The MacNeil/Lehrer Report; Family Farmer

JIM LEHRER: Good evening from Washington. The orange trees are freezing in Florida, a drought is threatening crops and grassland in California, two more developments in the continuing big story about the crazy, unusually harsh winter we`re now going through -- they`re also part of a consumer story because the cost of orange juice and meat, among other things, may rise as a result. But underlying those two front-page type stories is a quieter one about the men and women who actually raise the oranges and the rest of the food we eat, the family farmer. Today`s bad weather is only one of the problems he has right now. And tonight, with Robert MacNeil in Des Moines, Iowa, a look at the quiet story of the family farmer, his problems and his future. Robin?

ROBERT MacNEIL: Jim, the farmer in Iowa right now is also feeling the effects of a long drought, and that is probably his most urgent anxiety. But for thousands of small farmers there are more permanent factors which seem to be forcing the family farmer out of existence.

In the past fifteen years both the farm population and the number of farms have been cut almost in half. There are several forces at work: the soaring price of land is one; growing mechanization of all farmwork is another. Both factors are combining to make it harder for the family farmer to own a farm big enough to be efficient and that he can work himself. Some of the land is going out of farming as suburban sprawl eats it up, but more family farms get absorbed into larger and larger units managed by corporate agriculture. At the rate of decline predicted in official statistics only one percent of the American work force will be in farming by 1985. Not only will the landscape alter but a way of life always considered a fundamental and wholesome element in American society will have all but vanished.

Ken Jones is a family farmer in Zearing, Iowa, about forty miles north of Des Moines. He has 340 acres, 100 of which he bought from his father, and the remaining 240 acres he rents from his mother. Mr. Jones has been farming since he came out of the Marine Corps in 1950. He grows grain and raises livestock. Ken, what are the major problems that you face as a family farmer right now?

KENNETH JONES: They`re always the same, Robin -- the prices we get for what we raise, and the cost of producing it. This has been a continuing problem with some relief in recent years over what it used to be.

MacNEIL: Has the rising price of farmland affected you? Is there anybody after your land?

JONES: There`s nobody after it, but I`m not after anybody else`s, either, because now, if you`re going to have to pay interest of $200 an acre per year, you can`t make that kind of money off the land. What is happening, the larger operations are buying small parcels and throwing them into the larger operation; then they can handle them.

MacNEIL: But you couldn`t afford to buy more land to make your operation larger to make your life easier financially?

JONES: No.

MacNEIL: What kind of a living do you make out of it?

JONES: I suppose we would be in the middle income class -gross between forty and fifty thousand, and net twelve, sometimes less.

MacNEIL: Net twelve.

JONES: Sometimes less.

MacNEIL: Do you have to work harder these days to keep that standard than you had to in years past?

JONES: Yes. It seems to me -- now maybe it`s me; maybe I don`t organize my time as well as I used to -- it seems to me like when you get done with a job and you should be doing another job, you`re a week late doing that other job any more. Like one neighbor told me, there`s not as much enjoyment in this farming as there used to be. We`ve gone to where you used to visit with your neighbors every few days, and now you see them in church; that`s just about it. We don`t have time to go back and forth.

MacNEIL: Is there as much enjoyment for you as there used to be?

JONES: I don`t believe there is. My interest is there, but it`s not as leisurely.

MAcNEIL: What`s going to happen to your farm, Ken, when you either get too old to run it or die?

JONES: It will be absorbed by someone else. I don`t have any sons, and my two daughters will be in other fields -- they and their husbands -- so I will be one farm missing. Now, I was thinking here before we started, we were going to talk about family farms -- where in a radius of just a couple of miles from home, if you used a two mile radius, twenty years ago there were twenty-one farms and now there are eleven. And this has been a continuing process; I think it`s a normal process. It was accelerated somewhat in the 1950`s; some of those people that lost too much money to keep going in the 1950`s were good farmers, they just didn`t have enough backing behind them.

MacNEIL: What do you value in your way of life that makes all this very hard work worth while to you so that you wouldn`t rather go and do something else?

