Transcripts

text | pdf |

---

PERRY FINELLI: And good morning. This is Midday from Minnesota Public Radio. I'm Perry Finelli in this week for Gary Eichten. The time now is six minutes past 11 o'clock.

Well, this week on Minnesota Public Radio, we are looking at what some call the new Midwestern farm crisis. Despite almost perfect growing conditions, many farmers face financial hard times because of changing regulation and economic conditions. Today on midday, we're going to present a series of Main Street radio reports on the farm conditions this year. And later on in the hour, we'll be joined here in the studio by Wally Sparby, Director of the Federal Farm Service Agency.

But we begin this hour with a report on US Agriculture Secretary Dan Glickman visit to Minnesota and North Dakota Monday, offering emotional support and announcing changes to farm programs in hopes of helping struggling upper Midwestern farmers. Glickman visited individual farms, and then spoke to 2,000 farmers at a forum. Minnesota Public Radio's Hope Deutsche reports.

HOPE DEUTSCHE: As about a dozen reporters and congressional delegates tagged along, East Grand Forks farmer, John Driscoll told Secretary Glickman, farmers are suffering. There's been years of bad weather, low prices and a succession of blighted crops. He showed Glickman this year's wheat, healthy so far. But Driscoll says weather and disease could still destroy his field.

JOHN DRISCOLL: It's just a little early for the scab.

DAN GLICKMAN: Well, if you were to get scab, when would it come?

JOHN DRISCOLL: We get real humid weather about the time it's flowering and it's about three weeks away from flowering right now. And the scab moves around in the atmosphere, on the air, and it'll just take over this field.

HOPE DEUTSCHE: Glickman used his trip to announce the US Department of Agriculture is putting an extra $200,000 into scab research this year. And he'll ask Congress to increase scab research funding next year to almost $2 million. Economists say since 1993, scab has caused more than $2.5 billion in damages to North Dakota alone. Last year, scab spoiled much of Driscoll's crop, and the third that was left was poor quality. Driscoll says, worse yet, the federal crop insurance he purchased didn't cover his losses.

JOHN DRISCOLL: Our guarantees from the losses in the past have driven our yields down so low that we didn't trigger any funds from our federal crop because our yields are so low anyhow that it just didn't affect it.

HOPE DEUTSCHE: Driscoll's problems were echoed throughout the day by other farmers who are in similar circumstances. Farm disaster aid ended in 1994 and crop insurance was expanded. But crop insurance is based on previous crops. Farmers who have had several years of crop failure get little help from the program.

Several hundred farmers gathered at forums in Grand Forks and East Grand Forks Monday, sharing their fears, frustrations and solutions with the US Agriculture Secretary. Glickman says his department will begin addressing the farmers' concerns immediately.

DAN GLICKMAN: This week, we'll go back. And again, we'll examine and reexamine the administrative actions on crop insurance and other program issues. The message of this meeting needs to go directly to the president as well, and I will take it to him.

HOPE DEUTSCHE: Next year, Glickman says the agriculture department will start a pilot project to provide insurance for alternative crops, such as mustard and cranberry and oilseed. And Glickman says he will work on increasing wheat prices, currently around $3 a bushel.

But that news comes too late for some. More than 2,500 North Dakota farmers have quit in the past two years, and farm economists estimate another 1,800 will quit if low grain yield and prices continue. A week ago, Sharon and Kurt Therrien auctioned off their farm. Sharon warns her neighbors and Glickman, it's not easy to get out of farming. She says capital gain taxes are draining everything away.

SHARON THERRIEN: We're 50 years old, and we're going to be such debt for the rest of our lives. And all our equity out of this 111 year farm, three generation is gone. You guys got to figure out because there's going to be a lot of us quitting. You got to help us get out.

HOPE DEUTSCHE: Glickman encouraged farmers to continue working while he tries to incorporate long-term solutions.

DAN GLICKMAN: And there are no magic answers to the problems. I wish there were. Believe you me, I would love to snap my fingers and double, triple the price of wheat overnight. But I think we can do some things both administratively as well as legislatively, to help producers cope during these very, very difficult times.

HOPE DEUTSCHE: Glickman also restated his desire to change the 1996 Farm Act, the so-called Freedom to Farm, which released farmers from government production quotas, but also removed federal price supports. While the act is working well in most parts of the country, the combination of blight and low wheat prices has hit upper Midwestern farmers hard. Glickman agrees with farmers. It could be considered the freedom to failure act for some farmers. However, Glickman says supporters for such change have little support in Washington.

Hundreds of acres of farmland in North Dakota are flooded. Glickman says ranchers suffering losses because of flooded pasture will receive some of the $12 million left over in the livestock disaster reserve fund. And Glickman says he's increasing the export credit guarantees to Turkey by $100 million, making it easier for Turkey to buy American wheat, and hopefully bumping up the price of grain. I'm Hope Deutsche on Minnesota Public Radio.

