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MARK STEIL: MPR's Main Street radio coverage of rural issues is supported by the Blandin Foundation, committed to strengthening communities through grantmaking, leadership training, and convening. We invite you to visit the Main Street radio website. Go to www.mpr.org and click on Main Street. You can hear Main Street radio reports as well as hear this program live on the internet. If you missed any part of the program, you can hear it at any time on the Main Street website. That address, again, www.mpr.org, and click on Main Street.

[MUSIC PLAYING]

Good afternoon. I'm Mark Steil, and this is a special Main Street Radio Midday from Sioux Falls. We're going to turn our attention now to agriculture and the farm crisis. The prices farmers are paid for what they grow are terrible. That means lower income and the very real possibility that many will go out of business. With us from our Saint Paul studio is University of Minnesota extension economist Stan Stevens. Good afternoon, Stan.

STAN STEVENS: Good afternoon.

MARK STEIL: Stan, why don't we begin by-- if you could kind of run down what are some of the reasons that corn prices, soybean prices, wheat is not so great? Why are those prices so low?

STAN STEVENS: Well, they definitely are low. Not too many years ago, we were setting record highs, but it's been quite an adjustment down. I think the number one variable really is just the long range weather patterns that we've experienced. We've had three good crops in a row, or at least moderately good crops in a row in the corn soybean belt. In the early 1990s, it wasn't quite that favorable. So I think we could focus on that.

The new farm program released a lot of acres and farmers are farming them differently. We can focus on that a little bit. Perhaps that has had a contribution to supplies, and maybe the lower prices. At the International level, on the demand side, we have China. China is always interesting to look at. It's maybe been overrated a little bit in the last few years as something that might make a difference. And it continues to be interesting on the supply side, too, with a drought last year and floods this year.

MARK STEIL: We'll look at some of those reasons in details during the show. We should have time to go down each one. But we'd also like to hear from all of you, our listeners. Our phone number is 1-800-537-5252. 800-537-5252. The low prices have a very real and immediate impact on farmers. At a farm crisis rally in Worthington last weekend, Valley City, North Dakota, farmer Marcy Svenningsen told her story.

MARCY SVENNINGSEN: In my hands, ladies and gentlemen, I have auction bills that represent 21 family farm operations that were either forced to quit or decided that it was time to give up. These farmers, aged 30 to 55, all live within a one-hour drive of my house. These auctions all occurred in a five-month period earlier this year. Now, we're not talking about a very big piece of North Dakota. We're talking five-month period, one auctioneer. The story tells itself.

On our family farm, we have 150 beef cows and we farm approximately 1,200 acres. Our equipment is, on the average, 20 years old. Parts of the house we live in are over 100 years old. We live and farm very conservatively, but we still can't make it. In fact, three of the last five years, we haven't been able to make all of our payments. If it weren't for my job in town, we wouldn't be farming at all.

And I don't know if it's a comfort to us or not, but, according to our local banker, 85% of their farm customers did not make required capital or real estate payments. In '97. We're going to lose many more neighbors. My 14-year-old son loves to farm. He rakes hay bales, he works with the cows. And are we encouraging him to farm? No. After 20 years of farming, we still have nothing saved for retirement. Why would we want that for him?

MARK STEIL: North Dakota farmer Marcy Svenningsen. We'll hear more from that farm crisis rally later in the program. University of Minnesota extension grain marketing economist Stan Stevens is with us. Stan, you told us that the production of US farmers is tremendous. It's several good crop years in a row. And that builds up the stocks. And of course, when there's a lot of grain on hand, the prices tend to sink because supply and demand works into that. Have farmers just become too good at what they do?

STAN STEVENS: Well, they are definitely very good at what they do, there's no doubt about that. But sometimes, the long term weather patterns that I mentioned a few minutes ago can change that. I think, in agriculture, especially Midwestern grain based agriculture, there's two components of risk that the farmer experiences, and one of them is production risk, weather, getting the crop, getting it put in right, getting it taken care of, right, and getting the high yields. And the weather is the wild card on that there's no control over.

So the interesting thing about it, though, is that, if the production practices are correct and the weather is wrong, it's usually the case that we get our better marketing prices out of the weather disasters. In 1983, 1988, and the floods of '93, disastrous production wise, even for good farmers that had it all put together right, but the prices were good.

MARK STEIL: The drought of '88 is a landmark event many people remember. Was there a grain surplus at that time and did the drought end that surplus?

STAN STEVENS: Absolutely. That's exactly right. In the '85, '86, '87 period, maybe you could include '84 as well, we had a series of really three or four excellent crops as well. If you count '84, it would have been four. And it really put us in a position where we had stocks use ratios and corn, for example, of a 50%. That means, at the end of any particular demand year, we had enough corn on hand to go halfway through the next year without considering the new crop that was being harvested.

