Farmers can expect another year of low commodity prices

MANKATO (AP) -- Farmers are in for another tough year with low prices expected for most major commodities except cattle, according to the U.S. Department of Agriculture.

The department estimates that net farm income for farmers will fall from $48.1 billion last year to $40.4 billion this year. Corn, soybean, wheat and hog producers likely will continue taking the biggest hits.

''We're locked into a tough situation,'' said Kent Thiesse, a Mankato-based University of Minnesota extension educator. ''Most experts don't see anything on the horizon to cause a significant increase in crop commodity prices.''

Farmers will soon decide whether to cultivate their fields again, continue livestock operations or call it quits. Those who want to try again will face stiffer scrutiny from lenders.

Lenders say they're tightening values placed on farmers' land, machinery and livestock -- a lesson learned from the '80s farm crisis. As a result, farmers seeking loans may have to risk losing more equity than usual.

''You have to take the risk and hope it works out,'' said Curtis Swanson, a grain farmer near Thief River Falls in northwestern Minnesota. Last year, Swanson was unable to plant 38 percent of his 2,500 acres because his fields were too wet.

Heavy rains and crop disease have taken a toll in the state's northwestern region for several years. Some people are optimistic conditions will improve this year, but elsewhere in the state a lack of moisture has farmers worried about a potential drought.

Farmers in central and southern Minnesota need a wet spring, but climatologists are warning about possible subsoil moisture deficits across the Midwest.

''It's a rather heartless dilemma, but depending where the drought occurs, it can be either good or bad for the industry as a whole,'' said Gene Hugoson, the state's agriculture commissioner.

Minnesota farmers received more than $2 billion in federal and state aid last year, which Hugoson said substantially reduced the financial devastation. The state's overall loan delinquency rate was less than 2 percent at AgriBank, the country's largest agricultural lender.

''If it weren't for guaranteed loans and the federal assistance, I think many more of our farmers and ag institutions would be in a lot more peril,'' said Hubert (Buck) Humphrey, the government affairs manager at AgriBank in St. Paul.

Nationwide, government aid accounted for more than a third of farmers' estimated net cash income of $54.5 million in 1999, according to a report from Wells Fargo Co.

Net cash receipts for farming totaled $25 billion, well below the decade average of $34.5 billion, the report said.

Minnesota's Farm Service Agency predicted 6,500 Minnesota farmers -- 8 percent of the state's farmers -- would quit in 1999. Government aid greatly reduced that, though by how much is not certain, according to agency head Tracy Beckman.

Some farmers who actually did well last year worry about the impact of another season of low prices.

Kim Larson, a farmer from Willmar, said he had the best yield of soybeans in 25 years and that, despite the low return per bushel, he came out ahead. But he worries about what will happen this year if prices remain low and farmers have normal or low yields.

''It's bad enough not to get a good price for a good commodity, but when you don't get any crop or price it's a true catastrophe,'' Larson said. ''How many times can we go to the well for government support?''

Political pressure is building to address the economic plight of farmers. U.S. Agriculture Secretary Dan Glickman recently proposed a new farm subsidy program providing $3.1 billion this year in direct payments to small and medium-size operations.