JONES: I`ve had several opportunities to go into something else, but I chose farming because I like to be outdoors and I like to work with livestock. And our farm, particularly -- it`s a rolling farm, has a stream to it; I`d be bored if I got on a flat farm. At first I wouldn`t know what to do with it, and then I`d find I could handle twice as much as I handle now, I imagine. But it`s a good place to raise children.

MacNEIL: Thanks, we`ll come back. Jim?

LEHRER: Ken Jones is one of 2.6 million Americans who own and operate their own farms. A man who has studied their overall situation on a national basis is Dr. Neil Harl, a professor of economics at Iowa State University; Dr. Harl has a background in agriculture and law, too. Dr. Harl, how typical is Mr. Jones` situation?

NEIL HARL: I would say it`s quite typical for this part of the country, for the Middle West; it`s a three-to-four-hundred-acre operation, he and his wife provide the labor and the management and they`re quite committed to it, so I would say for this part of the country it`s very typical indeed. I think it`s important that we recognize the changes that have occurred recently with respect to capital, and Ken was giving out that in his comments. I think back about thirty-five years to when I was growing up on a farm, and one farmer with a team of horses, a scoop shovel and a husking peg perhaps could husk maybe 100 bushels a day -- that was a good day. Today, with a $55,000 combine, maybe another $20,000 in a couple of additional tractors, and three or four wagons and an elevator, can pick perhaps five to six thousand bushels; so you can see the kinds of changes that have occurred with respect to capital intensity. It`s almost unbelievable.

LEHRER: Then, in other words, the idea that the city folks have of the small farmer -- the one you described just a moment ago, with a team of horses and all of that -- he`s already gone; there`s no point in talking about him, right?

HARL: That`s right. That farmer has been replaced with a very capital- intensive unit; still has many of the characteristics of the family farmer of 1940 or 1950, but it`s a different situation with respect to the amount of capital. I think there`s another difference, too, and that has to do with management; I think we`re dealing with a farmer today who is in general a more capable manager with respect to capital, with respect to that mass of resources, partly because we have put a great deal of emphasis on dissemination of technical and management information, we have more people going away from our colleges back to the farm almost unprecedented; and so we have not only the physical capacity to operate four or five times the number of acres possible thirty or forty years ago, we also have the management ability to go with it. And so this has meant a tremendous change in the ability of agriculture to sustain its productivity and output with a sharply reduced person-power component going in.

LEHRER: Well, look -- the Ken Jones-type family farmer, which is what we`re talking about, what is really what we`re faced with today, what exists today -- is he also going to become extinct?

HARL: We have to face that kind of an operation because in retirement -- another ten or fifteen or twenty years, depending upon when Ken believes that the fun is no longer there, the point that he presently does-- what`s going to happen to that kind of an operation? We think that we can categorize farms today into about three groups. The first group -- and I think probably the one that Ken is in -- is the group where there`s really no hope for continuation of that particular farm business.

LEHRER: Why?

HARL: It`s going to come to a screeching halt, not because it isn`t presently so efficient, but simply because there`s no one there -- there are no sons, there are no sons-in-law, there is no successor in management, there is no successor in terms of ownership -- and so that one will terminate at the retirement or death of the present majority owners. This has traditionally been the pattern of agriculture; it`s not really new. Almost since the memory of man or if not to the contrary this has been the pattern. We call this the family farm cycle. The family farm has gone through a birth and a death every generation. The farm has been built up to the peak of efficiency and has declined as retirement approached every generation. That`s still the largest single group of farms. The children are all off -- at Wilmington, or Peoria, or East Ipswich or someplace doing other interesting things.

LEHRER: Let me put this back to Robin. Robin?

MacNEIL: W. Gordon Leith is corporate vice president of Farmland Industries, a giant agricultural cooperative with headquarters in Kansas City, Missouri. Farmland was founded as a small cooperative in 1929 and has grown to half a million members and $1.8 billion annual sales, in petroleum products, fertilizers, farm equipment and meat. Its purpose is to reduce the cost of all these commodities to its farmer members. Mr. Leith, is big business in agriculture helping to drive out the family farmer?

W. GORDON LEITH: I assume, Robert, you`re talking about the big corporations -- whether they are driving out the family farmer.

MacNEIL: Yes.

