The corn growing just outside Doug Wilson's kitchen window is tall and robust, the soybeans are lush and green, and the U.S. Senate has passed a massive $7.4 billion farm aid package of price supports, crop insurance payments and other safety nets to protect farmers from the fickle forces of nature and wildly swinging commodities markets.
Yet like a lot of farmers, Wilson, whose family has tilled the fields in this part of central Illinois for four generations, is still given to worry.
Wilson, 41, says he is grateful for the record-high rescue package that the Senate passed on Aug. 4.
But like a growing number of farmers across the country, he believes that the causes of the current farm crisis, which has reduced farm income nationally by nearly 17 percent in the past three years and has forced thousands of American farmers into bankruptcy, are more systemic than cyclical and more global than national.
Wilson spends more time on his computer checking world agriculture markets, he says, than he does on his tractor.
Farmers have always had to live or die by the law of supply and demand, and by the ratio of bushel yield an acre and the market price per bushel. There never has been a way to control those equations over time because neither the weather nor the onset of crop disease can be managed.
For decades, a system of government regulations that guaranteed farm income through cash subsidies and price supports in exchange for a measure of control over production sought to even out supply fluctuations and the corresponding price declines in bumper crop years. The Republican Congress overhauled that agricultural policy in 1996 with the Freedom to Farm Act, a market-oriented measure that introduced the risk of higher highs and lower lows in commodities prices but promised shorter recovery times at the bottom end of the cycles.
Another key element of the Freedom to Farm Act was the combined assurance by Congress and the Clinton administration that the government would develop new markets for agricultural exports through various means, including new trade agreements and the lifting of U.S. trade sanctions against six countries that farmers regard as huge potential markets for their crops.
But what has happened in the past three years, according to Wilson and other farmers who supported the Freedom to Farm Act and now feel betrayed by it, is that farm prices have gone into a free fall because of overproduction at home and abroad. And the government has failed to develop the new export markets it promised, the farmers say, while existing export markets are shrinking because of foreign competition.
The result is that American farmers are increasingly looking to new foreign markets for their salvation. That is particularly so in this small corner of the Midwestern farm belt, which for the most part has not been affected by the prolonged drought that has devastated crops along the East Coast.
Gridley is 40 miles from the Illinois River, where much of the high-oil livestock feeding corn Wilson produces on his 640 acres here is barged to the Mississippi River then down to the Gulf of Mexico for shipment around the world. More than half of Illinois's corn crop is exported, a 10 percent increase from just a few years ago.
"When I go to the [grain] elevator in town and pull that lever, as the corn goes down the chute I've got to be aware where that product is going," Wilson said. "Farmers need to think globally, who their customers are, what they want and what our competitors will provide if we don't."
Wilson said that unlike a lot of farmers in harder hit parts of the country, he is not yet close to going out of business. But he said that if he cannot find new markets and higher prices for his crops, he will be. And he did the math:
Typically, small or medium-sized farmers like him with home mortgages, $300,000 or more invested in farm machinery and $60,000 invested in the crops in the ground would like to get an income of $400 per acre, Wilson said. That translates into yields of 200 bushels of corn an acre sold at $2 a bushel or, failing that, at least yields of 150 bushels an acre selling at $2.65.
The reality is that in spite of the healthy-looking, 7-foot-tall corn stalks in his fields, the recent Midwest heat wave damaged some of the crop, and he said he could get a maximum of 130 bushels an acre when he harvests in September.
Then there are the variables that a farmer like Wilson has to factor into his production costs: $95 an acre for seeds, fertilizers, herbicides and insecticides; $150 an acre for renting tillable land; and $20 an acre for depreciation of farm machinery. These variables alone add up to $265 an acre.
If Wilson gets a yield of 130 bushels an acre and sells it for the current price of $1.85 a bushel, he will end up with $240.50 an acre, or a loss of nearly $25 per acre.
While the aid package, a version of which must be approved by the House when Congress returns next month, is largely intended to help family farms, corporate agribusinesses and absentee landlords would receive a large portion of the $5.5 billion in supplemental payments for marketing losses, said Bill Christison, president of the National Family Farm Coalition.
Christison said that of the 1.9 million farmers counted in 1992, less than 20 percent produced 83 percent of the nation's farm output. The nonprofit Economic Policy Institute in Washington said in a recent report that the family farms' share of production fell from 62 percent to 54 percent between 1978 and 1992, a decline that was preceded by three years in which 42,000 small farms had disappeared.
Christison, who farms grain and livestock on 2,000 acres in Chillicothe, Mo., said Congress routinely bails out other industries, such as banking, and that farming should receive no less.
"Besides, agriculture is the only industry that has no power to set their own prices," Christison said. "It is producing the food supply for the nation, and this becomes everybody's business.
"Farmers are asked to sell their product at below their production cost and there is nothing they can do about it," he said. "This is enough justification for keeping those farmers farming."
In the Midwest, grain prices have sunk so low this year that even record-breaking yields would not be enough for farmers in the region to meet typical expenses, said Chris Hurt, an economist with the Cooperative Extension Service at Purdue University in Indiana.
"For corn and soybean farmers, normal yields will not pay the bills, even after government payments are included," Hurt said. Using a model crop budget with average estimates of the cost of seeds, fertilizers and chemicals, plus machinery expenses, land rent and family living expenses, he said farmers with yields of 134 bushels of corn per acre would lose $68 an acre.
Even farmers who take full advantage of the loan deficiency payment program provided in last fall's $6 billion emergency aid package would incur big shortfalls, the Purdue study found. The loan deficiency program pays farmers the difference between the price a farmer expects to receive when he gets the loan and the price he is paid when he harvests his crop.
Hurt said that 36 bankers surveyed by Purdue last year said that if market conditions did not improve this year, up to 9 percent of their clients could face the loss of their farms, even with good crops.
To forestall that kind of disaster, Wilson said he would urge the Clinton administration to admit that it has not delivered what it promised on export market development and approve the supplemental payments passed by the Senate--and expected to be passed by the House--to compensate for that shortcoming. Then, he said, the president should open fast-track negotiations for new trade treaties, negotiate China into the World Trade Organization and lift trade sanctions against Cuba and other potential markets.
"They should give the farmers the tools they need to trade in a global economy," Wilson said. "Farmers don't want to rely on emergency aid. They don't want to raise a crop that nobody wants, that just goes into storage."
Wilson, a self-described conservative Republican who serves as president of the Illinois Corn Growers Association, said, "We say we want less government involvement and we mean it. But in trade issues, regulatory issues and almost everything we do, the government has a lot to say about what our bottom line comes to."
Wilson said the government enacted a $6 billion emergency farm aid bill last year "and we still went down the tubes. This year they're proposing $7.4 billion, but if the prices don't come out of the basement, the same thing is going to happen. And you still haven't fixed the problem."
CAPTION: Doug Wilson of Gridley, Ill., says Washington has not delivered on its promise to open more markets for U.S. crops.