MANHATTAN, Kan--A record $8.7 billion farm assistance package passed by the U.S. Senate on Oct. 13 should help bridge the gap in commodity prices left by faltering overseas demand and large global grain
supplies, a Kansas State University economist said.
"It's a temporary fix," said Barry Flinchbaugh, state agricultural
economics leader with K-State Research and Extension. "It's not a
permanent solution but it will buy some time until global economies
start to recover." "We'll probably need another aid package next year,"
Flinchbaugh said, adding that the economies of some of U.S.
agriculture's biggest overseas customers are rebounding from severe
problems but are still not as strong as they had been.

Flinchbaugh said the aid package, which passed the Senate largely as
expected, could bring net farm income to between $52 billion and $53
billion this year - making it the second highest net farm income level
in the 90s. "I think it's going to be pretty important for some Kansas
farmers to operate next year," said Duane Hund, coordinator for the
K-State Research and Extension farm analyst program. "Their margins are
just that close."

"We're seeing some machinery auctions out here with some pretty
substantial discounted prices," said Hund, who works closely with Kansas
farm families. He said, however, he"d not seen an increase in farm sales
yet. "Farms as a whole took out of the piggy bank, so to speak," Hund
said of farmers' financial needs to get them through this year. "If we
go into a third (crisis) year, I'm concerned about how we're going to
weather this."

He said the farm crisis of the late 90s will prompt some farmers to be
more innovative and efficient but it will also accelerate some farmers'
exit from the business altogether. "That trend will accelerate as long
as this price scenario continues as it is now," Hund said.He said two
bright spots in agriculture are the turnaround this year in
profitability in beef cattle and the reasonably profitable state of the
dairy business.

Highlights of the $8.7 billion farm assistance package include:

* $5.5 billion to double the amount of money grain and cotton farmers
will receive through their "market transition" contracts with the
government this year.
* $1.4 billion for weather-related losses, including $200 million for
livestock producers.
* $475 million for payments to soybean and sunflower growers.
* 400 million to reduce premiums for crop insurance next year.
* $328 million to compensate tobacco growers for declining cigarette
sales.
* $200 million to subsidize sales of domestic cotton.
* $125 million for payments to dairy farmers.
* $42 million for payments to peanut producers.
The bill also requires meat packers to start reporting prices they pay
for cattle and hogs and raises payment limitations on crop subsidies so
an individual farm could receive up to $150,000 a year. The measure
extends dairy price supports through next year so the government could
continue buying surplus production.
K-State Research and Extension is a short name for the Kansas State
University Agricultural Experiment Station and Cooperative Extension
Service, a program designed to generate and distribute useful knowledge
for the well-being of Kansans. Supported by county, state, federal and
private funds, the program has county Extension offices, experiment
fields, area Extension offices and regional research centers statewide.
Its headquarters is on the K-State campus in Manhattan.

Mary Lou Peter
Communications Specialist
K-State Research & Extension News



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