The MacNeil/Lehrer Report; Grain Glut

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broadcasting it's been nice but meaning the house of representatives has debated most of the day and is preparing to pass the nineteen seventy seven farm bill over the objections of its own budget committee that it is inflationary and goes too far in aiding some farmers the omnibus bill covers peanut farming disaster relief sugar subsidies and food stamp reforms among other things but one of the most controversial part is a substantial increase in support prices for wheat farmers similar legislation has already passed the senate president

carter who were first threatened to veto the increases is now reported ready to accept the legislation has apparently changed his mind wheat farmers are suffering because a huge growing surplus has driven prices down three years ago they were selling weed at more than four fifty abortion and making a profit today they're lucky to get half that and they're losing money after the massive weed sale to russia in nineteen seventy two farmers were encouraged to plant more to feed the world they did that this year all major grain producing countries are enjoying a bumper harvest and demand has fallen critics of the new farm bill claim that dealing with the grain but by getting the farmers more government aid will hurt consumers and encourage more overproduction tonight the consequences of the growing up and how the government should deal with it with us that station k u o n tv in lincoln nebraska is jane leavy a reporter for nebraska public television and sitting in for jim lehrer in washington is reporter nancy get answered conventional wisdom says the farmers blamed his

bad weather but this year farmers are suffering the effects of favorable climate adequate rainfall has raised the worldwide production of the week some sixteen percent over nineteen seventy six canada harvested a record crop in the soviet union the largest grower in consumer of we increase its production by fifty percent this means of the international demand for us wheat has fallen off so that farmers who normally export sixty percent of their crop now expect to sell less than half overseas and while the sluggish demand has forced wheat prices down production costs are up since nineteen seventy three the price of fertilizer his double energy costs are up by half farm machinery is forty percent more effective and land costs are soaring and farmers are looking to the federal government for relief from the spine robin about one fifth of this country's farmland is used to produce wheat eighty million acres were planted last year up

from fifty nine million in it in seventy three they grow weed in greenwood nebraska population five hundred and ten just outside the state capital lincoln farmers there have been hurt by weather conditions locally and the weak but internationally producer howard weinberg talked about the farmers' problems and how they should be handled with farmers a banker the nebraska governor and a grain elevator manager one of our brains is great and he has the option either stores grain or even celtic a surprise the cash price today for wheat we'd be a farmer two dollars and four cents a bushel or he can store it in the elevator and he added yards across the market like this most of them are looking at this chance today because the cash market is only two dollars a farmer can go not longer the elevator go to this the office and you know on a broadly tools six tools seven on his week depending on the charges but this is the inequity we've we ever national rate at twenty five for weed everybody says to twenty five here in

greenwood nebraska the farmer only gets to all six not long after his first year story charges taken off the loan advancements in the elevators here it's a farmer had that on the farm he would get to grow but in our area five five percent of our trade area here has to return to form the rest of look for us to have the storage here for farmers are just three kinds of government help tenants for cutting back on production export subsidies and post production guarantees it was cheap food limited to the need for a weekend you can make it as peter were paid and we're paying the price for these tractors and implements and stuff that we buy because a passer price on those of the future uv rays will only way to do that is kind of form well i'd like to see the command of that to

like every four or so buying program pays so much later lay out for a virgin and i guarantee you cost of production pill profiling foreign time to fill probably ever been phil's profit or dresses your profit if you don't re soon disappeared believer couple situations were so the large companies are pressuring they have collected a thing that interest for the last year four years in hand i guess as far as i know they are repossessing stuff yet they would like to have their money i don't like to talk about it further threats of further going out of business but there's terrible concerned about the loss of equity that they're suffering because of operating loss that produces course they're producing of innovation here below the production that means losses then it's in the national interest when you consider the bizarre oil

