Chicago Tribune from Chicago, Illinois • 103

Chicago Tribune, Sunday, August 16, 1987 Section 7 3 Farmers answer glut with innovation William R. Ncikirk It's up to industry to keep bull alive the ground as mulch. Sorensen said he could see the storm clouds of the farm crisis coming in the late 1970s and knew that he would have to diversify his operation to sur- vive. "We could see it coming with raising so much grain, watching inventories go up every year and the government getting involved so much, like a welfare program. "One day I was feeding cattle and saw that when straw gets wet it makes pieces and chunks and I just felt if we could make densified straw maybe we could use waste straw for burning." He lined up the equipment and thefn began to market a product called Strawloggs.

Now when he runs the combine through his fields, he sees the straw that is left behind not as residue but as a potential profit-maker. He balls the straw into round bales of 830 Ill A-jy: 'J Br- Tf 'Am BMmpBx -STI gSKS mil -v if lTj r- SZ-h -Nn a f1 1 4 "a By Michael Tackett Chicago Tribune ST. LOUIS Where other farmers see corn and wheat, Bill Chandler sees feed. Where others see straw, Jim i Sorensen sees fuel logs. And where others see an empty hill, R.E.

Lee Aldrich III sees Christmas trees, i These farmers, like thousands of others across the country, are supplementing their operations by producing an alternative crop or product. They represent a small segment of the pverall farm economy, but one that has grown steadily during the farm crisis of the 1980s. Farmers from Maine to California are turning to alternative crop production or are attempting to secure contracts to produce for specific customers, such as food companies or restaurants. Still others have worked to produce specialty vegetables, such as asparagus, and even exotic ones, such as shiitake mushrooms. Weary of simply producing crops for government stockpiles at prices they consider depressed despite federal subsidy payments they are marketing traditional crops in unusual ways, growing alternative crops or renting out their land for recreational purposes, such as hunting and fishing.

Marketing is becoming the key factor of a successful farming operation. Producing the alternative crop, farmers are quick to point out, is not nearly enough. They must also have a proper research foundation to gauge demand, distribution and even manufacturing needs. "We are looking at the alternative market to get a higher price for our product," said Chandler, who farms about 2,500 acres near Noble, 111., about 125 miles east of St. Louis.

Chandler started his bird feed business in 1982, and has since built a complete production and warehouse facility on his The bird feed is a mixture of cracked corn, wheat, milo and sunflower seeds, almost all of which he grows on his farm. He said the idea hit him five years ago when he saw cracked corn selling for $1 1 a bushel in grocery stores at a time when he was only getting $2.20 for his corn. Now corn prices are bringing even less and Chandler has expanded his bird feed operation to in- elude sales in St. Louis, Indianapolis, Louisville and Decatur, 111., and, as he said, "all points in between." He expects to produce 100 trailer loads of bird feed this year, a record for his company. He said that after all his costs, production, packaging, distribution and marketing, he can still sell his corn for more than double the current price he could get at a local elevator.

"My philosophy is that if somebody can do something, I can do it as well or better," said Chandler, who conceded he has nearly quit farming several I J7 I j. -A If I 1,1 Aa mm 23 ,0) to vuu pounds then teeds it into -a shredder by using a front-loader. Then it is pressed, at a rate of 1,000 pounds an hour, into Strawloggs. "We took something worth $4 a ton in the field that is now worth $150 "a ton," he said. "We're producing a product that we can put a price on.

1 The ability to set the price is among the more appealing to farmers considering alternative production. With the government effectively establishing the price for most crops, farmers essentially receive the same price for their crops, regardless of the efficiency of their operations. That ability appealed to Aldrich, who farms 640 acres of corn and soybeans in Belmond, about 100 miles north of Des Moines. "There was a hill that needed trees planted instead of being farmed," he said. "I didn't know I'd make any money off it." But just a few years after he planted the trees, his inadvertent venture turned into a Christmas tree farm, and npw, he said, he cannot meet local demand even though Belmond "is in the middle of nowhere." Last year he sold nearly 1,000 tree's for an average price of $18.75 a tree.

"You can hear your calculator run real fast on that," he said. "It kept me on the farm," he said. I don't know if that's good or not, but that extra cash flow kept me here." Diversification and alternative production are new buzzwords in the farm economy and have been the subject of studies and seminars. Successful Farming magazine has scheduled a conference on diversification Dec. 3 and 4 in Kansas City, Mo.

