[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                       ISSUES CRITICAL TO FARMERS

 Mr. GRASSLEY. Mr. President, in anticipation of the 1995 farm 
bill, I would like my colleagues to have the benefit of a series which 
appeared earlier this year in the Cedar Rapids Gazette from Cedar 
Rapids, IA.
  These thoughtful reports represent the work of three Gazette 
reporters: Marlene Lucas, rural affairs writer; Dale Kueter, staff 
writer; and David Lynch, Washington reporter. I am proud to submit them 
for the Congressional Record as they address issues critical to 
farmers, rural communities, and the economy generally in the upper 
Midwest.

              [From the Cedar Rapids Gazette, May 1, 1994]

                               Cash Crop

                          (By Phyllis Fleming)

       Federal farm subsidies are under attack. Critics hit them 
     hard on several fronts: They cost billions in tax dollars 
     each year, appear to help only one segment of the population 
     and some programs ``pay people to do nothing.'' They are 
     incredibly complicated and not well understood--even by many 
     farmers.
       One thing that's clear, however, is that subsidies and 
     price supports don't affect only farmers. They ripple through 
     the entire economy--rural and urban.
       That's especially true in Iowa, the second biggest 
     recipient of farm subsidies in the country. Only Texas 
     receives more.
       Indeed, farm subsidies have been a significant cash crop in 
     Iowa for over a half century. Last year, subsidies and farm 
     disaster payments brought $1.2 billion to the state; in 1992, 
     Iowa received $662 million in subsidies.
       Although subsidies come in for most of the criticism, at 
     $18 billion they are not the main part of the current $72 
     billion federal agriculture budget. More than half of that--
     $40 billion--goes for food stamps and other food assistance 
     programs.
       The current system of farm subsidies was born 61 years ago 
     during the Depression. World Was II helped lock them into the 
     system as a way of guaranteeing a stable and cheap food 
     supply.
       There has been general public support for the paternal 
     politics that fostered their growth. Americans have long had 
     a romantic notion about rural life and family farms.
       Some of these notions are fading as farming becomes a 
     bigger and bigger business.
       And as farms get bigger the number of farmers shrinks.
       Shrinking, too, is support in Congress and urban America 
     for farm subsidies.
       The subsidy system is being overwhelmed by the forces of 
     international trade agreements and the pressures to cut the 
     federal budget. Some experts, like Stanley Johnson of Iowa 
     State University, predict the end of subsidies by 2000.
       If payments to farmers survive at all, some say, it will be 
     only in ``green'' money--rewards for protecting the 
     environment.
       ``The idea of paying farmers to do nothing,'' says Coggon 
     farmer Doran Zumbach, 44, ``no longer has much support.''
       So what will it mean if, as expected, farm subsidies 
     eventually end?
       Will food and other prices climb?
       Will more farmers be forced off the land?
       Will more small towns wither along with implement dealers, 
     sales barns and other farm-related businesses?
       The 1995 farm bill, now being developed, may help provide 
     some answers.
       The Gazette will be taking a weeklong look at all these 
     issues starting today.


                                timeline

       From the administration of George Washington to that of 
     Bill Clinton, farmers have dealt with federal bureaucrats and 
     agriculture policies. What shape will farm programs take in 
     years to come? A look back suggests a wide range of 
     possibilities.
       1776: Declaration of Independence encourages development of 
     agriculture by allowing settlers to move west. Exports freed 
     from taxation by the British Empire.
       1796: A National Board of Agriculture is created at the 
     recommendation of President Washington.
       1837: Patent office begins distribution of improved seeds 
     and plants, the first federal effort to support improved 
     farming methods.
       1839: Congress provides $1,000 for collecting agricultural 
     statistics.
       1855: Pennsylvania and Michigan become home to the nation's 
     first agricultural colleges.
       1861: Civil War begins. Food demand--and farm prices--rise 
     sharply. Producers push for more output and expand use of new 
     horse-drawn machinery.
       1862: The U.S. Department of Agriculture is established by 
     President Lincoln. The Land Grant College Act provides sites 
     for state agricultural colleges. The Homestead Act gives 160 
     acres to anyone who will live on it for five years.
       1887: Legislation provides for federal funding of state 
     experiment stations.
       1889: USDA gains cabinet status.
       1896: Rural Free Delivery of mail starts.
       1910-14: Period of prosperity, which is later used as a 
     base to set parity price supports from 1938 to 1954.
       1914: World War I begins in Europe. Smith-Lever Act 
     establishes the Cooperative Extension Service to bring the 
     results of agricultural research to farmers.
       1916: Federal Farm Loan Act provides for a system of 12 
     Federal Land Banks to be regulated by a Federal Farm Loan 
     Board.
       1917: The U.S. enters World War I. Concerned about food for 
     the war effort, President Wilson sets minimum prices on wheat 
     and provides price supports for hogs. New legislation funds a 
     nationwide program of vocational education.
       1918: World War I ends and so do wartime food production 
     incentives, minimum hog prices and food distribution 
     controls.
       1920: Wheat price guarantees end. Farm prices drop sharply.
       1933: As the U.S. slips into economic depression, President 
     Franklin Roosevelt's New Deal moves to attack farm problems. 
     The Commodity Credit Corp. (CCC) is created to handle ``non-
     recourse'' loans. That is, grain used as equity for 
     government loans can, for the first time, be forfeited 
     without penalty or payment of interest. Farmers who agree to 
     maintain planting within newly created acreage allotments 
     qualify for loan programs. The Farm Credit Administration 
     forms to provide subsidized credit.
       1934: First great dust storm begins in ``Dust Bowl'' of 
     Great Plains.
       1935: Declaring soil erosion a national menace, Congress 
     establishes the Soil Conservation Service.
       1936: The Supreme Court invalidates farm production 
     controls established by 1933 legislation.
       1938: Legislation is revised to comply with Supreme Court 
     ruling. A new ``parity price'' formula is added to set price 
     support levels. The objective is to bring back the good times 
     farmers enjoyed in 1910-14 when there was a greater parity of 
     income between farmers and non-farmers. Congress also 
     establishes Federal Crop Insurance Corp.
       1939: World War II breaks out in Europe.
       1940: Roosevelt orders USDA to begin post-war planning to 
     prevent another farm depression like the one that occurred 
     after World War I.
       1941: Lend-Lease Act approved, giving aid to Allies. USDA 
     establishes price support program for hogs, dairy products, 
     chickens and eggs at rates above market prices. Hogs were to 
     be supported at not less than $9 per hundredweight. Japan 
     bombs Pearl Harbor. Congress raises loan rates on basic farm 
     commodities to encourage production.
       1942: Price controls are put in place. Food rationing 
     begins with sugar and is later extended to a long list of 
     foods, including meat, fats, oils, processed fruits and 
     vegetables and processed dairy products. Selective Service 
     Act amended to provide deferment of farm labor.
       1945: Surrender of Germany and Japan. U.S. food rationing 
     ends on all products but sugar.
       1946: Post-war period begins. Price controls end on all 
     food products except sugar and rice.
       1948: Parity formula revised to use most recent 10 years as 
     a base. Price supports on non-basic commodities, including 
     soybeans, turkeys, beans, dry peas and flax seed, are lowered 
     from 90 percent of parity to 60 percent.
       1950: Price supports on hogs, chickens, turkeys, long-
     staple cotton, peas and sweet potatoes discontinued. Korean 
     War breaks out.
       1951: Wartime economy returns. President Truman given 
     authority to control prices. Acreage controls removed from 
     1951 and 1952 crops.
       1953: War winds down, price controls removed, surplus 
     concerns return. Secretary of Agriculture applies mandatory 
     quotas on wheat.
       1954: New farm program established to provide flexible 
     price supports tied to stocks level.
       1956: Soil bank established to idle land in an effort to 
     reduce surplus production and cut erosion.
       1958: Corn farmers vote in referendum against maintaining 
     acreage allotments and having prices supported between 75 
     percent and 90 percent of parity. They vote instead for no 
     allotments, with prices supported at 90 percent of the past 
     three years or 65 percent of parity whichever is highest.
       1959: Food stamp program authorized.
       1961: Feed Grain Act approved, idles land from production 
     in return for payments for conservation efforts. Farmers set 
     aside 25 million feed grain acres and receive payment-in-kind 
     (PIK) certificates.
       1963: Wheat growers vote down mandatory quotas in 
     referendum. They're given the option to divert a percentage 
     of their acreage allotment in return for a direct payment.
       1965: Cropland Adjustment Program introduced with five- to 
     10-year land retirement contracts.
       1970: New agricultural act introduces acreage set-aside 
     requirements to qualify for program benefits. Set-asides to 
     be maintained in soil conserving cover crops.
       1973: First use of target prices based upon cost of 
     production rather than a parity formula.
       1974-76: Period of expanding exports. Market prices remain 
     above program targets.
       1977: Establishment of Farmer-Owned Reserve, which provides 
     for three- to five-year grain storage loans. Acreage 
     allotments replaced with set-asides and Normal Crop Acreage 
     (NCA) concept created. Set-aside for each crop must maintain 
     soil conserving cover crop. Total plantings and diversions 
     must not exceed NCA.
       1980: President Carter embargoes grain sales to Soviet 
     Union. Target prices set at $3.63 a bushel for wheat and 
     $2.35 a bushel for corn.
       1983: Farmers receive PIK certificates to reduce acreage. 
     Serious drought hits and production drops sharply.
       1985: New five-year farm legislation scales back target 
     prices over five years. Loan rates lowered and export bonuses 
     provided to expand markets. In-kind certificate payments used 
     to move surpluses--CCC stocks and crops held under loan by 
     farmers) into market channels. Ten-year Conservation Reserve 
     Program established.
       1988 and 1989: Disaster relief provided over and above crop 
     insurance payments.
       1990: New farm bill authorized wetland reserve program.
       1991: Reduced payment on corn acres by 15 percent.
       1993: Start of major disaster payments for flood losses.
                                 ______


                        Bottom Line Not Romantic

                            (By Dale Kueter)

       Washington, Iowa.--Ezra and Wanda Smith bought a house in 
     town eight years ago. ``It's a nice house,'' say Ezra. But 
     they never moved into it, instead retiring on their farm 
     along Highway 1 on the road to Kalona.
       It's hard to get off the soil,'' say Ezra, 77, fully 
     admitting he's the one who doesn't want to move.
       There has long been a romantic notice about farming, about 
     rural life and family farms. Mostly these are urban 
     sentiments, void of sweat and hard times. But most farmers, 
     too, hold a kinship with the soil, a love of seeing things 
     grow.
       Some of these images of farming are fading fast as fewer 
     farmers work bigger farms. Somewhere between those who 
     envision farming as a Norman Rockwell painting and those who 
     size it up with bottom-line Wall Street savvy lies the 
     present state of agriculture.
       Nowhere does this changing picture of agriculture come more 
     into focus than on the issue of farm subsidies, a staple on 
     American farms for six decades. Fewer farmers translates into 
     less political clout, which has led to declining subsidies 
     and now the possibility of no subsidies at all.
       Yet farm subsidies are important to Iowa's economy. Aside 
     from Social Security and Medicare, subsidies have been the 
     main pipeline for federal dollars coming back to the state--
     $1.2 billion in subsidies and disaster payments in 1993; $662 
     million in 1992.
       Farm subsidies were born out of economic crisis 61 years 
     ago as part of President Franklin Roosevelt's New Deal. 
     Critics called it economic tinkering. There were 7 million 
     farms then. Today, with fewer than 400,000 farms, those 
     opposed to dumping the farm subsidy machinery are being 
     overwhelmed by the forces of international trade agreements 
     and pressures to cut the budget.
       Congress has already acted to eliminate subsidies on honey, 
     wool and mohair. However, eliminating subsidies is easier 
     said than done. The honey subsidy, because of confusing 
     congressional procedures, will buzz to new life in fiscal 
     1995.
       Says one U.S. Department of Agriculture official: 
     ``Congress didn't know what it was doing.''


