v- w . C a o khs @ mCMza)lI 21 cD C eTE-;1 Contents Page Preface and Acknowledgments Summary Introduction Procedure Characteristics of Respondents Major Issues and Summary of Responses Price Supports, Loan Rates, and Target Prices Foreign Trade Disaster Protection Farm Program Expenditures and the Federal Budget Farm Financing References Appendix: Questionnaire used to Collect Alabama Farmers' Government and Agriculture Opinions on 50 ii iii 1 3 4 7 9 22 31 35 45 49 PREFACE AND ACKNOWLEDGMENTS The survey of Alabama farmer opinions on agricultural and related in selected policy issues is one of several such surveys being conducted areas of the United States. Similar questionnaires were used in the studState The ies and other state reports are beiny prepared from the responses. reports will be aggregated to represent the opinions of farmers. authors trust that the farmer opinions and experiences expressed herein will be useful in policy. Appreciation is expressed to Marshall Dantzler, Statistician in guiding the formulation of agricultural and related Charge, Alabama Crop and Livestock Reporting Service, and to the County Extension Agents for their assistance in selecting the sample of farmers for this survey. Special thanks are offered to the farmers who partici- pated in the study. ii SUMMARY Farmer opinions about present and future alternative agricultural programs are a necessary input in the development of the 1985 farm bill. To acquire information about how Alabama farmers feel about agricultural issues, a questionnaire was mailed to a random sample of 1,497 farmers in early 1984. Approximately 2U percent of the sample responded to the Respondents represented all sectors of crop and livestock questionnaire. agriculture, ranging in size from small farms heavily dependent on off-farm income to large specialized farm operations. Comparison of respondents to farmer characteristics reported in the 1982 Census of Agriculture shows that respondents were slightly older than the average Alabama farmer, with size of farm and gross sales being somewhat larger than the average for all farmers. Opinions were evaluated by size of farming operation as measured by gross sales ($40,000 or less and over $40,000), dependence on off-farm income, and the most important source of income (crop or livestock). support programs, tures, foreign trade, The major policy issues concerned price disaster protection, farm program expendi- and farm financing. Farmers supported voluntary agricultural programs, with few supporting mandatory programs. Farmers with larger operations and those more depenCrop dent on farm income favored target prices and deficiency payments. farmers favored the same to higher target prices and deficiency payments, while livestock farmers wanted low grain support prices. Continuation of a farmer-owned grain reserve, with a limit placed on payments, was desired. Loan rates set in relation to market prices were desired. program when large stocks reappear was preferred. iii Use of the PIK Strong support was found for requiring farmers to follow recommended soil conservation practices to qualify for price and income support programs. Responses were solicited to a series of proposals to increase agricultural export sales. Alabama farmers favored strengthening the General Agreement on Tariffs and Trade, as well as bilateral trade agreements. Few farmers favored lowering support prices to achieve However, the majority of farmers saw benefits from increased exports. expanding exports through use of farmer-financed market development. Continuation of Federal Crop Insurance programs was preferred with costs shared by farmers and the government. opinions about program mechanics. insurance questions. The great majority of farmers were concerned about federal budget deficits and the resulting impacts on interest rates. Decreasing or elimiand use Farmers were divided in their Many farmers did not respond to the crop nating food stamps, maintaining a limit on direct farmer payments, of a low "safety net" price program were ways of reducing agricultural program funding. Farmers with small operations most commonly favored giving price and income support to the small and medium-size farmers. With the Farmers Home Administration becoming the major source of agricultural credit in Alabama, its lending policies have an impact on the total agricultural community. About one-half the respondents favored con- tinuation of the FmHA policy of foreclosing only after all repayment efforts had failed. iv ALABAMA FARMERS' J. OPINIONS ON GOVERNMENT AND AGRICULTURE Lowell E. Wilson, and John L. Adrian* 1985 for grains, Lavaughn Johnson, The Agriculture and Food Act of 1981 expires in cotton, and oilseeds. It is now time to consider the future direction of these programs over the next few years. Many have argued that the current policy tools are not effectively dealing with the inherent volatility and uncertainty in agriculture. 1981 bill The was developed at a time when policymakers were concerned that Foreign trade production might not keep pace with world demand for food. was active and the export picture appeared bright. Inflation was running at moderately high levels and this was being translated into higher land values and increased farmer borrowing. Out of this climate came the pri- mary farm legislation that would impact on major United States field crops, and agriculture in general, during the 1981-85 period. Since enactment of this legislation, there have been two bumper crops followed by the worst drought in over 5b years. clined. Export demand has de- Surplus stocks of some commodities have accumulated, leading to a During this time, program costs have 1979 to about $20-28 billion in 1983, massive acreage-reduction program. increased from about $4 billion in depending on which expenditures are included. The Payment-in-Kind (PIK) program was instituted as a stopgap measure It also helped keep many farmers viable to lessen the growth of surpluses. *Extension Economist, Alabama Cooperative Extension Service, and Professors, Department of Agricultural Economics and Rural Sociology, Auburn University, respectively. 