25% of State Farms May Face Bankruptcy
One in every four California farms is teetering on the brink of bankruptcy--a situation that both the head of the state’s largest farm organization and Gov. George Deukmejian agreed here on Monday caught them by surprise.
“When the agricultural economy began to slow down in the Midwest and South, I thought it would not have as devastating an effect on us here in California,” said Henry J. Voss, president of the California Farm Bureau Federation. “I was wrong. Its effect has been devastating.”
The 98,000 farmers and ranchers, who belong to their own county farm bureaus, convene annually on a state level to recommend legislative policies on farming and social issues.
Voss, who farms 500 acres of peaches, prunes, walnuts, almonds and grapes in Stanislaus County, said talks with California farm lenders indicate that “as much as 25% of the farm operations in California have little or no net worth. I think we are going to see a great many of them going out of business,” Voss added.
Deukmejian, who also addressed the annual meeting, told reporters that the plight of the state’s largest industry caught him by surprise, too. In fact, he told the meeting that 99% of the farms in California are family owned, not big agribusiness conglomerates.
Deukmejian said he intends to introduce legislation early next year to allow farmers to carry forward net operating losses on their state income taxes to deduct against future profits for the next five years. The losses would be limited, however, to those resulting from what he called “this recent depressed period.”
Voss called on Congress to make available loans to needy farmers if the federal farm credit system is unable to “get us over the rough period.”
Voss told about 1,000 attending the meeting that for years California--the nation’s leading agricultural state--was thought to be recession resistant because of the cornucopia of crops that it produces--some 250 different commodities. This contrasts with the grain belt states of the Midwest, where economic fortune hinges on one or two major commodities.
“I’ve seen friends and acquaintances having a really difficult time, or even going out of business,” he said. “These are not speculators or people who were greedy. Many were good farmers, who made the right decisions, who were conservative in their operations. When the best farmers are faltering, we’ve got a problem.”
The hard times were illustrated, ironically, by the recipient of the federation’s distinguished service award, Fred R. Starrh, a Kern County cotton grower.
Starrh described himself as “a frustrated farmer” who is “fighting mad” over federal policies that allow defense contractors to pass on high costs to the government while farmers must absorb them and sell their crops at prices below their cost of production to compete in world markets.
‘I’m Going to Fight’
“I’m sick, I’m mad, but I’m not going to give up,” Starrh declared. “As long as I can, I’m going to fight.”
Neither Voss nor John R. Norton III, a Phoenix grower who became deputy secretary of the U.S. Department of Agriculture last spring, offered much optimism that Congress will pass by Christmas a new farm bill that will further the market-oriented policies favored by Western growers and the Reagan Administration.
A House-Senate conference committee is to begin this week hammering out differences in legislation passed by each house last month.
“That’s an ambitious schedule,” Norton commented. He recalled that in 1981 it took six weeks to produce the current farm legislation, which is due to expire Dec. 13 unless Congress extends it again.
“The farm bill has been debated, sliced up, pulled apart, patched up and hammered on all year long,” Voss said.
“It appears that we will have pretty much the same farm bill that we’ve had for the past four years, which history has already told us didn’t work.
“Government has spent billions upon billions of dollars on the agricultural sector,” he said, “but the farm program areas where most of the money has been spent are in worse shape.”
(Voss’ reference appeared to be to price support programs that price U.S. grains and dairy products largely out of world markets.)
