The Jubilant Farmers

Food prices remain a pain in the pocketbook, and shortages of canned goods are showing up in the supermarkets (see box following page), but America's newly fat and happy farmers are jubilant. With the notable exception of cotton, which is expected to be 4% behind last year's crop, never before has there been so much to harvest. Midwest farms are producing such quantities of grain and golden soybeans that equipment dealers cannot get enough storage bins for them. Even though a month of above-normal rainfall slowed the start of the harvest in the grain belt, the U.S. Department of Agriculture forecasts record crops of 5.8 billion bu. of corn (up 4% from last year), 1.6 billion bu. of soybeans (up 24%), 1.7 billion bu. of wheat (up 12%). The department predicts increased harvests of many vegetables and fruits, though in some cases not enough to meet insatiable demand.

Present Wealth. Farmers are reaping some of the highest prices in U.S. history. For example, durum wheat--used in noodles and spaghetti--has sold as high as $9 per bu., almost five times as much as a year earlier. The Department of Agriculture estimates that farmers' overall net income this year will total $25 billion, up more than $5 billion from 1972, which was a year of record prosperity. Exclaims Junaida Dibbet of Sioux Center, Iowa: "I'll tell you how good a year this is! We've been farming for 30 years, and we finally remodeled our house." Adds her husband Richard: "Got me a tractor too, with air conditioning and a radio."

Rural towns are suddenly booming. In Devils Lake, N. Dak., sales have doubled at Bill Bergstrom's Lake Chevrolet, the Western State Bank has a record $8,000,000 in deposits, and the local John Deere dealer cannot keep up with new orders. Perhaps the busiest man in town is Accountant Curtis Brekke, who does the federal tax returns of about 1,000 wheat farmers. This year his clients are obsessed with finding ways to spread out their ample earnings for tax purposes. "For all the years they never had the big money, they didn't pay much income tax, and they think it should stay that way," he says. "The thought of having to pay the Government $5,000 at a shot sends them into a panic." Declares Farmer Bob Garske, 49: "I'd rather hold my wheat and borrow money at 7% to live on than sell it and have to pay a 30% income tax."

Farmers rejoice in their record crops --and incomes--in many ways:

> Bob Plemel Jr., 43, figures that he could gross $100,000 on his share of the 2,300 acres that he farms in Ramsey County, N. Dak. He has set off on a buying spree that city people may consider peculiar. New machines are the Cadillacs of a farmer's life. Already, Plemel has bought a $1,400 gardening tractor for his lawn, a $7,000 utility tractor for his barnyard and a $25,000, four-wheel-drive tractor--complete with air conditioning, stereo and a contour seat designed by President John F. Kennedy's back specialist--for his fields.

> "I've never seen farmers smile as much," says California's Pete Penner with a laugh. "Two years of income in one is bound to produce a lot of happy people." Penner, 41, and his brothers grow grapes, nectarines, plums and peaches on 350 acres in the San Joaquin Valley. Rain ruined 20% of his raisins in 1958 and 1963, hail destroyed half of his plums four years in a row (1967-70), and frost killed 60% of his grapes in 1972. "This is the first time in 18 years that I haven't had frost or hail or blight," he says. After a normal harvest, his share of the farm's gross profit comes to about $25,000; this year he expects it to be $50,000, largely because of a 50% increase in raisin prices. "I'm going to save most of the money. When the price of raisins goes up that much in one year, you know it can't last forever."

> Henry Beyer of Sioux Center, Iowa, bangs his fist on the table and declares: "There isn't a bean of mine the market's gonna see for a while." He expects to harvest 9,500 bu. of soybeans this season and store them in hopes that the price will go even higher than the current $5.45 per bu., up from $3.39 last year. "Maybe it is a kind of luxury farming," he says a little defensively, "but it comes from scrimping for years. We've saved a little money so we don't have to sell the crop at harvest. One thing this country has to get on to--if the farmers have it good, then the nation is going to have it good. There is no new wealth in this country that doesn't come from the land."

That might be hard to demonstrate to the American consumer. The record crop is not expected to lower prices of farm products, and it may not be big enough to replenish the nation's grain reserves. In years past, the nation annually produced enormous surpluses. But foreign demand has cut into them deeply, and there is no sign of an end to that demand--which is a reason that the U.S. trade surplus jumped to $873 million in September, highest for any month in eight years. Exporters have foreign orders for more than 1.3 billion bu. of corn, 636 million bu. of soybeans and more than 930 million bu. of wheat. If filled, they could lead to sizable price increases. In fact, Chicago Commodity Trader Bud Frazier declares: "I don't think there's enough wheat in the country to meet all the commitments now on the books."

There is still hope for the housewife, since not all of those orders will materialize. Fearing that the Government may impose export quotas again or cut off foreign sales entirely, some grain houses have made bogus sales of grain to their overseas subsidiaries. If Washington does not slap on any controls and the exporter ultimately has no buyer, the phantom orders will be canceled.

Farmers have little sympathy for the housewives. Explains Devils Lake's Bob Garske: "I see this Bella Abzug thinks cheap food is a right. Do people really believe that? Do they know we're out here working? Maybe with these prices farmers can live now like city people have been living for years."

Future Bounty. Other farmers are obsessed with the thought voiced by North Dakota Farmer Bob Weed: "It's gotta be temporary. It's just too good to last." Secretary of Agriculture Earl Butz explains: "Farmers remember 1967, when we were talking about the need to feed the world. We drew all the stops on the farm and asked for full production. That was just before the 'green revolution' took hold in India and Pakistan and demand in the U.S. slowed down." The miscalculation created enormous surpluses--and low prices for farmers. But, Butz claims, "the situation is different now. In spite of the current distress in the Middle East, there is a worldwide boom in purchasing power, more stable conditions and long-range prospects for easing of tensions like we haven't had in years."

Indeed, the improvement in the farmer's lot will probably last for many years. Prospects are strong that world demand for food will continue to grow rapidly, auguring a good return for farmers--and stiff prices for shoppers--in the foreseeable future. Simultaneously, farm output will rise because the Government, in a historic and long-overdue policy shift, will no longer pay farmers to hold down production. Butz warns farmers to expect shortages of fertilizers and of propane gas used to dry grains. But barring drought, blight or flood, the men and women on the land can look forward to an even fatter harvest and richer incomes next year.

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