In testimony in the U.S. House of Representatives and U.S. Senate in 1998, I focused on what circumstances would turn crop prices around. Five possibilities were identified—(1) dramatically improved domestic demand (which is highly unlikely); (2) bad weather (which is not something we can count on); (3) better export levels (which, at the moment don't seem to be in the cards); or (4) the operation of the market as low prices eventually squeeze out higher cost producers—probably at the periphery of the major producing regions—with those producers shifting their land to another use, possibly grazing; and (5) a change in policy.

Actions by Congress have sent a fairly clear signal that the economic pain inherent in the fourth possibility is unacceptable, politically. The enormous expenditures by government for farm program subsidies since 1997 have been designed to reduce the economic pain for producers. Even at the levels of spending observed in 1998, 1999, and 2000, farm incomes have fallen.

The troubling scenario is that with no pick up in exports (indeed further weakening appears to be the most likely possibility) and average or better weather, we could be in worse shape a year from now than we are this autumn.

That's why it seems prudent to begin to ponder some fine tuning options on a contingency basis—if crop prices aren't boosted by bad weather or a pick up in exports. Here's a short list of items to think about. Many people, including some in the new Congress convening in January, will almost certainly be inclined to hope for bad weather—somewhere else—but that is not a sure thing.

Re-establishing a farmer-owned storage program for major commodities under carefully established rules for release could help to insulate some production from the market. It would make the most sense if the low price problem were to last for only a year or two.

Long-term land idling (up to 20 years) in marginal production areas in the so-called periphery or swing zones, is a necessity. Those are the regions that are expected to be squeezed out of intensive crop production in times of low prices but get back into the ball game when prices recover.

Long-term land idling could help ease the economic and social costs of adjustment in those areas. It would mean less sales of fertilizer, chemicals, seed and machinery and so it would impact the communities. But those communities are hurting now and will suffer from the periodic market adjustments that will characterize their economic life from now on.

Another approach advanced by a group of South Dakota producers would allow producers to bid land into retirement with a reward of a higher loan rate. This approach has some merit.

If prices of major crops were to remain for a specified period below a designated level for specified period (with both aspects determined within a legislative framework) standby authority should be given to the Secretary of Agriculture to implement a mandatory acreage set aside program. This would be viewed as a last resort measure to cope with pressures on the supply side. One thing we learned decades ago—it is less costly to prevent production than to compensate farmers for lost income once price and profitability have been driven down disproportionately.

To deal with a possible credit crunch, adequate funding for FSA direct lending and loan guarantees for limited resource borrowers is needed.

Finally, it seems prudent to continue LDP and marketing loans, possibly with a slightly higher loan rate but not higher than the cost of production on marginal lands. We certainly should not induce more production; that would be perverse.

It is important to note that any programs to ease the downside adjustment pressures (LDPs, marketing loans, AMTA payments, additional Congressional appropriations, or any other effort) frustrates the market and prevents the market from doing its thing—squeezing out land and causing the land to shift to a less intensive use.

It's entirely possible that none of this will be necessary—this time. With bad weather in South America, China, South Africa and Europe, we could see $3 corn and $8 soybeans in less than a year. On the other hand, we could be scraping by with $1.30 corn and $4.30 soybeans. We simply do not know which scenario will prevail. An economic downturn could reduce the willingness of Congress to provide huge subsidies to the agricultural sector.

Finally, the rapidly changing structure of agriculture means that aggressive efforts should be made by the federal government to assure price reporting on a mandatory basis where that is needed and to bring the focus of the antitrust agencies to bear on mergers, alliances and consolidations.

Therefore, the prudent approach would be to begin some contingency planning—just in case. After all, any fine tuning will require several months of deliberations in Congress. We can't very well wait until we're in the tank with no assistance forthcoming to begin thinking about options.

Neil Harl is Charles F. Curtiss Distinguished Professor in Agriculture and Professor of Economics at Iowa State University. Dr. Harl is also Director of the Center for International Agricultural Finance, and has served as President of the American Agricultural Economics Association and President of the American Agricultural Economics Foundation. He holds a B.S. from Iowa State University, a J.D. from the University of Iowa and a Ph.D. in economics from Iowa State University.