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Greenspan hears farm lament
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March 16, 1999: 12:54 p.m. ET
Fed chief says technology, cost cuts led to optimism despite sagging world demand
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NEW YORK (CNNfn) - U.S. Federal Reserve Chief Alan Greenspan said Tuesday the recently-battered U.S. farm sector appears to be looking up as technological advances and cost cuts take hold.
Farmers, despite what Greenspan said have been their solid efforts, haven't participated in the nation's current economic boom, struggling as ailing world economies have led to parched demand for U.S. agricultural goods.
Speaking to a convention of independent bankers in San Francisco, Greenspan offered the checklist of the woes -- such as ailing world economies and currencies -- that have siphoned off demand. Still, he said, there is optimism the sector has weathered the storm.
"Despite heightened anxieties about how long the present slack conditions in farm markets might persist, both farmers and lenders appear to retain a fair degree of optimism about the longer-run prospects for the sector, apparently owing to the expectations that technical change will create new markets for farm products and that further advances in productivity and cost reduction will help the lower-cost producers retain a competitive position in world markets," he said, speaking to the Annual Convention of the Independent Bankers Association of America.
Technological advances have helped boost that optimism about improvement ahead. But until then, Greenspan said that farmers may be forced to seek more ways of trimming costs.
"In the interim, farmers will likely be turning even more intensely to what has been, in the past, the one tried-and-true formula for maintaining profitability--reducing the costs of production to the bare bone," he said.
Behind the problems for the U.S. farm sector has been the tailspin in Asian economies that set in about two years ago. U.S. farm exports to recession-burdened Japan sank more than 20 percent in value from 1996 to 1998.
Ever the inflation hawk, Greenspan said the agricultural community has benefited from the simultaneous decline in "input" prices, such as gas, diesel oil, fertilizer and farm chemicals.
He also said government payments, cost reductions and gains in efficiency have kept aggregate farm debt relatively low. 
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