LEITH: I`m sure they wouldn`t like the word "driving," because no corporation wants to be accused of being anti-farmer; but this is happening in some areas of our economy in beef production, in poultry and in certain fruit and vegetable activities. However, by and large, most agriculture in this country is still family farm agriculture any way you slice it. But there has been a gradual trend towards more corporate farming, this is true.

MacNEIL: How does your cooperative differ from corporate agribusiness?

LEITH: I think the main difference between a cooperative -and I`m using the term in general -- and an ordinary corporation is the fact that in a cooperative the users and the owners are one and the same. The proceeds of our organization, as in other cooperatives, is returned back to the patrons; so therefore any savings that are generated through operation of the cooperative goes right back to the members in proportion to their patronage.

MacNEIL: How important is the family farmer to American agriculture in terms of efficiency? Are we just sentimental about it -would farming be more efficient, would we grow our food more efficiently if it were in much larger units and fewer of them?

LEITH: This is a very debatable point. The family farmer has certain efficiencies; in the first place, he has incentive. As Earl Butz used to say, "Who would sit up with a corporate sow at two o`clock on a cold winter morning?" So the family farmer does have the incentive. Also I`m sure, as Ken Jones would point out, in the busy times of the year he works long hours, which is one of the problems with corporate agriculture, is the cost of labor and the labor restrictions, which you don`t have with the family farmer. We feel that definitely, and I think that Dr. Harl would agree that certain research studies bear this out, that in many cases, especially in grain production and in certain livestock pursuits like hogs, the family farmer is a very efficient farmer.

MacNEIL: Can a large cooperative like yours help protect the family farmer and a keep him in existence?

LEITH: I don`t think there`s any question about it, cooperatives are designed and operated to increase farm income and they`re doing it. We do pay refunds; our refund last year in Farmland Industries averaged seven and a half percent -- this is a little beyond the rate of inflation, so in effect you can say that we were taking care of the increase in the cost to farmers. My answer is yes; if the cooperatives weren`t doing a good job they would not be growing and farmers would not patronize them, but the opposite is true.

MacNEIL: Dr. Harl, what is the solution to keep the family farmer in business, if that is desirable?

HARL: I think for one thing we need to consider the possibility for a particular farm whether he can continue, and we indicated in Ken`s case there probably isn`t much hope that that one will. But yet for others, the ones we`ve come to call the superfarm, where there is a son or a son-in-law -- where there is someone there to assume the ownership, the management, to take over the old family farm -- or what we call the spinoff, where a farmer may have helped a son or son-in-law get started and they`re off on their own independently.

MacNEIL: What are the statistics on sons or sons-in-law wanting to take over family farms?

HARL: It is growing, rather rapidly, because of the better economic condition recently with respect to this...with respect to agriculture. We are a little bit clouded here because we have some spinoffs -- where they spin off on their on in their own independent operation -- and some who remain with the old family farm unit and perpetuate it. Now, for those who are wanting to stay in agriculture, wanting to enter agriculture, I think it is important that they remain efficient; and there are three areas of efficiency that are crucial. One is the internal firm efficiency, and it`s a question of where the minimum cost point is in raising corn -- is it a thousand acres, or fifteen hundred acres -- and management`s important, the management ability as well as technology. So that`s one feature. The second is, what about purchasing inputs? If you can buy a couple of carloads of fertilizer then you can purchase it more cheaply than you could if you went in and bought a bag or two. And this is where tying in with an efficiently operating cooperative can really give the farmer the power to purchase the same way the larger production unit would. The third is in terms of selling outputs. If you can sell a hundred-car train at the Gulf of corn you`re going to get more for it than if you go into town with one load; and so again, if a farmer can tie into an efficiently operating cooperative sales organization, so that the benefits of that mass sale operation can come back to the individual farmer, then this can be helpful. The key is on, I think, efficiency internally and efficient acquisition of inputs and efficient sale of the product.

MacNEIL: What is your comment on all this, Ken? You`ve heard both the representative of the big cooperative and Dr. Harl, the academic agriculturist saying that obviously this sort of thing has benefits -- have you ever considered joining a cooperative? JONES: I belong to a cooperative.

MaCNEIL: You do? Do you belong to this one?

JONES: Yes, I do.

MacNEIL: Oh, you do. I didn`t know that.