PERRY FINELLI: This spring has been a once in a lifetime experience for Minnesota farmers. The weather has been almost perfect. Crops were planted so early, the old rhyme knee high by the 4th of July could be a huge understatement. But the good news from the fields is not matched at the marketplace.

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 the year 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. Main Street Radio's Mark Steil reports on concerns raised by Freedom to Farm.

MARK STEIL: 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 Ramsdell farms near Butterfield in Southwest Minnesota.

BRIAN RAMSDELL: The farm economy is pretty dismal right now with the current prices of both corn and soybeans.

MARK STEIL: He blames the 1996 Farm Bill known as Freedom to Farm for the gloomy indicators.

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

MARK STEIL: Ramsdell 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 forces 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. Ramsdell says the system wasn't perfect, but it held down production when elevators overflowed with grain helping prop up prices. He says left on their own, farmers will do what comes naturally, grow as much as they can.

BRIAN RAMSDELL: When you have a bumper crops, well, if it truly is a supply and demand market and your supplying more than what the demand is, it's financial suicide.

MARK STEIL: Call it that or call it free enterprise with all the risks that system contains. Southwest Minnesota farmer David Rowe says Freedom to Farm may be painful, but it's necessary.

DAVID ROWE: 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.

MARK STEIL: But Rowe also sees gloomy days ahead. 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, Rowe says most farmers have come to the same conclusion.

DAVID ROWE: They know that they're going to have to farm more acres to spread those tremendous production expenses over more acres, the machinery costs especially.

MARK STEIL: He says that scenario will hit small farmers hardest since they're less able to assume the debt required to buy land.

DAVID ROWE: Those who adapt to the change, the best will be farming. And those of us who don't won't be farming.

MARK STEIL: With almost all major farm commodities in a price tailspin, Rowe says this year may be a preview of the future. With no government controls, over production could be a recurring problem. That assumes, of course, that government actually gets out of farming.

C FORD RUNGE: Nothing is ever locked into place when it comes to Congress, and especially agriculture.

MARK STEIL: University of Minnesota Professor C Ford Runge. 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 federal involvement.

C FORD RUNGE: The fact is that if you have a substantial number of farmers in your congressional district, you see it properly as your job to respond to their concerns. To suggest that they would have nothing to do in these areas, simply goes against the nature of the political beast.

MARK STEIL: 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 Congress.

C FORD RUNGE: Now that the prospect of weaker prices and some additional weakness in the export markets is evident, that 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.

MARK STEIL: A major consideration Congress must consider is the importance of farm exports. Right now, an economic downturn in Asia is causing big problems for US agriculture. As farmers work their fields in the Midwest, their market is the world, much of it beyond the reach of the Freedom to Farm Act. This is Mark Steil, Main Street Radio.

PERRY FINELLI: We continue our series of Main Street Radio reports on the Midwest farm conditions this year by hearing from Minnesota Public Radio's Cara Hetland, who reports now that local farmers are selling to a global market where outside pressures, such as the Asian and Russian financial crisis, can have an impact on how they farm.

CARA HETLAND: The US Department of Agriculture predicts a record soybean crop this year. This would be the second record breaker in a row. Prices, though, could sink to the lowest level in a decade, and soybean exports are also declining. South Dakota State University Ag economist Evert Van der Sluis says the United States exports a third of the soybeans it grows. He says farmers now have the flexibility to plant in order to meet export demand, and that's why prices are falling.

EVERT VAN DER SLUIS: A large part of the export for soybeans is going to be determined by Southeast Asian countries, I think, and Latin American countries, as well as Middle Eastern countries.

CARA HETLAND: He says the personal incomes in those countries will drive the soybean exports. Van der Sluis says, as more people move into the middle class, the demand for meat will increase, and so will the demand for soybeans, the base for soymeal, which is a protein feed for cattle and poultry.

EVERT VAN DER SLUIS: A bit of a wild card right now is the import demand for soybeans in China. I think the United-- the USDA is expecting that it's going to increase dramatically, but it's still a bit of a question because it depends very much what China's going to do with respect to its membership or pending membership in the World Trade Organization.

CARA HETLAND: Congress will soon debate whether to renew the most favored nation status to China. That, too, will play a role to the local soybean producer. Working on a global scale is relatively new to farmers. 30 years ago, farmers would watch the local weather patterns, call the grain elevator in the nearest town for the latest price, and then decide whether or not to sell.

PAUL CASPER: That really doesn't move that much anymore, as if South America doesn't get a crop or if Africa doesn't get corn.

