COLUMBUS. Ohio Its
creators call it “Freedom to
Farm.”
Pessimists call it “Freedom to
Fail.”
Big spenders call it “Freedom
to Buy a Pickup.”
Whatever you call it, most eco
nomists agree that the new
“hands-off” U.S. farm policy
means farmers need to take a fresh
lode at risk.
“Risk management is the name
of the new game,” said Allan
Lines, agricultural economist at
Ohio State University. “The risk is
already apparent this planting sea
son. Farmers better be ready to
deal with it”
Eligible farmers who enroll in
the program will receive govern
ment payments for the next seven
years, regardless of what crops
they plant (provided they’re not
plandng fruits or vegetables for
the first time) or what prices they
receive. The government will no
longer step in to control produc
tion, and its role in moderating
prices is greatly reduced.
Risk will hit from several
fronts. Lines said. Legislators
have promised that they will no
longer bail out agriculture during
crop disasters. Unless there’s a
widespread catastrophe (such as
the 1988 drought), they’ll prob
ably stick to their word. Lines
said.
“While the new policy doesn’t
require farmers to buy crop insur
ance, some of the risk could be
abated that way.”
Lines also expects increased
price variability. “Big Uncle is
MAXI/POWER
DIESEL, L.P., NATURAL GAS, AND P.T.O. GENERATORS
MAXlmum Advantages
New Farm Policy Shifts Farm Risk
getting out of the business of man
aging prices. Producers must take
a more active role,” he said.
“Knowing and understanding
when and how to properly use fu
tures, options and other contracts
to fix prices, put floors under
prices and manage basis risk,
takes on a new sense of import
ance.”
The increased risk also means
farmers should pay down their
debt. Lines said. “They need to
use this opportunity to get their fi
nancial house in order. They will
be required to take on a higher lev
el of risk under the new policy, so
they should be in a less leveraged
position.”
That doesn’t mean that invest
ing in farm machinery is a bad op
tion, said Luther Tweeten, another
Ohio State economist.
“Keeping the debt-to-asset ratio
low and keeping liquidity up is
important But farmers could also
use these final government pay
ments to purchase needed form
machinery. Farmers often use
transitory dollars to buy big-ticket
items that can serve them over the
long haul. It’s a smart way to in-
he said.
The new policy will not in
crease the total amount of risk in
farming, but it will shift the nature
of the risk, said Carl Zulauf, also
an Ohio State agricultural eco
nomist. “A lot of people are talk
ing about increased risk, but get
ting the government out of farm
ing will actually reduce some
kinds-of risk,” Zulauf said.
“We won’t have the risk of the
government releasing craps from
POWERfuI Performance Phonei U'TW j^ 7^ 272-6294
public stocks or changing the
amount of acres which a farmer
needs to set aside. At times these
and other government decisions
created a large uncertainty in the
marketplace. So. to say uniformly
that there’s a lot more risk with the
new policy, I don’t know that
that’s true,” he said.
One significant change in risk
comes as farmers pull their plant
ers out of the machinery shed.
Farmers will now need to take a
more active role in making deci
sions for planting. To a large ex
tent, past farm policy dictated how
many acres of each crop farmers
could plant Now farmers will
need to make these decisions
based on expected prices and
Fruit Specialist Joins Extension
CLAYTON, NJ. Dr. Robert
Belding has joined Rutgers Co
operative Extension as a specialist
in pomology, or fruit science.
Belding comes to New Jersey
from North Carolina State Univer
sity where he received his mas
ter’s and doctorate degrees in
horticulture science.
He was an agricultural research
technician at North Carolina State
working on many aspects of horti
cultural management on apples
and peaches. In his new position
he will be working on pre- and
post-harvest physiology of fruit,
primarily peaches.
Specialist Belding will be lo
cated at the Rutgers Research and
Development Center in Upper
Deerfield Township on Northville
Warranty
MardPowar, U.C offer* ■ United to the original user tor two yean or 1500 horns. whichever occurs first
Extended warranties to fiw» yarn an available. A oopy of the complete warranty policy is avaiable on request
other factors.
The resulting uncertainty for
users of grain will create risk for
another sector of agriculture, Zu
lauf said. “Users of field crops are
as concerned about quantity risk
as price risk. Their businesses de
pend on maximizing ’through
put.’”
Crop and livestock farmers may
borrow a page from fruit and ve
getable growers who have long
depended on production contracts
to, in part, address quantity risk,
Zulauf said.
Livestock farmers may begin to
establish contracts with local
fanners to lock up supplies for the
coming year, Zulauf said. And
crop farmers may start thinking of
large livestock farms as another
Road near Bridgeton, he is part of
a trio of fruit scientists and their
staff being located at this station to
help the valuable peach industry
in New Jersey.
“Dr. Belding and his colleagues
Dr. Norman Lalancette ad Dr. Pe
ter Shearer are sorely needed by
our industry in southern New Jer
sey,” said Jerry Free on, agricultur
al agent with Rutgers Cooperative
Extension of Gloucester County.
Gloucester County is the largest
DIESEL GENERATOR kW RATINGS
MAXIPOWER
MODEL
JD-30-D
JD-40-D
JD-60-D
JD-70-D
JD-90-D
JD-100-D
JD-125-D
JD-150-D
JD-180-D
JD-2SO-D
Prime, Portable, or Standby
GENERATORS
MAXIPOWER, founded in 1973, enjoys a strong tradition
of excellence. From its inception, MAXIPOWER has been
a technological leader in the manufacture of engine gensets
MAXIPOWER is committed to manufacturing low cost, no
frills, world class gensets at the lowest cost per kilowatt
hour.
Lancaster Farming, Saturday, June 15, 1095-09
STANDBY RATING
1800 rpm 1500 rpm
100
103
125
125
150
148
180
220
250
maxiAower
' MAXI-POWER, LLC
398MnMi Road, LabmiM, PA ITtti-TDS
processor of their grains, the way
sweetener manufacturers and
ethanol plants are considered.
Financial risk will continue to
loom for agriculture, and in some
ways, more so in these times of
high crop prices, Zulauf said.
“I don’t know many farmers
who went broke because of deci
sions made in times of low prices.
It’s the decisions made in good
times that get people in trouble,”
he said.
“Ultimately the market will re
ward those who keep a lid on the
cash cost of production. If any
thing, the withdrawal of farm pro
grams will only underscore the
importance of managing cash cost
of production.”
peach producing county in New
Jersey and the seventh largest in
the nation.
“The center is only 20 minutes
from Gloucester County’s indus
try and the conditions for fruit re
search are very similar to most of
the growing regions in the south
ern part of the state,” said Frecon.
“The hiring of Dr. Belding
completes an 18-month search for
the right tree fruit people to staff
the center,” said Frecon.
PRIME POWER RATING
1800 rpm 1500 RPM
115
115
135
135
162
200
225