                      Subsidies to be left alone?

       Not all agree that farm subsidies are about to be plowed 
     under. Wayne Rasmussen, retired U.S. Department of 
     Agriculture (USDA) historian, says subsidies have been 
     shrinking during the last decade, ``and Congress may just 
     leave them alone. They will see the ag budget contains a lot 
     of money for food stamps and comparatively little for 
     subsidies, and say, `Let them go.' ''
       The scope of farm subsidies has long been exaggerated. The 
     fiscal 1994 USDA budget is $72 billion, or 4.8 percent of a 
     $1.5 trillion federal budget. Of that $72 billion, $40 
     billion goes for food stamps and other food assistance 
     programs.
       This year's USDA budget has $18 billion for the Commodity 
     Credit Corp., which, minus administration, constitutes the 
     primary source for farm subsidies. Another $1.7 billion goes 
     toward the Conservation Reserve program, a plan that idles 
     hilly cropland. Some 1.2 billion more goes toward other 
     conservation programs.
       There are older farmers--and sons and daughters of older 
     farmers--who sing the praises of farm supports. They remember 
     corn prices so low that they burned corn instead of wood. 
     They remember spending summer without shoes. ``I have a warm 
     sot in my heart for FDR's programs,'' says Ezra. ``It allowed 
     my dad to sell corn (government loan) at 45 cents a bushel, 
     gave him some cash flow and allowed him to keep on farming.''
       Today, farm income has improved dramatically along with 
     farm productivity. In 1985, the average income of farm 
     households--even though nearly half is from off-farm 
     sources--surpassed the average income of urban households.
       ``It's hard to convince non-farm people anymore that they 
     should be taxed (for subsidies) if farm household income is 
     higher,'' says Stanley Johnson, an Iowa State University 
     economist and adviser on congressional farm policy. ``They 
     may be convinced to help the low-end farmer, but that 
     requires more targeting of assistance. Most government 
     payments are going to large farmers, those with annual gross 
     sales of over $250,000.''
       Coggon farmer Doran Zumbach says about one-third of farmers 
     are ``doing well,'' while another one-third are ``getting 
     by'' and a bottom third are ``doing poorly.''
       While greater productivity boosts income, ISU's William 
     Edwards says most farmers maintain income levels through 
     expansion. ``They are running their equipment over more 
     acres. Larger and larger farms make the difference.
       American farmers have always fed the nation and then some. 
     Surpluses have been the offspring of farmer productivity. 
     While some policy-makers want to put the brakes on 
     production, even removing marginal lands permanently from 
     crop growing, others see American land as an asset to supply 
     the world.
       ISU's Johnson says the old farm subsidy pillars--food 
     security, price stability and maintenance of farm income--are 
     gone. Price protection, he says, can be achieved through the 
     futures market. An adequate food supply is ensured by 
     international markets, he claims.
       Urban consumers, says Rodney Leonard, executive director of 
     the Community Nutrition Institute in Washington, DC, have 
     less interest in continuing farm subsidies ``because 90 
     percent of it goes to big farmers.'' They have more interest 
     in healthy foods ``and they are willing to pay a premium 
     price.''


                         need for a safety net?

       Many, like Iowa Secretary of Agriculture Dale Cochran, 
     argue that the nature of farming, with its peculiar reliance 
     on fickle weather, requires some sort of publicly financed 
     safety net. There is even stronger support for the idea that 
     the costs of conservation--terraces, grassways or idling of 
     land--should be shared by all.
       ``I got a subsidy check in the mail today,'' says Ezra, 
     whose 120 acres are rented on a 50-50 share basis. ``Sure, 
     I'm glad to get it. Some think it's all a big giveaway, but 
     it's helped stabilize things, and it's good for younger 
     farmers.
       Ezra began farming in 1938. ``For a good many years we'd be 
     just as poor at the first of the year as the year before, but 
     we built up net worth. If I had to do it all over, I 
     definitely would farm. I liked all of it. We never put in 
     just eight-hour days. But it's an enjoyable lifestyle. I just 
     wish I could still be out there doing it.''


                               subsidies

       Top receivers of subsidies in 1992:
       1. Texas--$1,158,606,607, much of it from cotton and rice.
       2. Iowa--$662 million including $449,566,621 in corn 
     deficiency payments, the highest of any state.
       3. Kansas--$591 million including $250 million in wheat 
     deficiency payments and $124 million in corn deficiency 
     payments.
       4. Illinois--$481 million.
       5. Nebraska--$477 million.
       6. North Dakota--$443 million.
       7. California--$430 million.
       8. Minnesota--$422 million.
       9. Arkansas--$410 million.
       10. Montana--$298 million.
       Source: USDA.


                                 income

       Farm income has not come close to keeping pace with 
     inflation.
       In 1940, according to Iowa State University economists, 
     Iowa farms averaged $27 an acre in net income.
       In 1992, an acre had net income of $70. In that period, 
     inflation rose 886 percent, making that $27 worth $239 today.
                                  ____


         Without Subsidies, Iowa's Economy Will Suffer: Cochran

       Dale Cochran, Iowa secretary of agriculture, believes if 
     farm subsidies end, ``and they are not replaced by new 
     programs to stimulate the farm economy, there will be a major 
     impact on Iowa's economy.''
       Cochran says more than half of Iowans gain income directly 
     or indirectly from agriculture.
       ``So when ag falters, it's quite an effect on the state. 
     That's the thing people need to understand.''
       He says the 1980s farm recession was proof of that. Farm 
     receipts account for about 8 percent of Iowa's economy.
       A Democrat, Cochran acknowledges that farm subsidies are 
     likely to be eliminated.
       Farmers, he says, will have to change with the times.
       ``Farmers have been an independent lot,'' says Cochran, who 
     owns a 400-acre farm near Fort Dodge and has participated in 
     subsidy programs.
       ``I know. We used to get together for threshing and similar 
     chores. Then as we all got our own machinery we became very 
     independent.''
       ``Just as we worked together in production, now we have to 
     work together in marketing. Farmers have become master 
     producers. Now they must become master marketers.''


                               farm facts

       Iowa farms numbered 96,543 in 1992, dropping from 105,180 
     in 1987.
       Average size of an Iowa farm was 325 acres in 1992, an 
     increase of 24 acres since 1987.
       Farms of 1,000 acres or more grew in number from 3,742 in 
     1987 to 4,733 in 1992.
       Farms with 180 to 4599 acres decreased from 39,071 in 1987 
     to 33,988 in 1992.
       Farming was the principal occupation of 66,900 Iowans in 
     1992. That's 8,394 fewer than in 1987.
       43,610 Iowa farms raised cattle and calves in 1992, down 
     from 49,469 in 1987.
       31,790 Iowa farms raised hogs and pigs, down from 36,670 in 
     1987.
                                  ____


                             Big Cash Crop

       Farmers are about to weather the end of an era. Sixty years 
     of farm subsidies are about to be shifted to another form, if 
     not reduced or ended entirely. These changes will affect the 
     rest of us, not just because we all eat, but because we live 
     in Iowa. Only one other state, Texas, receives more farm 
     subsidy dollars than this one.
       The public has long had romantic notions about farming and 
     rural life and family farms, as pointed out in a week-long 
     series beginning in The Gazette today. The images are fading 
     as fewer farmers work bigger farms. One of many results is 
     declining clout, in Congress and in competition with urban 
     America: When subsidies began in the 1930s, 10.6 percent of 
     the gross national product came from the country's 7 million 
     farms; farmers represented 25 percent of the population. 
     Today, farm crops and livestock account for 2.8 percent of 
     the gross national product, which is generated by 400,000 
     farms; farmers comprise less than 2 percent of the nation's 
     population. Consequently, as a means of reducing federal 
     spending and the national debt, farm programs make an easy 
     target.
       As Coggon farmer Doran Zumbach laments, ``There are about 2 
     percent producers in this country and 100 percent eaters. 
     That tells the political clout tale.''
       But don't expect the end of subsidies to either erase your 
     tax burden or to leave Iowa unmarked.
       As an overview story in today's Gazette points out, the 
     scope of farm subsidies has long been exaggerated. Subsidies 
     account for $18 billion of the current $72 billion 
     agriculture budget. More than half the ag budget--$40 
     billion--goes to food stamps and other assistance programs. 
     Still, on the receiving end, farm subsidies have been a 
     significant Iowa cash crop for a half century: Subsidies and 
     farm disaster payments brought $1.2 billion here last year; 
     Iowa received $662 million in subsidies in 1992. Some 
     economists say most government payments go to farmers whose 
     gross annual sales exceed $250,000--another blemish on the 
     romantic image of farming. Even so, the economies of many 
     small towns across Iowa will likely be hurt first if dollars 
     in circulation are reduced.
       And even if crop subsidies are modified or reduced, society 
     will likely retain, if not expand, its participation in 
     conservation costs. That's only fair: Taking land out of 
     production costs owners money, Expect the Conservation 
     Reserve Program ($1.7 billion), wetlands reserve ($1.2 
     billion) and other programs to continue.
       What else lies ahead? A coalition of Iowa farm groups has 
     developed a plan that would assure farmers some support in 
     years of bad prices or poor weather. The fact that those 
     groups could work together is heartening. If the plan is 
     adopted, farmers would have more freedom to decide for 
     themselves what crops to plant and how many acres. Similar 
     results were seen in New Zealand, where farm subsidies were 
     dropped nine years ago and where both land and crops are now 
     priced more realistically.
       Whatever happens, you should know something about it. It's 
     a part of your world. And The Gazette will bring that part of 
     your world a little closer between now and next Sunday.
                                  ____


               Farm Programs, Subsidies Confuse E. Iowans

                            (By Dale Kueter)

       Add to the list of federal issues that baffle Iowans--
     things such as health care reform and the actions of the 
     Federal Reserve Board--the complicated machinery of farm 
     subsidies.
       In conjunction with preparing this series of stories, The 
     Gazette's research department sought opinions on farm 
     subsidies from farmers, and small-town and urban people 
     throughout Eastern Iowa. One-third of those contacted decline 
     participation because of a lack of knowledge on the subject.
       ``This is much higher than normal,'' says Jeff Wolff, 
     research director. ``Most surveys we conduct have a refusal 
     rate of between 5 percent and 10 percent.''
       Lack of understanding about farm subsidies is pervasive. 
     During interviews for the series, it became clear that 
     farmers and bureaucrats alike were befuddled about parts--
     even significant portions--of federal programs.
       The 308 people who participate in the survey were asked to 
     assess on a 1 to 5 scale, with 1 meaning ``nothing'' and 5 
     meaning ``a lot,'' their knowledge of farm subsidy programs. 
     Farmers rated themselves at 2.7 on average; urban residents, 
     1.9; and small-town residents, 2.
       In general, respondents believe farm subsidies are 
     important to Iowa. However, if eliminating them would reduce 
     the federal budget, a majority would favor it. That includes 
     54 percent of urban residents, 54 percent of small town 
     residents and 51.7 percent of farmers.
       When asked to estimate 1993 subsidies coming into Iowa, 40 
     percent said they didn't have any idea. Given a range of 
     choice, 31 percent pegged the amount at about $60 million. In 
     reality, Iowa farmers received more than 10 times that 
     amount.
       The $60 million guess was the main choice by farmers as 
     well as small-town and urban residents.
       However, when asked where most farm subsidies go, about 
     two-thirds in each group said ``big farmers,'' the correct 
     answer.
       See accompanying charts for details. The survey, which has 
     a 5.8 percent margin of error, was taken in mid-April. All 
     respondents were over age 21.
                                  ____


                          Smallest Cut of All

                           (By Marlene Lucas)