2 financially. The Farmers Home Administration (FmHA) emerged as the primary Poor crops lender of operating credit to Alabama farmers during this time. and low prices still led to foreclosure on many good farms. Disaster and provisions of the farm program were eliminated in the early 1980's, crop insurance became the major instrument for protection against disasters. It is fairly obvious that policymakers were off-target when formulatThe Act did not provide sufficient flexiPerhaps the most ing the 1981 Agricultural Act. bility in allowing adjustments to changing conditions. important lesson learned, again, was that no one can accurately predict the future. Yet, efforts are being made to anticipate conditions over the rest of this decade, so farm programs can be developed to deal with those conditions. Can policymakers do a better job this time around? There are many First, so, how questions that must be addressed in developing new legislation: should the United States even have government farm programs? much should be spent and who should receive the benefits? If Should program payments be based solely on production or should there be payment limitations? Should program recipients be required to follow certain soil and How water conservation practices in order to qualify for program benefits? should loan rates and target prices be determined? type of two-price plan for differentiated markets? tion controls are needed, voluntary or mandatory? Should there be some What types of producAre acreage reduction programs really effective, considering that no other country has such programs and United States farmers usually divert the worst land from production? Would production quotas work better? What is the appropriate 3 production? Would production quotas work better? What is the appropriate role for the grain reserve? price? If Should it be used as a direct means to enhance Should domestic farm policies be more Should farmers share more in so, for what crops? closely coordinated with trade policies? program costs through various assessments? Congress will be debating, these and numerous other questions as the new farm bill is being developed. They will be listening to several voices and the farmer is but one of those voices. In order to better understand how farmers feel about some of these issues, agricultural economists at several the country cooperated in land-grant universities around The surveying farmers to get their opinions. purpose of this survey was to obtain information about farmer experiences and opinions regarding selected agricultural programs and issues. responses from Alabama farmers are summarized in this report. The PROCEDURE A sample of Alabama farmers to be surveyed was selected by the Alabama Crop and Livestock Reporting Service and the Alabama Cooperative Extension Service. From an estimated total of 48,000 Alabama farmers, a stratified random sample was drawn which included farmers in all areas of the state and farmers representing each major agricultural enterprise. This sample In was drawn by the Crop Reporting Board and included 1,412 farmers. addition, Extension agents in all 67 counties were requested to send one copy of the survey form to a farmer in the county who farmed in excess of 6OO acres. This was done in order to incorporate a sufficient number of Thus, a total of 1,479 farmers, or about 3 larger farms into the sample. tionnaire and letter explaining the survey were mailed to each farmer in late February, 1984. about 10 days later. Appendix. A total of 284 farmers responded to the questionnaire, sented about 0.6 percent of all Alabama farmers. which repreA follow-up reminder card was send to each farmer A copy of the questionnaire is included in the To gain insight relative to the degree to which the farmer sample is drawn in this study was representative of all Alabama farmers, selected characteristics of farmers in the sample were compared with characteristics reported in the 1982 Census of Agriculture. Farmers in the sample were on average, slightly older (53 and had versus 51.8 years), owned larger farm units (289 versus 211 acres), larger gross sales (60U percent versus 83 percent with less than $40,000) than did Census farmers. Dependence on off-farm income was important to both respondents in the survey and Census farmers. Thus, the study is slightly biased toward larger, oriented farms. However, more commercially this bias would be expected given the nature of the analysis because firms with these characteristics would be the likely beneficiaries of agricultural support programs. CHARACTERISTICS OF RESPONDENTS Efforts were made to draw a sample which would be representative of Alabama farmers. The responses to the questions suggest that the sample Selected characteristics of the respondents are shown was representative. in Table 1. Age of Respondents. Farmers from all age strata were represented in the About 11 survey with the majority being between 35 and 65 years of age. 5 Table 1. Item Selected characteristics of farmers responding to policy analysis survey, Alabama, 1984 Number Percent Age: Under 3.5 35 to 49 50 to 64 65 and over No response Education: Grade school Some high school High school graduate Some college or technical school College graduate No response Contribution of off-farm employment to total income: U to 24 percent 25 to 49 percent 50 to 74 percent 75 to 100 percent No response Gross sales: Less than $40,000 $40,000 to $199,999 $200,000 and over No response 30 60 109 62 19 33 31 78 56 61 21 11 21 39 22 7 12 11 28 20 22 8 91 23 36 70 60 33 8 13 25 21 167 47 27 39 60 17 10 14 Number Acres owned, 1983: Cropland Pasture Woodland Acres rented out, 1983 Acres farmed, Owned Rented 1983: 158 100 174 '207 200 35 Acreage 200 104 129 