Well, that figure is more like 20% now. But still, the background, timing, and how we got here with respect to the weather kind of has the same feel to it. In the 1991 year, we had an Eastern corn belt drought. '93, we had the floods. In '95, we had just not that great a crop for lots of little reasons. The crop was about 2.8 billion bushel, 28% less than a year before. It was not a good crop.

So my point is, from 1991 through 1995, only two out of five crops were good. And then, now, we enter a period where we have three or possibly four good crops in a row. And it just is very similar. The good news is that we have not built up stocks as much as we did the mid 1980s. And then back to your original question, the El Niño cycle and the drought of '88 really performed exactly what was needed to get us back into more of an equilibrium. We had then a period of a little better prices after 1988.

MARK STEIL: That's pretty harsh medicine, though, to cure a surplus. It sounds a little bit like taking a shot of pneumonia to cure influenza. I mean, one is almost as bad as the other to say that, you know, a weather event, a bad drought can be good in a way.

STAN STEVENS: Yeah, that's right. Farming is tough and risky. And so often to find some good news, you have to trade off and compromise with some bad news. I think in terms of the trade-offs, just from a casual observation, if you'd lose 20% of your crop to the weather at the corn belt level, quite often, prices are up by a factor of maybe three to one, maybe 60% higher prices.

So if you just want to do the arithmetic, and look at the bottom line, and accept the risk, and manage it as best you can, it does turn out that Midwestern based agriculture, corn and soybean focused, does have more prosperity, a better income stream under conditions of a weather-reduced crop.

MARK STEIL: You're listening to a special Main Street Radio Midday from Sioux Falls. We're talking about the farm crisis and low grain prices. Our phone number is 1-800-537-5252. Let's take a call. Cliff is with us from Saint Cloud. Good afternoon, Cliff.

CLIFF: Hello. Something that I haven't heard mentioned is the failure of farmers to conduct their businesses in a business-like way. The smartest thing I ever did was to quit farming 20 years ago, and I was still making good money because I saw the handwriting on the wall at that time. If I had very little control over what my costs were and absolutely no control over what prices I was going to get paid for my produce, I was obviously going to be headed for disaster sooner or later. I'll hang up and let you continue.

MARK STEIL: Stan, that's a good question. Why do farmers farm?

STAN STEVENS: Well, we have all different categories. Sometimes, when I give speeches down near Rochester, Minnesota, I talk to what I call the IBM farmers. They're people that took a job similar to our questionnaire and retained a small farm base to work on weekends and to enjoy the outdoors or whatever that was. But they definitely, as Cliff had mentioned, weren't getting paid very much for what they needed their job at IBM. And in Waterloo, Iowa, there's what I call the John Deere farmers. And I'm sure there's others around.

We see all these compromises. There are some farmers that are able to be big enough, and get everything correct, and have enough luck, perhaps, go along with it to that maybe can make that work. But we tend to see lots of growth in the shorter end where we have part-time farmers and off farm jobs. That's been one of the more successful models over the last 10 or 20 years when things have really been stressful.

MARK STEIL: Our caller from Saint Cloud is not the only farmer who's left that industry. At the Worthington farm crisis rally over the weekend, one of the people there was Northwest Minnesota farmer Mark Fogelson. He says he's leaving agriculture. Mark is also a musician, and he sang a personal testimony of the farm crisis. We'll hear a portion of that song and then hear his story.

[MUSIC PLAYING]

MARK FOGELSON (SINGING): I remember back in '96 when we got the freedom to farm

The government said everything would be fine

No one should raise an alarm

But when I read the fine print

I knew we were in for a change

Because when you take away the farm safety net, ain't nothing going to be the same

MARK FOGELSON: is my 17th wheat harvest and it's my last one. I'm all done. Since '92, the wheat crop has been terrible. And it used to be wonderful, and you just can't make it. I got to hang it up, I guess. Lots and lots of sadness this year when I do the last thing. We just finished up our soybean harvest on Thursday and it was like, I laid down on the ground and cried. It was just like, it's done.

But how long can I keep beating my head against the wall? My wife works off the farm and has been subsidizing the farm for, well, since '92. And how long does that keep on? You know, I'm kind of knocking my head against the wall. And so it's time to quit. Just a lot of sad-- a lot of celebration, too, I mean, because it's over now and I have to go on to something else. I wish I knew what it was, but I don't. So I don't know.

MARK STEIL: And that's Mark Fogelson, who farms near Manomin in northwest Minnesota, speaking at a farm crisis rally in Worthington over the weekend. One of the people who was at that rally is second district Minnesota Congressman David Minge. And David joins us now by telephone. Good afternoon.

DAVID MINGE: Good afternoon.

MARK STEIL: What were your impressions of the rally on Saturday?

DAVID MINGE: Well, certainly, there were many people there that were experiencing tremendous frustration and anxiety because of the low prices, trying to decide where do we go next. I think that one thing that makes me very discouraged about it is that this has been a cycle that we've gone through many times in our country.

