A24—Lancaster Farming, Saturday,4iwemb»r 21,19»1 Inter-State annual (Continued from Page Al) the current support price equals 72 5 percent The conference committee agreed on an annual adjustment on October 1,1983 to 70 percent parity level However, if the US. Secretary of Agriculture believes CCC purchases will fall below 4 billion pounds milk equivalent in 1983, he can readjust milk supports to 75 percent of parity The following year, the agriculture secretary will move dairy supports to 70 percent parity on October 1, 1984, unless CCC removals fall below 3.5 billion pounds of milk equivalent. In that case the Secretary must set sup port of 75 percent parity. October 1985 will require another adjustment at 70 percent parity, unless CCC purchases are less than 269 billion pounds of milk equivalent The Secretary must then set supports at 75 percent of parity. Following the committee’s completion of the Farm Bill titles, the Bill will be sent back to the U.S House and Senate for ratification. "The Bill may very well not pass the House and very possibly will be vetoed by the president, ”Lyng reported. Earlier this year, President Reagan signed legislation that eliminated the April 1 adjustment that would have provided support at 80 percent parity. "We had hoped that would have slowed down the flow of milk but it didn’t,” the Deputy Secretary said "As a result,” he continued, “we’ve accumulated butter and powder in unprecedented amounts.” Lyng explained the government is currently paying million a day in interest on CCC purchases. "We don’t know what to do with to giving surplus DC If numbers, down from around 30 America’s crops and livestock nroducts to schools and in- present trends continue, nearly -percent now. By then, farms with annual sales stitutions Lyng explained the one out o{ every three of today’s “Many medium-size farms seem of $lOO,OOO or more will produce government attempted to offer the farms may not be around by the to be too large for part-time far- virtually all the food going into surplus up for unrestricted trade turn of the century. mmg and too small for efficient commercial marketing channels below world market price. But not fbe P rune culprit won’t be urban full-time farming,” Coffman says The dimished role ot small farms suprismgly as in the New Zealand sprawl. Most of the decline in the I" the future, they may also fail to will partly retlect their size Small butter deal' the government drew number of farms will come as serve as a transition to large tarms ot the year 2000 will be very complaints’ larger units absorb smaller ones, farms “Such farms often are small according to projections that Much of the butter sold to New resulting in an increasing con- unable to generate the revenue the largest million farms will Zealand said Lyng was3o months centration of farmland and farm necessary for growth,” according operate almost all of the nation’s old, lower in fat than most butter Production among the biggest toCoffman farmland Three-fourths of the used overseas and salted operations. On the other hand, the number of farmland will be in the hands of the “New Zealand is now having Of course, these projections are large farms (gross annual sales of top 200,000 operators trouble getting rid of the butter and by no means inevitable, as USDA $lOO,OOO or more) will grow Total farm wealth will show a doesn't ** want anymore ” Lyng economist George Coffman points sharply There may be about four similar pattern of concentration note( j ’ out Farm policies, the economy, tunes as many by the turn of the Equity capital (farmers’ ownership Although U S dairy prices are ener gy costs - technology, foreign century, and they’ll have-climbed share ot their total assets; was supported at higher levels than marliet developments, and other, to about one out of every three distributed evenly among farm world market bnces Lyng said the perhaps unanticipated, factors will farms from fewer than one out of sales classes in 1978 the small, future holds great’potential tor all influence the future of U S ten today medium and large classes each U S dairy exports - agriculture Many will incorporate to take accounted for about a third of total In suite of I vny’c onmhpr From 1935’s peak of close to 7 advantage of income and US. farm equity. In 20 years, message the Deputy Secretary mllbon ’ U.S farm numbers have inheritance tax laws, but the vast however, two-thirds of the total exnressed ontimism regarding the now dropped below 2Vz million. If majority of farms large and wealth of the farm sector will be in FiJaean economic nnhev the steady decline continues, small will still be family en- farms with sales of $lOO,OOO or •The fSig u> beginning to another half to terpnses - more work” he said. million units may disappear by the Concentration of Output Declining Opportunities Lyng said he is encouraged by year 2000. While much of the move to larger Partly for these reasons, it will the slowly declining interest rates. B y tben ’ the proportion of farms operations will reflect farmers’ become even more difficult for "Inflation is below double digit ln tbe small, medium, and large expansion decisions, price in- -new farmers to get started. They figures ” classes will have changed sub- Ration will also play a role in may need about $2 million in assets • Lyng explained the federal stantially. Small farms (those with pushing farms into larger sales for a farm to generate sales of budget doubled from 1975 to 1981. gross annual 83168 of less than classes Coffman’s projections more than $lOO,OOO, double the "It will not grow at that rate. 520,000) will no longer dominate assume an average annual in- estimated requirements of 1978 hnriopt m rnmmiJ Hnwn a iitiia ”he 0,6 larm count as they do today crease in farm prices of 7.5 percent Of course, capital requirements ’ The projections indicate that about equal to the average rate for small farms wilL be much For several dairy families at- bav ® slipped from about o f thel97o’s lower, and a large percentage of tendme Inter-State’s Annual two-thirds of all U S farms to only Under these conditions, about a operators are now at the age when Meetme the Demitv Secretary’s about balf third of tbe buildu P in larger farms they’ll be retiring sometime in the message came as no sunrise Many will shift out of the small will reflect nothing more than next few decades - “He just drove home the reality larrn class onl y because of com- changes in farm prices A higher However, even when smaller, ot what we have to face ” said