99 223 283 percent were under 35; 21 percent from 35 to 49; 39 percent from 5U to 64; 22 percent were 65 years and over; and 7 percent did not respond. Education. The respondents showed a wide range of educational attainment ranging from grade school to college graduates. Twelve percent reported completing grade school; 11 percent had attended high school; 28 percent were high school graduates; 20 percent had some college or technical training; school 22 percent were college graduates; and 8 percent did not respond. The group was about Contribution of off-farm employment to family income. evenly divided concerning the extent to which off-farm employment contributed to total family income. Approximately one-third of the respondents reported that 24 percent or less of the farm family income was from off-farm sources; 8 percent received 25 to 49 percent; 13 percent received 50 to 74 percent; and 25 percent received 75 to 100 percent of the family income from off-farm employment or investments. Gross sales. Among all respondents, 60 percent reported that they had gross annual sales of $40,000 or less; 17 percent reported gross sales from $40,000 to $199,999; 10 percent reported gross sales of $200,000 and over; and 14 percent did not respond. Size of farms. Sixty-one, 73, and 70 percent of the responding farmers indicated they had cropland, pasture, or woodland, respectively, on their farms. Average sizes of the holdings of these alternative land uses were Relative to rental arrangements, 35 200, 104, and 129 acres, respectively. respondents reported renting-out land with the average size being 99 acres. Land was rented-in by 100 respondents with the average amount being 283 acres. Membership in farm and commodity organizations. respondents belonged to the Alabama Farm Bureau. About 65 percent of all All other general farm The highest organizations had 2 percent or fewer of the sample as members. membership among commodity groups was reported for the Cattlemen's Association with 46 percent, followed by the Soybean Association with 13 percent, Labor Peanut Growers with 11 percent, and Pork Producers with 10 percent. union membership was reported by 8 percent of the group. MAJOR ISSUES AND SUMMARY OF RESPONSES The general format of the questionnaire was utilized to list the farmers' responses. Throughout this report, responses are based on all farmers who answered the particular question. In addition to the overall responses obtained from farmers, the data were further sub-grouped to determine if certain characteristics affected their responses. analysis. Three characteristics were selected for comparative Comparisons were made with respect to: (1) The size of farming operation as measured by gross farm sales ($40,000 or less; over $40,000). (2) Dependency of respondent on non-farm income as a proportion of total family income (less than 50 percent; over 50 percent). (3) Most important source of farm income (crops; livestock). Some enterprises were combined in order to classify the respondent as primarily a crops or livestock farmer. Major policy issues and farmers' presented in the following sections. the issue are discussed. responses concerning these issues are First, the major points concerning Brief statements summarizing each inquiry are then presented. Finally, each question is analyzed using a common table format incorporating these comparisons. The major policy issues explored are: * Price support, loan rates, and target prices * Foreign trade * Disaster protection * Farm program expenditures and the federal budget * Farm financing I~ire Ipj~mid1 l 10 It has been argued by many that the rigid price-support programs contained in the 1981 farm bill have not worked well. The administration has advocated that the current levels of loan rates and target prices are not in the best long-term interest of United States agriculture since they are so out of line with market realities. The arguments against high loan rates state that they provide an incentive for United States competitors to expand agricultural production, since the loan rate provides a floor price that other countries can depend on in the world trade arena. If we also have unrealistically high target prices, federal budget exposure. this means greater Our competitors realize that the United States will use acreage reduction programs in an attempt to raise market prices above the loan rate, so that the amount of deficiency payments will be When we have programs to lowered, thereby reducing the budget exposure. cut our acreage in order to raise market prices, the benefits are received by foreign competitors who have no such acreage reduction programs. Of course, it could be debated whether there really is a problem with high loan rates and target prices. The relationship among farm, target, and loan prices is shown in Table 2. It appears that wheat and cotton have been the most out of line relative to market price conditions in recent years. No doubt the "proper" determination of loan rates and target prices poses problems for policymakers. Perhaps the Secretary of Agriculture feels that he has sufficient in re- discretionary authority to make the necessary policy adjustments sponse to changing market conditions. But, what do farmers think? Are they really aware and concerned about the long-run national and international implications of price support 11 Table 2. Seasonal average farm prices, loan rates, and target prices for corn, wheat and cotton under the Agriculture and Food act of 1981 Corn, $1/bu. Farm Loan Target Wheat, $1/bu. Cotton, $1/cwt. Farm Loan Target Farm Loan Target Dollars ---------..-- .. 