CARA HETLAND: Paul Casper Farms in Lake Preston, South Dakota. When it comes to the global market, farmers like Casper like the flexibility in the Freedom to Farm legislation in order to meet demand. Casper says there's also more opportunity for farmers to market commodities through value added processing, like milling the grain and crushing the soybeans themselves to increase the value of the raw commodities. This soybean processing plant near Volga, South Dakota, crushes a million bushels of soybeans in three weeks. The mill goes to the livestock industry in the Dakotas and Minnesota, and the oil goes for further processing.

Casper is also the president of the South Dakota soybean processors. He says farmers can now compete with the larger companies and remove the middleman when selling their product. Casper says this is a better way to diversify than adding new crops or more livestock. He says the fear for farmers is missing out on value added opportunities and exporting raw material.

PAUL CASPER: I don't want your subsidies. I don't want your aid. What I want is your education and how I can become the processor or be the middleman of what I produce. And I want you to have funding available to help me start up companies like this.

CARA HETLAND: And there may be a window of opportunity for US farmers. Market specialist Alan May says Asian countries where labor costs are lower also want to build processing plants. But he says the United States can get a jump start now, while Asia recovers financially over the next two years. May says farmers need to become better at risk management. And it's going to take a different kind of farmer to compete globally.

ALAN MAY: And so from a farmers standpoint, I think they have to be prepared to do some things in terms of forward pricing. They have to look at establishing prices they know they can at least break even and see if the market offers that. I think they have to look at the longer term picture of being able to adjust quickly and rapidly when they see changes coming.

CARA HETLAND: With a recent downswing in prices, many farmers wish they had locked in a price two weeks ago at $6 a bushel. By harvest, if weather conditions continue to be favorable, prices are projected at $5 a bushel for soybeans. Bigger companies like Minnesota-based Cargill are working with farmers and local extension agents to lay out more options.

Cargill spokesman Rob Johnson says over the next 10 years, farmers will be able to diversify in many directions. He sees larger farms, more cooperative processing plants and more niche crops to serve specialty products for feed and oil markets. A year ago, Cargill caused a farmer uproar by importing soybeans. Johnson says that was an instance where poultry growers in the southeastern United States needed soymeal at a time when stockpiles were not high in the US and prices were lower in Brazil.

ROB JOHNSON: Companies like ours who are intermediaries in the marketplace can choose to serve or not serve that demand. But our decision not to serve it will not make the demand go away. It will still be there and someone else will serve it. And it is a business, but it is a business that is driven by growers and producers, in this case, producers of poultry in the southeastern United States.

CARA HETLAND: Farmers say they are now competing against big companies, foreign markets, politics and cheap labor, but in their favor is new technology helping to produce more bushels per acre and to farm more land. Affordable transportation also helps the US farmer. The desire expressed by many Midwestern farmers is to have a level playing field, so all farmers worldwide can compete fairly. Farmer Paul Casper says there needs to be fast track trade negotiations, free trade, and consistent standards in order for farmers to survive.

PAUL CASPER: Some of the chemicals we are not able to use here in the United States, they're able to use in other countries. And there are cheaper chemical. And we import that product. Now, to me, that doesn't make any sense. If it's not good enough for the American farmer to use and be processed or consumed here, how come we have it imported into the United States? And that gives them-- I mean, we're talking level playing field, that gives them a way better chance of surviving. But that's fine, we'll buy their product. And it's chemicals that we've banned here.

CARA HETLAND: Casper says he sees more farmers selling directly overseas as a new generation of farmers emerge. He says many older farmers will sell out in the next few years, and the new farmer will be linked to the internet and will farm more land than ever before. In Sioux falls, I'm Cara Hetland, Minnesota Public Radio.

PERRY FINELLI: The United States has a farm policy written by Congress every five years. Supporters of the 1995 Farm Bill say it opens a global marketplace more in tune with supply and demand. Opponents say the '95 Farm Bill marked a critical, destructive change in farm policy. But what is the underlying philosophy that shapes congressional action? We get that story from Main Street Radio's Dan Gunderson.

DAN GUNDERSON: At its heart, agricultural policy is about maintaining the food supply. In the US, the emphasis has long been on keeping that supply cheap for consumers. It's something often lost in the debate over yields and subsidies and using cyberspace to run the farm.

JERRY NORDICK: The whole system is down.

SPEAKER: I can't get none of the maps or no markets or nothing.

JERRY NORDICK: Well, I got a letter yesterday that said, turn the dish East another quarter of an inch or something. Maybe a satellite went down again.

DAN GUNDERSON: Jerry Nordick's computer connection to the grain markets isn't working. He says it doesn't much matter the way prices are. Nordick raises wheat, corn and soybeans on 1,200 acres near Rothsay. He says the idea of competing on the world market is fine, but it's not realistic because his European counterparts are guaranteed an income, so they can afford to sell at lower prices.

JERRY NORDICK: How in the hell can I or my neighbor or the US producer compete against that? You can't.

