Farm Bureau says ag assets dropped 40 percent
PARK RIDGE, IL - The value
of the nation’s farm assets con
tinued to decline in 1985, falling an
additional $4O billion. Asset values
declined by $lOO billion in 1984
representing a two-year drop of 15
percent. Net farm income should
also fall to $25 billion, the lowest
level in eight years.
According to the American
Farm Bureau Federation, prices
for most farm commodities fell in
1985. “The good news is that farm
production costs for the sector as a
whole also declined in 1985 though
not enough to compensate for the
lower prices,” said Robert Delano,
AFBF president.
Farmers will sell between $136-
$l4O billion worth of farm products
in 1985 down from $142 billion in
1984. Farm production expenses
could fall by as much as $5 billion,
primarily the result of lower in
terest rates and less expensive
energy supplies.
The nation’s farmers registered
record or near record production
in dairy products, com and
soybeans. Ideal weather
throughout most regions of tbe
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country produced larger corn and
soybean crops as the growing
season progressed. Com growers
are expected to harvest 8.72 billion
bushels worth an estimated $21.5
billion dollars. Soybeans, the
nation’s second most valuable
crop, will register an estimated $ll
billion in value from 2.13 billion
bushels. Wheat receipts are
estimated at $7.5 billion from a 2.42
billion bushel crop.
Com, soybeans and wheat also
represent the nation’s leading
export commodities. The decline in
farm export levels is seriously
affecting the nation’s farm
economy and presents a near-term
crisis on the farm market front.
From a high of $44 billion in sales
in 1980, foreign sales slipped to $32
billion in 1985, with a further
decline expected in 1986.
The biggest drop has occurred in
wheat sales. Wheat export com
mitments so far this year are the
lowest in 10 years and about one
half of what they were one year
ago. Weak export sales combined
with large supplies on hand paint
the gloomiest outlook for wheat
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producers. Many countries have
boosted their wheat production
sharply. Global wheat production
has increased 14 percent since
1980. Corn exports are down 1.5
percent; soybeans 13.7 percent and
cotton 13 percent.
Cattle and calves continue to be
the nation’s most valuable farm
commodity. Receipts in 1985 are
expected to total (29.2 billion, a
drop of $1.5 billion from the
previous year. The cattle market
dropped sharply in mid-1985,
aggravated by die marketing of
overweight cattle.
Dairymen produced a record 143
billion pounds of milk in 1985,
worth over $l9 billion. Hog
producers suffered from lower
market prices with the value of
production dropping by nearly $7OO
million to a total of $9 billion. Sheep
producers realized improved
prices with market receipts
climbing to $5OO million, up nearly
7 percent. Poultry production
accounted for $10.5 billion in sales.
Market prices were up for turkey
producers. While prices were
lower for egg and broiler
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A HINAJVCU'£,
operations, producers benefited
from the lower grain prices.
American farmers also
produced an estimated $3.8 billion
worth of cotton. Other crops
registering more than $1 billion in
sales were tobacco, sorghum,
barley, rice, sugar, oranges,
grapes, peanuts, potatoes,
"tomatoes and apples.
Lower farm prices translated
into slowly rising food prices for
consumers. Retail food prices
climbed a modest 2.2 percent in
1985. All the increase in cost oc
curred outside the farm ector. The
farm share of the retail food dollar
stands at 27 percent. Retail food
prices are expected to rise in a
range of 2 to 4 percent in 1986
following closely with the expected
rate of inflation.
For the most part the nation
enjoyed good weather conditions
throughout the growing season.
Drought conditions existed in a
portion of northern plains states.
The only other adverse weather
conditions struck at harvest time
with flooding conditions hitting
West Virginia and other portions
—I
in 1985
ot the eadt coast and gult states,
causing delays in harvest and
some crop losses.
In 1985 farm debt adjustment
became a major concern. Many
farmers and their lenders were
forced to write-down or restruc
ture their debts. An estimated 25
percent of America’s farm
families face serious financial
difficulties.
“The debt problems will con
tinue into 1986,” warned Delano.
“No one knows when or where the
bottom will be reached in land
values. We have some reason to
belive that the decline is beginning
to slow and that land values may
stabilize in 1986. Steps taken
Congress to deal with farm credit
problems should help. But, the
financial stress will continue.
“The action taken to aid the
Farm Credit System was an im
portant first step. This action helps
the System specifically. We must,
however, be sure that the longer
term financial interests of all
farmers are met as well, with
viable and diversified sources of
farm credit.
“The nation’s agriculture is
undergoing many changes. The
booming export markets of the
1970 s have passed and we will not
return soon to the levels reached
then. Future land values will be
based more on farm earnings,”
said Delano, “not speculative
earnings based on increased in
flation. These changes carry
mixed blessings. Estate transfers
will be eased by the change in land
values. Young farmers will have
greater opportunities to become
established. Land rentals should
begin to reflect the new values in
farm production. The adjustments
will be difficult for many fam ts.
“Many of the adjustments will
occur in 1986. Government farm
programs will result in fewer acres
planted overall. The large supplies
of commodities on hand, especially
wheat, will slow any price
recovery brought on by smaller
crops. A weaker dollar will help us
to compete in world markets, if it
is the result of stronger currencies
in foreign countries. Perhaps the
greatest response will come in the
area of specialty crops,” said
Delano.
“Protectionist legislation poses
a serious threat to American
agriculture,” the farm leader
warned. “The Asian countries
targeted in the recent textile
restraint bill account for $lO billion
in annual farm export sales. We
would be the first to suffer in trade
retaliation. The President’s veto of
the only major protectionist bill to
come out of Congress was a key
victory for agriculture.
“Trade, federal tax and spen
ding policy and environmental
issues will be among the other
major issues facing agriculture in
1986,” Delano added.