U.S. Offers Farmers Cash Payments to Idle Cropland

Corn farmers will be able to get substantial federal payments next year if they agree to idle an extra 15% of their cropland to help cut surplus production, the Agriculture Department said Friday.

Agriculture Secretary Richard E. Lyng, sensitive to the potential political fallout from corn prices that have dipped below $1 a bushel in some areas recently, made the offer less than two weeks before the elections. He coupled it with other moves he said would help ease farmers’ cash problems.

The announcement said farmers who sign up to participate in the 1987 program for corn and other feed grains will be required to idle 20% of their cropland. At their option, they may idle an additional 15% in return for federal payments of $2 a bushel for the grain that normally would have been grown on that acreage.

Half of the land-idling payment will be in cash, and the other half in certificates redeemable for surplus government-owned commodities, which can then be sold for cash.

The certificates have become a particularly hot item in the Farm Belt. A secondary market has developed using the paper as a form of currency that now is trading at up to 115% of face value.

One analyst said the land-idling move, while a step in the right direction, would not solve the problem of surplus feed grains.

“The 15% paid diversion announced today (Friday) will fall short of holding the line on surplus stocks. But it’s close,” said John Schnittker, a Washington agricultural consultant and former USDA official.

Schnittker said it would still take poor weather in other growing areas of the globe to boost demand high enough to soak up what he estimated as a 7.25 billion 1987 crop.