mocllt y P rice rises that boost their P nce inflation rate would shift less expensive tracts of farmland Lancaster County dairyman John sales above 520,000 Others will more farms into the largest sales are available for sale or rental, Barley' expand But many small classes, while a lower rate would many aspiring young farmers will "We’ve enjoyed too much operations will be sold or rented to slow the trend face intense competition from government subsidy for too long lar B er forms as their owners retire In either case, U S agricultural established fanners expanding And now it’s time to bite the or move into other occupations production will become in- their operations There may also bullet ” Barley added The may be even creasmgly concentrated among be sales competition from nonfarm Adams County dairyman Tom S reater on medium-size farms fewer and larger farms Recent investors seeking to develop the Clowney said he would have rather 1 520,000 to $99,999 ‘in gross annual figures show that the largest 1 land or rent it to a “proven” heard more solutions from Lyng sales) About half of these farms percent of the farms produce about operator Those who do manage to than problem causes may eltber ‘‘Xpand into —or be a fourth of the nation’s food In 20 enter farming on a small scale will “We’re aware of the surplus and by large farms during years they’ll account for half of be heavily dependent on off-farm we’ve been following the situation A l ® nex t 20 J' ears 11 this happens, U S output, while the income “Very few will succeed in Closely ’’Clowney said midsize units may account for only / smallest 50 percent of our farms making the transition to full-time "But’we have to keep producing about 20 P ercent of total farm-' will produce less than 1 percent-of farming,” Coffman says Most to meet inflationary production costs,” he added Clowney ex plained that to improve the situation, farmers should cull more heavily and concentrate on better crop production to reduce teed costs Lyng’s address highlighted the two-day Inter-State 64th Annual Meeting. The theme for the co-op’s meeting was "A Commitment to Progress." "Reflecting upon last year’s events, Inter-State has turned challenges into marketing op portunities for you, the Inter-State member,” said president Robert B. McSparran speaking before the more than 1,200 IMPCO members that attended McSparran outlined several marketing challenges tackled by Inter-State in the past year He cited the expansion of service in the Federal Order No 2 market, a capital retention program and the sole ownership of Holly Milk ”H oily Milk Cooperative has demonstrated its ability to con tibute to effective marketing,” saidivoV Otto, Jr past president of Holly’s Board of Directors Otto received a plaque from Inter-State tor lus sendee over the past years. "The greatest gift to me is that Holly can be an operation we can really be proud of,” Otto com mented. Otto explained that sales at Holly exceeded $75 million in 1980 The plant processed more that 450 million pounds of milk for the fiscal year ending this past July. Inter-State’s general manager James E. Honan offered a picture of many market changes the co- U.S. farmscape changes meeting op’s 3,200 members will encounter in the future. Honan noted the dosing ol Harbisons Dairies’ bottling plant in Philadelphia, following the lead set by Breumnger’s several years earlier In additon, Atlantic Processing Inc. has obtained the Acme Market bottling contract previously held by Penn Dairies, said Honan. Inter-State, an API member, had supplied milk to Acme on a tolling basis. “Inter-State is in a position to, if availability occurs, to provide milk to Order 2 buyers and/or other buyers in this region,” explained Honan. According to Honan, Inter-State can meet some goals by “going it alone ” He cited Holly ownership as an example. "This ownership provides Inter- State additional bargaining power We have a reasonable market share, and Holly will provide us with the opportunity to maintain it ” However, the general manager admitted that some goals require cooperation. "We needed a market tor Class 1 and Class II milk. API needed the volume to run the Allentown plant efficiently. Both parties bemfit,” noted Honan. "A strong cooperative can follow the path to its own objectives and still work with other cooperatives,” Honan concluded. At press tune, the Inter-State members are slated to hear keynote speaker Susan Fndy, legislative representative for National Milk Producers Federation. Pennsylvania Secretary of Agriculture Penrose Hallowed receives a word of advice from a mechanical friend. Milky the Robot was on hand during Inter-State’s Annual Meeting. to fewer, larger farms small' farms won?t generate enough income to support a family, let alone enough for expansion Also, as many of these units are bought up to expand existing farms, there will be fewer farms around for the future, particularly at the sizes a young person may be able to afford In fact, for every three operators who leave farms with sales of less than $lOO,OOO, only one will begin The total number of new farmers under age>3s, may shrink from about 377,000 just a few years a J ,o to 233,000 by the end of the centtf. y. Of course, the number of large farms will be expanding, but that won’t open many doors for new entrants because the r capital requirements will usually be far beyond their reach Opportunities will be confined mostly to those who inherit a farm, and more often than in the past they’ll be inheriting not an entire farm but partnership or shares in a family farm corporation that’s highly specialized. Specialization dramatically altered the face of U S. agriculture in recent decades, and its effects will grow more pronounced in the future This is partly related to increasingly specialized machinery and equipment and partly to the efficiencies producers obtain by devoting their attention and energy to one product, Coff man says Most large producers will be unwilling to forego the advantages of further specialization because pressures to expand will be greater than ever and opportunities more limited Thus, competition at the top will intensify as control of U S farmland is concentrated among fewer and fewer operations New capital-intensive farming technologies will encourage both the trend to larger farms and the move to greater specialization, larger farms will benefit more from labor-saving technology because they have more to gain (Turn to Page A 25)
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