JONES: They`re in Zearing. I think when we talk about a family farmer compared to a real large farm where much labor is involved, we can go to the field and do our work and spend all we have to raise that crop, and if we have anything left over that is our labor. But the corporate kind of farming -- their first cost is labor, and that in itself looks to me like we can produce food cheaper than they can. You won`t hear this too often, but this giant machinery is so expensive there is a bypassing of local dealers when this machinery is used. I think it would depress a little town like ours to have just a few large farms. Now, myself, for example -- I wouldn`t work for ... if I can`t make a living farming I`m going to do something else; I`m certainly not going to farm for over twenty years and then go to work for somebody else, and I`m going to hang in there for quite a while. If I could make it through the fifties, I can hang in there for quite a while now.

MacNEIL: Thanks. Jim?

LEHRER: Yes. Washington plays a big role in the life and times of Ken Jones and the other family farmers, and there`s a lot of wondering going on right now about what the new Carter administration may do to help or hurt. On the surface it looks good; after all, Jimmy Carter is the first farmer since Thomas Jefferson to become President; his Secretary of Agriculture, Bob Bergland, is also a farmer. Their Democratic Party pledged in its platform to establish a national food policy "based on the family agricultural system which has served the nation and the world so well for so long." Congressman Alvin Baldus is a Democrat from Wisconsin, he`s a member of the House Agriculture Committee and the Family Farm and Rural Development Subcommittee. Congressman, is the federal government now committed to the task of saving the family farmer in this country?

Rep. ALVIN BALDUS: I think the federal government should be committed, I think many more of us should be committed to saving the kind of farm that has made this country great. After all, looking at any alternative to that is going into an untried area; and I don`t think we want to move that rapidly into it and the results where it has been tried aren`t that good, so the government properly should be committed to preserving the family farm. The family farm as we have been talking about it this evening and the kind of evolution that family farm is not the picture that you described earlier of some forty or fifty years ago. The family farm has to keep up with prices and times, but family farm versus corporate farm? the government should be interested in preserving them.

LEHRER: Is it a nostalgic thing, is it a social-value thing, or is it because it`s more efficient and better for the public good that family farms exist?

BALDUS: I think if you`re a student of history at all, when you see other countries where they`ve let all the land come into a few hands, then after the revolution they would divide the land again; that`s going on yet in other countries, and it`s as simple as that. Having the land in a number of people`s hands is better -- it`s better as far as efficiency is concerned, but it`s also better as far as a whole stream of agricultural economy is concerned and that means for the consumer also.

LEHRER: You mentioned the consumer; there always seems to be -- here in Washington, at least -- every time a piece of legislation comes up, whether it be a consumer piece of legislation or considered an agriculture or a family farmer type legislation, there`s an automatic tension. Is that inevitable? Are the consumer and the family farmer on different sides?

BALDUS: No, they`re not. I think we had a Secretary of Agriculture who at various times tried to make them enemies, but they`re natural friends; after all, the consumer is the customer of the producer and has every reason in the world to get along as well as they can. Now, when the conflict occurs is when you have these very, very wide swings in prices. Everybody`s mad at the Brazilians now because they had a frost down there and we can`t buy a cup of coffee at a reasonable price; but on the other hand, that`s not the producer`s fault, either. So where the government can do things to assure some predictability to the producer so that when he puts in and invests enormous amounts of money in a crop and has high fixed cost so that there be some predictability, if he gets a crop there would be a predictable price. Now, that benefits the consumer also because he has some predictability as to whether or not he`ll be able to buy bread at a reasonable price.

LEHRER: Do you see that -- what you just laid out, the maintaining of a predictable income for the farmer -- really to be the number one function of the federal government in terms of helping the family farmer?

BALDUS: The producer could get along with it just fine without that, let`s say, if he found some mechanism of assuring him equity, fairness. But when the producer is -- and he is -- subsidizing the consumer at the rate of fifteen, twenty, twenty-five percent, then it seems to me that it`s really to the benefit of the consumer to make sure that that system that is producing that well stay there as a system; because if you lose that system you might have to pay not only just a fair price but what the market will bear.

LEHRER: In other words, what you`re talking about there is basically federal price supports or something like that.

