THE LATEST FARM CRISIS While Indiana’s legislative leaders are immersed in the proceedings of the 1999 General Assembly, and our Congressional delegations engaged in the opening skirmishes of the new Congress, the "latest" farm crisis continues to unfold in Indiana and across the nation. For CAC members there should be no doubt about the root causes of this current wave of economic trouble for the nation’s family farmers. They are founded in the ongoing take over and consolidation of nation’s agricultural industries by corporate conglomerates. This process has been made possible by the construction, application and interpretation of federal and state laws and regulations that are too often arbitrarily biased against the economic interests of family farmers. That’s the bad news. The good news is that our elected leaders in Washington and here in Indiana actually have the constitutional and statutory authority to address the farm crisis. The available public policy options include both short and long term solutions as well as legislative, administrative and legal actions. The question before us is simple: can we muster the wherewithal to persuade our political leaders to act? Examining the Farm Crisis Low prices for the crops and livestock raised and sold by family farmers define the reality and severity of the latest farm crisis. According to data from the United States Department of Agriculture (USDA), net farm income across the country peaked at $53.4 billion in 1996, dropped to $49.8 billion in 1997, and is estimated to have fallen to $45.7 billion in 1998. (But according to Farm Aid, for actual family farmers net income has declined by $16.6 billion since 1996, or 44 percent, from $39.9 billion to $23.3 billion in 1998. Farm Aid estimates a loss of $8 billion nationwide in just 1998.) In Indiana, the 1998 farm losses figure to be enormous due to low crop prices, extremely low pork prices, and poor weather. According to Ralph Gann, State Statistician for the Indiana Agricultural Statistics Service at Purdue University, Indiana farms saw weather related crop losses in 1998 estimated at $500 million and total losses of $1 billion from the profit generating portion of agriculture. These losses occurred in a state that generates about $6 billion a year in agriculture production. These numbers are more startling when the role of non farm income is factored into the overall equation. In 1997, 88.6 percent of the average farm family’s household income in the U.S. came from off farm sources. In other words, non farm income accounts for the vast majority of livable wages earned by family farmers in this country. This means most adults that live and work on a family farm are working two or more jobs while their kids are often pressed into farm work with little or no direct compensation. For those family farmers who earn all of their income from farming the economic situation threatens their very survival in agriculture. In Indiana, and across the nation, grain and livestock prices have been at very low levels for several months. The situation has been exacerbated this winter by heretofore unimaginable prices for pork. Indiana hogs have recently sold for less than $10 per hundred weight although the Indianapolis Star reported on January 10th that prices had recovered "to about 20 cents a pound" and by January 16th to "25 cents to 29 cents a pound." For most family farmers break even prices should be in the $30 to $35 range, and decent prices in the $45 to $60 range. Historically, many family farmers who raise grain crops in our state and across the Midwest have survived by having income from hogs and other livestock on which to fall back. With the terrible livestock prices that have accompanied low commodity prices this winter, that is no longer the case. The scope of the low grain/commodity prices in 1998 can be highlighted by looking at the average price generated by three basic crops: corn, wheat and soybeans. Corn averaged $2.15 per bushel nationwide but the cost of producing each bushel was estimated to be $3.50. Wheat averaged $2.90 per bushel but the cost of production was $4.15 per bushel. Soybeans averaged $5.35 a bushel but the production costs were estimated to be $6.56 per bushel according to data from the National Family Farm Coalition (NFFC) in Washington, D.C. Unfortunately, according to Jim Potts, the Program Director for NFFC, the present commodity price situation cannot be counted on to change in the near future: "Abysmally low grain prices, which fuel the corporate take over of the dairy, hog, beef, and poultry industries, are set to continue for the next few years." Francis Bradley, a family farmer in southwestern Indiana and a member of the CAC Board of Directors, states: "The situation is becoming very desperate. Farmers are now being forced to survive by drawing on their accumulated equity. The consumption of equity, over time, will mean they won’t survive, nor will they have anything to pass on to a future generation of family farmers." Bradley has lead a movement on the CAC board to upgrade the organization’s involvement in farm policy issues. This effort, called the Indiana Campaign for Economic Justice, envisions family farmers working with urban and suburban Hoosiers for policies that confront the economic problems facing family farmers and other groups of working people that are under financial duress. What Indiana Can Do Bradley and other CAC leaders have identified a number of actions the state of Indiana can take to address the current farm crisis. These are actions that can be taken by Governor O’Bannon and the General Assembly, but they are not necessarily actions that are of equal merit. However, the question remains: can we prompt our political leaders to take any significant actions? The possible actions available to our political leaders include:
