Monday, August 29, 1983
Page 14
Daily Nebraskan
i
DroiAl; saws' stenrsftk
of azea arMcmlte
ByJeffObrecht
January 1983 and an unexpected
event: The Department of Agriculture
announces Payment-In-Kind, or PIK, a
massive acreage retirement program.
July 1983 and another unexpected
event: Severe drought and high temper
atures scorch the Midwest. The two
factors are combining for an unusual
situation in agriculture that could
prove costly for some area farmers.
'This situation is unbelievable," said
Fritz Oltjenbruns, who farms with his
father near Ceresco in northern Lan
caster County. "Soybeans have risen $3
a bushel in the last two months and
the other day (Aug. 16), their price
varied 50 cents a bushel during just
one day."
The Oltjenbruns enrolled half of
their 700 acres in the PIK program.
"I wish I would have went into PIK
100 percent," Oltjenbruns said. "My
corn was green yesterday, but after
today's heat, I'm afraid to go look. I
know the yield is half gone."
Terrell Dreamer, who farms 400
acres near Alvo in western Cass
County, portrays a different situation.
MI thought seriously about going into
PIK and decided against it. I guess I
made the wrong choice," Dreamer
said. "It sure would be nice to know
that you're going to get a PIK crop in
October and not have had to worry
about your production costs and the
weather."
Dreamer said he planted only corn
and soybeans and that choice is com
pounding his problems.
"At least some of the corn I planted
was one seed company's most
drought-resistant variety," Dreamer
said. "But even the weeds have a hard
time growing when they don't get rain
for over a month. This drought is
terrible."
The drought area is roughly south of
Interstate 80, from Indiana through
central Nebraska, according to Dr.
James Kendrick, professor .of agricul
tural economics at UNL.
PIK farmers: Better off
Southeast Nebraska farmers who
enrolled in PIK are definitely better off
than those who didn't, Kendrick said.
Farmers who irrigated crops in sou
theast Nebraska will fare better than
those who didn't, he added.
"A farmer who has a full crop to
market can take advantage of high
grain prices in the fall, due to the
drought," Kendrick said.
The drought has hit Lancaster
County hard.
"The dryland corn crop in the
county is pretty well done, and the hay
Continued on Page 15
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Economist: PIK hurts
ag-related businesses
By Keryl Knake
The federal government Paymcnt-in-Kind
program might be an asset
for the grain farmer, but its effects
on agriculturally related businesses
has not been good, Roy Frederick,
UNL extention economist, said.
The PIK program gives surplus
grain to farmers for idling crop land
this year. There are 457,344 wheat
acres and 2,698,217 feed grain acres
(corn and sorghum) in the PIK pro
gram, said George Harnett, program
specialist of the Nebraska Agricul
tural Stabilization and Conservation
Services.
The U.S. Department of Agricul
ture predicted that seed, fertilizer
and pesticide use would decline 12
15 percent, fuel sales would drop 8
to 10 percent, machinery purchases
would decline 2 to 3 percent, and
machinery reparis would drop 1 2 to
15 percent in 1983 as a result of the
PIK program.
The PIK program is also causing a
loss in profits for cattle and pork
producers, Frederick said. PIK has
caused feed prices to rise from $2 a
bushes to about $3.40 a bushel. Feed
is a large cost factor for livestock
producers, he said, and the large
jump in prices is hurting them.
Workers have been laid off in
many areas because of the effects of
the PIK program, Frederick said.
The biggest layoffs have been in cit
ies where large machinery is produc
ed. The reduction in agri-businesses
is a short term situation, Harnett
said. As grain reserves go down, the
prices paid for grain per bushel will
increase, giving farmers more pur
chasing power.
A decrease in U.S. grain reserves
will also result in decreased costs
for storage, and should benefit the
government economically, he said.
A wheat acreage reduction pro
gram has been announced that
allows a PIK option of 10 to 20 per
cent for wheat acres, Harnett said.
The feed grains program for next
year has not been announced, but
Harnett said he did not think a PIK
program would be needed.
PIK program interest rates
cause implement sales to drop
Farm implement dealers in the
Lincoln area have mixed opinions
about the PIK program's effect on
their industry.
Don Kuhle, owner of Beltline
Tractor Sales, Inc. in Lincoln, said
he believes the PIK program has
caused a severe reduction in sales
for dealers. Kuhle said his sales for
August are down 40 percent from
August 1982 sales. He said he has
laid off about 25 percent of his work
force and will not rehire those
workers unless the situation
improves greatly.
The income from the PIK pro
gram is going to the bankers to
reduce (the farmers') debt, so I.
don't look for a whole lot of sales
this fall," he said.
Richard Skaggs, manager of Case
Power and Equipment Co. in Lin
coin, also has reduced his work
force. He said he has laid off approx
imately one of every 1 2 workers and
does not plan to rehire those
workers.
Skaggs said he is optimistic, how
ever, about long-range benefits from
the PIK program, the drought and
the new federal grain export pro
gram. He said he believes these three
factors will reduce the surplus grain
and force prices up, which will give
farmers more money to buy farm
equipment.
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