Oversupply of grain pushes prices to 30-year lows

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I don't think we would deplete the shelves by stockpiling, do you?



Fair Use Doctrine --- For Educational Purposes

------------------- OMAHA, Neb. (AP) - Marvin Yost was far from jubilant when he finished harvesting the 800 acres of wheat this past week on his farm near DeWitt in southeast Nebraska.

In any other year, he would be celebrating yields of more than 50 bushels per acre - but this is not a good time for a good crop.

Bumper harvests across the nation's Bread Basket are adding to an oversupply of grain that has pushed commodity prices to their lowest levels in nearly 30 years.

Yost and others are feeling the pinch of falling incomes and when they hurt, the people who sell them everything from washing machines to tractors also suffer.

``Where do we starting cutting?'' Yost asked. For so many self-employed farmers, it begins with personal expenditures, like a new pickup. ``That's totally out of the question,'' he said.

Wheat, corn and soybean production is far exceeding demand, pinning prices below the break-even mark for most farmers for the second straight year. And the situation gets worse as more grain is brought in from fields.

``To turn it around, it's going to take a severe drought ... but I hope it's not here,'' said Victor Bohuslavsky of the Nebraska Soybean Growers Association.

Many area grain elevators and silos were already spilling over before this year's harvest started. Last year's above-average crop yields and low prices prompted many farmers to store their grain rather than sell.

As a result, 850 million bushels of soybeans sit in storage nationwide, compared to 180 million bushels two years ago.

The grain surplus is burying many farmers in debt, and forcing sections of rural America into poverty, said Greg Peterson with Center for Rural Affairs in Walthill.

The center's adjusted gross income figures for the 50 poorest U.S. counties show 22 of them lie in the fruitful upper Plains, from North Dakota to Nebraska - areas dependent on agriculture.

No. 1 on that list is Arthur County, in northwestern Nebraska's panhandle, with a gross income averaging $9,385.

Farmers are traditionally a sturdy lot who can withstand the myriad of pressures, many of which - like the weather - are beyond their control. But optimism is waning as those pressures multiply.

- Wheat farmers are getting about $2.25 a bushel at local elevators, a price that was last this low in the 1970s.

- Corn has been trading at about $1.50 a bushel, the lowest level since the late 1980s.

- Soybean prices are hovering at 27 year lows of around $3.35 a bushel, a drop of more than $1 since April.

- Analysts say that even though Asian markets are beginning to recover from the economic collapse that began two years ago, relief to U.S. farmers may come too late. Before recent economic troubles, the Pacific Rim traditionally consumed U.S. grain surpluses.

- Pork producers only recently started to recover from some of the lowest prices in four decades, but continue to face intense competition from factory farms.

``Mental attitudes are the lowest in my recent memory,'' said Mark Lambert with the Illinois Corn Growers and Marketing Board in Bloomington, Ill.

When farmers look at prices, Lambert said they no longer see dollar signs.

``They see their future,'' he said. ``They make a direct correlation between those numbers and their survival.''

And it's beginning to be felt in the farmhouse.

Michelle Soll with the Nebraska Farm Hotline in Walthill said they field an average of 13 calls per day, up from 9 per day this spring. The hotline began during the 1980s farm crisis. Calls were not tracked during the program's infancy, but are up significantly since then, she said.

The hotline has received at least four suicidal calls in the past year. It had received only two suicidal calls during the six years before.

Most callers, not yet that desperate, seek financial or mental stress counseling referrals.

The hotline mailed 200 credit vouchers for rural family members to get free mental stress counseling between April and mid-June. All but four were used in the program's first offering.

Lenders are beginning to put pressure on farmers to get their finances in order. Callers want their finances reviewed by attorneys and farm counselors. ``They want to know, 'do we liquidate, restructure ... where do we go from here?''' Soll said.

The Federal Reserve Bank of Kansas City, Mo., recently reported the region's farmland values dropped for the third consecutive quarter. Federal Reserve economist Russell Lamb said farm loan demand is not on the rise, but that may indicate farmers are restraining their borrowing. Rural banks report they have funds available to loan farmers.

``If you don't see a recovery in prices in the next few weeks, there are going to be some pockets of pain,'' Lamb said.

And they will not be limited to the farm.

The poor agricultural economy has already set off a chain reaction. The New Holland farm equipment plant in Grand Island on Thursday began laying off nearly all of its 630 employees and will close until January because of decreased sales.

Deere & Co., the world's largest producer of farm equipment, said in May it expects sales to fall by 18 percent to 20 percent this year from last year's levels and has lengthened its usual summer plant shutdowns to reduce production.

The 1996 Freedom to Farm Act, aimed at weaning farmers away from government price supports in exchange for more leeway in what they plant, may have contributed to the grain glut, said Doug Schmale, a member of the Nebraska Wheat Board.

``We need to get away from this fantasy that we can sell everything we can grow at a profitable price. We simply oversupply the market,'' Schmale said. ``You can't pay the bills on the rhetoric of free trade.''

Until a change in farm policy or until Mother Nature decides it's time for a drought, farmers like Yost are forced to play the waiting game.

While he decides whether to sell his grain or hold it for a better price, his pocketbook is hit again - paying to store his grain.

``There are just two things wrong with wheat,'' he said. ``Price and price.''

Copyright 1999 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

-- storing (food@for.us), July 11, 1999


(1) Reason to prepare...we're helping keep farm prices reasonable.

(2) We are preparing at low prices, sort of like Joseph during the seven fat years before the3 seven lean ones...

-- Mad Monk (madmonk@hawaiian.net), July 11, 1999.

Oversupply is not the only problem, it is because our government (Clinton) has sanctions on more countries than ever before. We can't ship our food to them, and they can't buy it. Beans this week are $2.35, and corn is something like $1.25 a bushel. We will either have to help support our farmers by giving them tax breaks, or subsidies, or we will have a lot of farmers bankrupt. I live in the middle of farm country here in Illinois and I don't see any pigs anymore. Only big hog confinments...and the economy around here is in sad shape. John Deere's headquarters is here. My husband is a Union Carpenter and there is no work being done because so much is farm releated around here. We will have no family farms soon. I wonder what impact corporate farms will have on the price of food? I got 150 pounds of wheat for something like $5.00.....If I ever get the art of using it down I may never buy a loaf of bread again. Jo

-- Jo Stang (tj4261@geneseo.net), July 11, 1999.

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