We have the cheapest, we have the most dependable, the safest food supply in the world. And in large part, it's because we have a very efficient system of production and we have a market system for pricing. And that really hits the farmers harder than anyone else. And there has to be a way that we can provide some fairness in this process so that we're not cannibalizing our rural areas for the benefit of our cities.

MARK STEIL: The Democrats have a farm plan to help out. Tell us about that.

DAVID MINGE: Well, there are really two key components to it. One is relief for those areas like the Red River Valley, which have had tremendous crop losses. In the case of the Red River Valley, it's year after year. And it would be a type of disaster response to supplement crop insurance where crop insurance simply has not been adequate.

The other part of the response is the marketing loan program. We have had a marketing loan program in this country for many years. Essentially, what it does is it says to farmers, there's a price that we will assure you, the price at which you'll lose money, but at least you're not going to lose the whole farm. If you wish to participate in the program, you sell your crops. You take a loan against your crops at a certain loan rate level. And the proposal that's being advanced is that this level be increased by about a percent over its current level. And that would provide, from what I can tell, some fairly substantial relief because, although farmers, like I've said, would continue to lose money, their losses would not result in their loss of their farming operation.

MARK STEIL: What's the timetable for legislation in the US House this fall?

DAVID MINGE: I think that the chances of passing legislation in both the House and the Senate have improved dramatically here in the last month. The Republicans have a proposal, which is different than the one that the Democrats are advocating. But still, it's a strong proposal. It's one that is a fairly sizable financial commitment. The Democrats' proposal, I think, is a more effective one. It does provide this cash flow assurance. And with both parties attempting to move legislation, hopefully, we could pass it before the October recess or October adjournment. And hopefully, it would then be implemented by the end of the year or early in 1999.

MARK STEIL: Is there any possibility that the Clinton scandals will deadlock the House and tie things up so that nothing happens?

DAVID MINGE: I don't think that the Clinton situation really has a significant bearing on this. I've been in meetings in the last week. Secretary of Agriculture Glickman was in attendance. He has reported on what the administration position is. The Clinton administration has been quite strong in supporting the plan that the Senate Democrats announced earlier this week.

And I'm optimistic that this whole unfortunate situation with the Starr report and the President will be on a separate track. And although it certainly-- the national news media has focused on it, there are many of us in Congress that are devoting our energies to the agricultural situation.

MARK STEIL: Thanks for being with us this afternoon.

DAVID MINGE: Thank you.

MARK STEIL: That's Minnesota second district Congressman David Minge. With us in our Saint Paul studio is University of Minnesota extension economist Stan Stevens. Stan, Mr. Minge brought up the loan program. And I know that there is something out there that a lot of farmers will take advantage of this fall to try to squeeze some extra money out of their crops, something called the loan deficiency payment. What is that, and how does it work, and what potential for income does it have?

STAN STEVENS: Well, that ties right in with David Minge's comments on the marketing loan. If he were to raise the loan level, what we're going to talk about would just get to be a little bit larger than it is right now. But in current legislation, there is sort of a minimum price in place that a farmer could, if he opted to, could get a non-recourse loan from the government. And let's say, $1.80 per bushel perhaps might be what he would receive.

He then can pay that loan off at any time and then sell the corn. Or alternatively, he could just let the government have the corn and default on the non-recourse loan. That's been the way it's worked many times in the past. The situation is that the government really doesn't want to receive the corn. Their policy for at least the last 10 years has been with [? pig ?] certificates or various kinds of programs. They send a strong signal that they just do not want to receive corn into government storage.

So the LDP comes in as sort of a back door incentive for farmers not to take advantage of this privilege. So if a farmer receives an LDP, that might be as much as $0.20 or $0.30 per bushel, he gives up the right to receive the loan proceeds and to default to the government, or some other aspects of that might be given up as well.

MARK STEIL: Do you think a lot of farmers will use that this fall?

STAN STEVENS: Yes, I think it's going to be a cornerstone, a very fundamental part of this safety net that we do have in place. Farmers that do use it can be pretty much guaranteed the loan rate for their area, whatever it is. And one thing to keep in mind, too, is we do have all of our acres in production. So these benefits where, in the past, they might have operated against 80% or some component of the land because there was land set aside, now, we get the benefits applied toward really a full production base.

MARK STEIL: You're listening to a special Main Street Radio Midday from Sioux Falls, and we're talking about the farm crisis this afternoon. With us now by telephone is Minnesota first district Congressman Gil Gutknecht. Good afternoon, Gil.

GIL GUTKNECHT: Good afternoon.

MARK STEIL: The Republicans also have a plan to deal with the farm situation. What can you tell us about that?

