Is Another Farm Bailout Coming in 1999?
May 13, 1999
Agriculture Department economists are predicting the fourth consecutive year of bumper grain crops, prompting many farmers to plant less this month in the hope of averting another glut.
But their efforts are largely being offset by excellent growing weather across the farm belt.
- The Agriculture Department expects corn production to decrease just 3 percent -- even though farmers are planting about two million fewer acres than last year.
- Government economists predict that corn farmers will get only about $2 a bushel -- which wouldn't even cover the average grower's expenses.
- Farm income could drop another 5 percent to 10 percent this year -- pressuring Congress to come up with another multibillion-dollar aid package.
- Wheat farmers, confronted by a world-wide surplus, are planting the fewest acres in 26 years -- but good weather across the Southern Plains has led economists to project near- record yields in some states.
A flood of imported cloth is depressing demand for cotton by U.S. textile manufacturers at a time when the U.S. crop is set to rebound from last year's devastating Southern drought.
Even though soybean prices are expected to decline the most this year, farmers are planting more soybean acreage. That's because a quirk in the government's loan program allows soybean farmers to reap a price that is much higher than the world market price.
Such high yields should put a lid on consumer prices. Donald Ratajczak, of Georgia State University in Atlanta, expects grocery prices to rise just 1.6 percent this year -- compared with 2.1 percent in 1998.
Source: Scott Kilman, "U.S. Predicts Bumper Grain Harvest, Little Inflation, But Stress on Farmers," Wall Street Journal, May 13, 1999.
Browse more articles on Tax and Spending Issues