DAN GUNDERSON: As past president of the Minnesota wheat growers, Nordick spent time lobbying on trade agreements and the Farm Bill. He says US farmers were sold out in trade negotiations in exchange for good deals for American electronic and automotive industries. Nordick scoffs at those who say open markets make economic sense, and low farm prices benefit consumers by keeping food prices down. He says food packaging costs far more than the raw product in the package.

JERRY NORDICK: Bottom line, economics are you get 72 loaves of bread out of a bushel of wheat, and you could just about double the price of wheat, and it would have very little change on the price of a loaf of bread. So I think that's all hogwash.

DAN GUNDERSON: Most American consumers may not draw a relation between the price farmers get and the cost of their grocery bill. In fact, Ronald Knudsen says consumers just don't care. Knudsen, Director of AG Economics at Texas A&M University, says that makes it hard for farmers to get support for higher prices. Knudsen says Europeans pay more for food, because their farmers are heavily subsidized. He says US consumers don't care if farmers are making a profit as long as food prices stay relatively low.

RONALD KNUDSEN: I think most consumers look at the issue as they don't really care whether the wheat comes from Canada or from the United States. What they're interested in is the price of the bread.

DAN GUNDERSON: But farm advocate Bob Bergland says if the current trend continues, consumers will take notice. Berglund says if a few large corporations control agriculture, they'll also control food prices. Berglund was US Secretary of Agriculture in the Carter administration. He says many countries in Europe and elsewhere have a policy of supporting farmers to ensure a stable food supply. He says the US did have the same policy, but has now, with the Freedom to Farm Act, made a significant shift basing agriculture policy on bottom line economics.

BOB BERGLAND: The pure market economists that seem to run things these days don't really care what happens. They're determined they're going to have a pure market policy without regard to social consequences. I argued and still argue that you can't develop economic policies in a vacuum. You can't just say, well, this is-- it's in everybody's best interest to have a pure market discipline and ignore the losers.

DAN GUNDERSON: Those who favor current farm policy say there will always be winners and losers. That's economic reality. Minnesota Republican Senator Rod Grams says it may increase the pressure on farmers, but will help those who survive.

ROD GRAMS: You've got to learn to be as efficient, the best management you can in a very competitive market. But I think if we can develop, as we've tried to do with NAFTA and GATT to open these markets, to give farmers the opportunity to have more places to sell their crops, I think in that area, we're going to help drive the markets up and not down.

DAN GUNDERSON: North Dakota Democratic Senator Byron Dorgan says that's fine, in theory, but he says in a world market, US companies go where the cheapest grain is. That often means buying subsidized foreign grain, which drives US markets down. Dorgan says there may be an underlying philosophy of maintaining an affordable food supply, but he thinks current farm policy is driven by greed.

BYRON DORGAN: What is most at work here is that the big economic interests are preying on the smaller interests, and those who wrote the current Farm Bill said, we will no longer be in the business of caring what happens to the smaller economic interest. If a Cargill or a giant egg factory or corporate farm can farm the entire state or farm America from California to Maine, what's the difference? Well, there's a big difference.

DAN GUNDERSON: A Cargill spokesman says the company has no desire to control markets and needs farmers and consumers to be successful. Senator Dorgan says there's a fundamental but little debated question at the heart of farm policy. Does America want to ensure the future of family farms?

BYRON DORGAN: This isn't rocket science. If the world is hungry, we produce food. Who produces it? Family farmers. The cities are crowded. We have open space and good neighbors in rural areas. This isn't rocket science. If we can't figure out a way to put this together, while we care for family farmers and nurture their existence in the future, then we're not a very bright country. And I think this country is better than that. And I think we ought to be able to sit down and figure out a way to give family farmers a chance to make a living.

DAN GUNDERSON: Dorgan admits that debate is unlikely to happen as long as food prices are comparatively cheap. Farmer Jerry Nordick says Americans have it too good. They don't see the value of a stable food supply because. Grocery shelves have always been full.

JERRY NORDICK: This country has never been hungry before. And maybe the sooner that happens, maybe the sooner the wake up call will come.

DAN GUNDERSON: Nordick says he doesn't have the answers to foreign policy. He only knows if he doesn't make a profit, he'll soon be out of business. I'm Dan Gunderson, Minnesota Public Radio.

PERRY FINELLI: All right. That will conclude our series of Main Street Radio reports on farm conditions in the upper Midwest this spring. We are going to take just a very short break, and then we'll return with our studio guest, Wally Sparby of the Federal Farm Service Agency, to take your questions and comments about the current state of agriculture in the region, some of your questions and comments raised in the series of reports from our Main Street Radio unit. So stay with us.

Say just a few weeks remain in Minnesota Public Radio's fiscal year, and we are counting on you to help us reach our goal of 85,000 members. The momentum is building, but we still need 8,300 listeners to become new members or renew your membership. Remember, members are our single largest source of revenue. Please call us now at 1-800-227-2811. And thank you very much.