and then we say yeah basic food product we talk so much worse in the national interest and look for ways to assist agriculture government consumer groups and so on and in some way of managing as things are now operated i perceive the idea of former nsa is providing an individual farmer bases and as the first images in the operation is a success and danger might be the answer that every one has a whole lot of think the farmer he can all somebody can offer a long period and he's positioned financial aid all day level of the govett what's the holdup looks like them a rather thought that they reserve the navy's the people of jelly by this week maybe that nor a sweet they maybe they should have a reserve to protect themselves are and i don't think we should have to carry

reserve or laurel and it's not it's just a financial hardship on us but i don't know i would even think about or not it's really are a complex problem it isn't just don't like the way that i i suppose near future they're going after us it is not quite as much a veterinarian you have on terror or the gamut of how programs set aside just plant fewer acres until the demand it's back with a foreign supply situation sixty percent of all the wheat gluten united states has to be sold overseas now i think that the federal government must recognize that if they're going to use a food as an instrument or tool of international relations then they should not expect the farmers and other partners to make that contribution by themselves i feel that the state department for for example for a number of years has been too much involved and what the year prices would be for a

kosher products they think they can take cheap food or cheap grain and you said an international policy that that's good i don't have any quarrel with that it's not the only coral i have is the fact that then expecting and are still expecting the american farmer to make the contribution rather than lay people united states as a whole before we go on the definitions for two terms you'll be hearing throughout this program note rate and target price alarm rate is the amount of money a farmer may borrow from the government using his crop as collateral loan rate for wheat is not to twenty five a bushel the target prices the support level set by the government when the average market price for commodity falls below the target price the government plays the farmer the difference between the two figures congress is proposing a nineteen seventy seven target price of two dollars and ninety cents per bushel and say that target prices designed to cover the farmers cost of production according to the senate

agriculture committee the cost of producing a bushel of wheat breaks down this way variable costs including seed fertilizer fuel repair is a dollar twenty two cents machinery including replacement cost insurance and taxes sixty two cents overhead including general making and the utilities nineteen cents the farmer salary is eighteen cents the cost of land seventy six cents they've got to fix that return to the farmer for the use of this land for grazing and the cost of a bushel comes down to two dollars and ninety one cents one man who has had a great deal to do with shaping in implementing federal we policy is junky white mr white is deputy secretary of agriculture fine thank her you mr white the chairman of the house budget committee said today the administration and congress are proposing too much aid for the american farmer at the expense of the consumer and the tax payer how do you answer that charge certainly disagree i

respected opinion the truth matters every quarter and a total budget for the united states to go through a very small portion of our total budget and critically and relationships our contribution to the economy that it would be a tragedy if if we did anything that would wreck there's food and shame that means so much to the united states not only its mobile food and fiber to ourselves but maintaining our premier position in the world of the world's greatest food supply week because that's our number one international commodity let me ask you guys what is the american taxpayer by the havoc billion dollars in the company actually a party press has been from this polling i'm out of money that will be involved in income support levels will need to do we will be something like one billion two hundred million dollars and the figure i

think he uses something different in that it was an increase and that the houses have recommended at this point which makes the question more importantly the lemay so this figures indicate that there are something like one million wheat growers in this country are our balance of payments deficiency is something of significance and that we as the foremost international commodity and the income police so almost one million wheat farmers as something over six million dollars of which four million goes into next fall all of these things are generated in the end to look into the economy added something five times that thirty to forty billion dollars are at stake here ok but what it's going to do for the price of grey the tumor had difficulty thinking in these global problems and that's a perfectly legitimate question but that we were

warned time and time again in seventy three and seventy four that the price increases we would go around the price of bread that we got over five hours and the price of bread to go up of wheat has gone down significantly but after ten years as a force to have read even at any reasonable caution we must maintain a stable and reasonable flow of production in this country and that's what the farm bill is all about is to maintain their farm industry business fine thank you mr light on the other side of the fence of the farmers the people that government policy affect let's go back to gain levy in nebraska thank you nancy mr mcmaster one hundred and twenty two million bushels of wheat reproduced on three million fifty thousand acres of land one of the farmers producing that wheat was john sullivan <unk> seven is also president of the nebraska wheat growers association and is a member of the past week many as seven what's your reaction to the two dollar nine percent target price and with this prize cover the farmers cost of production