GIL GUTKNECHT: Well, first of all, several weeks ago, we passed a bill in the House, and I think it has made its way to the President's desk, that would roll up next year's AMT payments to this year to make them available to farmers, if they decide to take them. Secondly, we are working on a disaster relief package that will be about $4 billion for farmers, in part, for the markets they have lost due to sanctions that have been imposed by the administration.

I think a big part of this whole debate is the fact that we have lost about $5 billion worth of exports. I think most farmers agree with the basic principle that farmers ought to have the right to decide what to plant on their acres. And I think you were talking a little bit about that just before I came on.

But freedom to farm was really predicated on, also freedom to market. And where we've really stumbled, at least from the national perspective, is keeping those markets open in foreign markets. What's happening in Asia has had a profound impact on us. And I think Minnesota farmers, farmers in the upper Midwest, are much more dependent on exports than, perhaps, farmers even in other parts of the country.

MARK STEIL: Is the export situation something that can be evened out so that the demand is always there, or will there always be these cycles where a country has a huge economic crisis, they stop buying, and US farmers pay?

GIL GUTKNECHT: Well, I guess, the truth of the matter is anybody who's studied agriculture for more than a couple of days recognizes that there are certain cycles to markets, and we can't completely eliminate that. But I do think that we need to do more to increase the exports that we have. For example, over the last couple of years, Congress has approved, and authorized, and ultimately appropriated for nearly $5 billion worth of export enhancements. The administration has used a very, very small portion of that.

Same is true of the CRP. It's true that we did cap the acreage and the total appropriation for CRP, but the administration has not used the entire authorization. In other words, there's still several million acres that are authorized, approved, and appropriated for that the administration hasn't used. And I think that's another tool that can be used.

Finally, another thing that we've been strongly pushing that was part of the Farm Bill is what we call crop revenue insurance. And ultimately, one way that the federal government can work with farmers to create a shock absorber for some of those ups and downs and the cycles that we see not only in prices, but also in terms of what's happening with the weather is what's called crop revenue insurance.

There's a very effective program going on down in Iowa, sort of a pilot program. And I think most of the producers down in Iowa who are participating are very pleased with it because, next year, for example, we could guarantee a price of $3 a bushel. But if La Niña comes to pass, as many people believe it will, and we see dramatic reductions in production levels, a $3 price doesn't do you much good if you've got a 40 bushel the acre crop out there. And that's why I think, long term, we've got to look at crop revenue insurance, we've got to look at export enhancements and low interest loans to move those excess grains when we can.

MARK STEIL: A final question. Does the Clinton matter threaten to tie up the House and block farm legislation?

GIL GUTKNECHT: No, I don't think so. I think that's been greatly overstated. I think it's probably diminished the President's ability to be a world leader. I think, in some respects, this administration is suffering the snickers of many of our trading partners. But in the end, I think Congress is going to do what it believes right is right.

Ultimately, there is no real consensus. I mean, some people would like to go back to the old programs where the government basically decided what farmers could plant. But I think anybody who looks at that for any length of time recognizes that, under the old government-run agricultural system, we went from 7 million farmers to 2 million farmers. I don't think, by any objective measure, that would be described as success.

So I think we have made some mistakes. There are some things we need to correct in the 96 Farm Bill. But on balance, I think that it will work, as long as Washington, and the Department of Agriculture, and the Trade Representative continue to do their part to make certain that our farmers have equal access to those world markets, because American farmers are and will continue to be the most effective and efficient producers in the world. And if they have access to those markets, I think farming will have a bright future.

MARK STEIL: Thanks for being with us this afternoon.

GIL GUTKNECHT: Thank you.

MARK STEIL: That's Minnesota first district Congressman Gil Gutknecht. With us is University of Minnesota extension economist Stan Stevens. Stan, the export market seems to have just fallen apart for US farmers this year.

STAN STEVENS: Well, that's true. With a corn focus, we were maybe hoping to sell some corn to China inasmuch as they had a serious drought last year. And somehow or another, they were able to tighten their belt and squeak through. The Asian economic troubles lowered consumption standards in Asia in general and china, In particular, are showing up in the data now. They're just not using as much as they were.

For a few years, Chinese corn, coarse grain corn consumption was increasing by about 10 million metric tons per year. And now, it's about half that. So still growing, but slowed down. In the meantime, their capacity to produce corn, the underlying trend has got a pretty strong growth component to it as well. So longer term, they could probably keep up with their demand. Along the way, we're going to have the wiggles and the waggles of the weather.

One possible positive development is that the floods in China this year did come on the back of a drought last year. And it is really still pretty much unknown as to how that's going to really play out. There's a lot of uncertainty about Chinese production this year yet. And that could come through with a little Chinese business later in the year.

MARK STEIL: Russia has not had a great agricultural year, as I understand. What are the prospects for the Soviet, for Russia buying more grain from the US?

STAN STEVENS: They've had a very poor crop, as you know, but the prospects, I think, are not that good for one reason. Last year, they had a reasonably good crop, so they have a little bit of a buffer in place. Secondly, they just don't have any money. I know the IMF is working with Russia now, but even if something were worked out there, I doubt if we would see that translate into imports.

