August 14, 1998 | By: Randy Weckman

The 1996 farm bill, much ballyhooed as allowing farmers the "Freedom to Farm" because it phased out supply controls while kicking the props out of 50 years of government price supports for many farmers, now jeopardizes the farmers who supported the radical changes the bill brought.

"The economic outlook for agriculture has taken a sobering turn since the 1996 farm bill was passed. The bill that gave farmers much more leeway in deciding what to plant and guaranteed payments to farmers for only seven years, is now exposing those farmers to perils of the world marketplace," said Craig Infanger, Extension agricultural economist with the University of Kentucky College of Agriculture.

Why?

World prices for major commodities are sliding and with fewer governmental supports, American farmers' incomes are dropping as a result. In addition, many foreign farmers have substantial price incentives to continue to grow crops even when world prices are near or below production costs, he said.

For American farmers, the basic safety net remaining after the 1996 farm bill is in the form of "marketing assistance loans," capped now at $2.58 a bushel for wheat, $1.89 for corn and

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FREEDOM TO FARM 2-2-2

$4.92 - $5.26 for soybeans.

Already, world wheat prices have fallen enough to make U.S. wheat farmers eligible for marketing assistance loans and loan deficiency payments. Producers who've put their crop up as collateral for an assistance loan can pay the loan off at either the loan rate or the current "posted county price," which changes with local market changes.

Infanger said that corn and soybean producers may need the farm's safety net before the marketing season is over, given the prospects for both substantial harvests and low prices this year.

Even though many farmers are concerned that the safety nets provided by the 1996 farm bill won't be sufficient to keep them afloat while they wait for stronger prices, there seems only moderate support in Congress to raise marketing loan rates or to extend the repayment period.

"With Congress on track for an early adjournment for members to start politicking this October in home districts, there is little likelihood that it will provide any significant change in ag policy to moderate the impacts of the current market problems," Infanger said.

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Contact: 

Writer: Randy Weckman Source: Craig Infanger

(606) 257-3937 (606) 257-7274