In 1975, I made a career change and left my position as an economics professor at Williams College. I moved to the family wheat farm, located in a dry part of eastern Oregon.
In 1977, I began attending meetings of the Oregon Wheat Growers League. At that time, the League’s primary focus was on the federal farm programs and how to obtain higher payments for wheat farmers. The focus of the debate was on whether price supports (loan rates) should be increased. Most growers from the Pacific Northwest argued against high loan rates because they would make our wheat uncompetitive in export markets and primarily benefit our competitors. However, high loan rates were popular in the Mid-West, where a larger share of the crop is used domestically. Debates on this issue at national wheat grower meetings were often heated.
In 1981, the wheat loan rate was raised dramatically—partly in response to the embargo of wheat exports to the USSR following the Soviet invasion of Afghanistan. All of our dire predictions came true: U.S. wheat exports declined by half and huge piles of unsold wheat were everywhere. By the mid-1980’s, it was clear that a farm program based on high price supports doesn’t work. The 1986 farm bill cut the loan rate almost in half. We won that debate.
However, two new issues quickly arose. First, European wheat production and exports exploded during the 1980’s when we were priced out of export markets. European farmers were responding to high subsidies provided by their Common Agricultural Policy. Agricultural trade had been deliberately excluded from previous GATT agreements. The need for international rules governing agricultural subsidies became increasingly urgent. I became a strong supporter of a GATT agreement that would increase our exports, even if it meant a cap on U.S. federal farm payments.
The second new issue evolved from the claim by some Mid-West wheat growers that the decline in U.S. wheat exports in the early 1980’s was not due to high loan rates, but instead was a consequence of our “dirty wheat.” I started paying attention to dockage and wheat quality issues and whether expensive cleaning of our exports made sense.
During the latter part of the 1990’s, the Pacific Northwest Wheat industry went through hard times, with five years of drought and three consecutive years of average Portland wheat prices at $3 a bushel. I’d seen many years of drought and/or low prices in the past, but never such a long string of back-to-back loss years.
Partly in desperation, I started asking myself two questions: why are prices staying so low and what will happen to the PNW wheat industry if this situation continues. I concluded that our persistent low prices were due to the rising value of the U.S. dollar and that wheat growers should start paying more attention to exchange rates. I’ve found exchange rates, international finance, and the “global imbalances” to be fascinating topics. Much of my current interest is focused in this area.
My conclusions about the effects of continuing low farm profitability surprised me. The primary effect would be lower land values and a renegotiation of lease terms so the tenant farmer’s receives a larger share of the crop. Landowners would eventually absorb most of the decline in farm income.
Like most wheat farmers, I spend a considerable amount of time deciding when and how to sell my crop. When I started farming, I eagerly read articles in farm magazines on the importance of constructing a “marketing plan.” While most of these articles were interesting, they all lacked some key piece of information necessary to implement a plan. I believe the best complete framework for marketing wheat comes from two articles written by Professor Larry Lev of Oregon State University in the early 1990’s. I’ve tried to summarize and build on some of his insights.
Finally, ever since “conservation compliance” was added to the 1985 farm bill, I’ve been interested in how government environmental regulations should be written. They should reduce erosion and run-off, but still allow farmers enough freedom to manage their farms efficiently. During the early 1990’s I attempted to convince the Natural Resource Conservation Service (NRCS) to allow farmer to develop residue records and then use these records in determining compliance with federal regulations. More recently, I spent several years trying to convince the Oregon Department of Agriculture (ODA) that outcomes-based regulations will not work in the environment of Eastern Oregon and ODA should link their water-quality regulations more closely to the existing federal conservation plans. I haven’t been successful in convincing ODA, but have learned a lot along the way.
About once or twice every seven years, we have a winter flood caused by rain and/or snow melt on frozen ground. The erosion caused by these floods always makes me sick and reaffirms my dedication to reduce the damage. We have installed many miles of terraces to stop the run-off and increased the amount of crop residue we leave on the surface of my fields. For a residue history of my farm based on third-party measurements, see McCoy Residue History.pdf. We have not yet adopted direct seeding and chemical fallow. For an explantation of why we haven’t switched to direct seeding, see Why I Haven’t Switched to Direct Seeding.pdf .