       It's no wonder consumers have a hard time understanding why 
     they should care whether farmers get subsidies.
       Looking at the food on grocery store shelves, they see 
     little change in the prices they pay even though farmers are 
     watching commodity prices rise and fall.
       ``Prices in the grocery stores are cushioned from the 
     prices farmers get by all the processors in between,'' says 
     Dennis Dunham, an economic researcher for the U.S. Department 
     of Agriculture (USDA) in Washington, D.C.
       ``The price of grains is a small portion of the final 
     selling price of bread. Farm prices can be quite volatile and 
     not affect the price of the final product,'' he says. ``A 3 
     to 4 percent change in the price of a bushel of wheat is 
     nothing. It's a 3 to 4 percent change in price at the retail 
     level that we think is significant.''
       And as has been pointed out many times, those providing the 
     box get more money than the farmer who grows the grain used 
     in the cereal in the box. That $1.46 box of corn flakes sends 
     only 9 cents to farmers, says the USDA in 1990 figures.
       Additionally, government officials may seem to talk out of 
     both sides of their mouths when they discuss farm subsidies. 
     In one breath, they say subsidies benefit consumers by 
     keeping food cheap. In the next, they say subsidies support 
     farmers.
       They say farm programs are needed to control the overall 
     supply of food. And yet, it's clear that if U.S. farmers 
     reduce their corn crop to raise their prices, foreign corn 
     growers will supply the markets with cheaper corn.
       They say subsidies are needed to stabilize the rural 
     economy, but on the other hand, fiscal responsibilities must 
     be met by reducing subsidies.
       Two of the largest subsidy and/or price support programs 
     with the most potential to affect consumer prices are also 
     the two that Iowa farmers benefit from the most--feed grains 
     and dairy.
       We'll look at feed grains today; dairy tomorrow.
       Grains grown in Iowa that are part of the program include 
     corn, sorghum, barley, oats and rye. Soybeans are not a 
     subsidized crop.
       The earliest form of the feed grains program was initiated 
     in 1933 during the Depression. Prices were low and farmers 
     had a crop surplus, says Phil Sronce, an analyst for the 
     USDA.
                                  ____


              [From the Cedar Rapids Gazette, May 3, 1994]

                       Sending Cows to Slaughter

                            (By Dale Kueter)

       Earlville.--On July 6, 1986, it took Vern and Margaret 
     Bockenstedt a couple of hours to milk 38 Holsteins and do 
     other farm chores. The next day, chores took only 10 minutes.
       In between they had gotten out of the dairy business and 
     had been paid $52,000 by the federal government to do it. As 
     part of the agreement, Vern put ``X'' marks on jaws of the 
     cows, a sign that they were destined for slaughter.
       Under the program, entire herds had to be sent to slaughter 
     or exported to another country. Like most, the Bockenstedts 
     sold their herd to a packinghouse.
       ``Did you ever wake up in the morning with a headache and 
     not feel so good?'' asks Vern. ``That's the way I felt the 
     first morning. You do something all your life, and it bothers 
     you. I went out and bought some beef cows.''
       In Iowa alone, the dairy termination program, as it was 
     called in the 1985 farm bill, sent 51,000 dairy cows, heifers 
     and calves to slaughter over a two-year period. It cost the 
     government nearly $53 million.
       Nationwide, more than a million cows--9 percent of the 
     total--and 590,000 heifers and calves were sent to slaughter. 
     The Federal government paid $1.8 billion for the dairy 
     termination program; however, 30 percent of the cost was 
     assessed to dairy farmers still in business. The goal, of 
     course, was to reduce milk production so that the government 
     would not be forced, under the dairy price support program, 
     to buy more surplus cheese, butter and dry milk.
       Did it work? According to the Government Accounting Office 
     (GAO), the government will save an estimated $8.5 billion by 
     2001 and consumers will save $3.3 billion in that time.
       The GAO report, issued a year ago, actually underestimated 
     the decline in government surplus purchases. In the early 
     1980s, surplus purchases were in the 11-billion-pound range 
     annually. Now purchases are about half that.
       The Bockenstedts and 14,000 others who sold their herds 
     agreed to keep themselves and their facilities out of dairy 
     production for five years. Bockenstedt felt bad when a 
     neighbor, after his dairy barn burned down, asked to use 
     theirs. He had to tell him no.
       ``I didn't want to be mean, but I wasn't allowed to do 
     it,'' says Vern.
       Bockenstedt, 58, could have returned to dairying in 1991. 
     Like most who sold their cows, he didn't. He has since 
     retired from farming and does construction work.
       The GAO in 1991 surveyed 1,145 farmers who disposed of milk 
     cows. Fifty-five percent said they definitely would not 
     return to dairying, and another 28 percent said it was 
     unlikely.


                           dairy termination

       The Dairy Termination Program in the 1985 farm bill allowed 
     female dairy cows, heifers and calves to be slaughtered over 
     a two-year period. The goal was to reduce milk production.

------------------------------------------------------------------------
                                     Farmers'      Bids                 
              County                  bids to    accepted    Amount paid
                                    sell herds    by ASCS    to farmers 
------------------------------------------------------------------------
Allamakee.........................         119          34    $2,605,500
Benton............................          15           4       213,710
Black Hawk........................          22          15     1,096,111
Buchanan..........................          44           8       356,300
Cedar.............................          13          12       739,760
Clayton...........................         176          50     3,777,450
Clinton...........................          32          16     1,406,580
Delaware..........................          92          36     2,639,280
Dubuque...........................         158          62     6,032,820
Fayette...........................         103          32     2,065,160
Iowa..............................          14           8       304,660
Jackson...........................          85          36     2,117,000
Johnson...........................          13           4       276,280
Jones.............................          37          19     1,036,740
Keokuk............................           5           5       264,540
Linn..............................          35          15       898,060
Marshall..........................           8           4       211,750
Muscatine.........................          13           7       413,130
Poweshiek.........................           4           2       200,160
Tama..............................          13           2        50,570
Washington........................           4           4       416,080
Winneshiek........................         204          57     3,819,740
Iowa..............................       1,951         803    52,776,000
------------------------------------------------------------------------
Source: U.S. Department of Agriculture.                                 

                                  ____


     Dairy Producers Group Designs New Plan To Export Surplus Milk

                            (By Dale Kueter)

       Last month officials of the National Milk Producers 
     Federation walked into the office of Secretary of Agriculture 
     Mike Espy. They were hoping to make some political hay with 
     an idea they claim would yield both higher dairy income and 
     government savings.
       So far, it appears Espy and his U.S. Department of 
     Agriculture colleagues have been skeptical.
       The federation, the umbrella group for dairy cooperatives, 
     is hoping to get dairy's foot in the legislative door this 
     year--before Congress settles on the 1995 farm program.
       Its plan is known as ``self-help.'' The idea would be to 
     open more foreign markets for U.S. dairymen through a program 
     financed by producers themselves.
       ``Self-help would give us a bridge to compete in world 
     markets,'' says Gary Hanman, chief executive officer of Mid-
     America Dairymen, a cooperative based in Springfield, Mo.
       ``All it says is let dairy farmers step forward, and 
     through a national board like they have in New Zealand buy 
     surplus products we don't use domestically. The board would 
     then be able to sell the surpluses anywhere.''
       The board's export marketing efforts would be financed with 
     a 10-cent-per-hundredweight assessment on dairy farmers. Even 
     though proceeds from the assessment would in part be used to 
     lower prices on the international market, Hanman and other 
     self-help boosters believe such a plan would be legal under 
     new GATT subsidy restrictions.
       Steve Eure, federation director for legislative affairs, 
     says the plan would buy up to 2 billion pounds of dairy 
     products that the government would have to buy currently.
       By lowering the government's surplus-buying obligation, 
     Eure says ``we can save (the federal treasury) $150 million a 
     year and make more money for farmers.''
       The USDA thinks those estimates are optimistic. One top 
     agency official also believes that over time GATT will not 
     only prohibit the present dairy export enhancement program 
     but rule out the self-help concept.
       Marjorie Foust, assistant professor and Extension dairy 
     specialist at Iowa State University, says there is a danger 
     the present milk support program could evaporate if ``self-
     help'' is adopted.
       She says there are great uncertainties about what will 
     happen with any replacement policy. ``The devil we do know 
     may be better than the one we don't know.''
       But Hanman doesn't foresee any change in the dairy price 
     support program--at least in the upcoming farm bill. ``We 
     would like to see the support price increased, but the flip 
     side is a federal ag policy not driven by need but by budget.
       ``Even though we have lowered (federal) costs of the dairy 
     program from $2 billion to $200 million, we still have 
     exposure. To be a safety net, the support price should be 
     raised beyond (the present) $10.10. People tell us it takes 
     $12 to $12.50 to stay in business.''
                                  ____


                    Complex Machinery of Milk Prices

                            (By Dale Kueter)

       Years ago it was simple. The dairy farmer hauled his milk 
     to a nearby town where he bartered with the customer over the 
     price.
       Today, milk from cows just outside Cedar Rapids may end up 
     in St. Louis, and milk in Cedar Rapids stores may come from 
     cows hundreds of miles away. The price farmers get--which 
     affects what consumers pay--filters through government 
     machinery so complicated that few understand it.
       Dairy policy and regulations are distinct and far more 
     complex than those affecting grain and other commodities. 
     Milk, unlike corn, cannot be put into storage until prices 
     improve. Price stability for a product that pours into the 
     marketplace every day has long been the goal of dairy 
     interests.
       Supply and demand has a role in what consumers pay for 
     milk, but price also is influenced by three government 
     programs:
       Federal price supports: The 1990 farm bill sets the milk 
     support price at $10.10 per hundred pounds. Government, 
     through the Commodity Credit Corp. (CCC), is willing to buy 
     what the free market doesn't consume in an effort to keep the 
     price paid to farmers above $10.10. The market price today is 
     high enough--above $13--that the government is purchasing 
     little surplus.
       Milk orders: The average price farmers receive for milk in 
     any given locality is established by a system known as 
     federal milk orders. Two-thirds of the nation, including 
     Iowa, are covered by the orders.
       Dairy export subsidy: The government, through subsidies to 
     brokers, allows U.S. dairy products to cost less in the 
     export marketplace. This practice will end with new 
     international trade agreements.


                     supports' up-and-down history

       Federal milk price supports were begun during World War II 
     under wartime legislation to stimulate production. They 
     became a permanent part of agriculture policy in 1949.
       That year the milk support price was $3.14. Over the years 
     it was increased several times until it peaked at $13.10 in 
     1980, a price that spurred production and created major 
     surpluses the government had to buy.
       The USDA during the Reagan-Bush era sought to lower 
     government supports and production. It paid farmers to sell 
     their entire herds. Then during the cost-cutting clamor of 
     the 1990 Budget Reconciliation Act, Congress and President 
     bush decided dairy farmers should pay back 1 percent of costs 
     for dairy supports. While a drop in the bucket toward 
     balancing the budget, dairy farmers must return $700 million 
     over five years ending in 1995.
       However, that same year the dairy lobby convinced Congress 
     that farmers who do not increase milk production from one 
     year to the next should get that money back.
       So for fiscal 1993, the CCC collected $202 million in 
     assessments and refunded $51 million. The assessments lowered 
     the net cost of the dairy support program to $253 million.
       The CCC collects the money with assessments on farmers' 
     checks ranging from 11.25 cents to 16 cents or higher per 
     hundred pounds. The size of the assessment depends on how 
     many farmers seek refunds.
       The CCC continues to buy surplus milk products for two 
     reasons--to keep raw milk at or above the $10.10 support 
     level and to provide food for various federal programs. 
     Currently, it pays 65 cents a pound for surplus butter, $1.03 
     for dry milk and $1.12 for cheese--figures all below today's 
     market price.
       The surplus products are used for school lunch programs and 
     as assistance for needy families. The government at times has 
     also returned some of its purchases to the market, which has 
     a depressing impact on prices. In the mid-1980s it bought so 
     much surplus cheese it had to give it away.
       The 1990 farm bill also established trigger levels for 
     adjusting the milk price support. Twice a year--Aug. 1 and 
     Nov. 1--the USDA estimates how much dairy surplus it expects 
     to buy in the next year.
       If estimates are less than 3.5 billion pounds, the support 
     price is increased, sending a signal to farmers to produce 
     more milk.
       If the estimate is between 3.5 billion and 5 billion 
     pounds, the situation is considered stable and the price is 
     not changed.
       If the amount is above 5 billion pounds, the price support 
     is lowered, signaling farmers to cut production. However, the 
     price support cannot be cut below the $10.10 base.
       For that reason last November, even though the 1994 dairy 
     surplus was estimated to reach 6.5 billion pounds, the 
     support price didn't change.
       The law also provides that if surpluses exceed 7 billion 
     pounds, dairy farmers would be assessed to cover the costs. 
     However, that has never occurred.


