Agriculture subsidies ensure that Americans, percentage-wise, have the cheapest food in the world, according to Rob Hogan, assistant professor/economist with the Arkansas Cooperative Extension Service.
“Our people pay a smaller percentage of their disposable income than people anywhere in the world,” he said. “Everyone should take notice and continue to protect that.”
But the people who put the food on the table are being driven out of business by high fuel and fertilizer costs. Hogan said 20 percent of Arkansas producers could leave farming this year.
He calculates that raising an acre of rice could cost farmers 23 percent more in 2006. Grain production costs could rise 16 percent.
“Obviously, farmers need to make some hard choices. Some veteran producers have been farming a number of years, and they've built a nest egg for the future. They don't have a 401(k), but they have retirement money. Do they want to risk their retirement for a year like last year that was mostly in the red and another year that's obviously going to be in the red?
“Some farmers have been talking about living off their net worth. They don't like it, but what can they do? That's the way they prefer to make a living.”
Don Compton, an England, Ark., fertilizer dealer, said the surprising thing about the latest crisis in agriculture is that the farmers in trouble are good, hard-working people who don't spend much money.
“We've lost farmers over the years that didn't take care of business or spent too much,” said Compton. “But that's not the case now.”
Hogan said if farmers are to survive, they not only need favorable government support, but they must find creative ways to save on production costs, increase yields and generate more money.
A new landlord/tenant arrangement may offer the best hope for many farmers who lease land, he said. A landowner would have to decide if he or she wants to take a larger risk in a tenant's farm and be exposed to some of the risk as well as the rewards.
Putting land in the Conservation Reserve Program can also be a way for farmers to hold on to their land. “You don't make any money. But you don't lose the land.”
The one bright spot in agriculture is the price of wheat. Hogan said wheat has been trading in the $4-a-bushel-and-change range.
“That's a wonderful price. Some people in the state have booked 2007 wheat for $4.30-plus. That's one of the few things making some money in agriculture these days.”
He said wheat farmers should take advantage of favorable prices and book or contract part of their 2007 crop now.
In the current climate, many farmers will get a job in a nearby town or go back to school. Scott Stiles, Extension economist-risk management specialist stationed in Jonesboro, Ark., said, “You have to admire farmers. They keep getting up every day. A career change for someone who's between 40 and 60 is a difficult thing to think about. In many small communities, people are faced with having to move and find employment elsewhere. It's all they know. It's what they've done all their life.”
For more information about increasing yields or cutting production costs, contact your county extension agent or visit extension's Web site at www.aragriculture.org.