1999 Market Assistance should be Capitol Hill Priority

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Prairie Grains is the official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain Growers Association,
South Dakota Wheat, Inc., and the Minnesota Barley Growers Association.

Given higher grain stocks and the diminished expectations for many commodity prices, USDA recently adjusted its 1999 net farm income forecast to $43.6 billion, which is $1 billion lower than the forecast last December and $2.4 billion lower than the $46.0 billion estimated for 1998, according to Pro Farmer.

At the start of Congress this year, it appeared that further assistance similar to last fall’s nearly $6 billion federal farm aid package would be an uphill battle. However, the dismal outlook for the U.S. farm economy makes some sort of assistance package this year more and more likely. Republicans and Democrats alike, as well as the Clinton Administration, are ruminating on measures to help the income situation. We commend and thank our Congressional representation for being at the forefront of these discussions.

Kansas State University ag economist Barry Flinchbaugh, who wields farm policy influence as chair of the Federal Commission on 21st Century Production Agriculture, said in a March meeting of U.S. wheat leaders that last year’s assistance package will help many producers weather depressed farm prices. But given the price scenario in 1999, he said that "if we’re going to keep agriculture somewhat healthy, there has to be an infusion of funds this year." We think that is significant, coming from one of the chief architects of "Freedom to Farm."

F2F is not failed policy. It was the first new model for farm policy in decades. And with any prototype, there will need to be improvements. F2F has many positives, including planting flexibility, but was thwarted by market assumptions that have not of yet transpired. We do not foresee F2F being opened for surgery this year, although there will be debate on how to improve the safety net component of the program, and rightly so. Not only did the rug get pulled out of the global market, but promises such as better crop insurance and a more aggressive market stance have not occurred.

We believe the wrinkles in F2F can be fixed. We believe markets will improve. In the meantime, market assistance will be needed, and we will focus our energies to that end.

Kudos to BNSF for rate reduction
A recent rate reduction by the Burlington Northern and Santa Fe Railway deserves attention. Last fall, BNSF announced a freight rate increase of $50 a railcar, or about 1.5 cents per bushel, to take effect Jan. 1, 1999. Our counterparts at the Montana Grain Growers Association urged BNSF to do the opposite: The MGGA pointed out that grain movement and BNSF rail use would improve if the railway reduced its rate.

The message registered. BNSF responded by reducing its tariff rates by $150 per car for domestic and export wheat moving from Montana, SD, and western ND to Pacific Northwest markets from March 25 to July 31. BNSF says the rate reduction, coupled with discounted freight already available in secondary markets, will result in savings of 4 to 6 cents a bushel for wheat shippers, which in turn, should benefit producers as well. It’s modest, but in tough times, every cent counts.

It’s a great illustration of producers and industry working together. More agribusiness leaders should follow the BNSF example, and do what they can to help production agriculture through its slump. After all, farming is, as the saying goes, as much their "bread and butter" as it is ours.

"Association Perspectives" represents the views of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, South Dakota Wheat Inc., and the Minnesota Barley Growers Association.