As winter settles in on the Plains, we turn our thoughts to holiday cheer, family gatherings and, oh yeah, planning for next year.
If you are a farmer who plants spring crops, what are you going to do next year that is different from what you did this year? If your answer is "nothing," then how do expect the outcome to be any different than the price you received this harvest?
Farmers tell me that low prices for crops and very large government payments can't go on forever, but they are not inclined to change their cropping practices to bring surpluses down, because they are locked into planting a certain acreage to corn every year.
An Iowa commodity broker has been publicizing a concept called "Plan B." He says it is called Plan B, because "Plan A isn't working anymore." The idea is that a farmer who rotates between corn and soybeans should plant at least two-thirds of his acres to soybeans. The loan rate on soybeans is $5.26, in many areas, and almost certainly higher than the cash price soybeans will reach in 2001. If a farmer shorts his corn acreage, he eliminates much of his input costs. Soybeans have less need for fertilizer, since they are a legume and cost less to produce, transport and store. The reduced corn acreage, according to the author of the plan, would drop the total corn crop by about 3 billion bushels. The supply reduction should make the price rise sharply. The Plan B philosophy also would impact competitors in South America. Since U.S. soybean supplies would rise sharply, the cash price would fall and place the competition in a difficult position in world trade.
The Freedom to Farm program allows "flexibility" and planting more beans and less corn would be within its bounds. It might even save the government money by reducing the amount of Loan Deficiency Payment (LDP) on corn to offset the higher total payments on soybeans. A farmer making an individual decision without any written pledge or membership in a supporting organization would not be "colluding," because he made the decision on its own merits. He might cite the cost of fertilizer or fuel or limited availability of funds as the reason for shifting to a lower cost crop. He could say that it was done in the national interest, as a means to keep South American acres in cocoa and not convert them to soybeans.
Sounds good, right? So why don't you do it? Farmers always have made decisions that are good for them individually, but never good collectively. There is legal proof of that in the Capper Volstead Act. It allows farmers to collude, if they do not affect price. Dr. Neil Harl, Iowa State University agriculture economist, says the collusion clause has never been litigated, because farmers have never cooperated to raise prices.
Farmers hold their future in their own hands. Neither government nor industry can exploit a farmer who chooses not to produce. But farmers are only rebellious in their words, not their actions. The farm strike of 1977 was held in the winter. When spring came in 1978, crops were planted. I expect the same will happen this year. Even the National Farmer's Organization (NFO), in its wildest years, did not get enough participation in milk dumping to affect price.
As you turn to your planning decisions for next year, ask yourself why you do what you do. Be introspective, and dig deep into the logic of business that surely resides in there, in the layer below the culture of farming. Don't let the looks of neighbors driving by slow and inspecting your fields deter you from unconventional actions. Maybe your only action will be to write your representative and senators to say what you want the 2002 farm bill to do for you.
Keep in mind that a definition of insanity is doing the same thing year after year and expecting different results.--kr.
Editor's note: Ken Root is host of AgriTalk. He is an Oklahoma native and worked in Kansas for seven years as a farm news broadcaster. He has been a broadcast and agribusiness professional for 26 years, with a portion of the time spent in Oklahoma, New Jersey and Washington, DC. AgriTalk is a live, call in talk show heard across the country Monday through Friday, at 10:06 to 11 a.m. Central time, on 115 affiliate stations and the Internet, at agritalk.com.