DlO-LancMtM- Fanning Saturday, April 26,1986 i Pipeline -XT.' Buyout to save $9 billion The U.S. Government will be paying 14,000 fanners $l.B billion to slaughter or export their dairy cattle, and to stay out of dairying for five years. That’s only part of the story. The termination of these 14,000 dairy herds, youngstock and all, will prevent - rather permanently - the 12.3 billion lbs. of milk, produced annually by these herds, from ever entering the U.S. market, not just for one year, but forever. To the U.S. Government this represents an annual savings of about $2.1 billion in the purchase of surplus dairy products, or $10.5 billion in five years. It costs the Government about $l7 to purchase, store and handle 100 lbs. of surplus milk in the form of other dairy products. About 38% of the $l.B billion to be paid to the farmers participating in the program will come from assessments levied upon the remainder of the dairymen who continue to produce milk. These assessments will total about $684 million. The $l.B billion farmers will receive is taxable income. For purpose of illustration, let’s assume these farmers will be in a 20 percent tax bracket. That being the case, $360 million will be returned to the Government in the form of taxes. Thus, dairymen will be contributing about 1 billion of the $l.B billion; the Government’s share would be about $BOO million. To help prevent slaughtered dairy cattle from depressing the beef market, the Government is also required to purchase an extra 400 million lbs. of red meat during the next five years. I don’t know what it costs the Government to buy a pound of red meat. If it is $2 per pound, the total cost would be $BOO million. Thus, the Govern ment’s total real cost might be SATISFACTION GUARANTEED name - For further details, write ADDRESS CITY STATE PHONE Models and irices available on request. By Glenn A. Shirk I about $1.6 billion (a net payment of $BOO million to dairymen plus $BOO million for meat). What this really means is, the Government will be buying (preventing) five years worth of surplus production, which would have cost them $10.5 billion. They will be spending about $1.6 billion to accomplish this. That represents a potential savings of approximately $8.9 billion; with inflation, it could be more than this. The average farmer par ticipating in the dairy herd buyout program and 50 cows; he will receive a total of about $131,000 in payments over a five year period of time. However, that is not all profit. Requiring a farmer to sell his dairy herd for non-dairy purposes is similar to asking someone to sell their home for half price. With the exception of a few cattle that are exported, slaughtered cattle are selling for much less than their true dairy value. To an averge farmer this could be a $3O to 50,000 loss of potential income. The rental value and sale value of the farm are also reduced since the dairy facilities cannot be used for dairy purposes for five years. In addition, farm values in general, are depressed at the present time. If he sells his farm now, he takes an additional licking on price. Because of depressed farm values, most participants will probably elect to keep their farms. If they keep their farm they can either rent it to someone else or continue to operate it themselves. If they rent out the farm, they may not be able to rent out the buildings because of the restrictions on use of the dairy facilities. This loss in rental income could total $3O - Extension Dairy Agent Not All Profit volume mist blower does more work and with 1/10 the amount ol water that is required with conventional sprayers A mist blower can cover up to 50 acres per hour and cover up to 100 foot swath Different models to choose from include • 3-pomt hook-up PTO powered (one-sided or dual-sided) • 3-pomt hook-up, or pickup models engine powered • Orchard and vineyard models (one-sided and dual-sided) • Vegetable models (one-sided and dual-sided) yxAssc 171 Quarry Rd., Leola, PA 17540 717/656-2120 Dealership inquiries welcome. 1 50,000 in five years. In addition to his, they’ll have the expense of taxes, insurance and maintenance on buildings, even though they are not being used. Many of them will also have some debt servicing costs. Many farmers plan to use these payments to reduce debt loads. If they operate the farm themselves, they may have ad ditional costs if they convert to a new enterprise. And, as they venture into a new enterprise, they may not show a profit for the first year or two. Right now, it is very ' difficult to find profitable alter natives in agriculture. These were a few of the many factors that participating farmers had to consider as they prepared and submitted bids for being “bought out.” As one might expect these bids varied considerably from farm to farm. The Government’s goal was to terminate about 12 