| FARGO -- North Dakota farmers may be unpleasantly surprised
when they sit down this winter to plan next year's budget, a farm
management specialist says.
Federal payments to producers will be 20 percent less than what they
were this year -- and fuel and fertilizer prices will be higher, said Andy
Swenson, with the North Dakota State University Extension Service.
"As of now, there is a pretty good bump in the fuel prices, and
the fertilizer prices are up quite a bit from what they were the year
before," Swenson said.
But he said the larger problem for cash flow will be the reduced
federal payments. The drop is the biggest in the seven-year schedule of
reduced assistance set out in the 1996 farm bill, Swenson said.
Payments to North Dakota growers will fall from $225 million this year
to $183 million in 2001, he said. The amount received by individual
farmers depends on how many acres they have planted and what their yields
have been.
The 1996 farm law, known as "Freedom to Farm," was designed
to ease farmers' long-term dependence on the government by ending a
decades-old system of production controls and lowering federal price
supports. In turn, farmers were guaranteed continued -- but diminishing --
payments through 2002. They also would be able to plant whatever they
liked, without the risk of losing government subsidies.
Falling funds
The payments dropped about 10 percent from 1999 to 2000 -- from $241
million to $225 million in North Dakota. The drop from this year to next
year is 20 percent.
The law has been criticized since 1998, when commodity prices fell and
farmers' payments remained fixed to the 1996 schedule, which did not allow
for any adjustment for market prices.
Swenson said a key factor in producers' bottom lines next year will be
whether Congress passes supplemental assistance for farmers. The last
three years, lawmakers have approved bailout packages designed to make up
for low commodity markets.
"That's been the wild card the last couple years, with these low
crop prices," Swenson said.
North Dakota growers received market loss assistance payments of $241
million for 1999 and 2000, he said.
Whether such a payment is approved for 2001 is the "$241 million
political question" for North Dakota producers, Swenson said.
Sen. Byron Dorgan, D-N.D., said the market loss payments have passed
relatively easily, and he expects the same next year.
"I sure hope there's some market loss assistance," Dorgan
said. He said "it's pretty much accepted" among lawmakers that
the payments are necessary.
The problem for growers, Dorgan said, is that the funds aren't approved
until late spring or early summer, when supplemental appropriations
legislation is considered. That leaves farmers with little information
with which to plan next year's budget.
Whether the farm law should be replaced or fixed is a contentious
political issue.
Democrats, including Dorgan, are critical of the law. They say
Republicans -- who wrote the bill -- cut a needed safety net from under
farmers. Republicans counter that export policies have not been aggressive
enough and have failed to open foreign markets to U.S. farmers, which was
critical to the law's success.
Foreign governments' continued support for their growers hinders the
sale of American commodities, Swenson said.
"If you unilaterally disarm, you put producers at a
disadvantage," he said. |