All things are relative, including the buying capacity of a bushel of corn. As the price chart below shows, corn in my home town of Newman Grove is finally up to the price we sold all our corn for in 1973, $3.30 per bushel. We can see the ADM elevator from our farm, about 7 miles away. According to the CPI calculator, the inflation adjusted value of $3.30 November of 1973 is $17.60 in May of 2017. So, how does it work to live and farm in 2017 and pay for those 2017 costs with 1973 prices? The honest answer is that it does not work. New pickups back then were $4,500, new tractors were $11,000, new combines with two heads were $37,450, and farmland was worth from $200 to $400 per acre. And no, I did not have to look up those prices. J
The current farm crisis choking the economic life out of rural America is the direct result of non-competitive agricultural markets and domestic farm policy. It is imperative to understand that U.S. trade policy now creates the legal structure into which our domestic farm policy must comport. That public policy transformation was realized in the 1996 Farm Bill. The traditional farm policy tools were scrapped. Simple, business based tools like supply management that brought production into alignment with domestic consumption, strategic reserves, and export needs was shelved. Minimum price supports for grain commodities along with a Farmer Owned Reserve were replaced with Congressional promises that they would stand with farmers when grain commodities fell below the cost of production. Farm Bureau and the grain trade won that pivotal battle. National Farmers Union, their organizational allies, and family farm agriculture lost. When those tools were used, farm programs cost taxpayers far less money and did far more good for family farmers.
As a result, thanks to our trade policy and our domestic farm policy that it fits into, American farmers are now raising and selling all of their crops at below the cost of production prices for the fourth year in a row. That is not only a raw deal for the folks who do the work and produce the food and fiber our nation depends on, it is extremely bad economic policy because agriculture creates new wealth and is a primary economic driver. When agriculture does well, it drives manufacturing and service related jobs, and tax revenues at local, state, and federal levels. It is not in our nation’s primary economic interest to have one of our nation’s largest single industries operating at below the cost of production. Let’s hope that the re-thinking of U.S. trade policy includes the impact our trade policy has had on domestic farm policy and family farm agriculture. If America is to achieve greatness, it must include profitability for production agriculture.
All the best,
John K. Hansen, President
Nebraska Farmers Union
1305 Plum Street, Lincoln, NE 68502
402-476-8815 Office 402-476-8859 Fax
402-476-8608 Home 402-580-8815 Cell