U.S. Grain Loss Put at 31% but Drought May Be Easing

The Agriculture Department reported Monday that crop losses from the drought will slash U.S. grain production 31% from last year’s levels but predicted that the worst may be over for most of the hard-hit areas of the country.

In an update of the department’s mid-August estimates, Assistant Secretary of Agriculture Ewen M. Wilson said that a new survey “largely confirms what we knew earlier”--that the drought’s impact will produce one of the worst agricultural setbacks in recent years.

Weather Improving

At the same time, the department’s chief meteorologist, Norton D. Strommen, said that the weather situation has improved significantly in much of the drought-plagued area during the weeks since the mid-August survey, suggesting “a return to more normal” conditions.

Strommen said that the Gulf Coast, the Southeast and the mid-Atlantic region all had received “abundant rainfall” in recent weeks and noted that even the Rocky Mountain area is starting to receive some precipitation.

For many parched sections of the country, Strommen said, the drought effectively peaked in mid-July. But he cautioned that some sections of the nation will require several more months, possibly even a few years, to regain their productivity.

To Export More Grain

The department reported also that the United States now appears likely to export somewhat more grain than officials had predicted earlier, mainly because crop production in Canada and South America is lower than had been expected, leaving a gap in world supplies.

Wilson disclosed that, partly because U.S. grain stocks are now so much lower, the department is considering reducing export subsidies for grain sales to the Soviet Union. The subsidies were revived last year to meet foreign competition.

The United States has just concluded a series of agreements with the Soviet Union for purchases of American grain. Wilson said that the department already has begun scaling back the bonus it allows the Soviet Union on such sales.

Monday’s report estimated that corn production in the United States will total 4.46 billion bushels this year, down a record 37% from 1987. Average yield--the number of bushels harvested from each acre--is now at 78.5 bushels, compared to 119.4 bushels in 1987.

Soybean Crop Down 23%

Soybean production will fall to an estimated 1.47 billion bushels, 23% below 1987 levels, and yield will drop to 25.9 bushels an acre, down from 33.7 bushels in 1987. Farmers will harvest 56.8 million acres, up slightly from a year ago.

The combination of declines will leave the nation’s overall grain reserves far lower than they were a year ago. Existing stocks of corn now stand at 1.56 billion bushels, down from 4.35 billion in 1987.

Soybean supplies total 100 million bushels, compared to 280 million bushels a year ago. And supplies of durum wheat now stand at 41 million bushels, just under half of what the nation had in its storage bins in 1987.

Wilson stuck to the department’s prediction that the drought would have only a modest impact on food prices this year and next, even though analysts say that some food processors already are using the drought as an excuse to mark up their prices.

Price Hikes Discounted

The agency believes that in 1988 the drought will add only a percentage-point to previously expected food price increases and two percentage-points more in 1989. Despite early signs of more widespread increases, Wilson said, he expects “competitive forces” to stem the rise.

Meanwhile, officials said that overall farm income probably will remain near $57 billion this year, partly because of drought-caused price increases and partly because of cash payments from the $3.9-billion emergency drought-relief bill passed by Congress.

Under the legislation, farmers who lose more than 35% of a crop can be reimbursed for up to 65% of the income they normally would have expected, based on historical crop yields.