3.55 3.54 1/ 1/ 3.55 3.65 3.30 3.55 4.05 4.30 4.45 4.65 57.60 63.90 2/ 2/ 57.08 55.00 55.00 55.00 71.00 76.00 81.00 86.00 Year 1982 1983 1984 1985 S- 2.68 3.30 1/ 1/ 2.55 2.65 2.55 2.55 2.70 2.86 3.03 3.18 1/ Not available 2/ USDA is prohibited from publishing cotton price projections. levels, or are they simply interested in obtaining the best short-run price possible for their commodities, ernment? Loan rates and target prices will certainly be major items of discussion as the new farm bill is being developed. Several alternatives be it through the market or from the gov- have been suggested to deal with production and price supports over the next few years. Alabama farmers were asked to respond to several issues Their responses are briefly summarized: concerning price support programs. Preferred production and price support policy after 1985 Strongest support was to keep present voluntary programs, with 28 percent of respondents supporting this position. Farmers with larger farms and those depending on farming as their major source of income were the most supportive of present programs. Use of mandatory agriculture set aside and price support programs were the least popular of the program alternatives, Table 3. Continue target prices and deficiency payments in the 1985 Farm Bill Continuation of target prices and deficiency payments were preferred by almost one-half the farmers; however, those who were uncertain or opposed the programs comprised a similar proportion of responses. The farmers who were more dependent on off-farm income were more frequently opposed to target prices and deficiency payments, Table 4a. Table 3. Preferred production and price support policy after 1985 Annual gross sales Over $40,000 or less $40,UU000 ......... Keep present voluntary programs with minor revisions Have a mandatory set-aside and price support program in years of excess supply with all producers required to participate if approved in a farmer referendum Reestablish acreage allotments and marketing quotas for each farm as a basis of support Eliminate set-aside, price support and government storage programs Undecided Other responses No espns Response All farmers Contribution of offfarm income to total family income Less than 50% and 50% over Percent- Most important source of farm income Crop Livestock -------- .... ---------- 28 27 35 32 26 31 30 14 16 14 17 15 12 15 15 19 20 13 24 12 21 24 11 23 17 8 30 12 16 8 27 11 11 2 9 ~ /rC ~ ~ 7 1 4 7 3 7 m ~rr ~ rr Table 4a. Continue target prices and deficiency payments in the 1985 Farm Bill Response All farmers Annual sales $40,000 Over or less $40,000 gross Contribution of offfarm income to total family income Less than 5U% and over 50% Most important source of farm income Crop Livestock .... ..... Yes No Not sure No response 45 27 19 9 43 29 22 5 .... b9 31 7 3 --------Percent--------.-61 22 13 4 33 37 25 6 57 27 14 3 39 30 26 5 14 If target prices for corn, wheat and cotton are continued, they should be set at rates that are: Corn - Set rates about same to higher was most frequent response. Farmers with larger farms and crop farmers were strongest in their opinions to set corn prices higher (36 percent). Livestock farmers preferred lower target prices for corn. Wheat - Response was similar to opinions on corn. Crop producers wanted the same to higher price while livestock producers tended to favor lower target prices. Cotton - Forty-six percent desired same to higher price. Forty percent had no opinion or did not respond. Farmers with larger farms were more supportive of similar to higher prices than the farmers with smaller operations, Table 4b. Continue acreage diversion in future programs Overall, more respondents opposed than favored continuation of the diversion program (41 percent to 37 percent). Strongest support of the program was from farmers with larger operations and those most dependent on farm income. Practically no crop producers wanted the program continued; a majority of these farmers opposed the program, Table 5. Continue a farmer-owned grain reserve in 1985 Farm Bill One-half of all respondents wanted the program continued while only one-fifth opposed, Table 6a. Preferred future grain reserve policy Most common preference was to place a limit based on a proportion of the previous year's use (41 percent). There was little support for a no limit reserve or permitting the Secretary of Agriculture to set the limit, Table 6b. Loan rates of price supported commodities should be based on a percentage of the average market price for the past 3 to 5 years The majority of farmers agreed with this position (55 percent). Relatively few farmers opposed the proposal, Table 7. Use the Payment-in-Kind (PIK) Progra...m when larger stocks reappear This was supported by 47 percent of respondents; 27 percent opposed continued use. Farmers with larger operations and crop farmers were most supportive of the PIK program, Table 8. Table 4b. If target prices are continued, they should be set at rates that are: Commodity and level of rates compared with 1984 rates All farmers Annual gross sales Over $40,000 or less $40,000 ...------ Contribution of offfarm income to total family income Less than 50% and 50% over Percent -------- Most important source of farm income Crop Livestock ------- Corn, bu. Higher Lower About same No opinion No response Wheat, bu. Higher 25 13 27 15 20 23 15 28 18 16 35 11 27 12 15 32 17 28 12 11 18 10 27 25 20 3b 9 27 10 17 19 27 19 20 15 18 17 24 21 14 24 17 Lower About same No opinion No response Cotton, lb. Higher Lower About same No opinion No response 13 31 14 24 18 14 28 16 24 14 32 17 20 14 17 29 18 22 12 36 11 16 26 11 32 16 15 17 36 10 17 22 18 29 14 17 8 31 25 17 11 11 30 25 22 7 37 10 22 22 9 33 12 24 27 19 19 17 15 26 20 22 16 Table 5. Continue acreage diversion in future programs Annual Contribution of offfarm income to total family income Less than 5U% and 50% over Percent------59 34 5 1 b7 30 10 3 28 44 20 8 Response All farmers -, -, -, -, -. .- gros s sales $40,000 Over or less $40,000 -, ,- nS. Most important source of farm income Crop Livestock ----- Yes No Not sure No response 37 41 16 6 37 41 16 6 3 56 32 9 33 42 18 7 I.