Remarks at the Annual Meeting of the American Farm Bureau Federation in Dallas, Texas

January 11, 1983

Representatives Stenholm and Bartlett, Secretary Block -- and, Bob Delano, I thank you very much for this opportunity -- and you ladies and gentlemen:

I thank you for that down-on-the-farm welcome that I've just received. I'm like -- I once heard a fellow say, ``As happy as a hog in a tater patch.'' [Laughter] And let me tell you why.

I happened to read Bob Delano's Christmas message in a recent Farm Bureau News. And in case you missed it, I'd like to read part of it for you. Bob gave thanks for ``all that is good and well on every farm and ranch -- for family and health, for understanding neighbors . . . for puppies, kittens, calves, for good rains, fertile soil and good crops . . . for freedom to manage and to speak for oneself, and for the great voice of American agriculture that is Farm Bureau.'' Well, I say amen to all of these things, because they embody the spirit of the Farm Bureau, and I'm delighted to share in that spirit today.

Now, if there's one thing you must possess to be a farmer, it's patience. I know how difficult the past several years have been for farmers -- so difficult, in fact, that they should change the lyrics of that old song to read, ``How you gonna keep them down on the farm after they've seen the grain prices.'' [Laughter]

But I want to thank you for your patience and your support. On several occasions -- especially on the legislative front -- I've felt like that neighbor who's needed some assistance, and the Farm Bureau has been there with a helping hand. And because of that friendship, my door and Jack Block's door will always be open.

You know, there's a story about a young fellow from the city who hired out to work on a farm during the harvest season. And the first morning everyone was up well before dawn. The new hired hand and the farmer made their way in the dark out to the oatfield and neither one of them saying a word. And finally the city fellow asked what kind of oats were they going to cut -- wild oats or tame oats. [Laughter] The farmer, a little surprised, said, ``Well, tame oats, of course. Why do you ask?'' ``Well,'' he said, ``I was just wondering why we're sneaking up on 'em in the dark.'' [Laughter] Well, that's about as much as some people know about today's farm problems.

What I'd like today is to discuss what our administration -- or how our administration sees the problems and what we plan to do about them. And now I'm going to use the word ``farmer'' throughout these remarks. I want the women here to know I mean them as well -- not only the women who are farm operators but those who are farmwives. Like marriage, farming is a partnership, and I know most of you ladies, even with children and household chores, also help with the livestock or the bookkeeping, and I just wanted to get that little reminder in while your husbands were sitting there to hear it.

All of you well know the reasons for the current farm situation. During the 1970's the world demand for United States farm products exploded. There was a world food shortage at the same time that economies were expanding, and the value of the dollar was declining, making it easier to buy U.S. goods. Having crops in the ground was the next best thing to finding oil on your land, U.S. agricultural exports rose 500 percent in 10 years, and net farm income more than doubled. And farmers did what other American businessmen would do -- they tooled up to produce. They bought more equipment, applied more fertilizer, cropped more land, and embraced more science and technology. The acres devoted to corn, cotton, soybeans, and wheat jumped nearly 40 percent during the seventies. Things looked mighty good. While not exactly a gold rush, there certainly was a grain rush.

Agriculture came roaring into the 1980's pulsating with productive capacity and hopes for the future. But 2,000 years ago, the Roman poet Virgil said, ``God didn't will that the way of cultivation should be easy.'' Well, old Virgil didn't know how right he was. Three years ago this month, the previous administration embargoed grain shipments to the Soviet Union. Our 75-percent share of the Soviet market plummeted to 30 percent. Other countries filled in the gap and then locked in new, long-term trade agreements with the Soviets. We not only lost sales, we lost our reputation as a reliable supplier. It takes years, not months, to regain that reputation.

As you know, we lifted the embargo, and we've been working hard to repair the damage to our farm exports. We want the world to know that it can count on America and her farmers for two things: generous food aid for those who are hungry and the reliability of our farm supplies.