This reminder coming up at noon today as part of our Midday broadcast, we'll be going live to downtown Minneapolis, the Minnesota meeting. Today's guest is Minnesota native Norman Ornstein. Of course, he is the resident scholar at the American Enterprise Institute, certainly one of this country's best known and most respected political analysts.

His Minnesota meeting speech today is titled Getting Big Money Out of US Politics, What we can do now. Norman Ornstein, resident scholar at the American Enterprise Institute, live at the Minnesota meeting shortly after noon today here on Minnesota Public Radio. So stay with us.

The weather forecast, for the most part, dreary today. Cloudy skies across the South, a few showers, some drizzle today, some fog in places. Partly to mostly cloudy skies in the North. Highs today only the 50s near Lake Superior. Lower 70s in Thief River Falls and the Fargo-moorhead area today. And generally, right around 60 degrees in parts of Southern Minnesota.

Tonight, variable clouds, a slight chance of a thunderstorm in the far Southwest after midnight. Lows from the lower 40s to lower 50s. Tomorrow should be partly cloudy. A chance of afternoon showers, maybe some thunderstorms. Highs tomorrow. Middle 60s in the Arrowhead and the middle 70s in parts of Western Minnesota.

Right now in Duluth, it's partly sunny in 55. The warm spot, International Falls, where the temperature is 64. The cool spot in the region is Rochester, where the temperature is 52. The Twin Cities, well, also 52 degrees. Some drizzle now and looks like for the rest of today should be cloudy. Little drizzle, maybe a few sprinkles. A high temperature in the lower 60s. Tomorrow should be partly cloudy, a little bit nicer and a high in the low to mid 70s.

It is now 27 minutes before 12 noon. This is Midday on Minnesota Public Radio. Gary Eichten enjoying some time away this week. I'm Perry Fanelli. Thanks for joining us. We are looking at the-- well, what some have called the new Midwestern farm crisis. And in the last half hour, we presented a series of reports on that current situation, the State of Agriculture.

And for the next 20 minutes or so, we're going to talk with Wally Sparby of the Federal Farm Service agency. He is a farmer, small grains farmer in Northwestern Minnesota, a former state lawmaker representing Northwestern Minnesota. Mr. Sparby, thanks for coming in today.

WALLY SPARBY: Thank you, Perry. Good to be here.

PERRY FINELLI: And we have a phone number, a couple of phone numbers, actually, for those of you who would like to chime in with your questions or comments in some of the issues raised by today's reports. Here in the Twin Cities, the number is 227-6000, 227-6000, the Twin Cities number. Outside the metro area, the toll free number is 1-800-242-2828, 1-800-242-2828.

Mr. Sparby, we just read the weather forecast. And we talked a little bit a while ago about the fact that this really has been an almost ideal growing year. And I'm wondering if there has ever been an ideal growing year in the state of Minnesota. And prices have been decent. Is that possible, or is that a pipe dream in agriculture?

WALLY SPARBY: Well, I think there have been some that have been close. There seems to be a problem somewhere in the nation or in the state at a given time in any given year. In 1992, they had a very good crop up in the Red River Valley. That was an excellent wheat crop that year. The weather was good, the harvest was good, the yields were good.

From that time on, we've had all kinds of problems with weather and disease. The scab has been a very serious problem to deal with. And of course, last year we had that serious flooding situation. And that, of course, had after effects, such as more crop disease and so forth. So there have been varying degrees of good weather, but we're running into it now. I think I just heard today it's the coldest June on record so far. And last month, probably the warmest one.

PERRY FINELLI: Well, is it simply a case that there are so few years where the weather is good enough for farmers to produce enough crops and get a decent price, that agriculture is in a situation where it needs some kind of safety net or some kind of farm program from the government?

WALLY SPARBY: And I don't say this because I work for the government, I think it's really important that there be some type of a safety net. And we hear that time and time again. They like the Freedom to Farm opportunities where they have the opportunity to plant what they can.

The Freedom to Farm Act, I don't think they like that per se, because there's a lot of problems with the act itself as we listen to the people out there in the countryside, but they like to have that flexibility in their cropping patterns and so forth. And we've always had the problems with the weather. We always will have. So you have your crop varieties that are developed around that. And in most cases, we end up with a pretty decent crop year in and year out.

PERRY FINELLI: What are some of the specific problems with the Freedom to Farm? I mean, it sounds like it makes some sense. Let the market rule. What are what's the biggest problem, just the total variable?

WALLY SPARBY: Well, there's a couple of things that keep coming to the surface. And number one is that safety net thing. They really feel that the loan rates should have been higher, as an example, and that-- there was a formula in place prior to 1996 when the act was put into place.