- Table 6a. Yes No Not sure No response Continue a farmer-owned grain reserve in 1985 Farm Bill 50 19 23 8 56 17 22 5 43 28 26 3 58 16 23 3 46 21 27 6 56 22 202 45 21 27 7 Table 6b. Preferred future grain reserve policy Annual sales Over $40,000 or less $40,000 Contribution of offfarm income to total family income Less than 50% and 50% over Percent . Most important source of farm income Crop Livestock gross Response All farmers .... ...----- .------------------ No limit on the size of reserve Let the Secretary of Agriculture set the limit on the amount Set a limit based on a percent of the previous year's use Not sure Norepos 12 14 14 11 19 6 14 12 14 13 14 12 15 41 19 46 18 42 26 43 22 43 21 42 20 7 45 20 14 14 cnr +nn I 1 mi T rnn 10 10 8 11 r(l I T I L rn Table 7. Loan rates of price-supported commodities should be based on percent of the average market price for the past 3 to 5 years Annual 9ross sales $40,000 Over or less $40,000 Contribution of offfarm income to total family income Less than --50% and --eren 50% over Prnt Response All farmers -------------- Most important source of farm --income Crop Livestock Strongly agree Agree Not sure Disagree Strongly disagree No response 15 40 20 10 6 9 b15 44 22 9 6 5 19 35 18 41 16 15 5 4 15 38 27 4 10 6 18 39 17 14 11 2 14 43 24 7 co 18 14 11 4 8 4 Table 8. Use the Payment-In-Kind (PIK) program when large stocks reappear 18 29 18 13 14 17 26 23 17 13 4 27 34 9 5 23 1 26 31 15 12 13 3 10 25 23 18 19 b5 22 39 16 9 13 1 16 23 21 16 18 6 Strongly agree Agree Not sure Disagree Strongly disagree No response 8 19 To qualify for price and income support programs, each farmer should be required to follow recommended soil conservation measures There was strong support for this proposal (65 percent) with less than 20 percent opposing. Livestock farmers were more supportive than crop farmers, Table 9a. Distribution of federal funds for soil conservation purposes The greater support was to give funds to states with the most severe erosion problems (53 percent), with lesser support to allocate funds by number of farmers per state (26 percent). There was general agreement among the various groupings of farmers, Table 9b. If production is excessive in 1985, payments for production cutbacks by dairy farmers should be continued; in comparison to 1984, the number of dairy cows on my farm by the end of 1985 will be: (Respondent was to state cow number change) Although no respondent was dependent primarily on dairying for family income, more respondents opposed cutback payments than those supporting the program (35 percent to 25 percent). Relatively few respondents had milk cows on their farms, Tables 10 and Table 11. Table 9a. To qualify for price and income support programs, each farmer should be required to follow recommended soil conservation measures Annual sales gross All 40,000 Over Response farmers or less $40,000 Contribution of offfarm income to total family income Less than 50%.and 5U% over Percent------37 37 6 7 8 5 Most important source of farm income Crop Livestock Strongly agree Agree Not sure Di sagree Strongly disagree No response 30 35 10 10 8 31 41 7 10 30 31 14 12 27 36 12 13 8 4 2b 35 12 12 13 3 36 40 6 9 3 5 7 4 12 1 8 Table 9b. Distribution of federal funds for soil 28 conservation purposes Give funds to all states in proportion to number of farms Give more funds to those states with the most severe erosion problems Not sure Other No response TL,~ , C~L __1 26 30 27 27 31 24 53 8 4 9 _C. _ _r_ 56 8 5 4 _ _~ ~ __ __ 55 8 4 54 10 5 55 8 5 5 56 6 4 3 58 8 6 4 Table 10. If milk production is excessive in 1985, should be continued payments for production cut-back by dairy farmers Contribution of offfarm income to total family income Less than 50% and 50% over Perrnt ---. Response All farmers ... .. Annual gross sales Over $40,000 or less $40,000 ...--- Most important source of farm income Crop Livestock -------- ..------ Strongly agree Agree Not sure Disagree Strongly disagree No response 8 17 29 20 15 11 10 16 29 23 16 6 4 16 32 22 22 4 8 17 34 18 18 5 9 16 22 26 19 8 6 20 31 23 16 4 7 15 32 21 17 8 N -I' Table 11. More Fewer In comparison to 1984, the number of dairy cows on my farm by the end of 1985 will be: 1 2 7 79 11 1 2 4 86 7 0 4 15 77 4 1 4 8 81 1 1 6 84 8 2 3 3 85 7 0 3 11 80 6 About the same Do not have any dairy cows on my farm No response 6 'Tra~deI 'I / ' 23 The emergence of a well integrated capital market and the shift to floating exchange rates have been the two major changes that thrust the United States into a world market for agricultural products. Agriculture and the rest of the United States economy have become increasingly dependent on trade, with dependence on foreign trade as a source of markets doubling between 1971 and 1980. In recent years, the United States has exported the production from two of every five acres that are planted each year. The growth in exports during the 1970's was due, in large part, to a relatively low-valued dollar. It was during this heyday that the 1981 Farm Act was developed. How- ever, since that time, the dollar has strengthened and a worldwide recession has occurred. The result has been a sharp decline in exports. efforts To enjoy future growth in United States agricultural exports, need to be made to improve the competiveness of traditional exports. United States This can be done by lowering our domestic farm price supports, The lowering the exchange value of the dollar, or by export credits. United States should also try to expand its share of higher valued products trade. Efforts must also be continued to liberalize trade among our trad- ing partners. The increased dependence on trade makes it more difficult to influence the economy with strictly domestic policies. see a trade title in the new Agricultural Act. Alabama farmers had mixed opinions on the various proposals to increase exports. Therefore, we are likely to 24 A series of inquiries were made regarding ways to increase export sales by the United States, Table 12 - proposals 1 through 10. Proposal 1. To increase export sales, the