Originally created 08/01/98

Farm aid package now expected to top $1 billion



WASHINGTON -- The emergency aid package for farmers suffering from such natural disasters as drought in the South and too much rain in the upper Midwest is now expected to top $1 billion, a key Republican House member said Thursday.

The Senate earlier this month approved spending $500 million in disaster aid, about half of which would likely go to the Dakotas and Minnesota. With the drought growing worse in Texas, Oklahoma and parts of the Southeast, Congress is expected to increase the assistance before adjourning in October.

"I think we're talking about substantially more," said Rep. Larry Combest, R-Texas, who would become Agriculture Committee chairman next year if the GOP retains House control in the November elections. "We're looking at at least twice that number and maybe more."

Agriculture Secretary Dan Glickman, who appeared before the committee Thursday, said the Agriculture Department would revise its estimates of the disaster costs after release of the Aug. 12 crop production figures, which rely on actual field surveys of crops to be harvested in the fall.

"I suspect the numbers will be considerably higher," said Glickman, who declined to make any definite estimate. "I do not believe there has been an adequate assessment of the damage in the Soutwest, particularly in Texas."

A Texas A&M University study has estimated more than $1.4 billion in direct farmer losses due to the drought and $4.6 billion in overall economic loss. In Oklahoma, officials say the disaster could cost $2 billion in total loss.

That comes on top of repeated disasters in the upper Midwest, where chronic wet weather has spawned a wheat disease that has destroyed crops for several years in a row. In North Dakota, Glickman said farm income fell 92 percent in 1997 compared to the year before.

The House on Monday is expected to vote to permit farmers to receive all or part of their $5.5 billion in transition payments, intended to gradually wean farmers off old subsidies, scheduled for next year on Oct. 1. The Senate passed the measure Thursday night.

Aside from the weather disasters, Glickman said the overall farm economy is in a tailspin that will cut income by $7.5 billion this year. Prices for corn, wheat, soybeans and other commodities are off sharply because exports are down due to the Asian financial crisis and huge crops have been produced worldwide.

Projected U.S. fall harvests are once again expected to be huge and farmers are taking on more debt, he said.

"After sprinting for two years, setting records by almost every measure -- price, exports and income -- today farm markets are limping," Glickman said. "The U.S. agricultural economy is now declining."

Still, he said many producers will withstand the downturn because of the strong markets of the early 1990s and because production expenses actually dropped $1 billion this year because of low inflation, low interest rates and low oil prices.

Although Glickman wants to improve crop insurance and access to credit for the long term, he said the No. 1 priority for Congress after the emergency aid should be replenishment of the International Monetary Fund. This would help troubled Asian countries buy more U.S. farm products in the next 60 to 90 days, he said.

"IMF should be front and center," Glickman said.