Russia lowered their consumption quite a bit over the last-- well, in the post-cold war period by basically becoming a little more efficient. They're just not consuming as much. There was a time when we heard stories about bread being fed to hogs, it was so cheap. The government made food and feedstuffs so cheap that those kinds of things could happen. And that's been wrung out of the system now. They're more back in balance, but probably unlikely that the kind of policies that were in place 10 or 15 years ago would come back.

MARK STEIL: The farm crisis is tough on all farmers, but it seems to be especially difficult for anyone who's just getting started in agriculture. At the Worthington rally over the weekend, Dennis Johnson of Murray County in Southwest Minnesota said, there just aren't many young farmers out there because the agricultural economy is so bad. Johnson is a farmer and also runs a farm machinery business.

DENNIS JOHNSON: We look around, and I see maybe, if I could count on both my hands, I don't think I could find 10 young farmers, 30 and under, in Murray County. I know I can. I look around and all my friends, their wives who are working in town, it's not right. I have seven sons. I'd sure love to have them live here, but there's nothing for them.

I look around, and I see hogs at $0.28. Last year alone, as small as I am, I lost $19,000 raising hogs. It doesn't cash flow, and I'm tiny. I look around, as a machinery dealer, and I see the lots full of machinery. We can't sell this product if you don't have the buck. The buck starts out on the land. That's where it starts.

[APPLAUSE]

MARK STEIL: And that's Murray County farmer Dennis Johnson. Joining us now is David Hess from the Comfrey area. He farms there. He's also a farm advocate. Good afternoon, David.

DAVID HESS: Good afternoon, Mark.

MARK STEIL: You know, we heard from our representatives in Congress, David Minge and Gil Gutknecht, a little bit earlier in the program. What sorts of hope do you hear out there for yourself, personally, that some of these congressional measures could be of real benefit to farmers?

DAVID HESS: At this particular point, I guess, we're hoping that something will develop as far as the loan rates increasing. It's something that not only do we look at this year, but we have to end up looking into the future. And as Dennis Johnson was mentioning there earlier about the young farmers staying on the land, at this particular point, there just isn't anybody that's willing to start in agriculture right now. And very few people are trying to actually stick it out. It just appears that there's going to be an exodus of people right now, unless something happens in the very near future here, very quickly, that these prices can end up moving their way up.

MARK STEIL: What will happen if a large segment of farmers in their 50s, 60s, even 70s leave the business? Who will farm their land?

DAVID HESS: I guess, as it looks to me, there would be some corporate entity that probably would end up stepping in and, somehow or another, get it farmed. I know there is the talk by a few people, family farmers, that are saying, what's the use? Let's just leave it black next year. And maybe, in the end, that's the best alternative. Get the message across that we just can't survive at these prices any longer.

MARK STEIL: You're a farm advocate, which, as I understand it, means you work with farmers in financial trouble, try to help them get through the situation. Are you expecting a busy winter?

DAVID HESS: Yes, I am. It's already started. And we haven't even got the crop out of the field yet. That's kind of a signal, the amount of mediations just occurring right now. This week, and next week, and a phone call I had this morning, again, with another one that's going to be happening in probably two weeks, they're not waiting for the crop to end up coming in to even see what kind of yield. It is and see what kind of dollars that it's going to generate.

We already know that there's definitely going to be a shortfall, and that's starting now and into the future. When we were at Farmfest for the very first time, we ended up every daily-- I don't know how many people ended up coming up and saying, boy, are you going to be busy this next year. And it's started already. Mark.

MARK STEIL: David, one final question. Your area, your farm, even, was hit by the March 29th tornado, which nearly destroyed Comfrey and then the same storm later hit Saint Peter. Many farmers were hit by that twister. How are they doing, and is it just a double impact now? They have to deal with the tornado and the poor farm economy.

DAVID HESS: Absolutely. This couldn't come at a worse time. Not only was it the March 29th storm, but there were a lot of the same people, including myself, hit by July 18th and 20th storms, as well as now, of course, with the disastrous low prices, it's just very doom and gloom right now. And I wish that there were something that we could say that was very positive.

I guess, kind of looking at the positive side of it, there are a lot of new buildings that are going up. But there is a tremendous shortfall with the insurance proceeds that were received and still a lot of insurance issues that are still going on as well. Arbitration happening in some cases. And in some cases, nothing is being done at this point. The building sites are still sitting just with absolutely nothing been done since March 29th.

MARK STEIL: Thanks for being with us this afternoon.

DAVID HESS: You're welcome.

MARK STEIL: That was David Hess who farms near Comfrey. You're listening to a special Main Street Radio Midday on Minnesota Public Radio. We're talking about the farm crisis and grain prices. If you'd like to join us, call 1-800-537-5252. Michael from Winona is with us this afternoon. Good afternoon, Michael.