                        orders dictate payments

       In 1937, Congress approved laws establishing the federal 
     milk marketing system. This process is separate from price 
     supports.
       Cooperatives and other milk handlers are told through 
     monthly federal milk marketing orders what they must pay 
     farmers. Farmers in a certain area are paid the same minimum 
     price based on a formula.
       The system, which some call antiquated, is based on 
     Minnesota-Wisconsin market prices, called the M-W, for Class 
     B milk--milk destined to become cheese. Historically, those 
     two states have been the major producers of milk. Eau Claire, 
     Wis. is designated as the center for M-W prices.
       The M-W market price for Class B milk plus $1.04 a 
     hundredweight differential price for Class I drinking milk 
     are combined to produce the base price and that's the price 
     paid Eau Claire area farmers. The differential price 
     increases in proportion to distance from Eau Claire to 
     reflect hauling costs.
       For instance, at Dubuque the differential is $1.36; in Iowa 
     City, $1.48. Hence, if a Monticello farmer sells his milk to 
     a Dubuque plant, the minimum he gets is 12 cents a 
     hundredweight less than at Iowa City.
       Butterfat and protein content boost the total price 
     received.
       The system was established initially to stabilize prices 
     received by farmers and encourage dairy production in places 
     far from Minnesota and Wisconsin. The southeast United States 
     has long been a milk-deficient area.
       With no pricing order system, it is argued, some surplus 
     Wisconsin and Minnesota milk would be hauled to Iowa City or 
     Florida and put the squeeze on local farmers.
       In reality, say experts, hauling costs are slightly higher 
     than the differential allows. Hence, a Wisconsin tanker 
     taking milk to Florida for the fluid market usually cannot 
     compete with Florida prices. The only reason Florida buys 
     milk from Wisconsin is because of shortages in local 
     production.


                       influencing global market

       Export subsidies are also part of the federal government's 
     effort to boost U.S. dairy prices. World prices right now are 
     roughly 5 to 10 percent lower than U.S. markets. Brokers seek 
     bids for surplus U.S. dairy products from foreign buyers, 
     then present the offer and subsidy needed to the USDA's 
     Foreign Agriculture Service. If approved, the deal goes 
     forward.
       In 1992, the Dairy Export Incentive Program amounted to 
     $24.2 million. Last year the subsidy swelled to $134 million.
       One USDA official said the 1993 export allocation was set 
     during the 1992 presidential campaign. However, the 1994 
     allocation announced last month is about the same.
       Early each year the government sets export allocations for 
     countries. For example, 25,000 metric tons of powdered milk 
     is allocated to Mexico this year under the subsidy program.
       Both the North America Free Trade Agreement and General 
     Agreement on Trades and Tariffs mandate substantial 
     reductions in government subsidies in coming years.
                                  ____


                           Misunderstood Milk

                            (By Dale Kueter)

       Delhi.--The Holsteins file into the milking barn as 
     methodically as kindergarteners coming in from recess. 
     There's Molly followed by her offspring, Mol and Molla. 
     There's Crunch and Carmel. They all know where to go.
       Every morning, every night, 365 days a year, Nancy and 
     Larry Shover milk nearly 70 cows. They have one of the top-
     producing herds in northeast Iowa, averaging 22,000 pounds of 
     milk per head annually.
       Every day they send about 600 gallons of milk to the Mid-
     America Dairymen cooperative transfer plant in Marion. From 
     there, the milk is trucked to Roberts Home Town Dairies in 
     Iowa City where it is processed, bottled and sent to area 
     stores.
       ``We get up about 5:30 every day,'' says Nancy. She and 
     their herdsman usually handle the milking. Setup, milking and 
     cleanup is a 6 to 9 routine. Larry mixes the silage and 
     grain.
       Dairy farming is a demanding business. Not only must cows 
     be milked twice a day, but the product cannot be held until 
     market prices get better. The Shovers, as members of the co-
     op, have an ongoing contract with Mid-America.
       The Shovers usually get top price for their grade A milk, 
     currently $13.26 a hundred pounds for 3.5 percent butterfat 
     content.
       Like most farm programs, dairy price supports began more 
     than a half a century ago and are complex. Contrary to what 
     many believe, there is no direct federal subsidy payment.
       Instead, the government sets a support price--currently 
     $10.10 per hundred pounds. To maintain prices paid to farmers 
     at or above that point, the Commodity Credit Corp. (CCC) buys 
     cheese, butter and non-fat dry milk--ideally in quantities 
     that will stimulate the market, but not lead to vast 
     surpluses.
       The CCC also acts as a consumer, using the surplus dairy 
     products for government programs such as school lunches.


                        misunderstood machinery

       How such government economic machinery works is widely 
     misunderstood (see dairy regulations story). And the whole 
     picture is complicated by international trade considerations.
       ``Farm support programs provide a price floor,'' says 
     Larry, 46, a 1969 graduate of Iowa State University, ``but 
     they also serve as a ceiling. While the government buys 
     excess dairy products, these surplus commodities always hang 
     over the market.''
       Is it time to dump the federal dairy program and put 
     farmers and milk drinkers at the mercy of the free market?
       ``If we could be assured of fair competition 
     internationally,'' replies Larry, ``I'd say let's go with a 
     free market system.''
       ``The objective of the dairy price support program has been 
     to provide support at a level that will assure adequate 
     supplies,'' says Charlie Shaw, a dairy economist in the U.S. 
     Department of Agriculture. ``We believe the program has done 
     that, although sometimes we've had too large a surplus.
       ``Assuring an adequate supply is really all the support 
     program ought to do. When the program has been used in that 
     manner historically, we've had a reasonable supply-demand 
     balance. It's been mainly in those periods,'' he says, ``when 
     the program was used for income enhancement instead of price 
     stability where we saw more farmers come into dairy, with 
     resulting surpluses.''


                          politics plays role

       Translate Shaw's statement about ``income enhancement'' to 
     mean politics--manipulating the support base for political 
     rather than economic reasons. And both political parties have 
     done it.
       ``Right now we've got a market price that is well above the 
     support price. We're not buying much surplus.'' Economically, 
     says Shaw, the dairy industry today may not be too far off 
     from what it would be under a free market system, ``assuming 
     all other countries did the same.
       Last year the government's net cost for the dairy price 
     support program was $253 million. In 1992 it was $232 
     million. For 1983, the cost peaked at $2.5 billion (see 
     chart).
       The Carter Administration boosted milk supports, adjusting 
     them twice annually for inflation. The price floor hit a 
     maximum of $13.10 per hundred pounds in 1980, spurring 
     unprecedented milk production. By 1984, the government's cost 
     just for handling and storing surpluses zoomed to $79 
     million.
       To bring down surpluses and government costs, the Reagan 
     administration launched cheese give-aways and paid farmers to 
     get out of the dairy business (see accompanying story).


                         production on decline

       Milk production has taken a downward splash--declining 1 
     percent just in the last year. The number of cows on farms is 
     nearing 8 million, some 125,000 below September of 1992.
       The government does not purchase fluid milk but rather what 
     is called manufactured products. It pays 65 cents a pound for 
     butter, $1.12 cents for American cheese and $1.03 for dry 
     milk. Right now, it is buying no cheese and little dry milk. 
     Butter in storage--about 216 million pounds--is half the 
     amount of a year ago.
       While it's hard work, dairying has its positives. There's a 
     regular paycheck. Most Iowa dairy farmers are able to grow 
     their own forage and grain.


                           Building net worth

       Like many dairy farmers, Nancy and Larry Shover have 
     accumulated a sizeable net worth. They are not poor. Neither 
     do they live in a $200,000 house nor drive a Cadillac.
       With nearly 70 cows, their dairy paychecks may look like 
     milk and honey. But there are plenty of expenses. And the 
     $13.26 price is lowered by 11 to 16 cents in a federal 
     assessment (see government machinery story), 15 cents to 
     promote dairy products and hauling costs.
       Earlier this year, the Shovers paid 48 cents per 
     hundredweight for hauling. That has dropped to 7 cents to 
     match offers by a Wisconsin dairy plant looking for new 
     customers in northeast Iowa. ``Farmers must build net 
     worth,'' Larry emphasizes. ``if you don't grow in net worth 
     you have no reservoir to withstand the rough years. 
     Basically, net worth is your ticket for a bank loan and your 
     retirement plan.''
       ``It's a stable way of life,'' says Nancy. ``There is never 
     any problem about being fully employed,'' she jokes. ``It is 
     labor demanding, but that's a good way to raise a family. 
     There are chores for youngsters.''
       The Shover's son, Todd, is a senior at Iowa State 
     University. He is majoring in dairy science.
       ``We would like him to come back and be part of the farm,'' 
     says his mother. ``But he needs to make that decision. If you 
     don't have farming in your heart, there is not much fun in 
     getting up at the crack of dawn and working late hours.
       ``At Christmas, he said he would like to become a doctor, a 
     pediatrician. He will take some courses at Drake this summer 
     and take medical school entrance exams (at the University of 
     Iowa) in August.''
       Whatever Todd decides is fine with Larry and Nancy. They 
     plan to stick with dairy farming. They like cows. ``They are 
     docile animals,'' says Larry. ``Each has a distinct 
     personality.''
                                  ____


         Farmers Now in Business as Educated Environmentalists

                           (By Marlene Lucas)

       Farmers are no longer farmers. Now they are in business--
     and their business is farming.
       ``The old adage of the farmyard with chickens, sheep and 
     cows is gone,'' says Stan Herr, regional manager for the Iowa 
     Farm Bureau Federation, based in Marion. ``Those days are 
     long gone. It's a great tradition, but the use of technology 
     has changed the farmer as well as anyone else.''
       The typical farmer is ``extremely (well) educated,'' he 
     says. Many have college degrees, and most have attended 
     college.
       Farmers must know the Environmental Protection Agency 
     regulations regarding their use of chemicals. They must keep 
     detailed records of the amount they use, the way the wind was 
     blowing and the equipment used during application.
       ``They're environmentalists. No one is more concerned about 
     the environment than farmers nowadays. Water quality is their 
     main concern, and they get picked on over water quality and 
     the chemicals they use. Farmers in the country are drinking 
     water, too,'' Herr says.
       City people driving down country roads see a farmer driving 
     a big new tractor and assume he's wealthy, he says. They 
     don't consider the farmer's debt, and ``its a major debt.''
       Farmers are taxpayers, too. They pay an average of $18 per 
     acre and could easily face a $9,000 tax bill every six 
     months, he says.
       The lifestyle of the farmer is often envied by others as 
     the ideal way to have lots of free time. Herr points out that 
     Rockwell employees get 11 paid holidays a year, have two 
     weeks off at Christmas and get several weeks of vacation.
       ``A farmer's work doesn't stop on the Fourth of July. He's 
     got to fee the livestock and milk the cows every day,'' he 
     says. During busy times, farmers will work 18-hour days.
       As for those city cousins objecting to paying farm 
     subsidies, ``we are trying to work with them. We are not the 
     bad guys. We're getting low prices for our products, and the 
     profit is low,'' he says.
       ``Most farmers would like to do without a farm program. The 
     reason we have cheap food is the government subsidizes food 
     production. If it was market driven, we could get rid of the 
     program and get a fair market price for our products,'' he 
     says.