While it is not clear what the General Assembly and the Governor will do to address the farm crisis at this time there are signs state policy makers are feeling the pressure to take action. In an interesting development, the president of the Indiana Farm Bureau, Harry Pearson, recently called for a federal investigation of suspected price fixing activities by the meat packing industry, which has largely been consolidated into a few giant conglomerates in recent years. Pearson was quoted by the Star as saying: "A lot of people are questioning whether normal market factors could affect prices so drastically." Farm Bureau very rarely criticizes the monopolistic behaviors of large agri-conglomerates since that federation has always been structurally linked to corporate operations that include farm chemical and insurance interests. Consequently, Pearson’s comments may be measure of the severity of the current economic situation, and a measure for hope. The pork crisis and overall agricultural economic situation has prompted Lt. Governor Joe Kernan to establish a pork crisis working group. A member of that group, State Representative William Friend, a hog farmer from Macy, was quoted in the Indianapolis Star for comments at the January 15th Indiana Pork Conference. Of Friend the Star wrote, "he’s upset that retailers and packers made profits on pork while hog farmers watched their collective net worth shrink by $2 billion nationally last year. ‘I call it a redistribution of wealth.’" The Star article went on to state: "Far from passing on the low pork prices to consumers, U.S. supermarkets barely lowered their retail pork prices for most of last year, according to government surveys." So it remains to be seen how the frustration and anger of farm leaders, legislators, and the Lt. Governor’s crisis group will translate into specific acts of public policy. What the Congress and the Federal Government Can Do According to the Indianapolis Star, Vice President Al Gore announced on January 8th that the federal government, through the U. S. Department of Agriculture (USDA), would distribute $50 million in direct payments to hog producers nationwide. As of the writing of this article, the details of the federal distribution and the requirements for receiving the funds were not available, but given the enormity of the pork crisis specifically, and the farm crisis in general, the direct financial relief from the Clinton administration will only be a limited and temporary fix for farmers. CAC is a member of the National Family Farm Coalition (NFFC), a nation wide network of grassroots farm and consumer organizations that is working for economic justice solutions to the farm crisis at the federal level. Among the federal actions being advocated by the NFFC are steps to do the following:
CAC members wanting more details on the above federal and international farm issues can get that information by writing, e-mailing, or calling the following organizations: National Family Farm Coalition Center for Rural Affairs CAC’s Response to the Farm Crisis The leadership of the CAC Board of Directors sent a letter to Governor O’Bannon on September 24, 1998 that requested a meeting with the Governor. The letter stated: "We believe Indiana is failing to meet the challenge of the new farm crisis that is rapidly settling in across America....We want to meet with you as soon as possible to discuss what Indiana can do now and in the next few years to help its true family farmers." This letter followed a face-to-face meeting with the Governor on April 28, 1998 in which the initial request for a separate meeting on farm policy issues was made. (The April 28th meeting, which was a highly productive and positive meeting, mainly focused on utility, home health care, environmental and campaign finance issues, and the immediacy of the farm crisis was not so apparent at that moment.) However, since the September 24th written request for a meeting with the Governor the extent of the farm crisis has become all to evident. Since that time CAC has had direct communications with the Governor’s office and at the suggestion of his chief of staff, Tom New, CAC is pursuing a meeting with Lt. Governor Joe Kernan, who is Indiana’s statutory Commissioner of Agriculture. However, because of the sweeping nature of the policy steps that CAC has requested, as outlined in this article, a meeting with the Governor will have to happen and we hope it will be sooner rather than later. In the meantime, CAC has sent to the Governor and the Lt. Governor a white paper entitled The Farm Crisis, What Indiana Can Do. Many of the recommendations of the white paper are outlined in this article. CAC is also sharing the farm crisis white paper with members of the General Assembly and has requested hearings from the House and Senate Agriculture Committees on the farm crisis. To help move the General Assembly to action, CAC has also asked farm, environmental and church organizations, to make similar requests for hearings on the farm crisis. Finally, CAC is doing media work and distributing its own brochure about the Campaign for Economic Justice. At the federal level, CAC is distributing its farm crisis white paper to the Indiana Congressional delegation and asking those members of Congress to give positive consideration to the policy proposals that have been submitted to the Congress and the Clinton Administration by the National Family Farm Coalition. What You Can Do As a CAC member and citizen of this state, there are many things you can do in response to the farm crisis. Here are some suggestions. Call, write, fax or e-mail the Governor, or your State Senator and State Representative regarding what Indiana can do to respond to the farm crisis. Use the information in this newsletter to help you in your efforts. You can also contact CAC and request a copy of our policy white paper on the farm crisis. Urge your friends and neighbors to contact the Governor and the members of the General Assembly, and encourage organizations that you are active in to do the same. Churches can be especially effective on this issue. Additionally, letters to the editor in your local paper can be used to raise the public’s and the media’s awareness of the farm crisis. Finally, communicate with your Congressional representatives: your U.S. Representative or with Senators Richard Lugar and Evan Bayh. (Please be aware that Senator Lugar has been one of the most outspoken advocates for corporate agriculture in the Congress and we don’t expect him to be very helpful in response to the farm crisis he has played a hand in creating, nonetheless, he should be challenged to make a positive response.) Please keep this in mind: when CAC is communicating with the Governor, the General Assembly, and the Congressional delegation on the farm crisis we are letting them know what we believe they can do to solve the crisis. In your communications with our political leaders on this issue, and with your fellow citizens, always emphasize what can be done. Please say to people here is what we know and what we can do. Thank you. Go to Family Farm Issues Index
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