To rebuild our reputation as a reliable supplier, last March 22d I pledged an end to export interruptions except in extreme foreign policy circumstances. I've kept that pledge. As the Governor of another great agricultural State, Charles Thone of Nebraska, said to me last summer, there must be no question about our respect for contracts. We must restore confidence in the United States reliability as a supplier. An agreement would also protect Americans from possible Soviet disruption of our domestic market.

Well, we have now taken another important step toward restoring that confidence, and I wanted you to be the first to know about it. Today I have signed into law House resolution 5447, the Commodity Futures Trading Commission reauthorization legislation. And, as you know, it gives contract sanctity legislation the force of law. Our foreign customers now have the delivery assurance that you've asked for. And we stand ready as a nation to sell them the grain we have and they need. As we have in the past, we'll continue to differentiate between readily available agricultural products and industrial goods and technology.

Other challenges remain to be met. As if the grain embargo hadn't been enough, the world's economic expansion sank into recession, further weakening the demand for our farm products. And to add to that, a stronger dollar increased the prices of our farm products overseas. And the unfair trade practices of some foreign competitors continued hitting the farmer below the belt.

To top it all off, we've had record growing seasons lately. Even the great industries of America pale in comparison to the efficiency and productivity of the American farmer. What the microchip has done for technology, the American farmer has done for agriculture.

About 15 months ago, we had 185 million bushels of corn in farmer-held reserves. Now we have 11 times that much, 2 billion bushels, an incredible increase in just such a short time, 2 years. We've also had record wheat and soybean crops. And everyone knows about the billions of pounds of butter, cheese, and nonfat dry milk we're holding. Secretary Block has been so worried about those dairy surpluses, he's aging faster than the cheese. [Laughter] Yet, while the reserves and the warehouses are bursting at the seams, and despite the fact that we've provided record amounts of price supports, the farmer's wallet holds little more than the stitching.

The result of all these disturbing trends is evident in your communities: low farm prices, low farm incomes. I've seen the news stories on the farm auctions. Some of you've probably been to them. As a rancher myself, I know that when a family has to give up its farm, it's giving up a part of itself as well.

We've instructed the Farmers Home Administration to work with its farmers on a case-by-case basis to help them get back on their feet. Let me also allay any concerns that you may have regarding the Farm Credit System. I support it and expect it to continue providing substantial assistance to the farm community as it has in the past.

Now let me expand on some of the things we're trying to do.

Since our farmers' primary market is domestic, the Nation's economic strength is essential to a strong agricultural economy. You may recall what inflation, interest rates, and taxes were like in 1979, when I spoke at this same convention in Miami. Since then we've cut the estate taxes that were so burdensome to farm families. We've also managed to cut the 1979 inflation rate from 13.3 percent to 4.6 percent for 1982. In the 2 years 1979 and 1980, farm production expenses rose 30 percent. Last year the rate was only 2 percent, and in 1983 it's estimated those costs will hardly go up at all.

We've reduced the prime interest rate, which was at a peak of 21\1/2\ percent in 1980; we've cut it nearly in half. And I learned on the plane coming down this morning that where one bank had led the way, the others have now joined in, and the general prime rate is 11 percent. Now, that's still too high, but it's going in the right direction. And I'm pleased to announce that even before we knew that that was going down to 11 percent, the decrease in the Farmers Home Administration interest rates was to 10\1/4\ percent for operating loans and 10\3/4\ percent for real estate loans beginning this January 17th.

But let's face it -- and let's not fool anybody -- until farm prices go up, you'll be hurting.

Not long ago we proposed a temporary program to help farm families through this difficult period of adjustment. The policy people called our proposal payment-in-kind. That's not very descriptive. It's really a crop swap. And this is how our crop swap plan would work.

A farmer who takes additional acres out of production would be able to swap what he didn't grow for a certain amount of the commodity already in surplus. And he can then do with it as he wishes. The crop swap program would reduce production through a further cutback in planting, decrease surplus stocks, and avoid increased budget outlays that would otherwise be necessary under price support programs.

Now, this plan is aimed at bringing supply more in line with demand and strengthening farm income in future years. It makes our problem the solution. And farmers taking part will have the same or greater net returns, since they will avoid production costs and their risks will be lower. And the plan will also alleviate storage problems and enable sound conservation practices to be applied to more acres. I think we're all aware of the need to do something about soil erosion.

