What The Drought Hath Wrought

By Barry Hillenbrand

Farmer Charles Phelps knows he is lucky. His corn crop was days away from disaster when a pair of isolated rainstorms came breezing through Hastings, Iowa, dumping a bit more than 6 in. of rain on his parched fields. "Now it looks like we might have a crop after all," says Phelps. Some 360 miles to the east, Herb Steffen of Cropsey, Ill., laments that he has not seen enough rain "to settle the dust," much less nurse his corn crop though its critical pollination period. "It's heartbreaking to watch crops die in the field," says Steffen's wife Georgia.

And so it was throughout the U.S. Farmbelt last week. While a few fortunate areas were blessed with rain and even an occasional thunderstorm, most of the nation found little relief from the drought that began in the spring. Just how much damage the prolonged dry spell has already caused was the subject of a preliminary crop forecast issued by the U.S. Department of Agriculture. The USDA estimated that U.S. grain production in 1988 may be only 212 million metric tons, down 24% from 1987. The corn crop is particularly hard hit -- 26% smaller than last year. The USDA pegged soybean production at 1.65 billion bu., down 13%. Wheat output is expected to decline 13%, to 1.84 billion bu. That drop would be much worse were it not for the winter wheat crop. Planted last fall and almost completely harvested, winter wheat largely escaped drought damage. But the smaller, spring wheat crop has been devastated, and could be less than half its normal size.

Though discouraging enough, the USDA report may understate the problem. "The commercial surveys will doubtless be bolder, and lower, than those of USDA," says Conrad Leslie, one of the nation's leading private crop forecasters. Leslie predicts a corn crop of 4.4 billion bu., 800 million bu. less than the USDA estimate. A survey by the National Corn Growers Association is even more pessimistic, predicting that this year's corn yields will be down as much as 42% from last year's. The USDA estimates assume normal weather for the rest of the growing season, even though most long-range forecasts, including those of the National Weather Service issued last week, predict no break in the hot, dry weather. Chicago's commodities-futures traders tended to believe the worst. Prices for corn, wheat and soybean contracts surged after the USDA forecast was released.

The impact will soon be felt at the supermarket, but it may not be too severe. The USDA estimates that retail food prices will rise no more than 5% this year. One reason: much of this year's grain shortfall will be made up from stocks set aside during past bountiful harvests.

That will be little consolation for the farmers whose crops have been wiped out. Responding to their plight, Washington is rushing to pour money where too little water has fallen. A pair of drought-relief bills designed to distribute at least $7 billion is moving through Congress. Farmers who lose more than 35% of their normal crop would be reimbursed for 65% of their lost revenues. A ceiling of $100,000 would be put on the disaster benefits so that large corporate farms would not benefit disproportionately from the legislation. Drought relief has the full support of President Reagan, who last week visited the Midwest drought belt. Speaking at the fairgrounds in Du Quoin, Ill., the President said, "We can't make it rain, but we can help ease the pain."

Secretary of Agriculture Richard Lyng asserted that the proposed legislation would be "expensive, but something we can afford." The cost would in fact be offset by savings in the $17.7 billion farm-subsidies program already approved in the 1988 budget. As the drought tightens supplies and pushes up commodity prices, the Government will not have to pay out as much in price-support subsidies. In effect, Congress is recycling price supports in the form of disaster relief. The legislation, claim its supporters, would not add a penny to the Government's budget deficit.

With reporting by Gisela Bolte/Washington and Lee Griggs/Chicago