Michigan Farming Prospects Bleak
MICHIGAN FARMING PROSPECTS BLEAK
by Ellen Rusten
"Sure they get depressed," Rose Solowczuk said about her farming husband and two of her sons. "Wouldn't you get depressed if you were $10,000 in debt, and the corn you just planted was drying up in the field?"
One of her daughters-in-law nodded and said that was one of the many responsibilities of wives of farmers - keeping their husbands' morales up. And these days that's a heavy duty job because 17 percent of Michigan farmers predict they will be getting out of farming soon and 25% of the state's farmers have too many debts according to Dick Stout of Michigan Farm Unity.
The Solowczuks were talking on their farm eight miles west of Ann Arbor. They were the farm hosts for the Interfaith Council for Peace's third annual Farm Tour August 16. This year the more than 50 participants went to Torn and Steve Solowczuk's Holstein dairy farm and got a technical introduction to the computerized world of modern milking.
The two brothers rent about 500 acres, some of which is from their father John who bought the farm in 1947. They milk from 102 to 112 cows daily and sell about 600 gallons a day. The milk eventually ends up in Kroger. The Solowczuks are members of the Michigan Milk Producers Association, a farm cooperative which guarantees them a market.
"Dairy is probably the least affected by the current farm crisis," said Gil Whitney, a retired dairy farmer and one of the organizers of the Farm Tour. And "the Solowczuks have done a very careful job of minimizing their expenses," he said.
One of the reasons why so many farmers are having trouble is the extent of their indebtedness. According to a survey done in the spring of 1985 by the state Department of Agriculture, 25% of Michigan farmers who responded to the survey have a debt/asset ratio of over 41 percent. A debt/asset ratio is the total debt divided by total assets. Two percent of these farmers are insolvent. Fifty-two percent of farmers have real estate debts, with 8% of those delinquent. However, this means that 48% don't have real estate debts, according to the survey which sampled 1,312 farmers.
Another problem is depreciation of land, equipment and buildings. In the1970s, banks were encouraging farmers to borrow in order to expand, by either buying new land, equipment or building more buildings. Those farmers who bought land between 1974 and 1981 are having greater difficulties than farmers who resisted doing so, according to the study. The Solowczuks managed to avoid getting too deeply in debt.
"A lot of farmers are considering whether to stay in farming or not," said County Extension Agent Ivan Camacho. "It's just a question of not getting enough back" in prices for your product.
"There's going to be a lot of farmers out of farming in the next five years," he said. "Farming's going to be just like a factory.
"It's good to get bigger and bigger," said Camacho, who is director of the Saline Valley Project which encourages farmers to be concerned about conservation and the environment. "Big farmers can produce more and can fight competitors better.... Young farmers would have trouble.
"It's the low prices," he said. "Cost of production is high. Chemicals, just like everything else, are more expensive every year. But the price of wheat (and other crops) is not going up. Everything goes up but the price of their products. Big farmers can afford to get paid low."
The government says that there is too much production of milk and that is why prices are low. So after much controversy the federal government has sponsored a program called the Dairy Buy-Out. This is a controversial program in which the government buys the next year's supply of milk from dairy farmers and gives them the price for the cows. The cows must be killed or sold to Canada, but so far none have been sold there. The slaughtering of young producers of a lot of milk can be painful for the farmer, who has farming in his veins and has gotten attached to the cows.
Farmers who stay in business end up picking up the tab for this program. Originally, they were to pay 40 cents out of every 100 pounds of milk sold, but with Gramm-Rudman 12 cents was added. One hundred pounds of milk now sells for $11.86. Two years ago the price was $14 per 100 pounds, according to Steve Solowczuk. So with the cost of everything going up, the value of machinery and land going down, added to the fee for the Dairy Buy-Out things can look pretty bleak.
But the younger Solowczuk is only occasionally daunted. In an answer to a question about why farmers are in trouble, he said, "They're not always taking advantage of the management tools available" to them through the Cooperative Extension Service and government programs such as those that pay farmers not to farm land.
On the other hand, he warns, "In eight years, we (the Solowczuk family) may not even be here."
Net farm income during 1981-83 declined from $356.7 to $204.2 million, according to a 1985 report from the Michigan Department of Agriculture. New cash income, which is cash sales less cash expenses including interest, went down a fourth from the 1983 level of $1,079 million to $700 million. However, this figure "tells very little about the farm's ability to survive over the long-run or how profitably the farm is being operated," the report states.
One indication of profitability in dairy farming is how much milk is given per cow. Michigan cows gave nearly 5.4 billion pounds of milk in 1984, down 3 per cent from the year before. "Production was only 7% below the record high of 5.75 billion pounds set in 1964," according to the DOA report. But this was produced by about half the number of cows - 394,00 cows in 1984, 610,000 cows in 1964.
Dairy farming accounts for more cash receipts than any other single agricultural enterprise in Michigan. In 1984, "reduced milk marketings and lower milk prices resulted in the first drop in dairy cash receipts in recent history.