112 



We are very concerned about an increase in the 

 government payment sector of farm income. We are all 

 aware of how little the farm support program is of the 

 total U. S. budget. The chairman with his famous charts 

 has made us all aware that it is now less than 1 percent 

 of the total budget. However, when we begin to talk about 

 saving, it is always agriculture that is first on the 

 chopping block. 



It is not conceivable that in a time of tight budget 

 constraints that an increase in farm program payments will 

 be allowed. Quite the contrary, we probably face future 

 additional cuts in projected outlays for farm programs. 



Even with record production, many producers are having 

 a difficult time continuing to farm. Those who were 

 unfortunate enough to be in areas hit by severe weather 

 this year are in particularly bad shape. 



We are hearing many horror stories from our membership 

 concerning the poor quality of grain harvested in some 

 areas. This has dropped the already-demoralizing low 

 price that the producer is receiving as a result of the 

 abundant crop that was produced. 



ARI News Service reports that there is an increase in 

 financial problems in the midwest. Grain producers are 

 receiving $1 per bushel for their corn, and dairy experts 

 are warning that milk prices could sag again this year. 



There are reports of an increase in calls to rural 

 "hotlines" to the highest level since 1986, and of a 

 banker who says that the problems he is seeing now are as 

 severe or worse than the "farm crisis" of the mid-1980s, 

 because the impact has been more sudden. 



The banker went on to say that in the mid-1980s there 

 was a string of moderate losses of $10,000 to $20,000 per 

 year, which eventually led to bankruptcy. Now, he said, 

 people are losing $75,000 to $100,000 annually. 



In addition to these reports, FmHA has sent out 

 notices of service to 31,579 borrowers. In order to avert 

 foreclosure, the borrowers are required to contact their 

 FmHA offices to develop a workout program. Only 7,952 

 borrowers have responded. 



In figure 3, we see that things are not really 

 improving for farmers and ranchers. There is a slight 

 improvement in nominal terms; however, in real terms, 

 there is a decline in the farm balance sheet. We are 

 hearing from many that they simply are not able to improve 

 their financial situation. 



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