Outlook bleak for some producers without disaster aid
May 24, 2002
Farmers and ranchers in north-central Montana are facing a fourth straight year of severe drought and some may not make it without federal help, local bankers and government officials say.
"If they don't receive disaster relief, it's going to be very tough for some of these individuals," said Bill Keller, vice president of Independence Bank in Havre. "Three or four years of consecutive drought and no crops has made it very tough."
There's no telling when or if disaster aid will be passed by Congress.
"It's anybody's guess whether there's going to be any disaster relief program coming. As we go along it looks less and less likely to happen," said Alan Pearson, district president for Wells Fargo bank.
Montana's congressional delegation is working to pass disaster relief, although President Bush and Secretary of Agriculture Ann Veneman have both said disaster relief should not be necessary because of the passage of the farm bill.
Sen. Max Baucus, D-Mont., tried to pass relief twice before, and succeeded in attaching $2.4 billion to the Senate version of the farm bill. That relief was stripped out by the conference committee appointed to work out differences between the House and Senate versions of the bill. Baucus and Sen. Conrad Burns are working on new attempts. Rep. Denny Rehberg is continuing to build a bipartisan coalition to support disaster relief in the House, his spokesman, Dallas Lawrence, said.
"It's really been every day for two months. This week 50 percent of our work has gone to disaster relief," he said.
J.P. Donoven, spokesman for Burns, R-Mont., said he is trying to attach disaster relief to a supplemental appropriation. The amounts haven't been decided yet, but Burns will concentrate first on making sure Montana gets what it needs, Donoven said.
"That's his first job," he said.
Buacus is also working to get authorization for disaster aid passed out of the Senate Agriculture Committee.
Burns and Rehberg both feel that Veneman's and Bush's comments about disaster aid not being needed applies to future years, and that aid for last year's problems might still be approved.
Some farmers and ranchers might not be able to deal with another year of little or no crops without help, Keller said.
The national Drought Monitor, a partnership of national and regional departments and organizations, gave north-central Montana its highest rating exceptional drought at the end of April.
Recent moisture may help the situation, but representatives of the governor's Drought Advisory Task Force and the Natural Resources Conservation Service say the moisture content of the soil is so low, it will take precipitation well above average for an extended period of time, possibly several years, to fully recover.
And Montana is not alone in the drought. The latest Drought Monitor map shows part or all of 24 other states with drought conditions, although none with as severe a rating as north-central Montana. The other states include Idaho, Wyoming, Colorado, Nebraska, Nevada, Utah, California, Texas and most of the Eastern seaboard.
Peggy Stringer, state statistician for the Montana Agricultural Statistics Service, believes the drought is the worst it has been since the 1930s. Her opinion is reinforced by talking to older farmers and ranchers in the state, she said.
This year is already taking its toll on crops.
"We've already had a tremendous amount of the winter wheat crop abandoned. There was nothing like this last year," she said.
Farmers have reported abandoning 29 percent of their winter wheat crops already, Stringer said.
"And I expect that number to go up, based on what I've been hearing," she added.
The state's ag statistics tell the story of the drought. In 1996, farmers in Montana planted a total of nearly 6.5 million acres of wheat. Less than 300,000 acres was abandoned, and the average harvest was 27.5 bushels an acre. Hill County planted 567,000 acres of wheat, and harvested 530,000 acres with an average yield of 31.5 bushels an acre.
In 2001, farmers in Montana planted about 5.4 million acres of wheat, but abandoned more than 1 million acres. The average harvest was 22.9 bushels an acre. Hill County farmers planted 447,000 acres, and harvested 343,000 acres at an average yield of 11.2 bushels an acre.
The statistics show the hardships for ranchers feeding their cattle, too.
In 1995 Hill County ranchers harvested 20,000 acres of hay that yielded 38,000 tons of feed.
In 2001, they harvested 26,000 acres of hay, but only got 14,500 tons.
The shortage of hay has affected the number of cattle remaining in the state. Last year 200,000 to 450,000 cattle left Montana operations, over and above normal sales, he said.
The recent moisture might help producers, but that depends on future moisture, Stringer said. With heat and wind predicted in the next few weeks, the fields might drop right back to where they were, she said.
The situation is as bad or worse as any in recent memory, Pearson said.
"I've been a banker around here for 25 years. This last year's economy, because of the drought, is about as bad as it's been," he said.
Adrian Doucette, president of Heritage Bank in Havre, said some ag producers have been able to pay off their operating loans, but can't make payments on other debts. Disaster relief could be used to keep payments current, he said.
"I think it's important. Especially for the people that didn't cut any crop last year. Crop insurance just isn't going to pay the fixed payments they have," he said.
Banks have extended the credit limit for some ag producers about as far as they can, Keller said.
"Credit lines are being extended, dollar amounts are being extended beyond the previous years. The ability to borrow is being limited," he said. "And with no end in sight for the drought, or disaster relief, some people are not willing to borrow more."
The Federal Reserve Bank of Minneapolis, which covers an area that includes Montana, North and South Dakota, Minnesota and parts of Wisconsin and Michigan, released its survey of ag banking conditions in the region recently.
Montana had the worst responses in seven out of eight categories, with only Minnesota beating it in one: In Minnesota, 49 percent of the bankers who responded to the survey expect an increase in loan demand, while in Montana it was 44 percent.
In Montana, 78 percent of respondents said farmers had experienced decreased income, 56 percent saw a decrease in loan repayments, 56 percent saw decreased household spending and 78 percent saw decreased capital spending.
Ron Zellar, public information officer for the Montana Department of Commerce, said his department knows there is a problem for some producers, but can't say for how many. He said he has heard that many farmers and ranchers face foreclosure.
"I've seen stories that say that, and I wish there was some direct source of information. I don't think we have a handle how bad it is for some people," he said.
Veneman's comment that producers should be able to survive with help from the farm bill is true for many, Zellar said.
"But I think that's for the well-managed farm that hasn't faced four years of drought," he added.
He has heard of specific problems, though. Producers have contacted the department to say they are about to be foreclosed on, and banks have said they can't make more loans.
"It's anecdotal, what we've heard. We have heard from bankers that say, We just can't carry growers another year. We just can't take the risk that none of it's going to be repaid,'" Zellar said.