We've got surplus commodities sitting useless in bins and overflowing in warehouses. Let's put those surpluses to work to help the American farmer. Those surpluses hanging over the market can't help but have an effect on prices.

Now, I know the Farm Bureau already supports our crop swap plan. In the lameduck Congress, the House passed the plan. The Senate also favored it, but it didn't come to a vote even though only about 1 percent of the Senate opposed it. Well, farm families need the benefits this program can offer.

Because these are unusual and critical times on American farms, we don't have to stand around chewing our cud. So, without waiting, I am today announcing that within our current authority we will launch our crop swap program starting a week from next Monday. Secretary Block has brought with him the details. So, to the American family, let me say, help is on the way.

I also want to say something about the dairy program. It comes as no surprise that the taxpayers are looking very, very hard at the amount of money that's going into the dairy industry. Some people see the dairy program as an automatic milking machine for their tax dollars -- $2 billion a year -- and the bucket seems to take more and more.

The taxpayers aren't happy about that. You're not happy about the new 50-cent-per-hundredweight assessment. And I'm not happy about any of it. As you know, the assessment was not the administration's idea. Congress, present company excepted, plopped it in our lap and wrote the savings into the budget as they rejected the more flexible alternative proposed by the administration.

If the assessment doesn't cut production, we must work together to develop a better plan for the dairy industry, a plan that is fair to the farmer and as free as possible from government's heavy hand. President Eisenhower certainly knew why Washington should stay out of the farmer's way. Ike said that farming looks mighty easy when your plow is a pencil and you're a thousand miles from a cornfield. You have to fight the weather. You have to fight insects. You fight all kinds of natural disasters. You shouldn't have to fight your own government, too.

As every horseman knows, when a horse is really mad, his ears lay straight back on his head. Well, that's about how mad the American farmer is over the unfair trade practices of some of our foreign competitors. I want to say now -- and other countries should take notice -- we expect fair access to international agricultural markets. We will not give in to protectionist measures, but at the same time, we aren't going to let ourselves be plowed under.

Today in Washington, we're talking with the European Community about our agricultural concerns. Next week, when Prime Minister Nakasone of Japan comes to visit, our discussions will include agricultural exports, particularly, there, beef and citrus.

And let me add that Bob Delano was one of our representatives at the recent GATT ministerial meeting. He also led your State Farm Bureau presidents on two international trade delegations. I have a feeling Bob gave the protectionists quite an earful on those trips.

To help counter the massive European subsidies and eventually bring an end to such practices, one of the things that we're doing is offering overseas purchasers a blended credit program, which combines interest-free direct credits with government-guaranteed private credits, to produce a lower interest rate for foreign customers. By using a hundred million dollars provided by the Congress, we opened the door for additional farm exports of $500 million in 1982.

Well, this program worked so well that I'm telling you today we'll make available an additional $250 million of direct credit over the coming year, giving us the potential for another $1 billion in agricultural export sales.

Our competitors should know that we're pursuing all avenues for redressing unfair trade practices. They are through raiding the henhouse. America only seeks fair and open trade. But we've declared we will be competitive, and we will be.

Before I go, I want to thank you again for inviting me today. Daniel Webster said, ``Let us never forget that the cultivation of the earth is the most important labor of man.'' I know how much a heartfelt thank you can sometimes mean. So, on behalf of the Nation, let me express our gratitude to you, America's providers, for putting abundant food on our tables.

I believe if America can match the faith and strength and patience of her farm families, there are no limits to what our people can achieve. Yes, we have a long way to go before we set this country to rights. But God has blessed Americans with a fine brave spirit and a rich land. With His help and with yours, we can fulfill what we're meant to be.

Thank you, and God bless you.

Note: The President spoke at 11:20 a.m. at the Dallas Convention Center. He was introduced by Robert Delano, president of the American Farm Bureau Federation.

Following his remarks, the President met at the convention center with members of the Texas Reagan-Bush committee.