January 11, 1978

Farmers Need Profit, Freedom

There is an interesting connection between the farmers' strike which began last month and the death just a few weeks earlier of Roswell Garst at age 79.

Garst, you will remember, was the Iowa farmer who traveled to the Soviet Union in 1955 to sell Premier Nikita Khrushchev 5,000 tons of highly productive hybrid seed corn.

When Khrushchev visited the United States in 1959 he made a point of stopping at Coon Rapids, Iowa, to pick the brains once more of the successful Garst.  Russian agriculture was failing, and there was much publicity about the Garst-Khrushchev exchange whereby American know-how was imparted to a communist tyrant.

Garst told the Russian premier that American farmers were able to produce vast amounts of high quality corn because of improved farming methods, high quality seed, extensive use of machinery, and heavy use of fertilizers.

"But, Mr. Premier, until you free the Russian farmer and allow him to profit by his efforts, Soviet agriculture will fail," he warned Khrushchev.  "It is freedom and the profit motive that have made American farmers the leading food producers in the world."

Since Garst's famous lecture to the Soviet leader, the American farmer has lost some freedom to government regulations and a lot of profit to an unbalanced market.

The harvests for 1976 and 1977 were bountiful and produced surpluses which depressed the market prices of farm products.  At the same time, costs of land, machinery, seed and farm materials soared.  The result has been a depressed farm market and near bankruptcy for many - but not all - farmers.

Hardest hit are the wheat, corn and soybean farmers.  Cattle and dairy men, who were the first to feel the pinch, are benefiting now from lower feed grain prices.

Nevertheless, the American farm picture over all is gloomy.  A two-year surplus of grain has over filled the storage bins and threatens profits for a couple of harvests at least.

About a third of the nation's farmers have been demonstrating their plight for about a month with "tractorcades" around state capitols and even to President Jimmy Carter's peanut warehouse in Plains, Georgia.

The farmers demand "100 percent parity" and "price subsidies."

Parity is an equal relationship of prices to cost.  For something like four decades, the U.S. Department of Agriculture has each month computed parity using the costs and prices of the period 1910-14 as the yardstick.  Presumably this is the last time farm prices and costs were in proper balance.

For a long time during the post-Depression and World War II recovery years, parity was 100 percent - that is, prices were supported with government checks in whatever amount was necessary to insure a farm profit.

When farm prices started to soar in the late sixties, as world population outstripped the food supply, farm products were released to an "open market" but hedged against a 66 percent parity.

Now we have reached the capacity of hungry nations to buy U.S. food.  A "carryover" of recent harvests, boosted to open market levels, has our farmers in a bind.

The Ohio Farm Bureau, which so far has refrained from farm strikes, advocates "orderly market procedures" to correct the imbalance between productions and sales.  It is a logical and appealing concept, but no one has yet figured out how to introduce the management techniques of industry to agriculture.

Farmers SHOULD plant only enough to meet demand and avoid surpluses.  Yet, who but God can foretell at planting time whether the growing weather ahead will be just right?  Farmers might plant a billion bushels of wheat to meet an expected market of a billion bushels.  But a drought or a freeze would produce a shortfall that could price them, and consumers, out of the market.

And don't forget the Russian and Japanese consumers.  Our overseas export market takes up one fourth of the U.S. farm output.  Bountiful or scarce harvests there have an immediate and forceful impact on the market for U.S. farm products.

The bottom line is simply that no one knows how to control the market for farm produce.

Agriculture is our most important business.  Our very lives depend upon it.  Every collapse of civilizations in the past was triggered by an agricultural crisis.

When half the population of the world goes to bed hungry each night, it is inconceivable that U.S. agriculture could succumb to present circumstances.

Commercial farming is big business, and its problems can only be solved by individual farmers for themselves.  No business can be shielded from the risk of competition, not even so vital an activity as agriculture.

Government intervention with rescue gimmicks will only complicate matters.  The solution will be worked out by the 15 million persons depending upon a successful U.S. farm system for a livelihood - farmers, warehousemen, transporters, equipment manufacturers, processors and financial institutions.

And the name of the game is profit.

Author: Lindsey Williams