LANGFORD, S.D. -- For the wheat farmers of South Dakota, 1990 was supposed to be the year to buy a new combine, build a new barn, hunt geese for a couple of weeks or take a winter vacation some place warm. Everything was just about perfect; the grain practically leapt out of the ground.
"It was as good a crop as I ever had since I've been farming," said Pete Waletich with a wistful sigh. "Never saw anything like it."
It was too good -- not only in South Dakota, but over the United States, Canada and the rest of the Northern Hemisphere. Even the Soviet Union and China -- big wheat importers -- had excellent harvests.
There is way too much wheat. As a result, the bottom has fallen out of the market. At the Roslyn grain elevator, in Roslyn, S.D., last week, Bevan Schmidt and his son Steve were paying $2.20 per bushel for top-grade, 14 percent protein, hard red spring wheat, a bit higher than two weeks ago, but still about $1 less than at the same time last year.
"We haven't paid under $2 a bushel this year yet," said Bevan Schmidt. "But we've come darned close."
Waletich has several thousand bushels stored at the Roslyn elevator and several thousand more in bins on his farm near Langford, some 270 miles west of Minneapolis in South Dakota's northeastern corner. In all, he and his two sons harvested about 30,000 bushels of wheat on 551 acres of cropland. They have sold none of it: "We'll hold it and wait until the price comes back," Waletich said. "There's no profit in it right now."
The bumper harvest and the lower prices it brings may have a good side. It will help stabilize food costs -- although in many foods, including bread, wheat is a tiny portion of the overall cost. It will also help replenish grain stocks that had been drawn down in 1988 and 1989.
But the collapse in wheat prices hurts farmer income and has prompted a collective bellow of rage from the heartland, accompanied by demands that the government "do something." And with a new farm bill on the drawing boards, Congress in theory could do almost anything: raise subsidies; lower interest rates; grant new payments; fine-tune any of a dozen arcane and venerable programs that have been putting money in farmers' pockets for decades.
But Congress and the Bush Administration will probably do little or nothing. The wheat program will stay more or less the same, held hostage by the budget crisis and 10 years of Republican presidential distaste for government involvement in agriculture.
The conventional wisdom in Washington -- borne out by three straight years of rising farm income -- is that farmers have never had it so good, and that this year's complaints are merely cheap bellyaching because wheat profits won't be quite as high as last year.
This analysis, however, obscures one of the facts of U.S. agriculture in the 1990s: Most farmers operate so close to the margin that any unexpected news -- especially bad news -- can disturb the balance and tip it toward disaster.
Abundance was this year's bad news. The U.S. Department of Agriculture estimates that America's farmers in 1990 will harvest 2.76 billion bushels of wheat. This is 700 million bushels more than 1989, 900 million more than 1988 and close to the record 2.79 billion bushels in 1981 -- on 10 million more acres than were farmed this year.
Farmers had become accustomed to $3.72-per-bushel wheat in 1988 and 1989, drought years when grain was scarce. But in 1990, with timely rain, timely sunshine per-acre yields doubled in much of the country -- at a time when more acreage was planted.
Production reached 472 million bushels in Kansas, the nation's biggest wheat-producing state, up from 214 million bushels in 1989. As the harvest moved north in late August and September, it became apparent other wheat states were reaping bumper crops. South Dakota was typical: In a state where annual yields had averaged 23 bushels per acre, farmers in 1990 were reporting 51-53 bushels per acre.
It also became apparent that this bounty was not going to translate into material goods for farmers. Wheat prices at the elevator stood at $3.71 per bushel in January, but by mid-August were flirting with $2.
"Fifty-plus bushels, and it still wouldn't bring enough dollars," said Clark Larson, a farmer delivering grain to the Roslyn elevator. "Even at $3.50 a bushel, I can't make expenses. We got to have a living, and we aren't getting it."
Bumper crops and low prices are an old story in U.S. agriculture, and the government tries to cushion the worst blows with subsidies -- payments that guarantee farmers a higher price for at least part of their product.
This year the subsidy was $4 per bushel, but the government paid it only on the first 23 bushels of wheat on every acre. This means that successful farmers, like Larson, or Pete Waletich, will get the market price and no more for more than half their crop.
Waletich, Larson and others had planned for that. But they had also planned to have a market price of $3.70 and had already factored it into their equation. For Waletich, $2.20 per bushel wheat would result in a loss of many thousands of expected dollars.
To compound matters, the Persian Gulf crisis and the attendant rise in fuel prices occurred. Gasoline cost Waletich $1.04 per gallon in January and $1.38 per gallon on Sept. 5: "Costs are such a jittery thing," Waletich said. "And you have no control over them." The Department of Agriculture on Sept. 20 estimated that $30-per-barrel oil prices would raise farmers fuel costs $1.5 billion for the rest of the year.
Plans for buying new machinery were dropped; vacations were canceled and hopes for a windfall of cash to go with the bumper crop faded and died. Waletich and his friends hunkered down, thought about cutting costs and were thankful they also raised pigs and cattle. "High livestock prices are what's keeping most of us going," Waletich said.
Waletich, 53 years old with two grown sons helping him, will survive, and perhaps prosper, but the prairies of northeastern South Dakota are littered with the abandoned farmhouses of those who didn't make it or didn't want to bother. Preliminary figures show that Marshall County -- where Waletich has his farm -- lost 8.9 percent of its population between 1980 and 1990.
"There's no money here," Waletich said. "Who's going to come in and farm? That takes money."
Bruce Likness, a farm equipment dealer and longtime friend of Waletich, estimates that a beginner needs $409,780 to $526,487 worth of machinery to have a chance of success on a 1,500-acre farm.
Not surprisingly, there are few beginners in northeastern South Dakota. What young farmers there are either inherited their parents' land or have had their farming fathers sign their loans for them.
If you can't make the payments or your children don't want to farm, you can sell out to your neighbors and retire or go away. And it is the neighbors, like Waletich and Larson, who pick up the pieces.
"You have to expand, or you won't to get the full use out of your equipment," Waletich said. "Now that my two boys are helping me, we can farm more and we do."
In all, Waletich has four separate pieces of land scattered over Marshall and Day counties -- 3,300 acres in all, held in pasture or planted in wheat, corn, sorghum, barley, soybeans and millet. He has 800 pigs and nearly 300 cattle.
Rural South Dakota, like many farming areas in the United States today, has few small farmers, few young farmers and virtually no beginning farmers that come from out of state. What it does have are a growing number of modern "landed gentry" like Waletich and his boys -- big farmers with enormous assets, but no money.
Waletich can drive down main street in Roslyn and point out the stores that have closed in his lifetime: "The International Harvester store -- locked up -- the electrical shop and the lumberyard -- locked up -- the barbershop, the laundermat and the gas station -- all locked up. That leaves the post office, one bar and the meat market -- six out of nine in all.
"Nobody has any money to spend in these little towns, nobody shops," Waletich said. "The towns die."
The elevator is Roslyn's only viable enterprise, for this is where the gentry do their business. Jon Hendrickson, a successful farmer, netted $13,000 after taxes last year; Dana Sippel needs to replace 75 percent of his machinery, but doesn't have the money; Larson had to sell 45,000 bushels of wheat to cover $7,000 the government overpaid him in subsidies in 1988.
"Isn't it the pits," said Steve Schmidt, who buys and sells a million tons of grain each year at the Roslyn elevator. "All this grain around and everybody practically starving to death."