                           EASTERN IOWA FARMS                           
   [Eastern Iowa counties in 1993: number of farms, land in farms and   
                         average size of farms]                         
------------------------------------------------------------------------
                                         Number     Land in             
               Counties                 of farms     farms      Average 
                                                    acres     size acres
------------------------------------------------------------------------
Allamakee.............................     1,020     369,300         362
Benton................................     1,370     429,700         314
Black Hawk............................     1,220     305,200         250
Buchanan..............................     1,270     344,500         271
Cedar.................................     1,120     349,800         312
Clayton...............................     1,590     463,300         291
Delaware..............................     1,360     346,000         254
Dubuique..............................     1,570     345,700         220
Fayette...............................     1,440     440,500         306
Iowa..................................     1,010     357,500         354
Jackson...............................     1,290     375,500         291
Johnson...............................     1,300     232,000         248
Jones.................................     1,110     346,600         312
Keokuk................................       980     353,000         360
Linn..................................     1,600     381,200         238
Louisa................................       600     230,300         384
Powershiek............................       990     355,200         359
Tama..................................     1,330     428,800         322
Washington............................     1,100     340,500         310
Winneshiek............................     1,550     416,800         269
------------------------------------------------------------------------
Source: Iowa Agricultural Statistics.                                   

                                  ____


Benefits of bees--Honey Subsidy Helps Keep Prices of Other Products Low

                           (By Marlene Lucas)

       Monona.--Many consumers can take honey or leave it.
       In fact, they probably would be quick to say that ending 
     the annual subsidy of $22 million would be a good way to save 
     money.
       But they are likely to pay more at the grocery store, not 
     necessarily for honey but for other food products, if that 
     happens and beekeepers go out of business.
       ``Bees are pollinators, and you need bees to have seeds,'' 
     says Dave Fassbinder, a full-time honey producer in Clayton 
     County. ``If there were no bees to pollinate alfalfa, which 
     is already expensive, it would be even more expensive.''
       Costly alfalfa would drive up the cost of feeding cows, 
     which could drive up the price of hamburgers and ice cream. 
     Bees also are invaluable as pollinators of the California 
     almond and Florida citrus crops.
       ``If the honey (subsidy) goes, beekeepers will have to 
     raise fees for pollination and make things more expensive. It 
     will be a whole different way of beekeeping.'' he says.


                          pollination service

       By maintaining bee colonies on area farmland, Fassbinder 
     provides free pollination services for a Waukon farmer who 
     grows strawberries and melons and a Postville farmer who 
     grows crown vetch. Other colonies are spread out from north 
     of Waukon and north of Garnavillo to Postville.
       His payment is the honey he collects.
       ``I don't think the melon farmer and crown vetch farmer 
     could afford to pay me for pollination services. I don't feel 
     it's ethical (to ask for payment) as long as I'm getting good 
     crops of honey, especially with the support price. So why 
     should I charge them extra?'' he asks.
       But without the government subsidy and the income from the 
     nursing career of his wife, Barb, Fassbinder doubts he could 
     afford to stay in beekeeping. The market price for honey is 
     too low.
       One reason is cheap honey coming from China.
       Fassbinder needs to sell his honey at 60 cents a pound to 
     cover his costs and earn a living. But that never happens, so 
     the subsidy helps make up the difference. He sells honey to 
     smaller companies, when he can, for 56 cents a pound. 
     Commercial buyers pay 51 or 52 cents a pound.
       Honey production is much affected by weather. Last year, 
     Fassbinder's bees produced 18,900 pounds of honey, the 
     smallest amount since he began keeping bees 17 years ago. The 
     best was 81,900 pounds.
       His expenses last year were $21,500, without including his 
     labor.


                          support up and down

       Although Fassbinder needs the subsidy, he sees problems in 
     the way it is tied to production. Beekeepers receive the most 
     support during high production years and less support in low 
     production years, when they most need it.
       ``I wish they could regulate it so you get support only in 
     bad years,'' he says.
       He calls himself a midsize producer. This year he will 
     increase his 600-colony operation to 1,000 colonies, the 
     limit of hives he can handle by himself.
       ``In the last few years, costs have gone up in just keeping 
     bees. Two mites have come into the United States and are 
     causing havoc in the bee industry. It costs $5 per hive a 
     year to treat for mites,'' he says.
       Wild honey bees are being decimated by the mites, he says, 
     eradicating the chances of crops being pollinated without the 
     help of bees from treated hives.
       In 1993, the government program allowed producers to use 
     their honey as collateral for a government loan at 54 cents a 
     pound. They could repay the loan at 47 cents, creating a 7-
     cent subsidy. Producers also could claim the 7-cent subsidy 
     without getting a loan. However, the government assesses 1 
     cent a pound to fund the National Honey Board, which promotes 
     honey consumption.


                           suspension ending

       For fiscal year 1994, the Congressional Appropriations 
     Committee suspended the honey support subsidy but maintained 
     the loan program. Honey producers may borrow against their 
     honey stocks at 50 cents a pound and repay the loan at that 
     rate plus interest.
       The suspension of the subsidy expires Sept. 30. On Oct. 1, 
     the program reverts to its former system unless Congress acts 
     again, says Jane Phillips, a government honey analyst.
       ``The main reason for a honey program is to ensure 
     pollination. We can't support pollination directly, so we 
     support honey production. According to recent Cornell 
     University study, pollination by bees adds about $9 billion 
     in value to crops,'' Phillips says.
       In fiscal 1993, the honey program cost taxpayer $22.1 
     million. However, some of that reflects loans made that 
     weren't due at the close of the year. In 1992, the program 
     cost $16.6 million; in 1991 $18.6 million and in 1990 $46.7 
     million. After 1990, the loan rate went down and the market 
     got stronger, so subsidies were reduced, Phillips says.
       The number of producers who participate varies from 4,000 
     to 7,000, she says. In 1991, the latest available statistics, 
     Iowa had 160 producers in the program.
       Iowa participants received $2.6 million in 1993; $2.6 
     million in 1992; $2.2 million in 1991; and $2.1 million in 
     1990.
       The honey subsidy began in 1949 and has been as high as 
     $100 million in 1988 and as low as less than $1 million 
     during several years in the `60s and early `70s. In 1979, the 
     program showed a credit of $2 million when more loans were 
     paid back than loans were granted.


                                  FYI

       1993 Honey production in Iowa:
       Beekeepers maintained 60,000 colonies.
       Bees produced 3 million pounds of honey.
       Each colony produced an average of 49 pounds of honey.
       Value of the 1993 honey crop was $1.6 million.
       Source: USDA.
                                  ____


       Pennies a pound--Wool Producers Face Loss of Gov't Support

                           (By Marlene Lucas)

       Oxford.--Nick Greiner, holding a squirming sheep with one 
     hand, motions to a pile of wool with the other and says, 
     ``That's worth about a dollar.
       ``That 5 pounds of wool is worth about 20 cents a pound to 
     the farmer as it is. When it's washed and cleaned, it'll 
     weight about 2.5 pounds and will make about four or five 
     sweaters. So you have about $150 worth of sweaters from 
     something that's worth $1 to a farmer.''
       And if Greiner hadn't owned the sheep, he would have 
     collected $2.25, at least, for his work.
       So why, at those prices, don't producers just leave the 
     wool on sheep raised for meat?
       Greiner, who shears sheep for area producers and raises 
     2,000 sheep a year on 20 acres near Oxford, says sheared 
     sheep gain weight better than non-sheared sheep. Sheared 
     sheep also are worth more per pound when sold to packers.
       With wool being a money-loser, it's easy to see why Iowa 
     producers favor continuation of the federal wool subsidy, 
     scheduled to be phased out by 1995 to trim federal 
     expenditures.
       About 5,600 of Iowa's 8,000 sheep producers participated in 
     the wool subsidy program and received $2,033,984 in 1992. 
     Nationally, the U.S. sheep industry supports 100,000 families 
     and 350,000 rural jobs.
       The Wool Act was initiated in 1954 after domestic producers 
     experienced hardships when the government lowered wool import 
     tariffs from 25 cents to 10 cents a pound. Producers asked 
     that imports be limited, but instead the government created 
     the current subsidy system.


                         subsidy tied to price

       The subsidy is a percentage tied to the wool's selling 
     price.
       For instance, Midwest farmers, whose sheep produce medium-
     quality wool, sold their wool for 10 cents a pound in 1993. 
     Because the program pays wool producers 300 percent of the 
     price they received, Midwest producers actually received 40 
     cents for each pound sold--10 cents plus a 30-cent subsidy. 
     In the West, where the wool is considered higher quality and 
     sells for $1 a pound, producers get a subsidy of $3 per 
     pound.
       The 1993 subsidy of 300 percent was calculated to pay 
     producers the difference between the year's national average 
     wool market price of 51 cents and the government's price 
     level of $2.04. The price level is set each year based on the 
     amount producers spend raising wool.
       Another factor is a national checkoff supporting the 
     American Sheep Industry, a promotional organization. Growers 
     are assessed 8.5 cents a pound.


                          Program ends in '95

       Iowa sheep producers, who raise sheep mainly for meat, will 
     be little affected by the 1995 ending of the subsidy, Greiner 
     said, but those in Western states stand to lose a lot.
       Of the total $103.4 million paid in wool subsidies in 1993, 
     Texas producers received $24.9 million, Wyoming producers 
     received $11.7 million and Montana producers received $9.5 
     million.
       While rural communities will likely feel the loss of 
     subsidy income, urban consumers will see little difference in 
     the supply of wool products.
       ``Australia has such a supply of wool that the best 
     guestimates say it will take until 1997 to reduce the 
     stockpile. We can't expect better prices until that glut is 
     finished,'' Greiner says.


                      termination called political

       Voting to end the wool subsidy was ``a big political move. 
     It was an easy target. It didn't have too many people that 
     would bitch, and there's not a lot of votes to be lost, but 
     they get a lot of publicity for cutting programs,'' Greiner 
     says.
       Supporters of the subsidy claim that no money will be saved 
     by ending the program because the program is funded by 
     tariffs on imported wool. However, Sharon Diel at the 
     Agricultural Stabilization and Conservation Service in 
     Washington says that's not so.
       ``The tariff revenues go directly into the treasury and are 
     not earmarked for the subsidy. That's always been a confusing 
     area. The money for the wool and mohair subsidy is 
     appropriated by Congress,'' she says.
       ``The only thing the act specifically says is that our 
     program shall not cost more than 70 percent of the amount the 
     tariff collects,'' she says.
       In 1991, the tariff collected more than $401 million, and 
     $172 million was paid out in subsidies.
                                  ____


     Cropland Back to Wetland--Government and Farmer Share Cost of 
                              Restoration

                           (By Marlene Lucas)

       Brighton.--In a horseshoe bend of the Skunk River north of 
     Brighton, 102 acres of cropland are becoming a home for ducks 
     and frogs.
       Burnett Smith, who has owned the land for 32 years, 
     recently tore up 40 feet of tile that drained the cropland 
     and is watching the low area slowly fill with water. During 
     the floods last year, it was awash 13 times.
       ``I've always thought that's what should be down there. 
     I've never been real thrilled with river bottoms as 
     croplands,'' says Smith, 67, who runs a cow-calf operation on 
     1,000 acres. ``You can fight the river or decide to live with 
     it. We decided to live with it. When you look at the power of 
     water and the power of man, water will win. I think a lot of 
     people found that out last year.''
       Smith has placed the land in the Wetlands Reserve Program 
     (WRP), a federal program that purchases a permanent easement 
     to croplands converted from wetlands. The land is restored to 
     wetland conditions by the owner with cost-sharing by the 
     government.
       Smith is among the first group to enroll. He signed up in 
     1992, and the easement purchase was completed this year.
       ``I don't want to say how much we got for it. We found out 
     we were about half of what others bid. But I thought it was a 
     fair value when I put in my bid,'' he says.
       Pre-acre prices paid to date in Washington County have 
     ranged from $650 to $1,500.