MICHAEL: Good afternoon. How are you both doing?

MARK STEIL: Good.

MICHAEL: I'm an organic food broker and organic farm laborer over here in the Winona, Minnesota, area. And I just made a trip out to Ontario, California, and looked at one of those 10,000 cow dairies that they milked five times a day, the corporatists, they call them, a corporate dairy. And I saw cows out there that had one teat left and they were still milking that last teat. If we turn over the grains, and we turn over the vegetables, and we turn over the milk and the meat to the corporatist, we ain't going to have food fit to eat.

Now, I can tell you right off the bat that I'm very angry about these issues. And I'm empathetic with the conventional farmer in America today. But if you don't get back in control and have your consumer know your farmer and your farmer know your consumer, we ain't going to get back in control and we're going to have a disaster.

These are recommendations I mean to make to the conventional grower. And I don't care if they're 22,000 acres or two acres, there's a way to regain control of the market. That's selling direct. Every time $1 bill passes hands, you got to make sure that you control that son of buck and not the corporatists. Now, I'll get off the line and you can discuss this a little bit. One last thing I want to mention, our organic food cooperative out of this area has grown from two farms in 1978 to 154 farms. We're coming in behind these corporate bastards and we're going to regain control through an organic farm model. And you just watch us.

MARK STEIL: Thanks for the call. Stan Stevens, University of Minnesota extension economist, is with us this afternoon. A reaction, Stan?

STAN STEVENS: Well, that was quite a statement. I've been thinking about it a little bit. I guess, you have to get almost philosophical when you get emotional. And it seems to me like the rules of business in this country, especially in agriculture, are competitive. But I would argue a [? fair, ?] the large corporations can borrow too much money and get in trouble and have to be refinanced as well.

So I think, you know, the rules of business are operating. They're very competitive. There are some small farmers that are making it. There are some large ones that are making it. And also, both groups are having their stress under certain conditions. This side of the cycle, with respect to livestock and hogs, in particular, we haven't had a government program that I can recall that really got involved in stabilizing or influencing hog prices.

So historically, we've had good prices some of the time and lousy prices some of the time, now being an example. But those that have stayed with it in the long run and kept financial reserves in place to get through the low side of the hog cycle have-- well, they're still there and some of them, at least, are doing all right.

I think the grain markets are kind of headed for that kind of environment. It's going to take just a little while to get used to it. But the current situation in grains, I think, we're at the bottom. I don't see it getting any worse. And I do see some potential situations where it could get a little better. I'd be glad to talk about those if you would have time to do that.

GARY: You are listening to a special broadcast from Sioux Falls Main Street Radio broadcast. Mark Steil hosting, talking this hour about the major serious economic problems facing farmers all across our region and what might be done about those problems. We have temporarily lost our signal, apparently from Sioux Falls, and we will resume our conversation just as soon as that connection can be reestablished.

Again, a conversation emanating live from Sioux Falls, Main Street Radio broadcast on the farm crisis in our region. While we are waiting for the wires to be reconnected, let's take a quick look at our weather forecast. Cloudy skies forecast for this afternoon across Northeastern Minnesota. Sunny skies for the most part with highs today. Low 50s in the northeast to the mid 60s in the southern parts of Minnesota.

Tonight, increasing cloudiness out west. Clear to partly cloudy in the Eastern parts of the state. Matter of fact, there's a possibility for some frost down in the southeastern corner of Minnesota with overnight lows, mid 30s in the east to the mid 40s in Western Minnesota. Good chance for some rain across Southern Minnesota tomorrow. Partly cloudy in Northern Minnesota tomorrow with highs in the 60s.

The Twin City forecast for the day calls for a sunny sky this afternoon with a high in the middle 60s. Clear skies are forecast for tonight with an overnight low right around 40 degrees. And then, tomorrow, we can look for a cloudy sky in the Twin City area. 30% chance for some rain with a high from 60 to 65 degrees.

Waiting for our technical problems to be corrected here. You have been listening to a broadcast from Sioux Falls today dealing with the farm crisis in our region. It's become a source of considerable consternation, of course, as you know. It's also become a fairly big political issue and could end up playing quite a significant role in the governor's race yet this year. And we thought today would be a good day to take a closer look at what's actually going on out in the farm and what the possible solutions are. Let's try to resume that broadcast now from Sioux Falls. Here again is Mark Steil.

Apparently still having some difficulty getting that connection re-established. There was talk, of course, during the summer as the politicians were out in the hustings, there was some talk about possibly having a special legislative session to help farmers deal with the current economic problems.

And a number of the candidates signed on to that idea. Virtually, all of the politicians said that at least some programs should be considered to help farmers in the short run. Though, the general consensus seemed to be that, in fact, the biggest issue lie or the biggest solution to the extent there is a government solution to the problem, lies in Washington, D.C. And of course, that's what we were hearing from Congressman Minge and Congressman Gutknecht speaking about earlier during this hour.