Whereby it was kind of like a cost of living adjustment that went with the cost of production and the marketing rates. And if that were the case today, the loan rate on wheat would be $0.60 a bushel, higher than it is right now, which certainly would be of help. It's not the total answer, but it's a big help. And it's a safety net factor.

And the other thing is the Crop Insurance Program isn't working like most people would like it to work. The coverage isn't high enough, the cost is too high and so on and so forth. So those are a couple of things that are-- things that need to be fixed and could be repaired probably in some future legislation.

PERRY FINELLI: Well, you mentioned crop insurance, and I think a lot of people are kind of wondering how disaster payments work. I think the government's now saying that we're no longer going to make disaster payments. You're going to have to rely on crop insurance. But, I mean, as a practical matter, is that real? I mean, can that work?

WALLY SPARBY: Well, I think someday in the future, there's going to be some changes in the program itself and Congress will ultimately make that decision. But some months ago, former Secretary of Agriculture Earl Butz was in town here speaking in. At that engagement, he said that if you think there aren't going to be farm programs and farm payments in the future, you believe in the tooth fairy, too.

And he's probably right, is that it's a commodity. The money that's involved in the program is kind of a commodity, just like grain as what he was saying that day. And he's been around a lot longer than I have and has a lot more knowledge about the program activities than I do.

But we need to look at the overall picture. And the food costs that we have in this country probably are second to none. We have the ample food supply. And we have a very reasonable cost. And when we look at that, there has to be some fair reimbursement for the farmers that are involved in that growing.

And I don't think they're all looking to become rich folks. They're just looking to make a good living out there and be able to pay their family bills and have something left over at the end of the year like a lot of other folks do. And yeah, that's basically the theme that you hear out there all the time.

Talking about the disaster aid, back in 1993 when we had the big flood down here in Minnesota River Valley and very, very serious one, we had a disaster program in place at that time. And we paid out about $750 million that year in the State of Minnesota in the losses that were sustained by farmers. And it certainly was something to help keep those people out there on the land. And that's basically what we're looking at. You don't have it every year, but you need it there.

PERRY FINELLI: We're talking today about the current state of agriculture in Minnesota, some of the issues surrounding agriculture. If you'd like to join the conversation, the number in the Twin Cities is 227-6000, 227-6000. We have a toll free number as well outside the metro area, and that number is 1-800-242-2828, 1-800-242-2828. Let's take a call. Let's go to John in Bemidji. Good morning, John.

JOHN: Good morning. And thank you for the program. I guess, I've got something to say about the Conservation Reserve Program. And the Conservation Reserve Program seemed to be a very valuable thing for putting aside land, helping prevent erosion, really boosted up the pheasant wildlife populations for a short-term. But unfortunately, it was here today and seems to be gone tomorrow.

Wouldn't that money have been better spent purchasing land? And when we talk about the flood problems in the Red River Valley, wouldn't it have been better spent buying up wetlands and stream banks, that sort of thing, where it would have been a permanent situation to a long-term problem?

PERRY FINELLI: All right. Thanks for the call, John. And Wally, we should probably mention briefly what the Conservation Reserve Program is again to people not familiar with that.

WALLY SPARBY: Yeah. The Conservation Reserve Program is a land retirement program where they take land out of production for a period of 10 years. And it can be up to 15 years, if there are trees planted on the acreage. And that is set aside, and they are given a payment based on a per acre rental rate, the average rental rate of the County for that period of time. And they have to keep a vegetative cover on that and maintain that during that period of time.

We also-- what he's talking about is a permanent easement type of a program, which we have in the Conservation Reserve Enhancement Program for the Minnesota River Valley. We have what they call the crep program down there. And some of that may have permanent easements on it, but those acres have to be eligible for enrollment in the Conservation Reserve Program. And then they can go into that Conservation Reserve Enhancement Program, which is a program administered by the state of Minnesota.

There has been a reluctance on the part of a lot of farmers to go into permanent easements. However, maybe this is going to work better than others have in the past, but they're looking at anywhere from 20-year easements on up to permanent, forever. So we'll see how that works out.

But we have a lot of interest in the buffer initiative that's going on alongside the stream banks and the drainage systems right now. In fact, Yellow Medicine County out in West Central Minnesota has the largest number of contracts in that program of any County in the country. So it's been going over very well.

And those are buffer areas and riparian areas along the streams and the drainage areas that can be anywhere from 100 to 150 feet. We've got some that are in excess of that we've been doing in the past. And now we got a new rule that's come out where it says that we can't exceed 150 feet width. But that's kind of in a debate stage right now. And we'll see how that all works out.

