The Squeeze

In the midst of the growing economic boom stands a lonely exception: the U.S. farmer. Farm income has been declining since the peak of February 1951; it dropped nearly 20% in the past four years, 10% in 1954 alone. Farm operating costs, however, remain at near-peak levels. At mid-March farm parity (the ratio between the prices that the farmer receives and those he pays out) dipped to 86, the lowest point since 1940 and 14% below the theoretical "fair" level.

The drop has stirred up a new battle in Washington over rigid v. flexible support prices. The House Agriculture Committee (with its Democratic majority) a fortnight ago charged that the "dangerous Government policy of lowering price supports" has "pauperized agriculture." To which President Eisenhower replied: "Not correct." The program will not be felt until '55 crops are ready for marketing.

Is the farmer really the forgotten man of the boom? Actually, he is doing better than figures of the past few years indicate. Since 1939, farmers' incomes have risen more sharply than nonfarmers' (276% against 189%). The purchasing power of individual farmers has also been disproportionately higher; it is up 70% since 1939, compared with a 50% hike for non-farmers. Moreover, the trend from farm to city cut the number of farmers by 3.5% last year. Thus, per capita farm income last year rose slightly (from $914 in '53 to $918). At the same time per capita nonfarm income fell 3%, so that the farmer had a better year proportionately than his city brother.

In the Drought. But by and large, a farmer's prosperity depends on where he lives, and how good a farmer he is. In the drought-parched wheat-producing plains of eastern Colorado and western Kansas, where the moisture level has reached an alltime low, farm income has fallen as much as 75%-Some small farmers have quit and are moving to the cities or the oilfields. Big operators survived by cutting corners: laying off help, patching up equipment, postponing purchases.

To add to their troubles, last week the Federal Crop Insurance Corp., which has gone $6,000,000 into the red insuring wheat against drought, announced that it was canceling next year's crop insurance in nine dried-out Colorado. Texas and New Mexico counties, covering 3,751 policyholders. Said Farmer George Pittman of Lamar, Colo., who saw his 642 acres of winter wheat blow away this year: "That crop insurance saved me. It was the only security I had in getting a loan. Now the bank has turned me down. I've got nothing."

In Mississippi, scourged by flood and frost as well as record cotton surpluses, Bolivar County Farm Agent T. Y. Williford reported: "We are probably in as bad shape as when we plowed up cotton in 1933, or even worse."

Other areas boomed. A combination of good weather, lavish use of fertilizer and hard work gave wheat and pea growers their best yields in history in 1954. Last week one Washington farmer was building a $100,000 home, including a Hollywood-style swimming pool. No one was selling his Cadillac or private plane in California's San Joaquin valley, where grape and fruit growers reaped good incomes. Fanner Sid Cruff (250 acres) reported last year as his worst in the past half dozen, but the new Cadillac that he bought is too long to fit in his garage. In the Imperial valley farmers got around Government acreage slashes by upping their yields per acre and did almost as well as usual, while in Washington (peas, beans, barley, fruit) farmers also had a good year.

The Illinois farmer feels little pain. Iowa hog-corn growers have to sell three hogs to make as much as they did from two last year, but local bankers report no real withdrawal of savings. In northwest Minnesota, as elsewhere, farmers held on to last year's model cars, but when the Fargo, N. Dak. TV station opened, they rushed to get new TV sets.

On the Margin. The marginal farmer, however, is in trouble almost everywhere. He lacks the acreage to diversify, the size and know-how to utilize advanced technology and equipment, the cash reserve to tide him over. Said a Mitchel, S. Dak. real-estate broker: "The little fellow's got to have a crop each and every year or he's licked."

In Polk County, Iowa 80 farmers moved out, while others quit around Emporia, Kans. and in northern Oklahoma. Thousands of tenants gave up in Mississippi. Said a Greenville, Miss, cotton broker: "The 40-to-50-acre farmer just can't make it. He doesn't have the land to go into beans or oats. He can't afford farm storage for the beans, as required for a Government loan; he can't afford to buy a combine for such a small amount of grain, and all he knows how to grow is cotton anyway."

There is no doubt that the delayed postwar adjustment in farm prices is cleaning out inefficient and small fanners, just as the recurring postwar adjustments in industry have shaken out the least efficient producers. Said Louis H. Rochford, president of the Tejon Ranch Co. near Bakersfield, Calif.: "You can't be a shoestring operator any more. The farmer has to be a real businessman."

But last week there was also a growing feeling that the worst is over. Some products--notably beef and dairy--have gone through their readjustments and are on the upswing; the rest--wheat, poultry, rice, tobacco, cotton--are in the midst of the shakeout. The process, though painful to the individual farmer, is beginning to bring health to the entire farm economy. Said an Omaha banker, looking over his farmer clients: "They're solid now. They knew they were in a dream world before."

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