Unfortunately, when you ever have these live broadcasts, every once in a while, things don't go quite as smoothly as you'd hope. And especially when there's a major technical problem, which is what we're experiencing now.

MARK STEIL: Gary.

GARY: There we are. Hello. Mark.

MARK STEIL: Hey, we're back.

GARY: Well, just like magic. Just when I ran out of things to say.

MARK STEIL: You did a good job. Thanks. We'll jump right back into it here. University of Minnesota extension economist Stan Stevens is with us. And if we can, let's go right back to the phone lines. Some people who have been waiting there for quite a while. We have Ann from Osceola, Wisconsin, calling in this afternoon. Good afternoon, Ann.

ANN: Good afternoon. My point is, I guess, I'm not a farmer, but we're small business here too. And the more I see it, this doesn't come as any surprise to me-- I see a lot of correlations there-- we're pretty much left on our own to deal with very little help. We pay our own health insurance and we can't even buy insurances that the big corporations can get.

We pay higher percentage of taxes than the other ones do. I just don't think the United States is very friendly to small businesses all around. So this doesn't even come as a surprise to me. I think we need to help people like the farmers. We didn't use to be our own business. We only started this like seven years ago. And I've been on both sides of it, and I'd hate to be a farmer. Now, because just looking at what we're going through, just being a small business, I mean, we're a pretty good business managers. We're not losing a terrible amount of money or anything, but it's very hard. I mean, you can't get ahead.

MARK STEIL: That's right. Well, thanks for calling in this afternoon with that observation. And Stan Stevens, farming is a tough business. All small business is a tough business, but it's something that people love to do and they want to stay with it. But it's frustrating when prices are so low that it's hard to earn a profit.

STAN STEVENS: Well, that's true. It's a brutal business. It's very volatile. There are good times and, certainly, bad times as we're experiencing now. In the mid 1980s, I remember that period very well, how things had to resolve themselves, some very good farmers that had troubles with the weather, maybe had brought their son into business at just the wrong time, had the misfortune to be out of favor with a chance, got in trouble.

And the way that worked itself out, the next few years, the land was all farmed and it was farmed by those that had been more cautious and more conservative in their management or maybe just had a little bit better luck operating. But it was all farmed. Rent values came down, opportunities. One positive element here is that for those that are now last year having come and gone, interested to get started, if they have the cash and the reserves and the family connections or whatever it takes, now is probably a good time to get started. Some of those that started in the '86, '87, '88 period got off to a real good start and possibly are in strong position here today.

MARK STEIL: You're listening to a special Main Street Radio Midday. We're coming to you from Sioux Falls this afternoon. One thing that can be said about farmers in tough economic situations is that they're never short on ideas on how to deal with a matter. One of the more interesting ideas at the Worthington farm crisis rally came from Jim Sarff, who farms near Eagle Bend. He says, since farmers are losing money on most of the crops they plant, they should cut back, idle some of their fields, and not plant anything in them. He thinks it would be a dramatic visual reminder of agriculture's plight.

JIM SARFF: We are just tired of producing for nothing. When I started farming, I did not take a vow of poverty. I didn't do that. But I have put my family through it, and I'm not doing it no more. We don't have to do it no more. There are families that can't do it out there. But last year, my wife and I working those hours made $9,000 on our income tax. One good job can take care of that, easy. And we don't have to work as hard. We've worked way too hard. And we can plow it black. It'll look good black. I think it's a good plan. And maybe if we can get more people to do it, it would be best.

I would not like to see anything better than driving down I-94 and see nothing but black fields. I think it would leave a message to the people who depend on us, because there's people who depend on us so dearly. And when the Amoco guy comes out to deliver my fuel next spring, I'll just tell him I don't need it. A vacation sounds really good to me. It really does. It does to my whole family.

MARK STEIL: That's Eagle Bend farmer Jim [? Sarff. ?] Let's take another phone caller now. Bob is on the line from Little Falls. Good afternoon, Bob.

BOB: Good afternoon. I appreciate the program. It's very interesting. And I'm a farmer. I have 80 dairy cow farm, and it's been very tough. And I just would like to a couple of comments, like the concept of part-time farming. I know Stan mentioned that it's been a successful model and someone works at IBM and et cetera like that. But the truth of that is we're Walmart workers and people who work part-time just struggling to get by. And children are suffering. I mean, it's really bad because you put all your time from 5 o'clock in the morning till, gee, 9:00, 10:00 at night. And you just don't have time with children anymore.

And in terms of competitive business, like trying to equate corporations who make the cereals and sell the oils and fertilizers to us, yeah, it's competitive there. But when you've got to struggle this hard and this long, and you go through these long cycles where you're just making the ends meet, you can't compare it that way. It's not on an equal playing at all.