billion pounds of milk production potential by accepting reasonable buyout bids from farmers. This, they ac complished. The top bid price accepted was $22.50 per cwt. The average bid price accepted was $14.88, $2.12 less than the $l7 it normally costs the Government for each 100 pounds of surplus milk. Many of the dairymen, whose buyout bids were accepted, are hard working, honest individuals GeMi bkid loaders are rugged durable machines that pedorm a wide vanpfv of |Obs after day and >ear after year You may buy it to move manure but youli soon discover its the one machine youii use every day tor all types of |Obs Fingertip control Gehis prelusive Load Irak Tbar control system is easy to learn to operate And Load Irak delivers more precise bucket and drive control The side mounted controls are set at natural hand angles The left Tbar controls steering and traction the right one controls bucket and boom And the built m secondary operator restraint seat bar serves as a comfortable padded arm rest Operating convenience Gehl skid loaders feature a se't leveling lift action to Keep the load m the bucket not m your lap And you II appreciate the easy to view overhead mstm (nvestingtodayinjhe future of agriculture GEHL A.L. HERR ft BRO. Quarryville, PA 717-786-3521 STOUFFER BROS. INC. Chambersburg, PA 717-263-8424 UMBERGER’S OF FONTANA Lebanon, PA 717-867-5161 PEOPLE'S SALES ft SERVICE Oakland Mills, PA 717-463-2735 who are genuinely interested in being questioned, and their their community and the welfare privacy is being invaded. That’s of their neighbors. mighty unfair to those who are honestly trying to help the dairy They are also concerned about situation. the dairy industry, the milk sur plus situation, and the Govern mental cost of purchasing surplus Whether or not the dairy herd dairy products and supporting buyout program will overcome the milk prices. They realize if they niilk surplus situation remains to continue to dairy they are con- be seen - ne thing is certain, the tributing to the surplus problem, herds that have been slaughtered To exit from dairying, with no won’t be creating any milk sur restrictions, they know that their plusses! Future surplusses will cows and their facilities would depend largely upon the number of probably be used by someone else additional dairymen who will exit to continue producing milk; that from the business, and on milk wouldn’t help correct the surplus production from those who remain problem. in business. Dairying has provided these families a livelihood over the years. Now, they consider it a good deed to participate in the dairy herd buyout program, to return a favor to the industry in its time of need so it in turn can help provide a future for other families interested in dairying. They are not looking to get rich off of the Government; they only want to recover some of the extra costs that are associated with getting out of dairying under the strict guidelines set by the Government. Unfortunately, the integrity of many of these individuals is now Gehl buHcls it strong, Load-Trak {V tf* makes it easy ' Contact your Gehl dealer for complete details LEBANON VALLEY PETERMAN FARM MILLER EQUIPMENT IMPLEMENT CO., INC. EQUIPMENT, INC. CO. Richland, PA Carlisle, PA Bechtelsville, PA 717-866-7518 717-249-5338 215-845-2911 GEO. W. KINSMAN, ING. Honesdale, PA 717-253-3440 HINES EQUIPMENT Cresson, PA 814-886-4183 Bel (wood 814-742-8171 mentation (he rollback cab for eisy ser the convenient engine access and thf Quick Loo attachment system Full line Theres a Gehl skid loader to match your unload Seven models range from 750 to 2 050 pound SAE lift capacities Ask your Gehl dealer for a hands on demonstration today Gehl Company West Bend Wl 53095 WAIVER OF FINANCE UNTIL JANUARY 1. 1987 ON ALL GEHL EQUIPMENT WITH 30% DOWN PAYMENT, CASH OR TRADE-IN BINKLEY ft HURST BROS. Lititz, PA 717-626-4705 BENNETT MACHINE CO. Milford, DE 302-422-4837 ECKROTH BROS. FARM EQUIPMENT New Ringgold, PA 717-943-2131 As the dairy economy tightens, many dairymen find it necessary to increase milk output in an effort to keep current on the bills. If surplusses continue the milk support price will be triggered downward. Further reductions, or assessments, can be expected too as a result of Gramm-Rudman legislation. As prices continue to fall, more and more dairymen will exit. That may help offset in creased production from other dairymen. Some people would like to implement a system of supply management; others prefer a free market. What lies ahead remains to be seen. . S k A. ’ \ ELDER SALES & SERVICE, INC Stoneboro. PA 412-376-3740 EQUIPMENT, INC. Springs, PA 814-662-2222 NICHOLS FARM EQUIPMENT Bloomsburg, PA 717-784-7731 R.R. WALKER ft SON Edinboro, PA 814-734-1552 IprsMMK Mna STJSJhs EOWM*KT» Dayton, PA 412-783-6990 SPRINGS
Significant historical Pennsylvania newspapers