The Wingham Advance-Times, 1985-03-20, Page 85r
ilhe Fain Edition, Week of March 20, 1585 - 5a
Bank official says causes of farm pressures fere to stay
--By Sharon Dietz
Fanners have traditionally relied on
historical cycles in their industry, a trust that
time will correct the problem and if you work
a little harder and longer hours and increase
production, things will improve. This reliance
on historical cycles has prompted some farm-
ers today to believe the tough times farmers
are facing now will dissipate when the cycle
starts an upswing.
But a Royal Bank official speaking at a
financial, in Ludmow recently told
area fanners these are normal times and if
fanners are relying on ai,ghange in the cycle to
bring back the good old days, they should
think again.
"While it was valuable historically and the
work ethic is traditionally a part of farming,
farming; this is not working in the pressures
Reagan's policy to
President Ronald Reagan's much maligned
plan to dismantle U.S. farm support
programs is causing nervous twitdies north of
the border as Canadian fanners realize their
incomes stand to suffer from the fallout.
Canadian government offidalls and experts
in the field readily admit that Reagon's plan
to "wean" U.S. farmers from costly
programs that support prices for such
products as wheat, soybeans and corn, could
cut deeply into the incomes of farmers . in
Canada and elsewhere.
The main reason: ° U.S. prices tend to
become the world price because the United
States is the largest world trader in most
of modem situation.
"In the pressures off the modem situation,
the work ethic, work a little harder and a little
more, while it was valuable historically and it
is traditionally a part of fanning, it. is not
working today," observed Bill Bearss,
manager of the Royal Bank agricultural
services.
In the 70s there was margin for error but
they were unique times, said Bearss.. In the
40s and 50s you couldn't make mistakes and
survive.
"These are normal times," Bearss told
about 50 farmers attending the Inekriow
District Co-op financial workshop February
28. "All of l..he causes and pressures to create
a situation of imbalance in a farming opera-
tion are with us to stay."
Despite what you read and the pressureson
some fanners after an assessment of their
operation, banks want to, do business with
fanners, Beams. The dollars are there for
qualified borrowers and the compassion is
there for those in trouble.
look around you, Bearss told the fanners,
there are people with high debt load who are
making a profit. Even in these tough tines,
there have been fanners who have percolated
up through the industry and they have rade
profits, remarked Bears.
He asked those at the workshop to think
about why one fanner dying a heavy debt
load is able to make it, while another fanner
• with a ninth smaller debt load is • forced
under.
One farmer at the workshop 'commented he
had once been told "if you have more money
tied up outside the barn than inside the barn,
you'll never make a go of it."
Bearss said financial management makes
the difference. Fanners who do not make it
are slow to read to negative situations, slow
to identify a problem and react too little and
too late to be effective.. There is no replace-
ment for good financial and production
records, he stated.
Good financial and production records
require organization, regular maintenance
which tames drsdpline and consistent figures
which are understandable to the farmer.
Good records can be used to take action to
make change, said Bearss. Sound financial
management permits better planning for the
short and long tenn and prepares a farmer for
a down cycle. It also allows monitoring of the
situation, when compared to your plan.
Banks were remiss until the mid 70s, said
Bearss, because they did not follow up to
show people how to use the money they were
tom. to page ea
dismantle farm support programs threatens farmers
agricultural products, including wheat and
other grains.
If those prices are inflated because of the
complex web of support programs dating to
the Depression, they are destined to fall as
sop loans and cash subsidies to U.S. fanners
are reduced or stripped away.
American farmers will be spurred to
produce more to make up for lost income,
thereby flooding the world market and further
depressing prices.
It is a worrisome prospect for fanners in
Canada, as well as their counterparts in
Argentina, Australia and Europe, who know
the paces they Command are "influenced, if
not determined" by U.S. prices, said John
Sdrnittker, a Washington -based agricultural
consultant.
Against this backdrop is the nagging fear
that should the strung U.S. dollar begin to
drop beside its Canadian cotmWapart, the
competitive advantage enjoyed b Canadian
exports will shrink
The subject could be touched on at the
March 17-18 meeting between Reagan and
Prime Minister Brian Mulroney in Quebec
City, but the more likely forum is a meeting
between Agriculture Minister John Wise and
his U.S. counterpart, John Block, in April.
A major sticking point in the debate so far
is that even if existing U.S. policy has led to
artificially high prices, many farmers still
cannot cover their costs in the face of high
interest rates and plunging land values.
The current spurt of activity by. Congress to
provide .beefed up emergency bans to
farmers -in time for spring planting is recogni-
tion of the problem Reagan has already been
forced to ease credit terms for his $650 -mil-
lion relief program, but he is expected to veto
congressional efforts to add money to the
package.
Regardless, the battle over ;,� -term
relief has pushed the debate ' _ -term •
fano policy into the national t.
The Reagan plan is part of a move to reduce
the 5200 -billion U.S. federal deficit.
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