Harvest, With Help From Congress

Congress this week voted for guns and butter. Lots of butter.

Never mind that the dairy spread is causing sticker shock in the nation's supermarkets. Never mind that farmers are getting record prices for milk. In its $6 billion emergency aid package to farmers, passed this week as part of its budget agreement, Congress bestowed an extra $200 million on dairymen - some $2,000 apiece in unexpected bonus money.

"It is surprising," says Terry Francl, senior economist at the American Farm Bureau Federation in Park Ridge, Ill. "Everyone gets at least something."

On its way to socking away its surplus for Social Security and getting government out of agriculture, Congress has taken a detour. So far, it's a small one. The emergency farm aid doesn't substantially change the five-year farm bill passed two years ago. But faced with withering drought in the South, wilting crop prices, and an election year, Congress blinked.

Democrats and Republicans this week hammered out a compromise $520 billion budget package that provides farmers with an extra $5 billion in disaster relief and supplemental compensation for low prices. Farmers also get $1 billion in various tax cuts over five years. President Clinton is expected to sign the measure.

"We haven't gone back to trying to manage the supply" of products, says Darnell Smith, an agricultural expert at Iowa State University in Ames. "This is more of an income-enhancement policy."

But neither conservatives nor liberals are happy with the compromise.

Senate majority leader Trent Lott (R) of Mississippi called the subsidies an "atrocious amount of money." In Missouri, where farmers have seen corn prices fall briefly to levels unseen in three decades, activists grouse that they don't want year-to-year handouts. "We can have any type of farm policy in this country that we want," says Roger Allison, executive director of the Missouri Rural Crisis Center in Columbia, Mo. "But if farmers are going to get these prices, you are going to have to have a supply-management program."

Farmers' concerns are real. "This is one of those years," says Mike Hustedde, a small producer in Fayette who is harvesting soybeans this particular day. "If you can just keep from losing anything, you are going to be doing good."

Two years ago, he saw corn reach $2.90 a bushel; today it hovers around $1.89 after hitting lows of about $1.50 this summer. Two years ago, he sold soybeans for $6.50 a bushel; today, they run about $5.23. He figures the slump has cut his income by $19,000 on the 400 acres of rented ground he farms.

An unusual combination of events caused the price slump that hit almost all farm commodities at the same time. An economically depressed Asia bought fewer farm products. An appreciating dollar made US farm goods less competitive on world markets. And most areas of the world enjoyed bumper harvests.

Unless the world produces a bin-buster crop next year, the worst is probably over. "I think we've bottomed out," adds Mr. Francl. But just as prices aren't likely to fall soon, they're not likely to rise much either in the next 18 months, he adds. "It's going to be a long and slow recovery."