PERRY FINELLI: This year, clearly, the focus in the upper Midwest is on the Red River Valley, the floods last year. There's a disease, some kind of a scab going around this year. And Ag Secretary Dan Glickman was in the region yesterday, as we heard a few moments ago. He came with some remedies, some suggestions to make things better up there. Do you have some sense of whether they will work, or what do you think of what he is-- what he told the farmers there?

WALLY SPARBY: Well, I think some of the things he said is it would be very helpful. One of those was removing that formula from the loan rate, increasing the loan rates, trying to improve the federal crop insurance program. And he said they were spending more money, and the providing monies for people like in Turkey to buy more wheat. And we've done that in Southeast Asia.

In fact, we've got over $2 billion that have been allocated to those countries for the purchase of grain from the United States. And that's allocated so much for wheat, so much for corn, so much for soybeans, so on and so forth. I think those things are all helpful. But he can't do those things like the changing of the loan rates, the removal of the formula or anything like that. That all has to be enacted by Congress. But I suspect--

PERRY FINELLI: This Congress, have they indicated what they think about his ideas?

WALLY SPARBY: Well, at this point, as far as I know, Senator Lugar, who is the Chairman of the Ag Committee in the senate, has indicated that he's not interested in doing that at the present time. However, the Secretary and the administration may very well bring that forward and ask for a hearing on that. And we'll have to see what happens. I'm sure it's not going to happen next week or the week after, but likely, they might act and work on it sometime this year.

PERRY FINELLI: Our guest today is Wally Sparby of the Federal Farm Service Agency. We have about 10 minutes left. So if you want to give us a call with a question or comment, feel free to call. The toll free number is 1-800-242-2828. In the Twin cities, 227-6,000. Rodney in Woodbury, go ahead.

RODNEY: Yes, I have a question. I'd like to know when Secretary Glickman is going to approve a label for US beef and to stop the blending of beef in America. I know that most of the producers in Minnesota are against blending of foreign imports, and yet Secretary Glickman has had this in front of him for about four years and hasn't responded to us. Can you answer why?

WALLY SPARBY: Well, that's a little bit out of my area, but I know that question was asked of him in South Dakota when I attended that meeting out there. And if I recall, his response is that they were working on that. And I know that's not an answer for you, but they were to have a response back on that within a few weeks. So they had gone through some process with that, Rodney. And I really can't give you a timeline on it, but as far as I know, he was definitely asked that same question in South Dakota at Aberdeen.

PERRY FINELLI: One of the reports that we heard focused on global markets for Minnesota farm products. And first of all, if you could just give us some perspective on the global market for Minnesota farm products, where does a lot of it go. And I'm kind of curious whether, if at all, how it's changed since the '80s of the last time we were talking about a crisis in agriculture in Minnesota.

WALLY SPARBY: Well, our global marketing has worked very well. In fact, we're selling a lot more grain overseas now than we ever have. It's expanded immensely. We've got that little glitch in it. Right now, we're in the Southeast Asia. We're having some problems there. But they've pumped some money into that to provide some opportunities for that market to come back.

However, with global marketing like it's been, we also got to remember that a lot of the other countries have had some fantastic crops as well, and that's like Argentina and Canada is a part of that marketing system. And so there's a lot of competition there. And that's what we're faced with.

And now we've got a big wheat crop coming again this year. They're harvesting down in Oklahoma right now, and it's going quite well, as I understand. And probably in a week or two, we'll be in a Kansas doing the harvest there. So, we're learning more. Our technology is getting better. And we're raising more grain with this Freedom to Farm Act. Of course, there's more acres involved, and that's probably offsetting a lot of that market ability out there.

PERRY FINELLI: Is there any sense that the prices will improve or not? I mean, I suppose it looks like the weather has been good in so many places. It's probably not. But is there any some kind of trend at all that you're seeing as far as grain prices?

WALLY SPARBY: Well, the predictions that we see for this year is not good. I don't anticipate that the price of wheat, as we're looking at it right now, is going to get much better because of the supply that's out there. What's going to happen with corn and beans? I don't know.

But I know this morning I just checked and the corn price down in Blue Earth County was, I believe, $2.01 a bushel. So that price is way down, too. And the bean price is down about-- I think, it was in the $5.92 or something in that range this morning. So those prices are down as well. And if those commodities come in with large productions, we probably see that price going lower as well.

PERRY FINELLI: We've heard some people predict that we could see even more consolidations in agriculture, fear of bankruptcies. And I know Glickman, Dan Glickman said that he doesn't want to preside over a period of that. What do you think? Is that-- I mean, is that likely a lot of consolidation, possibility of bankruptcies?

WALLY SPARBY: Yeah, there's going to be some serious problems this fall, if the price doesn't improve on the grains. As an example, we did a sampling and review with the lenders in Northwest Minnesota and asked them if they thought that the farmers in their portfolio would be able to meet their obligations this fall in 1998.

