Chicago Tribune / By Robert Manor
Although the farm economy remains in a slump, federal subsidies are propping up farmers' incomes, according to a report from an agricultural lender.
The Chicago-based Farm Credit System, which makes farm loans, said Friday that those subsidies are helping farmers stay current on their debt payments.
"The ability of ... borrowers to repay loans and interest on loans has been supported by significant direct Federal government payments, offsetting certain adverse agricultural economic conditions," the Farm Credit System said.
The Farm Credit System's third-quarter earnings rose to $388 million, up from $342 million a year ago, in an indication of the effect of the U.S. government's increased assistance to the farm sector.
Farmers and their advocates say that federal subsidies are, in a weak climate like the one that prevails today, the only barrier to insolvency.
"It's a welfare check," said Robert Johnson, 57, who farms 500 acres of corn and soybeans west of Joliet. "I don't like welfare and I know other people don't either--but you have to take it to survive."
Johnson said prices for his crops are too low for him to make a living. He drives a truck at night and his wife drives a school bus to make ends meet.
"Without federal assistance over the last three years, we would have seen large numbers of farm bankruptcies," said Doug Yoder, director of marketing for the Illinois Farm Bureau.
The bureau said that one in seven of the state's 79,000 farms is losing money this year, while many others are barely breaking even.
"All we are doing is allowing farmers to hang on," Yoder said. Federal assistance "is allowing them to survive until things get better."
Farm bureau statistics show that the average income of an Illinois farmer this year should come in at $37,000. Of that figure, $16,000 came from federal farm subsidies.
Grain prices dived in 1998 after the financial crisis in Asia and Russia devastated exports.
What would have been a disaster for farmers was averted due to federal legislation in the mid-1990s that established subsidies for farmers when the price of of corn, soybeans and other commodity grains falls too low.
Direct government payments to farmers nationwide rose 86 percent to $22.7 billion, and are expected to go even higher this year.
Excluding subsidies, farm income is expected to fall this year.
"Crop receipts are forecast to fall by $2 billion in 2000, reaching their lowest level since 1994," the U.S. Department of Agriculture said in a report earlier this year. "Net farm income is forecast to be $40.4 billion in 2000, a decline of $7.7 billion from the preliminary estimate of $48.1 billion for 1999."
Illinois farmers have never fully recovered from the loss of exports three years ago, according to Dan Zwicker, a market analyst for Bloomington-based AgriVisor Services, an advisory service for farmers.:
