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Farm News & Views - May 31, 2022

The Conservation Reserve Program was established in 1985, to provide incentives for farmers to retire environmentally sensitive cropland, while at the same time, also help reduce the supply of crops that were depressing farm gate prices. Late last week, USDA announced “it will offer voluntary CRP contract termination to participants who are in their final year of their CRP contract to help producers make informed decisions about land use and conservation options amid Russia’s invasion of Ukraine and other factors.” Farmers will still receive payment for the whole year. Normally, CRP contracts are terminated at the end of the year, too late to plant them to crops like winter wheat, but by ending contracts early, farmers will have time to prepare fields to be planted this fall for crops, which will be harvested in the summer of 2023. Participants who seek this one-time voluntary termination, have to make requests for the termination in writing through their local USDA office. If the voluntary CRP termination is granted, producers will need to plant their crops before October 1st, 2022

In the past, government initiatives to encourage farmers to produce more crops hasn’t ended well. For example, the 1980 farm debt crisis was triggered in the 1970s, when Secretary of Agriculture Earl Butz extorted farmers to plant crops “fence row to fence row” to produce grain for sale to the Soviet Union. Many heard the call, and they geared up by buying new farm machinery and more land, which drove up the cost of both of these assets. They then produced themselves into bankruptcy by the early 1980s when crop prices dropped off of a cliff. An Iowa State University survey predicted that about 60,000 people were displaced due to foreclosures during that time. By 1985, USDA economists estimated that net farm income declined by 30%, and land values were reduced by 50%, forcing one of three commercial-sized farmers to be unable to pay their bills. With the possibility of prices for corn, soybeans and wheat being double by this fall, farmers maybe tempted to purchase larger machinery and more high priced land, but land grant college agricultural economists are encouraging farms to go slow, since we may be seeing a boom, which inevitability ends up in a bust before the dust settles.

USDA is making $200 million available to create a new meat processing capacity expansion program, which includes $25 million for workforce training under the Meat and Poultry Intermediary Lending Program. The $200 million will “provide much-needed financing to independent meat and poultry processors to start up and expand operations,” according to the USDA. Grants of up to $15 million from a revolving loan fund can be used to finance capacity expansion to independent meat and poultry processors to start up and expand operations. The funding will flow through nonprofit lenders, including private nonprofits, cooperatives, public agencies and tribal entities, according to USDA. Those entities are tasked to the funding to “establish a revolving loan funds to finance a variety of activities related to meat and poultry processing.”

https://pubs.lib.uiowa.edu/annals-of-iowa/article/5283/galley/114117/view/

https://www.calt.iastate.edu/article/guest-article-1980s-farm-crisis-some-lessons-learned

https://livinghistoryfarm.org/farminginthe70s/money_05.html

An old farmer I know told me that last Sunday, he was out in the garden, when a drop of rain hit him, knocking him out. His wife had to throw two buckets of dirt on him to wake him up.

Bob has been an agricultural educator and farm and ranch management consultant for over 40 years in southwest Colorado. He writes about agricultural issues from his farm near Cortez, and has helped to produce farm reports on KSJD for more than a dozen years.