                            program growing

       At a time when most government farm programs are shrinking, 
     WRP is growing.
       ``The proposal for the 1995 budget includes'' $241 million 
     for WRP, says Lois Hubbard, Agriculture Stabilization and 
     Conservation Service program specialist in Washington, D.C. 
     ``The proposed goal is to have 330,000 acres in the program 
     by the end of '95. Everything depends on appropriations.''
       The federal government accepted 49,888 acres in six states, 
     at a cost of $46.1 million, in the 1992 WRP enrollment. For 
     the second enrollment, held this year, $66.7 million has been 
     allotted for 75,000 acres. Landowners have offered 508,735 
     acres.
       Hubbard says program officials initially thought farmers 
     would be turned off by the program's permanent easement 
     clause, but ``we've been pleasantly surprised. There has been 
     a lot more intentions to participate than we could accept.''
       ``They're more interested in . . . protecting the land,'' 
     she says.
       Wendell Jones, district conservationist for the Soil 
     Conservation Service in Washington, Iowa, says, ``Burnett had 
     an appreciation for the program for what it could do for the 
     land.
       ``For other farmers, their first objective can be to unload 
     the land.'' They see the program as a way to make money on 
     cropland that floods or produces less-than-average crops.
       Farmers struggle with marginal croplands because ``the 
     farming economy is such that some farmers feel they have to 
     use every acre to make a living,'' Jones says. ``There are 
     different answers for different farmers.''


                          5,000 acres in iowa

       A total of 587 acres in Washington County, where Smith 
     lives, was accepted in the 1992 enrollment. Across Iowa, 
     5,096 acres are in the program. In the 1994 enrollment, 1,058 
     Iowa farmers offered a total of 57,702 acres. Offers will be 
     evaluated by the end of May.
       Land is accepted into WRP according to the amount of money 
     the farmer requests for the permanent easement and on the 
     expected cost of restoration to wetland. The government will 
     pay up to 75 percent of the restoration costs.
       Smith retains ownership of the land and will continue to 
     pay taxes. But the taxes will be reduced as the value of the 
     land decreases now that it is no longer producing crops. He 
     is permitted to grow hay and graze the land, he retains 
     access for hunting and recreation, and he may sell the land. 
     But, the land would remain in WRP under the new owner's care.
       ``The WRP benefits the public in several ways,'' Jones 
     says. ``It creates a wildlife habitat very quickly and you 
     see the return of water fowl, plants and vegetation. A major 
     benefit is improved water quality, and it's a floodwater 
     storage area.
       ``This little bit of land may not make a tremendous amount 
     of change, but it's a start. This is a reversal piece by 
     piece.''
                                  ____


  Green Farming--Market Prices and Environment Benefit From Idled Land

                            (By Dale Kueter)

       Scotch Grove.--The fields that surround the farm buildings 
     at Barb and Glenn Tobiason's place are out of an Iowa picture 
     book--fertile loam on gentle Jones County slopes.
       You can smell the soil's richness as it is reopened to once 
     again accept the seeds that produce the crops that make Iowa 
     famous as America's breadbasket. It's the essence of Iowa.
       Three miles to the south the Tobiasons own 250 acres of 
     clayish loam, less productive soil that lies on hills and is 
     highly susceptible to erosion. In 1986, a farm crisis time 
     when the Tobiasons were looking for some steady income, they 
     placed these acres in the Conservation Reserve Program (CRP).
       Again this spring, the CRP land is sprouting alfalfa, brome 
     and other grasses the Tobiasons seeded eight years ago as 
     required by the program. CRP yields are measured in erosion 
     protection, nesting places for wildlife and idling corn 
     production that would otherwise depress prices.
       CRP, begun in 1985, is a major component of the U.S. farm 
     program. Conservationists like it. Urban politicians prefer 
     it to crop subsidies. Farmers have mixed feelings.
       Nationwide, 36.5 million acres are idled in CRP--8 percent 
     of all U.S. cropland. Farmers are paid an average of $50 per 
     CRP acre per year by the government. The CRP contracts are 
     for 10 years, and no one knows what will happen when the 
     first acres come out of CRP in 1995.
       ``They have not come up with any follow-up to CRP,'' says 
     Glenn Tobiason. ``I don't think it will be extended because 
     of budget problems.'' The Tobiasons' CRP contract expires in 
     1996. ``We could put ours back into crops or use it for 
     grazing, but we'd have to do a lot of fencing for grazing, so 
     now it looks like we'll go back to cropping it.''
       Tobiason, 48, lifts his Pioneer seed corn hat and scratches 
     his head in one motion.
       ``If you want to analyze farm programs,'' he cautions, 
     ``you can't. Remember, it took a lot of lawyers to do this.''
       Yet, Tobiason is uncertain about throwing out farm 
     subsidies altogether. He's interested in something simpler, 
     perhaps the so-called Iowa Plan--revenue assurance--that 
     would guarantee farmers 70 percent of some base-period 
     income.
       ``The principle of a free market is great,'' says Tobiason, 
     ``if all countries are playing the same game. Without a farm 
     program, I think you'd see more volatility in grocery prices. 
     And programs--price supports and subsidy--help get young 
     people into farming.
       ``CRP is not that costly compared to other things,'' he 
     adds, ``and I help pay for it, too, through my taxes. Still, 
     I don't know if the government can afford to keep it. It's a 
     society program, really. How important is it?''


                          cost of conservation

       CRP will cost $1.8 billion this fiscal year. Meanwhile, the 
     government will shell out $18 billion for commodity subsidy 
     programs, including corn deficiency payments.
       Agriculture budget number-crunching has already begun. The 
     trick is to cut the budget but keep farm production down and 
     conservation practices up.
       Doing all that is a little like slopping the hogs in your 
     best suit and coming out smelling like a rose.
       Bob Wisner, grain marketing economist at Iowa State 
     University, tends to agree with Tobiason's CRP predictions.
       ``I expect that much of the CRP land will go back into 
     production,'' says Wisner. ``There may be federal payments 
     for filter strips along creeks but not much more.''
       One floor up from Wisner's office, Professor Stan Johnson, 
     director of ISU's Center for Agriculture and Rural 
     Development (CARD), envisions a different future. CARD and a 
     team at the University of Missouri are advising Congress on 
     options for the 1995 farm program.
       ``CRP or something like it will be renewed'' he predicts. 
     ``It may not survive as a line item in the agriculture 
     budget, but conservationists want it. And if necessary, they 
     will push to take money from deficiency (subsidy) payments to 
     pay for it.''
       One of Johnson's ideas would pay farmers a reduced amount 
     to keep CRP land out of corn and soybean production but allow 
     them to harvest the hay. Farmers could cut CRP hay last year 
     only because wet weather produced emergency conditions and a 
     poor hay crop.
       Some critics say the government made a mistake in 1985 when 
     CRP was created. Instead of paying an annual rent, they say 
     the government should simply have purchased the marginal 
     acres. As it is, they say, the government is spending an 
     average of $500 an acre over 10 years and farmers still own 
     the land.
       But explains one agriculture observer, ``that's the price 
     of politics.'' Congress, he says, wasn't abut to buy up a lot 
     of farmland and accelerate the depopulation of rural America 
     and hasten the demise of rural towns.


                        Farmers bid for program

       The Tobiasons receive $85 an acre for their CRP land, 
     considerably above average. Farmers who applied for CRP had 
     to submit a ``bid'' that did not exceed prevailing local rent 
     for comparable land. Payments are limited to $50,000 per farm 
     operator per year.
       Tobiason, once he figures his costs--equipment, fuel, seed, 
     fertilizer, chemicals, land, taxes and labor--and assuming an 
     average yield of 125 bushels per acre at a price of $2.80 a 
     bushel, expects corn land will yield $70 more an acre than 
     CRP.
       ``But there is no risk with CRP,'' he quickly adds. Last 
     year, because wet weather drastically reduced yields, CRP 
     produced the most income. Many farmers lost money on corn.
       The Soil and Water Conservation Society, an ardent booster 
     of CRP, estimates the program will cost upwards to $20 
     billion over the life of current contracts, not including 
     administration. The estimate also does not reflect savings of 
     price and income support programs resulting from idling 
     acres.
       Environmental benefits of CRP are difficult to quantify. 
     USDA officials have made broad estimates for environmental 
     benefits of $6 billion to $13 billion.
       Clearly, says the Soil and Water Conservation Society, CRP 
     has reduced top soil erosion and resulting sediment damage, 
     provided an emergency source of forage, reduced federal 
     commodity program costs and stabilized land prices. But, it 
     added, dollar estimates of these benefits have not been made.
       With environmentalists overtaking farmers in political 
     clout, agriculture policy experts expect CRP legislation or 
     something ``similarly green'' will be planted in the 1995 
     farm fill.


                                  fyi

       A look at the farm operation of Glen and Barb Tobiason, 
     Scotch Grove:
       Own 450 acres of cropland.
       250 acres in Conservation Reserve Program (CRP).
       Rent 150 acres more for crops.
       Finish 400 head of feeder cattle.
       Farrow and finish 1,500 hogs a year.
                                  ____


            Students Pen Narrative of Revenue Assurance Plan

                           (By Marlene Lucas)

       A group of high school English students took on a project 
     last fall that could make them part of farming history.
       They wrote the narrative of a revolutionary proposal that 
     would replace the federal feed grains program with a Revenue 
     Assurance program. Instead of the complex provisions of crop 
     insurance, disaster programs, set-asides and deficiency 
     payments, farmers would be guaranteed 70 percent of their 
     income in a bad crop year.
       Doran Zumbach, a Coggon farmer who headed the Iowa Farm 
     Bill Study Team, contacted Jim Oberbroeckling, North Linn 
     High School English teacher, with the idea of having his 
     students write the narrative of the proposal.
       ``We wanted a group without preconceived prejudices. We 
     wanted someone that would mirror our feelings. Adults have 
     preconceived ideas. We saw this in this age of youth,'' 
     Zumbach says.
       ``We needed a group with writing skills. And everyone talks 
     about involving youth in agriculture, but no one does 
     anything about it,'' he says.


                         learning about farming

       The students agreed to take on the project. Several of them 
     are from farming families and have a rudimentary 
     understanding of farm programs. Others have always lived in a 
     city and were ignorant of the programs. The students were 
     surprised by what they learned from the project.
       ``It was worse than we actually realized. I didn't realize 
     how the farmers were hit. I didn't pay attention,'' says 
     student Deidra Blin.
       ``The target price and the set yields aren't up to date. 
     They were set 15 years ago. They relied on ARPs (acreage 
     reduction program), and they haven't done what they set out 
     to do (which was to reduce supply and raise prices). There's 
     a lot more behind the scenes that go on than we thought 
     before,'' says Kristin Michael.
       Krista Moenk and Nicole Price were surprised that some 
     farmers didn't buy crop insurance and that they could receive 
     as much or more from disaster programs than those who bought 
     insurance.
       Nichole Zumbach, Doran's daughter, became more aware of the 
     politics that formulated the farm program and about the 
     practice of piggybacking special interest bills onto other 
     bills.
       ``I learned about dirty politics and how everyone has to 
     get something for themselves. The Brady bill and flood 
     disaster aid bill both had something tacked on. Why do 
     (politicians) act that way? Why do they have to have 
     something for themselves?'' she asks.
       Other students who participated are Nikki Aden, Chris 
     Chrystal, Jamie Meier, Mark Neighbor, Stephania Sauer, Alan 
     Schaul and Tami Webster.
       Oberbroeckling regularly assigns a research paper to his 
     senior, college-bound English class and writing this 
     narrative took the place of that assignment for the students 
     who chose to participate.
       ``I was quite skeptical at first,'' he says. ``Many of 
     these students are not farm-reared. They are living in town. 
     I didn't know if they would get involved and understand what 
     they were doing.
       ``I'm really pleased and happy and proud of the 
     accomplishment on the part of the students. They did a good 
     job, all of them.''