And I guess my concern is, sometimes, you got to get to the reality of it. And the farmer, I've been told, receives 10% of what you buy at a store. When's the last time-- when you're going through this low price for corn commodities and cereal or grain commodities, are you going to see the price of a box of cereal drop substantially? No, you're not. We don't have that control. And so I think we just got to get to a far more just system. And that's what I'd like to comment on, that there is an injustice here so horrible. And they're forcing farmers to become bigger and bigger.

And what happens is, we get the technology, we go from 50 pounds production per cow to where we're at 70 right now. But a year ago when the milk prices dropped to a $10, we're at that point of just going under again. And so I'd just like to say, we've got to really bring that justice system back and quit thinking in terms of, I think, just dollars and cents.

MARK STEIL: All right. Well, thanks for calling in this afternoon with that observation. Another phone caller, Al from Eden Prairie is with us. Good afternoon, Al.

AL: Good afternoon. It's been quite an interesting discussion. I don't want to sound cold, cruel-hearted, or anything like that, but I believe, for the vast majority of the farmers are out there, they're in there as a business. And I don't know how many-- I haven't done a lot of research, but I'm not sure how many businesses there are out there that are looking for guarantees.

There is no such thing as a guarantee. And I'm not trying to sound like a rabid Republican because I'm definitely not. But it seems that, yes, there are hard times. A lot of people will go through hard times. A decision was made maybe by your father and you've kind of walked into it or whatever that you're going to be doing farming or you just love it. That's great.

But to choose a business and then to may or may not be successful at it any given time, it seems kind of unusual to be saying, well, since we can't make it, I want someone to guarantee that I'll get a price, even if the market doesn't bear it or things like that. I guess, I'd just like to have a little more discussion on that because I'm kind of curious as to how we can avoid, quote, unquote, socializing farming. I guess, I'd like to take my answer off the air. Thank you very much.

MARK STEIL: Thanks for calling in. With us is University of Minnesota extension economist Stan Stevens. And that is a question that has been debated for years, decades, maybe ever since farming has been around.

STAN STEVENS: Since the mid 1930s for sure.

MARK STEIL: Right.

STAN STEVENS: Well, yes, agriculture is very risky. The volatility that comes from the weather is really the main source with respect to grain based agriculture. And it can be crops can be reduced at the national level by one fourth, and we've talked about that before. The risk is very high.

But the risk is two-sided. I have talked to some farmers recently who are telling me that they had last year and the year before the best farming years they've had in a long, long time. They received government payments. They received corn in the $4 to $5 area one of those years. They've got their grain sold that they're producing this year because they were conservative, and like the prices that we had last Christmas.

And they're not they're not too worried about at least this next year. So these are the winners and the ones that will pick up the slack and carry forward. It does not negate the point that it's a brutal world. Agriculture is brutal and very risky. It's very challenging to the management person. And good managers will be rewarded in this environment and they are being rewarded today. And the ones that aren't are going to suffer some consequences. I don't want to downplay the fact, though, that a lot of the risk in agriculture is just raw luck. Sometimes, good managers just have bad luck and vice versa. So I don't want to downplay that component.

MARK STEIL: I've seen it so often where a fire or a bad spell of weather in the winter, a medical crisis just does in a farm.

STAN STEVENS: That's right.

MARK STEIL: Well, Stan, I'd like to thank you for being with us this afternoon. Stan Stevens is an extension economist in grain marketing at the University of Minnesota. And you've been listening to a special Main Street Radio edition of Midday coming to you from our studio at Augustana College in Sioux Falls, South Dakota. Also, thanks to David Hess, who joined us from his farm near Comfrey in Southwest Minnesota.

Our Saint Paul engineer for the broadcast has been Randy Johnson. Cliff Bentley handled the technical side here in Sioux Falls. Thanks also to our Saint Paul producer Sarah Meyer, and to Sioux Falls producer Cara Hetland. Thanks also to Rachel Reabe for reporting assistance on the Dakota, Minnesota, and Eastern railroad stories. And just a reminder that you can hear more about the railroad issue tomorrow and Thursday at 7:50 AM on Morning Edition.

Main Street Radio's coverage of rural issues is supported by the Blandin Foundation, committed to strengthening communities through grantmaking, leadership training, and convening. And just a reminder, too, about that website that many people are dialing into, we invite you to visit the Main Street Radio website at www.mpr.org. Click on Main Street. You can hear Main Street Radio reports there, as well as this program.

And if you miss or want to hear a repeat of the program, just tune in. Just go to that Main Street website. Again, that address, www.mpr.org, and click on Main Street.

SPEAKER 1: Main Street Radio examines a plan to send dozens of coal trains a day through Southern Minnesota. Tune in Tuesday, Wednesday and Thursday at 7:50 AM on Morning Edition on Minnesota Public Radio KNOW FM 91.1 in the Twin Cities.

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