US farm belt bulges with record wheat crop despite drought

Despite months of well-publicized drought, the US winter wheat harvest now beginning in Southern states is expected to set records. The United States holds a tremendous natural advantage as an agricultural producer: Its croplands stretch from Texas to the Dakotas, from the Carolinas to California. This reach in latitude and longitude within a temperate climate zone virtually guarantees that the country as a whole will yield a respectable crop regardless of adverse conditions affecting some parts of the nation.

Over the past year, dramatic photographs have documented severe crop damage in certain areas. Such evidence can be misleading because even in the best of years, somewhere in the US it is always possible to find farmers with withered fields and a good case for collecting disaster payments.

US Department of Agriculture (USDA) reports released May 11 and 12 on world crop prospects show just how effectively America's geographic hedge is working.

A very dry 1980 did result in crop losses. And farmers planting this month in dried-out fields remain concerned. But losses in states such as North Dakota should be more than offset this year by bumper harvests in other areas.

The USDA forecasts a 2.08 billion bushel 1981 winter wheat crop. This would set a record, 10 percent above the 1980 harvest of this key export crop, which is planted in the fall and harvested each spring and summer.

Late frosts still could reduce winter wheat yields slightly. And it is too early to depend fully on the USDA forecasts for the 1981 corn and soybean crops. Yet the projected 2 billion-bushel soybean crop would be midway between last year's drought-reduced 1.8 billion-bushel crop and the previous year's record 2. 3 billion bushels. The USDA predicts a 7.7 billion bushel corn crop, up from 6. 6 billion last year and close to the bumper 7.9 billion bushels for 1979-80.

The USDA's forecasts of good wheat, corn, and soybean harvests do not mean that farmers and their well-organized lobby groups have nothing to worry about. Poor crops cause problems. But so do bumper crops.

Drought, pest, or storm damage can leave individual farmers without enough of a harvest to sell to cover production costs.

But bumper crops can create oversupply and low prices for farm products.

Carl Schwensen, executive vice-president of the National Association of Wheat Growers, says that "we see indications of a bumper harvest and that is going to produce a record crop and generate overall record supplies in the US." Accordingly, he says, government farm programs will be vital this year "to postpone sales and to isolate excess supplies" by lending money to farmers so that they can store their grain rather than putting it on the market immediately.

As well, Mr. Schwensen says, "We are having a large crop at the same time as the world is expected to produce what could be a record crop, so we don't have prospects of marketing our additional supplies in overseas trade." The USDA projects the world's corn and other coarse grain crops this year will set a record of 777 million metric tons, up from last year's 725 million.

The USDA estimates that the Soviet grain crop this year will be 210 million metric tons, 21 million metric tons above last year and 5 million over the average of the past five years. Better Soviet yields, coupled with the aftermath of the just-ended US embargo on grain sales to the Soviets, Schwensen says, will further limit US farmers' ability to market their grain at a profit.

"As the US restricted its sales, other nations [Argentina, Australia, Canada] have enlarged their grain sales to the Soviet Union and it's our belief that they will want to maintain their expanded share of the Soviet market," Schwensen says."In fact, in Australia and Argentina, the indications are that farmers in those nations will be permanently increasing their acreage, largely for the Soviet market."

American Farm Bureau research economist Ross Korves also predicts that this year's expected bumper harvest will bring problems. With the prospect of "wheat supplies considerably in excess of usage," Mr. Korves says, "I would class the prediction as continued burdensome supplies with pressure on the price." He expects "a depressed market at harvest with the record-sized crop" and greater use of the farmer-owned grain reserve program to keep excess supplies from flooding the market.

Private crop analyst Conrad Leslie in Chicago says that both the USDA prediction of bumper crops and his own more conservative estimate "suggests ample supplies for both US and Soviet needs."

The latest USDA estimates for wheat and corn forecast larger crops than grain traders expected, Mr. Leslie says, "considering the drought that has occurred in the Midwest." The result will be downward pressure on grain prices. But he adds that with continuing frost damage, there may be reductions in wheat yields and that with corn planting delayed in some areas, "It is too early to be optimistic about anything but wheat."

The USDA crop reports brought an immediate response on the trading floors of the Midwest's grain exchanges, with wheat, corn, and soybean prices all dropping.

According to a commodity analyst for one of the leading grain merchants, "You can disagree internally, but you have to trade the USDA numbers." The analyst says he feels that USDA accuracy may be suffering from budgetary cutbacks, but that there's no other system to which traders can turn. So even if the industry remains less sure of bumper US and world harvests this year, bushels of wheat, corn, and soybeans will trade at bargain prices "at least until the next report" --the USDA crop production report coming out June 10. Reagan's plan for social security Currently . . . President's proposals . . . Worker with average income, Worker with average income, retiring at 65 in 1987, would retiring at 65 in 1987, would get $719.00 a month. get $691.90 a month. At 62, retirees get 80% of At 62, retirees get 55% of benefits due them at 65. benefits due them at 65. FICA rate: set at 7.05% of FICA rate: set at 6.45% of taxable taxable wage base in 1985, wage base from 1985 to 2019. 7.15% from 1986-89, 7.65% from 1990-2019. Cost-of-living adjustment 1981 cost-of-living adjustment awarded each July. postponed until October and awarded each October thereafter. Benefits for retirees aged 65 to Penalties for earning outside 71 cut $1 for each $2 of outside income phased out over five earned income. years. Disability benefits based on Disability benefits based only on medical and nonmedical factors. medical factors.