Resolved: That the United States should substantially change its federal agricultural policy.

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Source: Successful Farming, August 2000 v98 i9 p9.

Title: Here's one more piece of the puzzle for making things better.(land
idling and interest rates)(Brief Article)
Author: Dan Looker

Full Text COPYRIGHT 2000 Meredith Corporation

Craig Blindert is a man caught in the middle. The South Dakota farmer is behind an idea called Flexible Fallow. It falls between pro- and anti- Freedom to Farm camps. It would allow you to enter a voluntary land idling program and be paid a higher loan rate if you don't plant part of a crop's intended acreage. For most crops, the program would start with today's loan rates on farms not using Flexible Fallow and pay progressively higher rates the more land you idle, up to 30% of a crop's acreage. On corn, the top loan rate would be $2.75 a bushel if you idle 30% of corn acres.

Blindert worked with fellow South Dakotan Phil Cyre to polish up and promote his idea, and in two years he's been remarkably successful. Cotton farmers in Texas like it. The South Dakota Farmers Union backs it. Some Farm Bureau members in Illinois are giving it a look.

Blindert sees his idea as market oriented. The USDA wouldn't decide whether to have a set-aside or its size. Individual farmers would decide and enroll only if it paid. Marketing loans and Agricultural Market Transition Act payments would continue if the idea becomes law before the current Farm Bill expires. His idea is would be an addition to Freedom to Farm.

The challenge for Blindert is to convince National Farmers Union that this isn't a "set-aside lite" that won't really control what could be a scary, price depressing buildup in stocks. His other challenge is convincing Farm Bureau to work for his idea, when many of its members say they're opposed to any kind of set-aside at all. The fear is that idling land here just encourages more production in Brazil and elsewhere.

This isn't relying on big government

The truth is that Blindert's idea is a modest proposal that could help in a lot of ways. It's more market oriented than recent farm aid. It starts with current loan rates and works up to still modest levels. If too many farmers decided to enter the program, prices would rise so much that it would be more profitable to go back to full production. The program is most likely to be attractive in areas with more marginal land, says Iowa State University economist Neil Harl.

[Graphic omitted]A study of Flexible Fallow by the University of Missouri's Food and Agricultural Policy Research Institute shows how modest this program would be. It projects an increase in U.S. net farm income of $4.8 billion a year from 2000 through 2008. That's less than the $7.1 billion in emergency farm aid passed by Congress this year. Flexible Fallow is a relative bargain for Uncle Sam, costing $2.5 billion. Yet it's better than a 10% pay raise for you with USDA forecasting net farm income this year at $40 billion.

The marketplace still rules, but this helps

Does this mean I suddenly think federal programs are the answer for everything? Hardly. Real long-term farm prosperity will come from two things: building demand, and increasing your bargaining power. More exports, perhaps to China or Cuba, will help increase demand. So will new uses for farm products. Cargill-Dow's plant to make plastics from corn at Blair, Nebraska, is a good example.

My guess is that farmers near the Blair processing plant will never enter the Flexible Fallow program because it won't pay enough. The same will be true for Illinois farmers near river terminals that supply grain to new markets overseas. Economist Harl says there's no historical evidence that a modest program like this one would boost acres in Brazil, either.

On the other hand, Flexible Fallow would give producers some ability to manage excess inventory. And that modest control will enhance your bargaining power. Here are two examples.

* Niche markets. By definition, they're small. When prices of most commodities are depressed, niche markets look better to a lot of other producers. Those farmers can quickly overwhelm niches, depressing prices there, too. That has already happened with organic vegetables, for example. In the last two years, premiums for them fell from 25% over conventional markets to 10%. Slightly higher grain prices will take pressure off niche markets, which are easier to organize into bargaining co-ops than widely grown commodities.

* Livestock. More than cheap grain drives expansion in hogs and dairies. But slightly higher grain prices might slow that expansion. Slower expansion would give new hog coops for independent farmers more bargaining clout.

I still believe that stronger antitrust laws and bargaining laws are vital for you to get more from the marketplace. But Blindert's idea fits into the puzzle, too. I urge you to support it. You can e-mail him at blindagy@triotel.net. If you do, be patient.; he's a farmer, not a lobbyist. If he's in the middle of harvest, it may take awhile to get back to you.

 
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