Lower Costs, Higher Prices Benefit Hog And Cattle Farmers
Apr. 06, 1988
WASHINGTON (AP) _ The long-awaited financial turnaround for U.S. agriculture has been led by a two-year economic boomlet in the livestock sector, according to an Agriculture Department report.
''Since the fourth quarter of 1985, hog and cattle farmers have benefited from generally higher prices and lower feed costs,'' the report said. ''Feed expenses declined by $2.4 billion during 1985-87, while hog and cattle (sales) receipts increased by $4.7 billion.''
Further, poultry and egg sales increased $1.5 billion in 1986 before declining last year.
According to USDA economists, the net cash income of farmers - what's left over from gross cash income after deducting cash expenses - rose to a record $57 billion in 1987 from $52 billion in 1986 and $47.3 billion in 1985. Some decline is expected this year to between $50 billion and $55 billion.
The report by the department's Economic Research Service was in the current issue of Agricultural Outlook magazine and was written by Gregory Hanson and Richard Kodl.
''More than 80 percent of the $10 billion increase in net cash income from 1985 to 1987 went to livestock producers,'' the report said. ''Strong growth in net cash income was shared by most major livestock enterprises in 1986, and by hog, dairy and beef farms in 1987.''
The darker side was among crop producers who saw feed grain receipts decline from their 1985 peak, contributing to the recent financial stress on Midwest crop farms.
''However, the strong rebound in livestock earnings has provided an important offset in this region,'' the report said. ''Five of the top 10 cattle producing states and seven of the top 10 hog producing states are located in the northern plains (from North Dakota to Kansas) and western Corn Belt (Illinois, Iowa, Minnesota, Missouri and Wisconsin).''
The gains in livestock receipts and big increases in government payments translated into increases of 70 percent to 80 percent in the net cash incomes of farmers in the two regions, the report said.
''Farmers used their higher incomes to pay down more than $6 billion of farm business and household debt annually during 1984-87,'' the report said. ''They are now in a position to reap substantial benefits in 1988 from continued livestock profits and from recovering crop profits.''
The overall debt crunch of the early and mid-1980s ''has subsided,'' the report said. ''By the end of this year business debt in agriculture likely will have fallen $55 billion to $60 billion, or nearly one-third, since 1983.''
It added: ''Farmers' recent financial progress is evident in the closely watched debt-to-asset ratio, which measures the degree of lender security and the farmers' use of their earnings and capital to finance farming operations.''
After climbing to 23 percent in 1985 - which meant farers owed $23 for every $100 worth of assets - economists said the debt-to-asset ratio nationally declined to an estimated 17 percent to 19 percent by 1988.
WASHINGTON (AP) - China has been given approval by the Agriculture Department to buy an additional 2 million metric tons of U.S. wheat at subsidized prices.
Acting Undersecretary Thomas O. Kay said Tuesday that China has already bought more than 4.9 million tons of U.S. wheat under previously announced authorizations under the department's Export Enhancement Program, or EEP.
A metric ton is about 2,205 pounds and is equal to 36.7 bushels of wheat.
Under EEP arrangements, exporters can sell U.S. commodities at reduced prices in order to meet foreign competition and then collect free government surpluses of grain or other commodities as bonuses, or subsidies.
The subsidies have ranged from less than $20 to more than $40 per ton of wheat, or in the range of 54 cents to $1.09 per bushel.
The Soviet Union also has been a big buyer of U.S. wheat under EEP, with purchases totaling more than 11.8 million tons in the last year. An additional 1 million tons of EEP wheat for the Soviets were authorized earlier in the week.
WASHINGTON (AP) - Public comments are being sought on how to define a ''person'' for purposes of determining federal limits on payments to farmers, the Agriculture Department said Tuesday.
There are limits on federal payments to individuals, including benefits paid under commodity price support programs, the Conservation Reserve Program and some other programs where direct payments are made.
Additionally, the proposed rule would determine whether foreigners will be eligible to receive certain program payments.
In budget legislation late last year, Congress included a number of provisions designed to tighten loopholes in USDA farm payment regulations, beginning with 1989 crops.
The law provides, for example, that to qualify for payments a ''person'' must be actively engaged in farming by providing a significant amount of capital, equipment or land, and personal labor or management to the enterprise.
A basic limit of $50,000 per person annually is set on direct ''deficiency'' payments, but this can be ballooned to as much as $100,000 maximum depending on a person's interest in other entities.
The term ''person'' can include individuals, corporations, associations, charitable organizations or other entity as determined by USDA.
A recent study by the department's Economic Research Service says the law requires the secretary of agriculture ''to give fair and equitable treatment to trusts and estates and the beneficiaries thereof, and provides that spouses may be separate persons if their farming operations were separate prior to their marriage and continue to be operated separately.''
Written comments can be sent by May 6 to: Director, Cotton, Grain and Rice Price Support Division, ASCS-USDA, P.O. Box 2415, Washington, D.C. 20013.