Record Earnings in ’87 Amid Decline in Subsidies : 85% of U.S. Farmers Reported to Be Profitable

U.S. farmers had record earnings last year--nearly $58 billion--even though government spending declined, the head of the nation’s largest family farm organization said Sunday.

“The trend (in government spending) is down, the projections are down,” said Dean Kleckner, president of the 3.6-million member American Farm Bureau Federation, which opens its 69th annual meeting in New Orleans today.

Kleckner told reporters that 85% to 90% of the nation’s farmers have returned to profitability, a major improvement from the depths of the farm crisis two years ago when more than half the nation’s farms were in financial trouble. On the other hand, he added, farm foreclosures and the exodus of farmers from agriculture will continue at a high rate.

The $58 billion in earnings included about $22 billion in government payments to farmers under the five-year 1985 Food Protection Act, Kleckner said. That was down from about $26 billion in 1986, and subsidies are expected to drop to $19 billion this year.

Most U.S. crops are not subsidized, however, and nowhere is that more true than in California, which leads the nation in production of 56 specialty crops, from alfalfa seed and almonds to strawberries, turnips and walnuts.

The 1985 act, Kleckner said, was designed to be “a transition bill” to wean farmers of government-supported commodities from subsidies, while giving them time to adjust.

U.S. agricultural exports fell drastically in the early 1980s as the dollar grew stronger against major foreign currencies, increasing the cost of U.S. goods in foreign markets. At the same time, the nation’s farm program was contributing to a global surplus in grains that lowered prices internationally, making U.S. products increasingly uncompetitive.

The 1985 act sought to remedy this by cutting the direct link between farm subsidies--so-called income protection--from crop prices. Export prices thus were allowed to fall to competitive levels.

“It is regrettable” that any export subsidies are needed, Kleckner said. “In an ideal world we wouldn’t have to use them because no one else would use them. But it’s not an ideal world.”

The American Farm Bureau Federation this week will be debating scores of national issues to determine its lobbying agenda for 1988. Even though California by far leads the nation in the value of its agricultural production, in terms of farm-bureau membership--and thus policy-setting influence within the 294-member House of Delegates--it ranks 12th with 99,281 farmers and ranchers.

Alabama, which broke with the national organization years ago, is the only state not in the bureau.