Ac; Policy Fotum
THE SECRETARY
AND FARM POLICY
For the first time in 23 years, a
secretary of agriculture has resigned in
the middle of a presidential term All
the reasons probably will never be
known But 1972 is an election year,
record wheat and corn crops were pro
duced in the first year of a “new” farm
program designed to stabilize prices
and incomes, and Midwest corn prices
plunged below $ 1
Senate hearings on the appointment
of Earl Butz gave office seekers a
chance to show concern for farmers.
And the controversy that developed
suggests that farm policy will be a key
election issue.
Remember, however, that no matter
who is Secretary of Agriculture, Con
gress holds high cards in determining
many policies he carries out. Even the
flexibility in administering the Agri
cultural Act of 1970 depends on money
appropriated by Congress.
The options open to the Secretary
under the present law include: (1) gov
ernment buying of feed grams and
wheat to take them off the market, (2)
raising loan rates, and (3) increasing
the set aside for 1972 plantings.
Greatly increasing government hold
ings of feed grains and wheat boosts
storage costs, and eventually such
stocks move back into the market to
depress prices. The experiences be
tween 1960 and 1965 clearly showed
the limitations to the government’s role
in storing and pricing grains
Raising support prices would be at
tractive to some farmers But it would
require more control of production than
other farmers want Raising payment
rates would retire more acres but the
higher government costs could bring
adverse public reaction against all price
stabilization programs
Plain Talk About
FINANCIAL STATEMENTS
JjnHpHk The bank needs a new financial statement from
m each borrower every year The examiners require it,
and you and the bank need it to understand where
you are going financially The best way to determine
► - where you are going is to compare where you are
L financially with where you were last year and five
jk r >.. You should prepare your statement about the same
time every year because inventories of gram, feed
and livestock will be in about the same relationship
Bucher each year The exact date can and should vary accord
ing to your plans, but an effort should be made to prepare the new statement
the same month each year If you are to have a good view of your progress,
you must keep a consistent plan for reporting asset values and debts
There is no best way to place value on equipment, but many customers
like to carry the current value the same as they use for income tax purposes
The pricing of gram and livestock should be at market value
The hardest job is to place a value on real estate owned There is more
misunderstanding regarding the valuation of real estate than any other asset
Most bankers prefer to list the real estate at its cost plus capital improve
ments made This figure may well be less than the current market value How
ever, reporting the value this way makes it easy to see how much you have
increased your net worth due to retained earnings This is important because
it shows how much profit you have made and have been able to save More
important, it shows if you can repay your loans out of profit or have to liqui
date assets to make the payment
If you write up the land to its current value due to inflation, your financial
statement will look a lot better, but don't be fooled by the increase in net
worth due to rising land prices If you do not write up land values, then both
you and your banker should make a record of its current value to determine
your true net worth because this is one of the figures you need when deter
mining how much you can borrow
For a specific loan, it may not be necessary to list all assets, but you really
gam nothing by withholding information You should always list all debts
large, small and in between The only way a banker can give the kind of fi
nancial help a farmer needs is to provide a complete financial statement
* Robert 0 Bucher Agricultural Relations Officer
Commonwealth National JV
Agri-Loan Corp.
h Nil a A 9 ri ‘ Loan Corp is a subsidiary of Commonwealth National
LmiiLTZ JrP ° S f ,s '° serve the f,nanc,a ' needs of the South Central Pennsylvania
gncultural community Ask at your nearest Commonwealth office, or call Mr Robert P
Bucher, Manager, direct, collect, in Lancaster (717) 393-5601, ext 278