United States should match export subsidies of competin. countries Non-response and uncertain responses accounted for 46 percent of all respondents; 43 percent agreed with the proposal, Table 12-1. Proposal 2. To increase export sales, the United States should lower trade barriers by major importers Forty-five percent favored lower trade barriers, 43 percent were Farmuncertain or did not respond, while relatively few disagreed. were most positive in support of lower ers with larger operations barriers, Table 12-2. Proposal 3. To encourage export sales, the United States should lower support prices Only 23 percent agreed with this proposal, 27 percent disagreed, and Crop farmers were one-half were uncertain or offered no response. the most opposed to lowering support prices to encourage exports, Table 12-3. Proposal 4. To encourage export sales, the United States should establish a marketing board The majority of respondents either did not answer or were unsure of However, 42 percent supported one; 5 the value of a marketing board. percent opposed the concept, Table 12-4. Proposal 5. To encourage export sales, the United States should promote bilateral trade agreements with minimum purchases and export guarantees Almost 50 percent agreed that trade agreements would be useful, however, a similar percentage was either not sure or did not respond to the question, Table 12-5. Proposal 6. To encourage export sales, the United States should join an export cartel A fourth of the farmers did not respond to this proposal and a third Of those stating a of the farmers were uncertain of the proposal. positions, more were favorable than opposed, Table 12-6. Table 12. Proposal 1. To increase export sales, the United States should match export subsidies of competing countries ross All $40,000 Annual sales Contribution of farm income to total family incomes off- Most important Co ietc Over Less than 50% andfamice over ----------------- Response farmers or less - -- $40,000 ------------ 50% nt -- Strongly agree Agree Not sure Disagree Strongly disagree No response 16 27 25 6 4 21 17 28 28 7 4 17 21 30 24 8 8 9 19 32 22 6 3 18 18 .24 28 8 8 14 20 30 21 8 7 14 16 25 33 6 N 01 3 16 Table 12. Proposal 2. To increase export sales, the United States should encourage lower trade barriers by major importers 15 30 20 9 3 23 13 28 26 10 3 20 25 44 14 7 3 7 16 38 21 6 2 18 17 27 24 11 3 18 20 33 17 9 5 15 13 32 26 9 1 19 Strongly agree Agree Not sure Disagree Strongly disagree No response Table 12. Proposal 3. To encourage export sales, the United States should lower support prices Contribution of offfarm income to total family income Less than 50% and over 50% Percent ---------------- Response All farmers Annual sales $40,U000 Over less $40,000 or gross Most important source of farm income Crop Livestock ---------------Strongly agree Agree Not sure Disagree Strongly disagree No response 16 25 20 7 2b5 6 18 28 22 b5 21 11 14 27 23 15 11 8 14 31 20 7 20 8 20 25 22 6 20 6 13 23 28 13 18 8 20 31 19 3 19 Table 12. Proposal 4. To encourage export sales, the United States should establish a marketing board 11 31 31 3 2 22 Strongly agree I 12 29 35 4 3 18 14 45 32 0 1 8 13 34 31 2 3 18 13 32 33 4 2 16 12 35 32 2 2 17 U10 3b 35 3 3 14 Agree Not sure Disagree Strongly disagree No response Table 12. Proposal 5. To encourage export sales, the United States should promote bilateral trade agreements with minimum purchases and export guarantees Annual gross sales Over $40,000 or less $40,000 Contribution of offfarm income to total family income Less than 50% and 50% over Most impo source farm in Crop Liv rtant of come estock Response All farmers . . . . . . . . . . . . . . . . Strongly agree Agree Not sure Disagree Strongly disagree No response 11 38 26 3 1 21 11 41 27 2 1 19 12 43 30 5 1 8 Percent -. . .------- --- -11 42 29 1 1 16 15 35 27 5 1 17 14 47 22 3 1 14 9 37 33 3 1 17 Table 12. Proposal 6. To encourage export sales, the United States should join an export cartel 6 23 33 12 2 24 7 22 34 14 2 22 6 32 38 12 4 8 6 25 34 14 3 18 8 2U 34 14 3 22 U 29 32 13 3 17 I L Strongly agree Agree Not sure Disagree Strongly disagree No response 7 22 39 13 28 18 L 28 Proposal 7. To encourage export sales, the United States should provide more funds for food aid to hungry nations Only 28 percent of the farmers participating in the study agreed to the proposal that providing more funds for food aid to hungry nations was a good way to encourage export sales; a similar percentage disagreed with this approach. Farmers with larger farms were most supportive of using food aid to encourage exports, Table 12-7. Proposal 8. To encourage export sales, the United States should strengthen the General Agreement on Tariffs and Trade to facilitate freer trade Strong support was found for strengthening the General Agreement in Tariffs and Trade, particularly among farmers with larger operations (78 percent). There was essentially no disayreement to the proposal, Table 12-8. Proposal 9. To encourage export sales, the United States should expand farmer financed foreign market development Farmers with larger operations were very supportive of the proposal. The majority of all farmer groups favored farmer-financed foreign market development to increase export sales, although there was a substantial number who either did not respond or were not sure of the approach, Table 12-9. Proposal 10. To encourage export sales, the United States should set up a two-price plan with higher prices for commodities used in the domestic market and let exports sell at the world price Almost half the respondents either did not answer or were uncertain. Slightly more favored the proposal than were opposed, Table 12-10. Table 12. Proposal 7. To encourage export sales, the United States should provide more funds for food aid to hungry nations Annual gross sales $40,000 Over or less $40,000 Contribution of offfarm income to total family income Less than 50% and 50% over Most important source of farm income Crop Livestock Response All farmers ................ Strongly agree Agree Not sure Disagree Strongly disagree No response 9 19 21 21 9 21 6 21 22 23 9 19 14 22 22 19 16 8 Percent -.-...------------11 19 19 24 9 17 8 21 23 20 13 16 8 24 20 24 10 13 8 19 24 19 11 19 Table 12. Proposal 8. To encourage export sales, the United States should strengthen the General Agreement on Tariffs and Trade to facilitate freer trade Strongly agree Agree Not sure Disagree Strongly disagree No response 16 42 20 2 0 20 14 43 24 3 0 16 26 52 14 0 0 8 22 40 21 1 0 16 14 47 23 3 0 13 17 51 18 2 0 12 16 41 24 3 0 16 Table 12. Proposal 9. To encourage export sales, the United States should expand farmer-financed foreign market development Response All farmers ------------ Annual gross sales $40,000 Over or less $40,000 -18 34 23 7 30 40 18 14 Contribution of offfarm income to total family income Less than 50% and 50% over Percent -25 30 23 22 40 19 Most important source of farm income Crop Livestock ---16 41 21 w ----------23 34 19 Strongly agree Agree Not sure 20 33 20 Disagree Strongly disagree No response 19 15 15 14 14 Table 12. Proposal 10. To encourage export sales, the United States should set up a two-price plan with higher prices for commodities used in the domestic market and let exports sell at the world price Strongly agree Agree Not sure Disagree Strongly disagree No response 1 ~LI I tL(, TI I)l)ll~n I 111_ 10 21 28 16 8 18 22 30 16 8 14 I I1C1 8 23 30 22 12 11 22 26 19 8 13 23 30 15 11 12 30 20 24 8 8 17 37 11 11 15 IIII I I C~II ~f rl IDi~tit' T11)1 32 The disaster provisions of the Agriculture and Food Act of 1981 were discontinued and federal crop insurance was promoted to take its place. Actually, changes had already been implemented by the Carter Administration with the 1980 Federal Crop Insurance Act. The Reagan Administration simply supported and continued this concept of expanded coverage. Farmers in Alabama have not been very receptive to crop insurance. Some say that it costs too much for the coverage provided. is too complicated. Others think it Still others imply that the private insurance compa- nies are not well versed in merchandising and administering the program. It is important that farmers are offered some type of protection This can be accomplished by reinstating against natural disasters. disaster provisions in the new farm bill, by providing low interest loans or other financial aid, or by an improved federal crop insurance program. Alabama farmers were asked to express their opinions on the federal crop insurance programs. Preferred government policy to deal with farm production risks from natural disasters Preference was to continue present crop insurance program in which producers pay part of cost and government pays part of cost. Less than one-fifth of the respondents preferred a program paid entirely by the government. There was relatively little support to do away with Federal Crop Insurance programs, Table 13. Opinions about the Federal Crop Insurance Program on cost, coverage, and program mechanics The opinion was fairly evenly divided about the program in regard to cost, coverage, and mechanics. Only 17 percent thought the insurance was a good buy, 16 percent stated that coverage was adequate and only 9 percent thought the mechanics were easy to understand. Well over half the farmers either offered no opinion or did not respond. Inadequate coverage was expressed by 62 percent of the larger farmers as being a problem, Table 14. Table 13. Preferred government policy to deal with farm production risks from natural disasters Annual 9ross sales Over $40,000 or less $40,000 -.Contribution of offfarm income to total family income Less than 50% and over 50% Most important source of farm income Crop Livestock Response All farmers _---- Percent------------------- Continue present all-risk crop insurance where producers pay about 70 percent and government pays about 30 percent of the cost Return to disaster payments where government pays all the cost Eliminate all disaster payments and Federal Crop Insurance programs Not sure Other No repons 4b5 47 42 50 43 41 47 17 16 24 21 12 22 15 wA wA 13 14 1 10 14 16 16 11 9 10 20 20 0 15 13 14 17 7 1t 5 6 5 ~N~lt~~r UIIVrllllllrlll~ LI~Y~ Table 14. Opinions about the Federal Crop Insurance Program Annual sales $40,000 Over or less $40,000 Contribution of offfarm income to total family income Less than 50% and over 50% -- gross Response All farmers ------------ Most important source of farm income Crop Livestock Percent 18 32 23 27 15 42 20 23 8 25 21 46 19 26 37 18 20 17 35 28 12 26 35 26 - --------19 34 20 27 14 28 36 22 Cost: A good buy Expensive No opinion No response Coverage: Adequate coverage Inadequate coverage No opinion No response Mechanics of the Program: Easy to understand Complicated No opinion No response 17 28 28 27 16 29 26 29 9 24 27 40 18 27 32 23 18 20 32 30 8 23 30 39 15 39 22 24 9 62 18 11 15 36 22 27 20 40 18 22 10 32 18 40 14 26 33 27 10 23 33 34 ,n o ZPOIMORtuireo the and 'FedelriR ]Budget 36 The federal budget has been showing a deficit for several years, will be a major concern in formulating new farm program legislation. and It should be pointed out that agricultural programs themselves are responsible for part of the deficit, and this is catching the eyes of policymakers. The escalation in program costs is shown in Table 15. Table 15. Budgetary Expenditures for Price-Support Programs, 1979-1983 Fiscal Year 1979 1980 1981 1982 1983 Price-Support Expenditures Billion dollars 3.6 2.9 4.0 11.6 21.7 Costs for the 1983 program were approximately 1U percent of the federal deficit and two-thirds of net farm income for all of agriculture. Besides the budget exposure, agriculture is also affected by the deficit in other ways. As long as there is a large federal deficit, some private There will investment will be crowded out in order to finance the deficit. be a resulting expectation of higher