Farm Economy 2000

February 1, 2000

The farm economy appears to be turning around ever so slightly. Farm land values have held up very nicely in the face of low farm prices keeping the U.S. farm balance sheet reasonably sound. The Asian economies are gaining strength which should help boost prices of certain select commodities. Can we put on a happy face? We want to.

Yet I just finished reading the speech that Keith Collins, USDA's Chief Economist, gave to the American farm Bureau Convention. He calls them the way he sees them. In part, here is what he said: "With average weather, I see very weak crop and milk markets ahead for sometime but improving livestock and poultry markets. Without new farm payments in 2000, we will have the lowest level of farm income since the 1980' s."

That's his prediction. Now with an election in the fall, there is little doubt that Congress will rush to the rescue as they did last year. There will be debate about limiting the payments to small farms -- lower payment limitations perhaps. Depending on one's farming operation, this mayor may not be reassuring. In the longer view, I don't think it is safe to assume Uncle Sugar will continue to negotiate to lower trade barriers to farm products. The World Trade Organization will inevitably restrict how much direct farm subsidies will be acceptable.

Yes, that will hit the European farmers where it hurts, but can we be far behind? In addition, the fact that there are only 3500 commercial farmers suggest that our political clout isn't what it once was. In spite of these unsettling points, I am optimistic. But there will be some difficult farm bill negotiations in the next few years.