And 35% of their borrowers, they said, would not be able to meet their obligations this year. And that's a very, very serious. And so if that continues, we could see 25% of our people up there probably going out of business. And that is so detrimental to the small communities as well as the rural areas.

PERRY FINELLI: But you hear that argument about it would be detrimental if they went out of business. But, I mean, how much of that is simply the marketplace, and it's simply responding to what's taking place very naturally? You hear a lot of businesses, they go out of business. And why is it any different for agriculture?

WALLY SPARBY: Yeah, a lot of small businesses fail. That's true. And that's true with agriculture, too. There's a normal transition there. There always is and attrition. And that I don't think we'll ever change. But right now, we're probably seeing that expedited by probably 20% to 25% over what it normally would be. And I think that's the scary factor here.

PERRY FINELLI: And that's just-- you're talking about, that's the weather. That's the--

WALLY SPARBY: It's a combination of factors, the weather, the price and the whole situation here that we're looking at.

PERRY FINELLI: So what about-- just a couple of minutes left. We kind of wind up here, the safety net. Do you think that-- I think I heard you earlier say that you think that it will always be there in some form. How do you see it in its-- I suppose it will always change. But essentially, what will be the safety net for farmers?

WALLY SPARBY: Well, what's the intent of Congress was the last time around is to make the Federal Crop Insurance Program be that safety net. And unless there is some improvement in that, I don't think that's going to succeed. But hopefully, they will fix that and repair it, make some changes in it and make that thing much more workable.

And other than that, the Crop Insurance Program being there, I think there has to be a loan rate out there that's commensurate with the cost of production. When we do a calculation on a person that's going out there to do farming for the year, we look at-- that price either has to be $4 a bushel for a wheat or $4.25 for a wheat or $2.50 for corn or whatever it is. And if you can't do that and have some kind of an indicator that you're going to get close to that, the banker is going to get very nervous about providing you funds for that.

PERRY FINELLI: Well, are there different kinds of crops? Are we seeing anything emerging that we haven't heard a lot about? And I was kind of-- I just want to ask curious. There are many states where tobacco is grown, obviously. Is tobacco grown here?

WALLY SPARBY: Not that I'm aware of, but we do have six counties that are former tobacco growing counties.

PERRY FINELLI: Six counties that were.

WALLY SPARBY: In Minnesota, they have-- we got tobacco allotments out there, but there hasn't been any tobacco growing out there that I'm aware of in the last several years. But we have grown it in the past. And now one of the new crops that's coming on is canola.

We grow quite a bit of canola up in the northern part of the state. And that's been a good option program for them to go to. However, that has to be in a rotation. So you can't grow that every year and you have to have a rotation factor going on with that with various other grains.

PERRY FINELLI: So do you think-- bottom line, do you think that the upper Midwest is in a farm crisis right now? Is that a fair statement?

WALLY SPARBY: Definitely, very much so.

PERRY FINELLI: And do you see it as a long-term thing, or do you think it could write itself in a fairly short period of time?

WALLY SPARBY: Even if we were to have a very good crop, very good price, it's going to take several years of that to make it come out of the situation that it's in right now. It's going to take quite a while.

PERRY FINELLI: All right. Very good. Wally, we sure appreciate your coming in today.

WALLY SPARBY: Thank you for the invite. I appreciate the opportunity.

PERRY FINELLI: The last hour we've been talking about what some have called the new Midwestern farm crisis, a series of reports here at Minnesota Public Radio. And we've been hearing some of those reports this week, and we've got more throughout the week. So stay tuned for that. So again, thanks to Wally Sparby, director of the Federal Farm Service Agency. He is a small grain farmer in Northwestern Minnesota and a former state lawmaker representing Northwestern Minnesota. Thanks to the folks who called today.

It is now six minutes before 12 noon. And in just a few minutes, we'll be checking news headlines, and then we'll be going off live to the Minnesota meeting today, where today's guest is Norman Ornstein, a resident scholar at the American Enterprise Institute. He is, as many of you know, one of the country's best known and most respected political analysts. He's going to be talking about Getting Big Money Out of US Politics, What We Can Do Now. And that'll be coming up shortly after noon here on Minnesota Public Radio. It's now five minutes before 12 noon.

RAY SUAREZ: I'm Ray Suarez. Leonard Slatkin, conductor of the National Symphony Orchestra, is an advocate of 20th century American works.

LEONARD SLATKIN: An orchestra is here to preserve a tradition that has been passed down for centuries, but also to provide the works that will continue to be passed down.

RAY SUAREZ: Slatkin joins us to talk about new music, new listeners and the future of America's symphony orchestras on the next Talk of the Nation from MPR News.

PERRY FINELLI: And you can hear Talk of the Nation this afternoon at 1:00 right here on Minnesota Public Radio. It's now five minutes before 12 noon. Let's hear from Garrison Keillor and the Writer's Almanac.