interest rates to ration the available funds. Foreign capital and goods will continue to flow into the United The "safe harbor" States and maintain the strong position of the dollar. role of the dollar will continue as long as a large number of countries experience political, social, and economic stability problems. As long The strong-valued dollar is putting a damper on export sales. as the dollar remains strong, exports remain more expensive to foreign 37 buyers in terms of their own currencies. Thus, reducing the deficit is necessary in order to help correct our trade problems. Large deficits and resulting higher interest rates also mean higher production costs for farmers. Therefore, appropriate monetary and fiscal policies are perhaps more important than the farm bill itself concerning the long-run health of United States agriculture. Farmers across Alabama had varying opinions on the alternatives to help the agricultural program funding and budget situation. Give most prices and income support benefit to small and medium size farms The smaller farm operators and those heavily dependent on off-farm income strongly supported this proposal, with over 70 percent in favor while only a fourth of the farmers with larger operations agreed. The strongest disagreement to the proposal was from large farmers, Table 16. Preferred changes in funding government programs The most common response was a preference for a low "safety net" loan and target price program, 40 percent support. One-half of the farmers with larger operations favored this approach. Interest in a farm income insurance program with costs shared by government was expressed by about one-third of the respondents, Table 17. Recommendations on changing the limit of $50,000 on direct payments to each farmer There was relatively little support to increase the $50,000 limit on direct payments, even among farmers with larger operations. Respondents were evenly divided over either making no change or decreasing the limit, Table 18. Recommendations on changing the level of expenditures on food stamps Decrease or eliminate food stamp expenditures were the most common responses (56 percent), while less than one-fourth desired to keep the same level or increased expenditures. Only 5 percent were willing to see increased food stamp expenditures, Table 19. Table 16. Give most prices and income support benefit to small and medium size farms (farms with gross sales less than $4U,000) Annual ross sales $40,000 Over or less $40,000 ................ Contribution of offfarm income to total family income Less than 50% and over 50% Most important source of farm income Crop Livestock Response All farmers Percent ------------ -----11 15 29 24 11 38 24 17 15 2 53 20 14 35 22 9 19 11 35 27 15 11 00 o Strongly agree Agree Not sure Disagree Strongly disagree No response 34 24 12 13 8 9 48 28 13 4 2 Table 17. Preferred changes in funding government programs A low "safety net" loan and target price program Replace commodity programs with a farm income insurance plan with costs shared by farmers and government Other No response 40U 39 5U 42 38 43 39 32 12 16 37 12 12 23 18 9 32 14 34 16 33 13 11 35. 14 12 12 12 Table 18. Recommendations on changing limit of $5U,UUU on direct payments to each farmer Response All farmers Annual gross sales Over $40,000 or less $40,000 Contribution of offfarm income to total family income Less than 50% and 50% over .C.Prnt-................ - Most important source of farm income Crop Livestock Increase the limit Make no change Decrease limit Eliminate the limit 9 35 37 7 34 45 15 42 24 14 40 30 8 28 47 11 42 31 10 8 31 46 completely No response 8 11 15 4 11 5 7 10 ) 0 (I- a) a) c,) Nd ~0 a) 0 a. We should keep things as they are and not worry about balancing the budget. b. We should reduce the deficit in order to reduce interest rates for borrowers. c. Freeze present federal expenditures and raise taxes. d. We should reduce the deficit to reduce the debt burden on future generations. e. The federal budget should be balanced even if it means a substantial cut in all government programs including farm price and income supports. 55 TO HELP ANALYZE YOUR ANSWERS, WE WOULD LIKE TO KNOW A LITTLE ABOUT YOU AND YOUR INTERESTS: 20. Check below the price and income support programs that you participated in during 1983: Wheat Feed Grains Cotton Rice Peanuts Tobacco Acreage Reduction Payment-In-Kind 21. Your age: (Please check) 35-49 50-64 65 or over under 35 22a. Number of acres owned in 1983: b. Of the acreage owned, how much 1983? pasture woodland cropland iT any) did you rent out to others in owned + = rental total. c. Number of acres you farmed in 1983: (including government idled acres) 23. Approximate annual gross sales from your farm in recent years: $40,000 or less $40,000-$199,999 $200,000 and over 24. Your most important source of farm income in 1983: mixed grain and dairy hogs, beef cattle grain livestock other peanuts cotton What was the last year of school you completed? high school graduate some high school grade school graduated from college some college or technical school If you or members of your family were employed off the farm, what percent of your total farm family income in 1983 came from off-farm employment and investments? 75-100% 50-74% 25-49% 0-24% Please check your 1983 membership in the following types of organizations: Cotton Growers Farm Bureau Peanut Growers Farmers Union Fruit, Vegetable & Horticulture Grange Corn Growers National Farmers Organization Soybean Association American Agricultural Movement Wheat Producers Cattlemen's Association Labor Union Pork Producers Milk Producers 25. 26. 27. 56 All your individual responses will Thank you for answering these questions. You are welcome to make be kept confidential. You need not sign your name. any comments on the bottom of this page or on a separate sheet if you want to It write more. Please return in the enclosed self-addressed envelope. requires no postage.