Farmers
(Continued From Page 12)
record. The September crop
report indicates the corn crop
will set a record at 5.8 billion
bushels, up about four percent
from a year ago. The soybean
estimate is set at 1.6 billion
bushels, up nearly 25 percent
from last year’s record-. Despite
the record prospects for 1973,
grain prices continue at levels
which are so high that many
farmers feel they cannot afford to
expand livestock production.
Grain production in 1974 is
expected to be substantially
above this year. Early estimates
place next year’s increase in
wheat production at 110 million
bushels. The corn crop should
increase 580 million bushels to a
total of 6.3 billion bushels. This
would be a crop nearly 85 percent
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larger than was produced just 10
years earlier. Total feed grain
production in 1974 may be 8 to 10
percent larger than the 1973
record. Soybean acreage in 1974,
however, is not expected to be as
large as was planted this year. It
is expected that some soybean
land will be diverted to cotton
production in 1974. By 1985 grain
production could be more than
two-fifths higher than today.
Soybean production will probably
double. Feed grain" production
might increase by a half and
wheat production could easily
increase by one-third. Even with
strong export markets there will
be years when unneeded wheat
and feed grains will begin to
accumulate.
Changed government policy
To assure that big crops are
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produced in 1974 the government
has ended restrictive programs
to cut back agricultural output.
The 1974 feed grain program is
designed to encourage producers
to go “all out” in expanding
production. There will be no set
aside requirement and no
restictions on acreage planted for
1974 and there will be no con
serving base for the duration of
the Agricultural and Consumer
Protection Act of 1973. Farmers
are likely to respond to this new
freedom in the Farm Program by
planting about 11.4 million more
acres to wheat and com in the
1974 crop year.
World demand for grain has
increased sharply in the past
year. The question is “Will
foreign demand remain high now
that prices have moved to very
high levels?” These high prices
will probably discourage future
grain sales from the U.S. Im
porting nations, in addition to
cutting back their grain orders as
much as possible, will do their
utmost to increase their own
grain production. It is reported
that 1973 grain harvest in the
Soviet Union has been excellent
and will nearly meet the target
levels. It is true that U.S.
producers will go all out to
produce more grain in the next
few years, but we should also
recognize that other exporting
nations, which compete with us
for world markets, will be in
creasing their grain production
too.
Uncertainties
Much of the so-called increased
need for U.S. grain conies from
two general sources: (1) The
Soviet Union and the Peoples
Republic of China have recently
become big customers for U.S.
grains and (2) the threat of
famine in many of the emerging
nations.
Trade relations with the Soviet
Union have come a long way in
the past year but legislation to
normalize trade relations with
the Soviets has been stalled in
Congress. While normal trade
between the two countries may
not develop soon, it will
ultimately imporve. The Soviet
Union is interested in Western
capital and technology and U.S.
businessmen want to sell to the
Russians. At this point it would
appear that there are so many
uncertainties regarding trade
with the Russians and Chinese
that it will be difficult to make
long-range production plans on
Lancaster Farming, Saturday, December 15,1973
the assumption that these two
countries will or will not be
customers. We just don’t know
whether last year’s thaw in
relations and our big grain sale
will prove to be the beginning of
bigger sales or just a brief thaw
in the Cold War.
The threat of famine in parts of
India, Pakistan, Bangladesh, and
the African drought belt puts the
U.S. in a dilemma. If drought
conditions worsen in these
nations, it is reported that 10 to 30
million people could starve. Only
the well-fed nations, particularly
the U.S., could help solve such a
disaster if it occurs. With our
balance of payments problem,
the U.S. is under a great deal of
pressure to sell as much grain as
possible, and may not have as
much left over to donate to
countries faced with famine.
Other wealthier nations may be
faced with the same dilemma.
Can the wealthier nations
cooperate in developing
programs to assist the nations
where drought threatens? The
richer nations may need to
simplify their diets and waste
less food to help provide relief for
less fortunate areas.
Prospects for the future
Strong export demand is ex
pected to continue during the
coming year. Possible more than
a billion bushels of wheat has
already been committed to
foreign markets. Significantly
about one-fourth of this is not
marked for any destination. It
may be in the hands of traders
and speculators who will later
dump it if the price drops.
Preliminary export com
mitments are equivalent to about
60 percent of the 1973 wheat
harvest. In normal years the
nation exports about 40 percent of
the wheat crop. Despite the in
creased level of exports, there is
little likelihood that export
embargos will be used to restrict
exports of grain to incure
adequate supplies for domestic
use. Carryover stocks of wheat
will probably not be much more
than 250 million bushels when
harvest of the 1974 crop begins.
Thus there will be adequate
supplies for domestic use but the
close supply-demand relationship
will keep prices high as com
pared to other years when supply
greatly exceeded demand. About
530 million bushels of wheat will
be used for food in the U.S. in the
73-74 year.
Strong demand and high prices
for agricultural products will aid
in setting a new farm income
record for 1973. Net farm income
is expected to increase about 21
percent from last year’s record
$19.7 billion. The largest
benefactors will be the grain
producers. Improved incomes
will encourage grain producers to
expand production next year.
The biggest user of grain in the
U.S. is the livestock industry.
Because grain prices have risen
more than livestock prices in the
past year, livestock producers
are not optimistic about future
profitability of livestock
production. Through hog prices
on September first, at $52 per
hundredweight, were $23 per
hundred above a year earlier,
farmers indicated they would not
expand hog numbers this fall and
winter. The hog-corn ratio, a
rough measure of hog
profitability, was 21 in September
compared to the more favorable
24 a year earlier. Recent
memories of the hardships
caused by price freezes, ceilings,
consumer boycotts, and rapidly
rising feed prices have also
undoubtedly influenced farmers’
decisions to hold back on ex
pansion. Many probably reason
“Why take all of that risk in
livestock when I can just sell my
grain at a high price?”
Beef production will increase
over the next two-year period
because the calves have already
been born which will make the
beef supply during much of this
period. The 1973 beef calf crop
increased about 6 percent, the
largest increase in 9 years. If
profit margins are too narrow,
however, many of these animals
will not be purchased for fini
‘ shing in feedlots.
During the coming year
Americans will not go hungry.
Despite a 60 percent increase in
exports of agricultural products
there will still be enough for
domestic use—at relatively high
prices. Higher export activity
will likely lead to a favorable
balance of payments in 1974. This
will enable Americans to con
tinue to purchase the imported
goods and to continue to travel in
foreign lands which we have
come to enjoy so much in recent
years.
As the inflationary forces in the
economy continue to increase we
will see wages and salaries
increase substantially. Food
prices and taxes will increase but
not as much as wages. But the
consumer still fretful about
higher prices of food asks, “When
will we be able to buy steak again
for 89 cents a pound? ” The 89 cent
steak is probably as far away as
the 5 percent home mortgage, a
new Buick for $2300, and a
minimum wage of 90 cents per
hour. There is no food shortage in
sight in the U.S. unless con
sumers again exert pressure on
the government for price controls
as they did this past year.
13