BALDUS: Some kind of mechanism that we`ve been experimenting around with for years needs to be there to provide some predictability -- and that`s to benefit both the producer and the consumer.

LEHRER: So from Ken Jones` standpoint, if Ken Jones is growing corn -- Ken, do you grow corn?

MacNEIL: He said yes, Jim.

LEHRER: Okay, so let`s say that when Ken Jones puts out a field of corn that he knows, because the federal government or some federal program, he knows how much money -- at least, a stable price - that he`s going to get; he`s not going to get below a certain price when he grows his corn.

BALDUS: If he can get some assurance of getting somewhere near cost of production, that will be of considerable benefit, and stabilizing both the amount of acres that we have and the amount of production that we have; and I think we are coming into times when export is a proper thing for us to want to do. But if we don`t give him some assurance then we`re not going to have it there to export, either.

LEHRER: Ken Jones, let me ask you -- do you see Washington as a friend or foe when it comes to your farm?

JONES: (Laughing.) Well, it seemed to be more of a foe in the fifties. You know, you have the problem, you never know just what each acre`s going to produce and yet you want to guarantee there`s enough; so the problem over the years has been, in order to guarantee enough we`d plant enough acres. If it did well, then it hurt us financially at the marketplace.

LEHRER: There would be a glut on the market and that would lower the price.

JONES: Right, right. And if it didn`t do well and we were short crop the money stayed about the same -- you got more per bushel -- but you didn`t have any bushels. So this is a continuing problem. It would be nice to have a support price or a loan rate at near the cost of production.

LEHRER: Mr. Leith, let me ask you -- is Washington helping or hurting the co-op projects like the one you`re on?

LEITH: It`s a little difficult to give a yes or no answer to that, Jim. Cooperatives have a higher profile now and there are more studies and investigations of cooperatives, and this isn`t all bad. All we ask, of course, is that they be fair and honest and studies in some depth. Generally speaking, I think that cooperatives are looked upon quite favorably, especially by the Congress. I`m sure that Congressman Baldus feels this way, being from an important dairy state. We`ve had a few problems with some of the agencies in the executive branch of the government, but by and large all we do is plead for fairness; and we recognize that by their deeds they shall know you, and we hope our deeds are all right.

LEHRER: Gentlemen, finally, all four of you: Does the fact that Jimmy Carter is a farmer really mean anything in terms of federal policy from a farming standpoint -- Congressman Baldus?

BALDUS: I think that -- well, I hope -- that there will be at least an understanding of the kind of problems that farmers have. Former Congressman Bergland, as the new Secretary of Agriculture, I know has that kind of understanding. Now, I hope that that will lead them to deal with those problems that preserve some semblance of the kind of family farm that we have now and has been shown in other countries to be the best kind to have.

LEHRER: Dr. Harl, how do you read the new Carter farmer phenomenon in terms of the farmer?

HARL: I think one of the important elements for continued viability of the family farm is that it receive a fair shake in terms of income tax; and that`s not really based on the tax that the family farm pays but the tax motivations that have led others to get into agriculture, perhaps because of the cash method of accounting that farmers generally have had -- over 97 percent of the farmers are on it -- and it means more in some areas, or has in the past, if one was a high-tax-bracket investor. And so in two major moves, in the Tax Reform Act of 1969 and the Tax Reform Act of 1976, very substantial moves have been made in the direction of restricting the use of the cash method of accounting -- the effect -- for the non-farm investor; and I think this type of thing is quite important -- to maintain fairness for the family farmer.

LEHRER: All right. Let me ask Mr. Leith and Mr. Jones, in a word. Are you hopeful that there will be a new attitude towards you all?

JONES: Yes.

LEHRER: That`s a good word. Mr. Leith?

LEITH: I think that President Carter is a man of the land, if I may use that expression; I think it`s good he has a basic understanding of agriculture and its problems, and we feel very good about the new Secretary of Agriculture -- we think it will be good in all respects.

LEHRER: All right. On that hopeful word we say good night to you gentlemen in Iowa and Robin.

MacNEIL: Good night, Jim.

LEHRER: Congressman, thank you. Robin and I will be back tomorrow night. I`m Jim Lehrer. Thank you and good night.