junior of appreciative of the kid on the national level and he came and we can get to give her some help it will not cover the cost of production the good are nonessential your hair would not use that land charge most twelve week is produced on rented land the landlord is one third of the crop when you it uses slime church for you would come up with about three dollars of dissent cost reduction well let's suppose at the cover price were raised three dollars and sixty cents whatever price that i even guarantee the father an equitable standard of living if we compare him to workers and other segments of the american economy virginia's <unk> return the cost his actual quote production if you have an income comparable to the other segments of the economy you'd be going back to earlier referred to as parody this is an established formula and in order to be comparable you'd have to have one hundred percent a thirty which today is about five dollars and eight cents show about your great deal about the debate over target

prices that were the lone ranger and the farm bill be equally as important or even more important in the target price i think you probably in the long run that people are important in the two main things that we need in a farm bill is alone price it would approach her cost of production and every super bowl just as the right to extend the loan and the grain we have you know june we're not asking for a long price ever one hundred percent of parody this would be guaranteeing profit and we don't ask for that but we do need something new approach cost of production we're looking in the future though will hire target prices increased loan rates actually put an end to the boom bust cycles that farm has been experiencing over the past several years well with the long run i'm sure the tissue tend to level out the prices are safeguarded that they're written and that it doesn't know about that the boss level

mccain drew peterson from the kansas state farm bureau said the government buying and we give this a guaranteed market but then we just grow more week our feelings of the government's alone the sink or swim then get the message and played so much in the fall is that the best kind of program really no program at all for those of us who might be able to survive or the long run we might get the message i'm not sure that we would go we look at what's happened the past few years and the farmer is inclined to in trying to cover his costs voting increased production and when producer sheldon of bankrupting ford left alone i'm afraid i'm up or not to hear that is we mentioned earlier in the program sixty percent of our production has to be export and as soon as you go into the international market you not only have our government to contend with that also the governments of all the other important as well as a foreign countries so getting harder than i would be the still have to

go ok and we have some reaction i think finance in washington and say yes mr sullivan i was just wondering who you blame for the week while it seemed to be i think that the farmers are producing more just to earn a living but is the government line here and to some extent yes and so i think they are you from people were asked to increase or production by the federal government which we did we had a surplus well and i wonder how you would answer that charge and i think the basic statement is the prevailing feeling in the letters to her three years has been that we can plan for adventure on the films some magic formula there would be a market for most of us have felt though that we cannot depend on a crop failure in another country such as we had

russia and early seventies to create this great demand and as you pointed out here the remarks were properly we have had good growing conditions now for two years in a row throughout throughout the world and we better world a situation of over four hundred million times oh wheat available in this particular year mr sullivan i wondered if you could tell me why should farmers have a government guaranteed return on their businesses other businesses don't have this kind of support group has sent many segments of the economy transportation system i can't linger many have right now but i do know that there are many parts of our economy do have government support government guarantees or personal income which is what we're talking about here with the target prices

you do have to look at this as a partial unpunished but i think we're talking here is agriculture as a statement of the economy rather than an on an individual portion of the issues find mr sullivan thank you robin in addition to voting on target prices and loan rates for week congress has taken up the idea of establishing a national grain reserve system although something we already have a de facto one under written by grain farmers bread for the world a non profit organisation based here in new york and that's the idea of a farmer held national grain reserve terrence martin isn't issues analyst for that group <unk> martin hasn't in some people say the us and garner grain reserve in effect right now with its huge surplus what has happened the difference is that with a reserve you have rules about how to dispose of surplus of surplus the grain comes back on the market anytime the price gives incentives to farmers won't return market or what exactly would a reserve a