                            proposal present

       The 18-page document titled ``The Findings of the 1994 Farm 
     Bill Study Team'' discusses the impact of current policies 
     and their shortcomings and describes the benefits of Revenue 
     Assurance.
       Doran Zumback presented the proposal at the Iowa Farm 
     Bureau Federation annual meeting in December, and the members 
     adopted it. He continues to promote the plan at meetings of 
     other farm organizations.
       He's happy with the reaction so far. ``I'm not naive enough 
     to think it's a done deal, but Congress is ready for a 
     change. We have been successful at setting the early debate. 
     We're hopeful it will become law,'' Zumbach says.
                                  ____


          Leaner Harvest--1995 Farm Bill Seen as Less Generous

                            (By David Lynch)

       Washington, DC.--Rep. E (Kika) de la Garza, D-Texas, is 
     famous for his ``Submarine Story.''
       The submarine is a modern masterpiece of machinery, he 
     says, able to go on and on, but ultimately it is forced to 
     come to the surface.
       Why?
       The chairman of the House Agriculture Committee, with great 
     glee and a flourish, then delivers the punch line: ``Because 
     they have no food left.''
       Food production, he explains, is what has made this country 
     great and why the federal government has to help the people 
     who grow the food. Since we eat cheaply compared to other 
     nations, he continues, we should feel indebted to the federal 
     farm program.
       There are many, and their number is growing, who no longer 
     fully share the chairman's convictions for assisting 
     agriculture. Reps. Dick Armey, a conservative Republican from 
     Texas, and Rep. Charles Schumer, a liberal Brooklyn democrat, 
     are among them.
       Four years ago they waged a sophisticated attack against 
     the 1990 farm bill, offering a series of amendments aimed at 
     capping federal farm payments, eliminating the honey and wool 
     and mohair programs as well as cutting the price supports on 
     sugar.
       They landed some body blows to the farm bloc, still felt 
     today. It allowed President Clinton to win congressional 
     approval of his proposals to suspend the honey price support 
     program and to phase out the wool and mohair price support 
     program in 1996.
       Armey and Schumer are back, as are the environmental 
     lobbies that scored major successes in the 1985 farm bill 
     with soil and wetlands preservation provisions that are tied 
     to participation in the federal farm program. In other words, 
     farmers who apply for federal price supports must comply with 
     federal soil and wetlands provisions.
       ``Conventional wisdom says the 1995 farm bill will look a 
     lot like the 1990 bill--only less generous,'' says John 
     Campbell, a former undersecretary of agriculture to Clayton 
     Yeutter.
       ``Conventional wisdom says that commodity loans, target 
     prices and set-asides will stay. Conventional wisdom says 
     that the Conservation Reserve Program (CRP) will hang around 
     in midget form and a larger triple base will be offered up 
     for the budget cutters.
       ``Unfortunately, conventional wisdom is usually right,'' 
     adds Campbell.
       ``I really don't know what to expect,'' admits Susan Keith, 
     an official with the National Corn Growers Association. She 
     says the future is clouded with questions about the General 
     Agreement on Tariffs and Trade (GATT), ``green boxes,'' the 
     Iowa Plan and, of course, money.
       ``We really won't know what the bill's going to look like 
     until January when the president makes his budget request to 
     Congress. But when it comes to the farm bill, I'll always bet 
     with the status quo.''
       Campbell, now a top executive with AGP, an Omaha-based 
     agribusiness, warns that if the status guo and conventional 
     wisdom hold, ``agriculture has nothing but less of the same 
     to look forward to.'' He says American agriculture ``will 
     continue its post-1970s state of splendid decline.''


                         program began in 1933

       What is the farm bill, anyway?
       Technically, it's the reauthorization of permanent federal 
     law that dictates long-term farm legislation.
       The first farm bill was the Agricultural Adjustment Act of 
     1933. The purpose then was the same as the purpose today--to 
     protect farmers from the unknowns of weather and market 
     fluctuations so they may stay in business through bumper 
     crops and disasters and so the American people can reap the 
     fruits of a cheap food policy.
       The farm bill was reauthorized every four years, but in 
     1985 lawmakers realized it would be less job threatening if 
     they did the farm bill every five years. Not only did it give 
     them more political breathing room, but it took the issue out 
     of cycle with presidential elections.
       The CRP that Campbell referred to provides federal rent 
     checks for highly erodible land that is kept out of 
     production. The first parcels under 10-year CRP contracts 
     with the government are coming due. Keith, the former 
     agriculture adviser to former Rep. Dave Nagle, D-Iowa, says 
     there is no funding to renew these contracts. She says farm 
     bill formulators will have the unenviable task of having to 
     find the money or drop the mostly successful CRP.
       The environmental lobby has grown in stature and clout 
     since 1985, and that is not being lost on any of the players 
     in the coming farm bill debate.
       Dean Kleckner, president of the American Farm Bureau 
     Federation, warned in 1990 that to give in to the 
     environmental extremists would be to give up control of 
     federal farm policy. His rhetoric is toned down a bit, but he 
     continues to warn farm audiences that the Nature Conservancy 
     has an annual budget of $173 million; the National Wildlife 
     Federation, $87 million; the Sierra Club, $50 million plus; 
     and ``the 10 wealthiest environmental organizations have a 
     total budget approaching a half a billion dollars.''


                            Little from Espy

       Agriculture Secretary Mike Espy has not had much to say 
     about the farm bill yet. However, he has made a number of 
     references to Revenue Assurance. The concept would assure 
     farmers a certain percentage of past crop revenue. The most 
     common figure used has been 70 percent, but it could be 
     adjusted.
       The plan would combine crop insurance, price support and 
     conservation practices, and ideally would allow the farmer to 
     make the basic choices on what to plant in reaction to market 
     prices.
       No one expects Espy and Congress to buy the proposal lock, 
     stock and barrel. Keith thinks that if it is made a part of 
     the farm bill, it will be a voluntary pilot program.
       Given budget constraints, pressure from non-farm elements 
     in Congress and the environmentalists, change can no longer 
     be held back.
       Campbell urges farmers to resist conventional wisdom. He 
     urges them to form a new farm bloc that includes 
     environmentalists, who he says ``offer a natural political 
     partnership with progressive and market-oriented agricultural 
     interests.''
       ``The average person is much more worried about how food is 
     produced than the adequacy of farm income or the need to pay 
     farmers for not working.'' says Campbell.
       ``A positive political and economic strategy for 
     agriculture would be to trade in the worn-out supply/
     management, command and control income support programs for 
     new environmental enhancement programs.''
       He recommends government lock in all future projected 
     budget outlays for price and income support payments and 
     earmark them for producers who need only to live up to 
     current sodbuster, swampbuster and conservation compliance 
     measures. Farmers would therefore have full flexibility to 
     plant for the market, not the farm program.
       The program would bring farmers and environmentalists 
     together on greener, more productive ground.
                                  ____


New Safety Net--Iowa's Revenue Assurance Proposal Touted as Improvement 
                             Over Subsidies

                            (By Dale Kueter)

       Coggon.--A year ago 11 Iowa agriculture groups, motivated 
     by changing times, developed the seeds for a new federal farm 
     program--a hybrid that would end traditional subsidies yet 
     protect farmers from disaster.
       Getting diverse farm organizations to sit down together was 
     amazing enough. That they produced a new concept for farm 
     economic security was regarded by some as a miracle.
       The proposal has become known as Revenue Assurance. Some 
     call it the Iowa Plan. In its simplest form, it would assure 
     farmers--in years of bad prices or poor weather--a certain 
     percentage of past crop revenue. Seventy percent of gross 
     revenue is commonly used, but it could be some other figure.
       Conservaton practices would be tied to the plan, but 
     farmers would decide for themselves--reacting to market 
     prices--what crop and how many acres to plant.
       Federal price supports have been used for 60 years. But 
     there is a realization, says Doran Zumbach, 44, that less 
     money will be available in the 1995 farm bill. Many believe 
     the subsidy concept will be plowed under by the turn of the 
     century.
       Zumbach, who farms north of Coggon in Delaware County, is 
     vice president of the Iowa Corn Growers Association and was 
     chairman of the Iowa Farm Bill Study Team that created 
     Revenue Assurance. He calls the concept a ``safety net.''
       ``Revenue Assurance is like auto insurance,'' says Zumbach. 
     ``You hope you never have to collect. In 1977, central Iowa 
     farmers had a poor crop because of a localized drought. 
     Prices didn't respond upward because yields elsewhere were 
     good. So they had both a poor crop and low prices. That's 
     what the producer fears.''
       The study team projects the program would pay farmers once 
     every five years instead of nearly every year as under the 
     current system. Savings to the government is estimated in 
     excess of $2 billion annually.
       Zumbach says farmers ``can holler all they want, but there 
     will be more cuts in the agriculture budget.'' He says 
     President Clinton has promised to cut the deficit, ``a pledge 
     he must keep to be re-elected.''
       ``There are 2 percent producers in this country and 100 
     percent eaters. That tells the political clout tale.''


                         ISU analyzing project

       Stan Johnson, Iowa State University professor who is among 
     those advising the U.S. House and Senate agriculture 
     committees on the 1995 farm bill, praised the Iowa 
     agriculture organizations for working together. He says, 
     ``It's a sign that farm groups are . . . realizing it will be 
     difficult to hold traditional deficiency payments.''
       ISU is doing an analysis of Revenue Assurance with results 
     due in June. ``We need to translate what is a loose 
     concept,'' says Johnson. ``How will you calculate the 70 
     percent? Will it be on basis of county average yields or farm 
     average yields? There are lots of mechanical questions.''
       If incorporated into federal farm policy, Johnson believes 
     Revenue Assurance would come down to ``less price protection 
     and more weather protection.'' Price protection, he says, can 
     be purchased through the futures market. Johnson says the 
     trigger for Revenue Assurance should be on the basis of 
     county yield averages.
       ``So if you are a bad farmer, an inefficient farmer and all 
     others in the county do a good job, you don't get any 
     payments,'' he explains. Once a county would be declared 
     eligible for Revenue Assurance payments, then individual farm 
     records would be used to determine amounts, he says.
       Revenue Assurance would be the farmer's reward, says 
     Zumbach, for conservation compliance. There has long been a 
     belief among agriculture policy-makers that all society 
     should share in conservation costs. ``It costs farmers real 
     dollars to build terraces or buy no-till drills,'' he adds.


                          plenty of criticism

       The plan has plenty of critics. Farmers are not famous for 
     building consensus. Negative response has already come from 
     some rice and cotton farmers in the South and wheat interests 
     in the Midwest. Iowa Plan proponents argue that most 
     opposition is based on fear of change.
       Sen. Tom Harkin, D-Iowa, initially charged the plan would 
     lead to expanded corn production. Zumbach believes the 
     opposite.
       ``Now the farmer is locked in by the program,'' says 
     Zumbach, referring to corn-base acres that provide the 
     starting point for figuring subsidies. ``Ask farmers if they 
     plant corn on corn, and two-thirds will say yes. Ask them if 
     they would grow less corn if it weren't for maintaining a 
     base or receiving a subsidy, and 80 percent will say yes.''
       Zumbach and other proponents say there would be more crop 
     rotation under a system that didn't subsidize corn.
       Zumbach says Canada is revising its farm program along the 
     lines of Revenue Assurance. No all of the 11 organizations 
     that helped draft the plan have formally endorsed it yet. 
     However, Zumbach says he would be surprised if any didn't.


