By Molly Matthews, DBJ Contributing Writer

    Delta farmers will be lucky to break even during harvest time, said Dr. O.A. Cleveland, marketing
specialist for the Mississippi State University extension service.
    "We started the year in excellent fashion with early anticipation of outstanding yields," said Cleveland.
"The August crop report showed conditions with expected five-year average yields, or, in other words,
a very respectable crop. Since then, we've been void of any moisture or rainfall and that has taken its
toll."
    Dry land cotton acreage has quit producing fiber and farmers are waiting for defoliation before the ginning
process begins, he said.
    "Not only will we be below the five-year average in the Delta, but also in Mississippi and the midsouth,"
he said. "The mid south has been the heart of the drought region. With this in mind, you might
anticipate rather outstanding prices but we do not. The shortage in Mississippi is being more than made up
for by excellent growing conditions in Texas and California. The yields in both states are considerably
higher than here."
    Joe Bryan, agricultural lender for the Bank of Yazoo City, said Delta farmers are facing the most severe
financial problem since he began his career in 1965.
    "Not only will it adversely affect a lot of farmers, but also banks and small businesses, chemical and seed
companies and agricultural supply companies," Bryan said. "It touches everything from mom-and-pop stores
to tire shops and service stations."
    Bob Carson, past president of the Delta Council, said the outlook is bleak.
    "When you work your land hard, it's tough not to even break even," he said.
    The index of futures values show the biggest drop in cotton from June 1995 to July 1999, followed by
soybeans, corn and wheat.
    Because of the adequate supply of cotton in the U.S., and the excess of supplies globally, cotton prices are
the lowest this decade, Cleveland said.
    "You'd probably have to go back to 1983 to see prices lower than they are now," he said. "Cotton farmers can
expect to make a potential of about 60 cents per pound, based on government disaster payments plus
market price. We anticipate the average farmer requires 69 cents a pound to break even in
Mississippi. Market price will be in the neighborhood of 45 to 48 cents per pound. With 1.2 million acres
losing nine cents a pound on 750 pounds per acre, we'll have a fairly substantial loss."
    Soybean producers may not be any better off, Cleveland said.
    "The drought has affected the corn-bean belt of the Midwest, but it's been more pronounced in the
midsouth," he said. "Soybeans, like cotton, are below loan. The loan price is about $5.25 to $5.75 per
bushel for the average soybean producer's production costs. We anticipate taking in, with market and
government payments, about $5.25 to $5.50. The soybean producer will lose money or nearly break even. Most of
Mississippi's soybeans are non-irrigated dry land and yields will be severely impacted. We'll hear some
horror stories and yields will drop to about 20 bushels per acre. The irrigated producer will nearly
break even."
    At harvest time, one group may come out ahead - large farmers, Cleveland said.
    "This will be a year that the transition out of agriculture for some farmers will speed up the number
of farms going out of business as opposed to the normal curve," he said. "Those with equity going in
will not only suffer a crop loss, but the lender probably required some equity loan based on land. They
will either become more in debt to the bank and land values will be tied up with the lending institution
and they'll farm again another day if they have other assets from which to borrow or their land may very
well come up for sale. It's not a very pretty picture at all."
    Today, there are 300,000 fewer farmers than in 1979, and farmers are receiving 13% less for every consumer
dollar. Four firms now control more than 80% of the beef market. About 94% of the nation's farms are small
farms, but they receive only 41% of all farm receipts and farmers have almost no control over crop prices.
    The 1996 Federal Agricultural Improvement and Reform Act, passed two years prior to a congressional
election year, signaled federal farm policy's shift of control in the marketplace.
    "If you read between the lines, the legislation says you must get larger or else," Cleveland said. "The
marketplace is a very cold institution and it requires efficiency. Legislation tends to favor those farmers
who are more efficient."
    However, the recent and considerable nosedive in farm prices was totally unexpected in the legislature, he
said.
    "An emergency appropriation bill for a hefty sum will go to conference as soon as the House and Senate get
back on Sept. 8,Ó Cleveland said. "It's been debated and passed by the Senate but it hasn't even been
brought up in the House. That doesn't mean it can't go straight to a conference committee and then go to
the House. Odds are, that's what will happen."
    Bryan said large farms that are doing well or breaking even will probably gobble up lands of small farms.
    "It's already happening," he said. "Seed and chemical companies are providing financing and farmers are
basically share-cropping with them."
    Most agricultural lending institutions must meet guidelines and requirements of regulatory agencies,
like the FDIC. But chemical and seed companies do not have regulatory agencies, Bryan said.
    "That's something a lot of people don't understand," he said. "That puts normal agricultural lenders at a
disadvantage," he said.