States Racing to Find Ways to Rescue Farmers

With just weeks remaining before spring planting, state governments throughout the Midwest are racing to find ways to help economically distressed farmers find money to buy seeds and fertilizer, but the aid is likely to leave many still in need.

The pace of state activity has picked up markedly in the last two weeks, after President Reagan’s veto of a $2.5-billion bill to aid farmers.

The Administration offered instead a $650-million aid package through the Farmers Home Administration; but, as of Friday, only 91 farmers had been helped and only $10.5 million in loans had been guaranteed. Economists estimate that nationwide about $3 billion in aid to distressed farmers will be needed this year.

Applications Backlogged

State governments have criticized the Administration’s commitment to its program, charging that loan applications are backlogged because of a lack of personnel to process them.

On Friday, Wisconsin Gov. Anthony S. Earl signed two emergency measures. One makes $50 million available for low-interest loans to the state’s most indebted farmers. The second provides state funds to pay for personnel in Farmers Home Administration offices to speed processing of applications for federal loans.

Iowa Gov. Terry Branstad has assigned seven National Guard administrative experts to work in Farmers Home Administration offices to speed farmers’ loan applications.

Minnesota Gov. Rudy Perpich has signed legislation providing $25 million in state funds to provide low-interest loans for that state’s farmers. But a number of other measures approved by the Minnesota Senate have died in the House.

“Couple that with an absolutely unresponsive, irresponsible and intransigent federal Administration, and there is not much hope of saving farmers,” said Roger D. Moe, Democratic-Farmer-Labor Party majority leader of the Minnesota Senate.

The Minnesota Department of Agriculture estimates that the state will lose farmers--most of them traditional family farmers--at a rate of about 17 a day this year. Nationwide, economists have estimated that as many as 250 farmers are being foreclosed or forced to liquidate daily.

Emergency Credit

Illinois and Indiana have deposited tens of millions of dollars of state funds in rural banks on the condition that the money be used for low-interest loans to farmers. And the Illinois General Assembly is debating measures that could provide between $25 million and $50 million in emergency credit for farmers unable to get conventional spring planting loans.

“States are looking at what they can do to help farmers over the short-term hurdle, and then they’ll consider long-term plans for the health of farmers and rural communities,” said Dave Nichols, an agriculture analyst for the Council of State Governments, based in Chicago.

Emergency aid proposals are being debated in Nebraska, Michigan, Iowa, North Dakota, Missouri, Minnesota, Ohio and Kansas, although most states view their efforts as unlikely to save those farmers deepest in debt. Some economists believe that as many as 100,000 to 150,000 farmers could be forced off the land this year by a combination of heavy indebtedness, high interest rates, low commodity prices and diminishing export markets.

“The stuff we do at the state level isn’t going to do much,” said Illinois state Sen. Jerome J. Joyce, a farmer and chairman of the Senate’s Agriculture Committee.

Seen as Federal Issue

“It’s too late to solve the entire problem of operating loans,” Bill Lock, a research analyst for the Nebraska Legislature, said. “It’s unrealistic to expect the states to solve these problems. Agriculture policy is dominated at the federal level. The answers have to come from the federal government.”

In Iowa Friday, Gov. Branstad vetoed a measure that would have allowed the state, in concert with other states, to take over responsibility for setting minimum prices on farm commodities and for limiting production in times of surplus output. Such measures are considered radical because both of those regulatory functions have been the responsibility of the federal government for the last half-century.

“I’m concerned that signing this legislation would take the pressure off Washington to address our agricultural problems and would provide only false hopes to Iowa farmers,” Branstad, a conservative Republican, said. He added that he does not believe that efforts by states acting in concert would be successful because of the size of world production.

But perhaps more significant than Branstad’s veto was the fact that the legislation reached his desk. Although similar laws have been proposed for a number of years, this was the first time that both houses of the Iowa General Assembly had considered and passed the legislation.

Marketing Cartel

Several neighboring states are weighing similar legislation, suggesting that, if the farm depression continues or deepens or the Reagan Administration is successful in lowering or ending federal crop subsidies, states might join to set up, in effect, a marketing cartel.

Among the commodities that might be affected are corn, hogs, soybeans and wheat.

Although a trend toward such an approach appears to be developing, it is unlikely that it will become a reality in the near future. To control the price of American corn, for example, at least six states would have to agree on identical pricing and production measures.

Minimum pricing is being weighed in Wisconsin, Nebraska, Kansas, Minnesota and Missouri and has been discussed in the Dakotas.

Research assistant Wendy Leopold contributed to this article.