MPR: "Freedom to Farm" Legislation Leading to Changes in Farming Practice

"Freedom to Farm" Legislation
Leading to Changes in Farming Practice
By Mark Steil
June 9, 1998

Part of an MPR Mainstreet Radio project on farming issues.
The June 8 - 10, 1998 series includes:
1. What's Driving U.S. Farm Policies?
2. "Freedom to Farm" Legislation Leading to Changes in Farming Practice
3. Regional Farmers Join Global Economy
4. Secretary of Agriculture Visits Region, Offers Help
5. The Economics of Organic Farming

The price farmers receive for their corn, soybeans, and wheat are low and headed lower. American farmers are producing more than this nation or the world can use. The problems come as a historic change in the federal government's role in agriculture is about to take place. Two years ago Congress passed landmark legislation known as "Freedom to Farm." It will end most federal farm support payments after 2002. With the current downturn, farmers wonder if the disappearance of the federal safety net will cause a wave of farm consolidations and bankruptcies during the next decade.

SOME FARMERS SAY A FULL-BLOWN CRISIS like they went through in the mid-1980s is imminent, others believe it's only a moderate downturn, part of a cycle all segments of the economy go through. Brian Romsdahl farms near Butterfield, and he's worried.

Romsdahl: I feel the farm economy is pretty dismal right now with the current prices of both corn and soybeans.

He blames the 1995 farm act, the "Freedom to Farm" law for the gloomy indicators.

Romsdahl: I don't have a very rosy picture of the future, if this is kind of the precedence.

Romsdahl believes Freedom to Farm has launched the agricultural economy on a damaging cycle of overproduction. By eventually ending government payments and leaving farmers on their own, the legislation leaves it to farmers, not the government, to decide how much grain they grow. That may sound like a no-brainer, but for more than 60 years, until Freedom to Farm passed, the government was involved in deciding how much grain a farmer produced. Romsdahl says the system wasn't perfect, but it held down production when elevators bulged with grain, helping to prop up prices. He says left on their own, farmers will do what comes naturally, grow as much as they can.

Romsdahl: When you have bumper crops, if it truly is a supply-and-demand market, and you're supplying more than what the demand is, it's financial suicide.

Call it that, or call it free enterprise - with all the risks that system contains. Southwest Minnesota farmer David Roe says Freedom to Farm may be painful, but it's needed.

Roe: There's an argument that we don't subsidize the hardware store owner or the small manufacturer, why should we subsidize the person involved in production agriculture? I don't believe that you can afford to subsidize one sector of the economy to the expense of the others.

But Roe also sees gloomy days ahead, and he says a race is underway as farmers position themselves for the end of federal payments in 2002. To make up that lost income and pay the rising cost of fertilizer, machinery, and seed, Roe says most farmers have come to the same conclusion.

Roe: They know that they're going to have to farm more acres to spread those tremendous production costs over more acres.

He says that scenario will hit small farms hardest, since they are less able to assume the debt required to buy land.

Roe: Those who adapt to the change the best will be farming and those of us who don't won't be farming.

With almost all major farm commodities in a price tailspin - corn, soybeans, hogs - Roe says this year may be a preview of the future. With no government production controls, overproduction could be a recurring problem. That assumes government stays the course and gets out of farming.

C. Ford Runge: Nothing is ever locked into place when it comes to Congress.

University of Minnesota Professor C. Ford Runge says it's implausible, even laughable, to believe government will stay the course and end most payments to farmers after 2002. He says our congressional system almost guarantees that involvement of some kind.

Runge: Anyone who believes that the government is going to entirely walk away from intervening in agricultural prices is naive. The fact is if you have a substantial number of farmers in your congressional district you see it properly as your job to respond to their concerns. And to suggest that they would have nothing to do in these areas simply goes against the nature of the political beast.

Runge says while it's true farm-state representatives make up a small part of Congress, they and the farm interests who lobby them are well organized. Farmers in fact have won several major victories recently, including the extension of the ethanol credit. Runge says the economic rumbles just starting in farm country will be heard in Washington.

Runge: Now that the prospect of weaker prices and some additional weakness in the export markets is evident, Congress will be forced to think through what sort of safety net they can devise. But that kind of discussion has only been behind the scenes and nothing has been brought forward of a substantial sort that I know of to date.

A major consideration for Congress is the importance of farm exports to the agricultural economy. Right now an economic downturn in Asia is causing big problems for U.S. farmers. As farmers work in their fields in the Midwest, their market is the world, much of it far beyond the reach of the Freedom to Farm act.

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