 50 years, the nation's corn crop will drop by almost half and soybean production will be down a third from 1982's record levels, the Department of Agriculture said yesterday, signaling higher prices for consumers next year.
If the department's estimates hold up, the corn crop will be the smallest since 1970, down 48 percent from last year to 4.4 billion bushels, and soybean output will be the lowest since 1976, down 33 percent from 1982 to 1.5 billion bushels.
But even though the drought and the federal acreage-reduction program have increased farm prices dramatically this summer, Agriculture Secretary John R. Block predicted that consumer costs will rise less than 2 percent on top of the 4 to 5 percent food inflation previously projected for 1984.
The USDA and food-industry analysts said that the dramatically lower crops of corn and soybeans, key feeds for cattle, pigs and chickens, will show up in the form of higher meat prices in the second half of next year as supplies tighten. In the shorter run, Block said yesterday, supplies will be plentiful and prices attractive as farmers send more stock to market because of higher costs.
Yesterday's crop report will give new ammunition to Capitol Hill critics of the administration who have charged that the acreage-reduction program will add to consumer costs and contribute to federal deficits.
But Block insisted that the land-idling scheme and the summer's weather shocks will have little effect on supermarket shoppers. "There is no reason for anyone to become overly concerned about food-price increases," Block said. "It is impossible to be precise . . . it will be 6-6 1/2 percent. But it inflation will be below other non-food costs. It shows food is the inflation-fighter."
Block also said he anticipates there would be no payment-in-kind (PIK) program for corn and sorghum next year, although he has announced a modest land-retirement plan for wheat growers. PIK programs for rice and cotton remain undecided, he said.
"We start next year with a clear playing field," Block said, but he acknowledged that the summer's devastating weather--intense heat and minimal rain--will have "staggering" costs for farmers reeling from four straight years of lagging income.
Although the weather was a major factor, at least part of the reduction in the corn crop is a result of the PIK program, which encouraged farmers to leave land idle in return for payments of federal grain in a move to reduce surpluses and boost farm prices. Corn farmers responded by sharply reducing planting.
Soybeans, however, were not in the PIK program, and the bulk of the 33 percent crop reduction was attributed by USDA analysts to the drought. Soybean plantings were at last year's levels because of low prices and because some land enrolled in the wheat PIK could not be used later for soybeans, as is common practice in many farming areas.
Corn and soybeans drew most of the attention, but the department's report projected dramatic reductions in other major commodities because of the summer's intense heat and dryness.
Cotton, for example, will be about 35 percent below last year, with production expected to be 7.8 million bales. Tobacco production will be 1.4 billion pounds, 31 percent lower than last year, while sorghum is expected to be down 43 percent from 1984, with 480 million bushels.
The wheat crop, about 75 percent harvested before the drought set in, will be down 14 percent from last year, to 2.4 billion bushels. But durum wheat and other spring wheat, planted and combined later in the year, will be off 51 percent and 35 percent, respectively.
Block said the weather would have "a severe impact on producers, especially for those who are not in the PIK program or who have no crop insurance . . . . It is very sad to see a drought like this sweep across the country."
Despite calls from some farm groups and farm-state legislators, Block reiterated his position that the USDA is planning no new assistance programs to help farmers hurt by the weather. Low-interest disaster loans will be the major tool available for farmers who need help.