COLLEGE STATION — The 1996 Farm Bill brings sweeping changes away depression-era government supports, but the dust will settle with income bolstering market strategies, Texas A&M Agriculture Program officials believe.
“The greatest demand will be for programs that teach marketing techniques such as forming marketing clubs and hedging,” said Dr. James Richardson, Texas Agricultural Experiment Station policy economist. “We’re not telling anyone to fold the tent and go home.”
The Farm Bill outlines a historical transition in policy away from the subsidies provided by government to maintain steady farm incomes to the so-called “right to farm” measure that allows producers to make decisions as support payments are phased out over a seven year period.
The measure will save an estimated $13.2 billion over that time, and some fear that the savings for taxpayers will come at the expense of lost farms. But Agriculture Program leaders said planning in advance and trying new ventures can reduce the chance for loss.
“Our whole effort is in the strategic opportunities and looking at solutions for agriculture producers, agribusinesses and rural communities,” said Dr. Ed Hiler, vice chancellor and dean of agriculture at Texas A&M. “We are committed to contributing to the solutions, and we have some experience already with that type of situation.”
Hiler noted that when wool and mohair producers lost their government support programs a few years ago, the Agriculture Program – – through its Texas Agricultural Experiment Station and Texas Agricultural Extension Service agencies — worked with the state’s producers to get a marketing co-operative and processing plant put together.
“There is no question that this new farm bill will lead to more value-added opportunities for Texas producers,” Hiler said. “And that is something that we’ve been pushing for years.”
Richardson said the new bill means a completely new way of decision making for producers. And, he said, without the guaranteed price supports from government, the variability of Texas farm income is likely to increase by some 30 percent, meaning farm income could be at times one-third less or one-third higher depending on market and world events.
“We will have to find new ways of balancing the risk,” he said. “We have to come up with better marketing strategies.” For cotton growers, the governmental transition payments will taper off from about 9 cents per pound this year to 5 cents per pound by the year 2002, he said.
Richardson said that the state’s producers probably will not begin to feel the effect of the new measure until the turn of the century, but that gives growers about three years to make changes to secure their operations.
“There will be significant structural pressure on moderate-sized farms,” Richardson said. “And the greatest pressure will be on wheat, rice, cotton, peanuts and dairy farms. Those are the ones that need to start planning now.”
He said farmers and commodity groups need to increase their emphasis on international markets, for example.