Farmers have little to fear from Congress, experts say Bills would shift agriculture away from price supports

February 25, 1996|By CAPITAL NEWS SERVICE

WASHINGTON -- Maryland farmers, whose products range from meat to milk to mushrooms, probably have little to fear from farm bills working their way through Congress, industry officials say.

A bill passed Feb. 7 in the Senate and one to be debated this week in the House would move farmers away from price-support and market-control programs in place for more than four decades.

Both bills would implement a system of declining fixed payments through 2002, designed to move farmers toward a market economy. But many Maryland farmers are already there.

"Most Maryland farmers run fairly small and diverse operations, and Maryland agriculture is already consumer-oriented," said Maryland Department of Agriculture spokesman Harold Kanarek.

During the past three years, Maryland farmers grew more vegetables and fruits -- all unsubsidized -- than before. They sold more of them directly to consumers instead of produce brokers, Mr. Kanarek said.

Most of the corn, wheat and soybeans raised in the state are not tied to price-support programs, he said. Much of the crop is fed to livestock on the farms where it is grown.

The poultry and egg industry, which accounts for about one-third of Maryland's farm income, is not subject to federal supply or price controls.

Because up to 70 percent of the cost of producing poultry is buying grain, poultry and egg producers stand to benefit from higher grain production and lower prices expected to come from the shift to a market economy, experts said.

Likewise, livestock producers and dairy farmers, whose products account for almost a fifth of Maryland farm income, could benefit from reduced feed costs.

For consumers, the transition to a market economy would make prices for grain-based foods, such as cereals and bread, and for grain-dependent foods like meat and milk, less stable.

But in the long run, a government move away from price supports and production controls would bring down grocery bills, says the consumer group Public Voice for Food and Health Policy and the conservative Competitive Enterprise Institute.

Because federal subsidy programs have stabilized prices, even farmers who are not in the programs have benefited, said Kevin McNew, assistant professor of agricultural and resource economics at the University of Maryland at College Park.

"Where Maryland farmers will get hurt the most is with lower prices that will eventually come after 1995's weather-driven highs," Mr. McNew said. "The most efficient, those who can sustain large swings in prices, will be survivors."

Nationally, farm groups favor changes that move agriculture to a market economy, but are concerned about how they might be implemented.

"We're supportive of fiscal responsibility and we're glad to see something moving, although there are going to be pluses and minuses," said Maryland Farm Bureau President William Knill, a Mount Airy farmer.

But farm bill critics such as the National Grange, and the National Farmers Union, believe the federal government should provide a "safety net" for farmers when weather or market conditions threaten their economic security.

While experts said some agriculture proposals before Congress could benefit farmers and consumers, they also said provisions in the House bill could put consumers and dairy farmers at odds.

The proposal would create a federal milk standard in line with higher California standards.

It would require adding nonfat milk solids to fluid milk, increasing both its cost and nutritional value.

Nationwide, dairy farmers support the mandate, saying it would improve the taste and increase demand along with food value.

Some groups, such as the National Farmers Union, also have criticized a proposal for transition payments, because only farmers who have participated in a price-support program in one the last five years would be eligible.

Up to $40,000 in transition payments would be available annually to an eligible farmer, regardless of whether he plants a crop.

NFU spokeswoman Nancy Danielson expressed concerns about the policy, which would offer a temporary incentive not to plant without offering assistance after 2002. She said it might encourage some farmers to quit without encouraging others to stay in or start farming.

NFU critics also say a new farm bill could hurt the environment because farmers not in subsidy programs would no longer have to comply with conservation requirements built into the program.

Their concern is disputed by the Competitive Enterprise Institute, which contends that the requirements have been ineffective in reducing erosion and have increased environmental pressure on acreage in production.

Neither bill tells farmers what to expect from the federal government in 2003. But the House bill would establish an 11-member commission to assess the effects of federal program changes on agriculture and the nation.

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