grain reserve be where would it be kept who would keep that you would only close to the proposals that are currently being considered by congress and administration have the reserve kept on the farmer and farm storage owned by the farmers with a storage costing paid by the government ms lee and the farmers were continued <unk> on a lot of farmers would continue on it and that they would be contractually bound to hold it off of the market until the price went up to a certain precise level in most cases it's forty fifty percent depending on which fire talking about or why would that they've been improving on the situation we have right now what happens now is this is the price goes up one or two points each farmer is concerned about the prospects of the market will be destroyed by other farmers brings his own soap was going back into the market and confused all the price down reserve is the same alice to our reservoir that holds back the surplus of water and keeps it out of distribution channels until was a deficit of water and its return the channels is that it was the government paid him for that when he was holding in storage or loaned money on it but he would have the same cache or problems and that's exactly how the program works and

in every case that i'm with loan him at the loan rate the prevailing loan rate on money probably to the grain that you put into an example what would be the overall purpose of this grain reserve to take the surplus grain off the market when it's wholly the price down and return it to the market when the price we're still very high because of inefficiency and ransom recalled stockpiles ended up process it just it's a very natural way to secure our souls sometimes deficiency or so boys the times i'd know when farmers of being driven out of business because of excess supply you remove that excess supply and return it when people get hungry the house voted on at evergreen reserve this week that made it voluntary for the secretary of agriculture to implement it or not is that a good idea i think most people are convinced that it's never a good idea at this current administration has not a policy adopted the principal reserves that wants to be allowed to do it internally discretionary basis and i think most people think the function the legislature is to stipulate the rules of the game in this case the rules of how reserved work and that the will the the senate in fact did pass a mandate in reserve

measure and the house clearly intended to do that until it was frustrated by the intervention of harvey ministration mr sullivan well you know people are frustrated the intention of the house by a are you going to have to go sledding ended over a voluntary grain reserve system i like that that may address for a second that briefly one is is that we support the fear researcher and our reseal program basically earl will cover eight million metric tons of reverb or three hundred million bushels your resealed rebecca riccio parliament this time what isn't that that's in which we can take a long term long at least three years that have certain triggering devices and researcher and the market an orderly manner reasonably opposed we remember that at this mandate was because administratively it would be

very difficult to have to administer because we had we had no understanding of a triggering devices and when when these commodities could be moved into the market we quite agree that that reserve hitchcock we're also very concerned though that in this situation a worldwide that the united states not be placed in a position of all taken responsibility of developing a management classes and which week we bear all the costs and that we take all the logs and then the other week among nations of the world take advantage of our situation and actually increase they're planning we feel that there should be a coordinated problem with the other with your notions of the war and it and it's a part of our overall problem the saw this particular surplus that we have at this time that reflects itself into a really disastrous low income will sam song mr

solomon doesn't one of the things i want to point out here and as we mentioned before the possibility of this being worrying that the farmer had received alone on this fast growth than this way but let's remember that the law one of the farmers is cast production so here's a collateral his production tied up for a year or two three years whether the period maybe at less than it cost him and then on top of that he asked they encouraged that the federal government on its loan and he has received on the weight and if production but it does take the possibility of three hundred million bushels market and i think john mchugh you mentioned although you favor that mr salman spoken this is limited to the nineteen sixty six crop

year and this week is already in storage and is up from a year they're just coming to the end of our time and under ask you both the house and senate bills and are your boss the secretary of agriculture to impose planting restrictions on next year's crop is he going to do that well let me say that we're an announcement on this particular said it will be in order for sometime late in august i think the situation and i think the answer is i think i am guessing i don't know but i'm sure that we have to have some restriction on planning we can't continue to overproduce simple robin i made very quickly something that we feel like we must do and

saw the situation and said a sad or reduce planning and coordination with other countries in the world that this is a very important week in an international agreement that's going on it at this particular time at the same time an aggressive so from the united states or appeal for eighty and our other international commodity development situations that that we be allowed to put the united states in the premier position having these are typically problems we don't think it's insurmountable in the current the current situation with a splendid veteran and one of her account is almost out of average work week we have to leave it there mr white thank you very much and thank you mr solomon in nebraska and nancy and to nebraska nancy dix number that tomorrow night in other news permitting our story will be wise son congressman don't

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