The Farmers' Bursting Cornucopia

IT should be the best crop I've had in many, many years," gloated Delmar Grotefendt, surveying the fields of ripe golden corn on his 350-acre farm in Marine, Ill. Only last year corn blight, which destroyed 15% of the nation's corn harvest, rotted black much of Grotefendt's planting. Farmers feared that the virulent fungus might ruin up to half the crop this summer. Yet last week, a mood of quiet satisfaction was evident across the U.S. heartland as farmers began bringing in one of the most bountiful harvests in history.

Almost every crop will be larger than last year. The Agriculture Department expects a record 1.6 billion bushel harvest of wheat, or 18% more than in 1970. An unmatched 1.2 billion bushels of soybeans is predicted. Since the threat of widespread blight never materialized, the corn yield is expected to weigh in at an unprecedented 5.3 billion bushels, up 28% from last year.

Perfect Weather. A big factor in checking the blight was the unusually dry weather in July and August that deprived the fungus of life-giving moisture. The cornbelt states of Illinois, Nebraska and Iowa, which were badly plagued in 1970, escaped with only light damage this summer. "The weather was perfect," says Wyne Englehardt, who grows corn and wheat on a 4,000-acre farm near Oakley, Kans. Many farmers in Southern states where leaf disease broke out in 1970 planted blight-resistant seeds this year. Thus the spores could not accumulate and be blown North to infect fields there.

A change in the Government's complicated price-support program also contributed to the overflowing corn crop. To offset the possible effects of blight this year, the program was realigned to induce farmers to use up to 20% more of their corn-growing land instead of leaving it fallow. The result: corn plantings increased by almost 7,000,000 acres, to 64 million acres.

This bursting cornucopia is not likely to result in quick or major cuts in food prices. Feed for hogs and cattle will be cheaper as a result of the bumper corn crop. But farmers reduced their hog production last year because of low prices and high feed costs caused by the blight. The effect of their decision will be felt in stores early next year and will probably make bacon, sausage and other pork products slightly costlier than now. More cattle will be raised this year, but this beefed-up production will not be reflected in meat-counter prices for 18 months--if ever. Says Economist Larry Simerl of the University of Illinois: "Consumers buy more beef every year, and this increased demand is likely to absorb any increase in production." The best that shoppers can probably expect is more cut-rate supermarket specials on chickens.

Less Clout. For many of the 3,000,000 U.S. farmers, the pleasure derived from the bumper crop is tempered by a wistful remembrance of things past. Its numbers much diminished by increasing mechanization on ever larger tracts, the farm bloc has lost much of its political clout in Washington and the nation. A chronic dissatisfaction afflicts small farmers, many of whom are forced off the land each year. Those who remain face persistent rises in production costs; last year, despite a record gross income of $56.6 billion, farmers wound up with total earnings of $15.7 billion--$500 million less than the year before.

Farm income this year will probably not rise above the 1970 level and could come in slightly below it. Any dip in prices for livestock, which accounts for about 60% of farm earnings, has a widespread effect. Thus the payments farmers receive for the rich autumn bounty will be partially offset by relatively meager prices for hogs, poultry and eggs in the first half of the year. To nudge farmers into growing more corn as a hedge against blight, the Department of Agriculture discontinued some support payments for unused acreage. All together, the move will snip Government payments to farmers this year by $500 million, to about $3.2 billion. Economist Simerl reckons that because of lower prices the total cash value of the record corn crop might not be much higher than that of the 1970 harvest.

A major part of the decision on prices for farmers, and indirectly for consumers, will be made in commodities exchanges like the Chicago Board of Trade, the nation's largest. September corn futures closed there last week at $1.40 a bushel v. $1.51 for the same day last year. Because of growing world demand for soybeans, of which the U.S. is the leading producer, trading in them has been brisk, and the commodity closed the week at $3.05 compared with $2.79 at the same time last year.

The big imponderable for traders, farmers and the taxpaying public is whether foreign countries will retaliate against the U.S. import surcharge. Meeting with President Nixon last week, farm group leaders urged an early end to the surcharge to prevent their goods from being kept out of overseas markets. In the year ending last June, the U.S. sold $2.9 billion worth of farm goods to Europe. Of the total, $1 billion was in sales of soybeans and soybean products, which are used in things like margarine and ink. This commodity would be vulnerable in any trade war; if necessary, Europeans could import soybeans from Brazil or Africa. "There can always be substitutes if it is a matter of national policy," says Clarence Palmby, an assistant secretary of the Agriculture Department.

Concerned Traders. Small signs of annoyance are already evident in Japan, the world's biggest customer for American wheat and tobacco. In fiscal 1971, Japan spent $1.2 billion for U.S. farm products, up from $900 million in 1968. Last week, Japan bypassed the U.S. and bought wheat from Canada and Australia, a move that caused concern among traders in Chicago's market. Any large-scale retaliation by foreigners against U.S. farm goods would be painful. It would lead to lower farm incomes, and to make up for them, bigger Government crop subsidies--paid for by all U.S. taxpayers.

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