1980: Culver Warns of Farm Crisis, Calls for Raising Price Floors

CULVER URGES FARM, SMALL BUSINESS PRIORITY

Sunday March 23, 1980. Manson — U.S. Senator John C. Culver, (D-Iowa) Sunday said the Federal Reserve Board and the U.S. Department of Agriculture must act to assist farmers and small businesses in rural areas in light of the “devastating effects” high interest rates and low farm prices are having on them.

Speaking at a fundraising reception at the Dave and Norene Wollenzien residence, Culver said such steps as encouraging a greater flow of funds to rural banks and strengthening farm commodity programs could “help avert disaster” in these sections.

He said the Federal Reserve can help increase the flow of funds to rural banks through a greater emphasis on “productive rather than speculative credit needs.” He said he has personally urged Federal Reserve Board Chairman Paul Volker to take this step. Noting that the Board has now indicated that it is moving in this direction, he said it is “important to keep the pressure on to see that they follow through.”

Culver stressed, however, that “credit is no substitute for fair prices,” and said the USDA should strengthen commodity programs by raising support prices and reversing its decision on a paid diversion program. “This is what our farmers really need, and the Administration owes it to them, after the embargo,” he said.

Culver said the scarcity and high cost of credit caused by the Federal Reserve’s tight money policies are having “a disproportionately heavy impact” on farmers and small business operators.

He said they are suffering more than others because farmers with high fixed costs cannot pass borrowing costs on to consumers, and small businesses do not have the alternative sources of credit which large corporations do.

“Actions must be taken,” he said, “to spread the burden of high interest rates more equitably through the economy. If we cannot do this, many small businesses and family farmers – who are the backbone of our economy and way of life in Iowa – may fold. The net result will be even greater inflationary pressures in the future because of the loss of competition and productivity which will result.”

Culver said the ultimate solution to interest rate problems is reducing the rate of inflation. He said he has “spent many long hours” this month in the meetings the Administration has had with congressional leaders to balance the budget, and believes that “a balanced budget is critical at this time to send a signal to the rest of the economy that the government is serious about putting its own house in order.”

This fiscal restraint will also help lessen the excessive reliance on high interest rates to fight inflation,” he said.

In his remarks, Culver also repeated his call for filling the current vacancy on the Federal Reserve Board with a person who understands farm and small business credit needs.

“The Board, and it’s policies, are currently controlled by large banking and corporate interests,” he said. “There is no strong voice on the board for the needs of the agricultural and small business sectors of our economy, and the current credit crisis graphically demonstrates why this must be corrected.”

Culver said his proposal has gained the support of the Northwest Iowa Farm-Business Coalition, various state and national associations and Senator William Proxmire (D-Wis.) who chairs the Senate Banking Committee. Proxmire’s Committee is the Senate panel which must approve nominations to the Federal Reserve Board.

CULVER SAYS LOAN RATE HIKE MOST EFFECTIVE STEP

Monday, April 7, 1980. Indianola – Increasing the corn loan rate is “the most effective single step that can be taken at this point to ease the crisis facing Iowa’s agricultural economy,” U.S. Senator John C. Culver (D-Iowa) said here Monday.

Speaking at a fundraising reception at the Simpson College Chapel Lounge, he said it is “really too late” to effectively implement a paid land diversion or set-aside program because the planting season is about to begin.

Culver criticized the administration for its unwillingness to adopt either program, saying the White House “has failed to keep its word that the farmers would not have to bear the brunt of the effects of the Soviet grain embargo.”

He said the grain purchase program has not been effective because the Administration “has been unwilling to buy grain at reasonable prices even though they were willing to pay major grain companies the full cost of contracts for Soviet-bound grain that was not shipped.” 

Culver said the Administration’s “unwillingness to do more to help farmers” stems from its “overly rigid reliance” on interest rates and fiscal restraint to combat inflation,

He said he has “repeatedly urged” the White House, the Secretary of Agriculture and the Chairman of the Federal Reserve Board to “take further steps to restore farm prices and market confidence.”

He said the steps he has been urging include implementation of a paid diversion program, a set-aside program, meaningful loan rate increases, a greater flow of Federal Reserve funds to rural banks, appointment of a farm and small business credit expert to the current vacancy on the Federal Reserve Board, opening the grain reserve to all farmers, requiring government grain purchases to be made at pre-embargo prices and jawboning national supermarket chains to offer consumer specials on beef and pork.

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