                           what senators say

       Sen. Charles Grassley, R-Iowa: ``We've got to get away from 
     the traditional commodity programs because of the reduced 
     (federal) budget.'' Grassley said he likes the Revenue 
     Assurance plan. ``On my farm we would be better off if we 
     could rotate between corn and soybeans, but the (present) 
     farm program requires that we maintain a corn base.'' 
     Grassley said he is struck by the fact that disparate farm 
     organizations have endorsed Revenue Assurance.
       Sen. Tom Harkin, D-Iowa: The Revenue Assurance proposal is 
     a good starting point for the farm bill debate, but it has to 
     be studied to see how it would really work, he said. ``It's a 
     serious effort that should be put through the hoops.'' While 
     it is an interesting idea, he said it's too soon to say if it 
     should be part of the farm bill.
                                  ____


                       A Future Without Subsidies

                            (By Dale Kueter)

       In 1984, New Zealand was a nation of 3 million people and 
     60 million sheep. The large sheep population was in part 
     attributed to the country's generous farm subsidy program, 
     which was based on livestock numbers.
       Then in 1984, after bitter debate, New Zealand's Parliament 
     abolished its subsidy system. In protest, farmers slit the 
     throats of sheep. Some political opponents predicted half the 
     farmers would go out of business.
       ``In the end only 3 percent of farmers went under,'' said 
     Denis McLean, New Zealand's ambassador to the United States. 
     ``There's barely a farmer today who wants to go back to the 
     old system,'' he added during a telephone interview.
       After a 60-year run, farm subsidies in the United States, 
     too, are getting close review. Some even predict their 
     elimination by the end of the century. Subsidies are caught 
     up in changing times, the drive to cut the federal deficit 
     and new international trade agreements that restrict such 
     programs.
       Stanley Johnson, farm policy expert at Iowa State 
     University, says paying farmers a subsidy to make up for low 
     prices has declining support. If direct payments survive at 
     all, he says, they will be targeted to smaller farmers who 
     need them. ``Most government payments now to the largest 
     farmers.''
       What would the future be like without farm subsidies?
       There is an array of opinion. Some say farm prices would 
     initially go down, forcing many marginal farmers out of 
     business. Then prices would rise. Many see a period of 
     volatile consumer prices. Others predict a hastening of 
     corporate involvement in farming.
       It's clear that more than just farmers would feel the 
     impact. Coggan farmer Doran Zumbach puts it this way: Even 
     though farmers make up less than 2 percent of the U.S. 
     population, ``100 percent of Americans eat.'' Food prices 
     affect everyone.
       The ripple would go beyond farmers and consumers. Rural 
     towns that grew up on providing services to farmers would be 
     hurt by fewer farmers. Rural schools, churches and hospitals 
     would be affected.
       ``And what do we do with displaced farmers?'' asks Bob 
     Wisner, ISU grain marketing economist. ``That's something we 
     need to be aware of. They will be competing with urban people 
     for city jobs.''
       The subsidy issue has been debated for years. Farming is a 
     business like any other, some have argued, and should stand 
     on its own. Subsidies have not only benefited farmers, others 
     counter, but have maintained a cheap food policy in the 
     nation.
       The subsidy debate has been joined by new forces and new 
     attitudes.
       Environmentalists, who gained a foothold in farm policy 
     with the 1985 farm bill, are poised to assert greater 
     influence. So called ``green'' programs, incentives to 
     farmers for environmental protection, will likely expand.
       Federal farm programs have been tied to conservation 
     compliance. Even though farmers generally are good stewards 
     of the soil, it is feared conservation practices would 
     decline if subsidies were eliminated. Some believe 
     environmentalists would then seek mandatory conservation 
     steps without reimbursing farmers.
       ``Our programs traditionally have required farmers to idle 
     cropland, to take conservation steps in return for payments 
     to help stabilize prices,'' says Wisner. ``In Europe, farmers 
     have produced all they wanted and were paid for the excess.''


                            attitudes change

       ISU's Johnson says urban attitudes toward the family farm 
     have changed dramatically. He says city people, generally, 
     ``are more interested in preserving the rural landscape than 
     farm families. The traditional idea of the family farm is 
     dead.
       ``Not that there won't be family farms,'' he says. Instead 
     of mom and dad and the kids, ``family farms will be family 
     partnerships or proprietorships and family corporations.'' He 
     says several family entities will operate bigger and bigger 
     farms.
       In six decades of existence, farm support programs have 
     taken on the layered look. Responding to various interests, 
     they have been patched together in a complex pattern that 
     itself is a basis for criticism. Many farmers don't 
     understand them.
       A 1991 survey of dairy farmers by the Government Accounting 
     Office showed that half were not familiar with the 1990 farm 
     bill.
       ``I don't know which way the future will take farm 
     subsidies,'' says Wayne Rasmussen, who served as USDA 
     historian for a half century. ``I believe they will survive 
     in some form, but most certainly be tied to environmental 
     concerns.''
       If subsidies are eliminated, Rasmussen says farm markets 
     are stable enough ``that we wouldn't drop into any 1920s kind 
     of collapse.'' The farm economy then constituted 40 percent 
     of the country's economy, he said. ``If subsidies are 
     dropped, I think some farmers will be driven out of business. 
     But somebody will be out there to produce the food.''


                            Affordable food

       ``I don't think our food will ever get expensive under any 
     scenario because of our inherent ability to produce,'' says 
     Gary Hanman, chief executive officer of Mid-America Dairymen. 
     ``Right now we have agriculture production throttled back to 
     60 percent.
       ``Our farmers are the most productive anywhere. They are 
     the first to adopt new technology. We ought to be producing 
     the food because we are more efficient than farmers in 
     Europe. They ought to be doing something else.''
       But with the General Agreement on Tariffs and Trade (GATT), 
     farm products are likely to be moving in all directions. Most 
     experts say GATT is good for U.S. farmers. While more foreign 
     food products will be coming into the United States, American 
     farmers expect to be sending more out.
       GATT has yet to be ratified by Congress. Some farm groups 
     and farm state senators have threatened to oppose GATT if 
     farm subsidies are cut to make up for income lost because of 
     reduced tariffs.
       ISU's Johnson says the old pillars for farm programs--an 
     adequate and cheap supply of food, stability in agriculture 
     and maintenance of farm income--are being replaced. Global 
     trade has changed the food supply issue. Market tools like 
     futures trading can protect farmers from price changes, he 
     says.
       In the future, he predicts, agriculture policy and 
     expenditures will be shifted further to environmental issues, 
     control of food quality, research, and development of rural 
     infrastructure.
       Next year's farm bill, however, will retain some price 
     protection for farmers, many believe. That will either come 
     through the present deficiency payments system or adoption of 
     some new program like the Iowa Plan. The latter, developed by 
     a coalition of Iowa farm groups, would put a price ``safety 
     net'' under farm revenue.
       There is also a move to revise the 1937 federal milk 
     marketing order system, a complex formula regarded by many as 
     antiquated. A federal judge has ordered Agriculture Secretary 
     Mike Espy to restudy the system, which helps determine the 
     price of liquid milk.
       In New Zealand, farm subsidies were the first to go in 
     reforming government involvement in the economy. In the 
     United States, too, other subsidies may be in for 
     examination.
       ``We all receive some subsidies,'' says USDA spokesman Ray 
     Wagner. ``Newspapers get favorable postal rates. When I 
     deduct mortgage interest from my income tax, that's a form of 
     subsidy.''
       But farmers' political clout has withered. And the cash 
     crop that subsidies have provided for 60 years is withering 
     with it.


                                  FYI

       One scenario if subsidies end:
       Prices of some goods will go up, while prices of other 
     goods will go down. The resulting changes in prices will 
     affect farm markets and consumer prices.
       Marginal farmers will probably go out of business.
       The number of large, family corporation farms likely will 
     grow.
       Fewer farmers will mean less business for small-town 
     merchants. Many communities in rural America would suffer 
     unless jobs were created.
       Jobless farmers will compete with urban residents for city 
     jobs.
       Trade agreements will steer food policy and markets in new 
     directions.
                                  ____


          USDA Refuses To Divulge Names of Subsidy Recipients

                            (By Dale Kueter)

       Legal counsel for the U.S. Department of Agriculture says 
     privacy rights of individual farmers prohibit the agency from 
     releasing names of top recipients of agriculture subsidies.
       The Gazette sought the names in preparing this series of 
     stories on federal farm programs. The USDA spokesman said a 
     1989 Supreme Court ruling elevates privacy rights to new 
     standards. The media must show that the public interest 
     clearly surpasses privacy interests, he says.
       Prior to the 1989 ruling names of subsidy recipients could 
     be published.
       The newspaper had sought the information in an effort to 
     help both rural and urban readers decide if dwindling federal 
     subsidies were being used in a fashion they agree with. The 
     newspaper argued that such information was vital for any 
     debate on the future direction of farm policy and subsidies.
       USDA officials said they can release information about 
     subsidies given to farm corporations, unless they represent 
     family operations. Nearly all Iowa farm corporations are 
     those involving family farmers.
       Federal law restricts deficiency payments on commodities 
     such as corn to $50,000 a year. There is also a $50,000 limit 
     on payments for land idled under the Conservation Reserve 
     Program.
       The number of Eastern Iowa farmers who received the maximum 
     payment in 1992 ranged from none in Clayton and Winneshiek 
     counties to 27 in Buchanan and 19 in Fayette. However, 
     officials at Iowa State University say many farmers reach 
     payment levels of $30,000, $40,000 and amounts just short of 
     $50,000.
       Some, including economists at ISU, believe that over the 
     years many farmers have managed, legally, to work around the 
     $50,000 limit. Souses, parents or siblings would form 
     separate corporations to establish ownership in part of a 
     farm to qualify for separate subsidy payments. A prominent 
     Eastern Iowa grain producer says ``any farmer with a halfway 
     decent lawyer'' could work around the $50,000 limit.
       USDA officials in Des Moines questioned claims that such 
     legal maneuvering was widespread. Most Iowa farmers, they 
     say, aren't big enough to reach the payment limit.
       However, after a mid-1980s scandal in Mississippi, in which 
     a group of individuals formed 21 corporations to reap federal 
     subsidies, Congress passed legislation limiting each 
     individual to forming three such entities.
       With the 1990 farm bill, Congress said a husband and wife 
     can be treated as separate persons for purposes of subsidy 
     qualification without each forming a corporation.
       In such a 50-50 joint operation, each, in theory, could 
     qualify for up to $50,000 in payments. However, stresses 
     Steve Phillips, an Iowa USDA official, a spouse must make a 
     labor and management contribution to be eligible.
       If, for example, the wife holds an off-farm job, the USDA 
     could decide it is a 55-45 partnership. In such a case, the 
     husband could receive the full $50,000 in payments, but the 
     wife could not receive more than 45 percent of that.
       For 1994, Phillips says, based on the proposed deficiency 
     payment schedule, a farmer would have to have some 1,250 
     acres of corn base before nearing subsidy payment limits. For 
     a spouse to also qualify for payments, the acreage would have 
     to be even more.
       The Gazette has requested congressional agriculture leaders 
     to include language in the upcoming farm bill that would 
     inform farmers who receive subsidy payments that their names 
     would be published. A USDA official says that would be 
     similar to a law regarding publishing of salaries received by 
     federal employees.

                          ____________________