Along with those ideas are older ones that are gaining new fervor. Lawrence Rikenberger of Crown Point, has been helping grow tomatoes on contract for large companies since the late 1930s. Then producers moved their processing plants and Rinkenberger Continued on page 4 Photo for Tht Trlbun by Ctwryl PerxWeton Bill Chandler transports bags of bird feed at his farm near Noble, III. "Bird feed is another spoke in the wheel that makes my operation grow," he says. Chicago Tribune WASHINGTON People are bullish on America until the bull gets too big and fierce and begins to strut around this glass house we call an economy.

I find this anxious attitude everywhere. "How much longer can this bull market last?" you hear fearful Wall Street analysts say. A radio commentator the other night called the stock market an accident ready to happen. The darkest fear is that inflation will begin to re-emerge, forcing the Federal Reserve Board to slam the brakes down on the money supply and drive up interest rates. That would all but kill the recovery and cause a stock market hiding along on debt and easy money to go into a free fall.

I'm not a believer in he theory that we should all panic just because something appears to be doing well, but I must admit that this market gives me pause. At this moment, I find myself siding with those economists who believe this market has risen so sharply because of the Fed's easy money policies, the takeover wave and the cost-cutting campaign by corporations to improve their bottom line. What's discouraging about it is that it has not resulted in the kind of nation-building that we'd all like to see. Higher asset values have not produced the kind of new investment in plant and equipment required to make the economy markedly more efficient. In fact, many firms have been forgoing these investments (which have a longer-term payoff) in order to improve their balance sheets so their short-term profits and stock values will look better.

In an era in which everyone is a takeover target, this kind of short-term thinking is almost a mandate for corporate executives. "Are we going to gain anything from this rise in the market?" asked economist David Jones of Aubrey Lanston a large government securities firm in New York. "It is ironic that with all the takeovers, we might not have added anything of value to the economy. It may be nothing but paper shuffling." True, there has been some increase in manufacturing efficiency, but U.S. firms have not yet exploited the technology that could give them a powerful surge in productivity.

Robert Dedenck, senior economist at Northern -Trust Co. in Chicago, blamed the lagging investment performance on the tax revision bill, a dollar that was too strong and interest rates that were high relative to inflation. He said that in the next year, U.S. firms appear ready to spend more on investment to make them more efficient "If investment doesn't come around, it means we have shuffled the deck around," Dederick said. If this were to happen, it seems to me that U.S.

industry would be building a solid base for a longer expansion and that manufacturing could be the leader in that improvement U.S. manufacturers could blow it, though, by marking up their prices sharply simply because the Japanese and Europeans are being forced to do so because of dollar devaluation. They have' shot themselves in the foot before, and they could easily do it again. I think U.S. firms are wasting valuable time.

The money is available now at a reasonable rate, and it is a good time to make some long-range commitments rather than aiming for short-term gains. The one sure way to end this stock market rally is to continue the current practices. There should be a stronger economic foundation arising from the tremendous rush of capital going into the market As it stands now, this bull market has a little while longer to run, probably into next year. Federal Reserve Board Chairman Alan Greenspan isn't going to let inflation get out of hand, especially if it appears that wages start rising sharply -again. When he tightens, it's all over.

There have been many jobs added during this recovery, but the labor market is much more volatile than it was in the old days, and these jobs can be ended as quickly as they were added. I'm worried that the next recession is going to be a long-lasting one. We cannot use the budget to stimulate the economy the way we did in die past, and easy money isn the answer anymore. To keep the bears away, U.S. industry needs to be bullish on itself.

times because he was having trouble sustaining his operation. "Bird feed is another spoke in the wheel that makes my operation grow." With the farm economy appearing to begin a slow rebound, many farmers see the alternative crop production as a hedge against future crises. For some, such as Aldrich, the Christmas tree farmer, it has made the difference between staying in farming and getting out. Overproduction continues to be a chronic problem in American agriculture, a fact made clear last week when the U.S. Department of Agriculture projected that corn production would be down only 12 percent this year, notwithstanding thousands of acres taken out of production under subsidy programs.

Moreover, the export market for U.S. grain continues to face increased competition; every year more countries are developing their agricultural technology and weaning themselves from dependence on U.S. products. A recent Agriculture Department task force report recommended that diversification become a "national priority" in agriculture, emphasizng that new crops and new uses for existing ones offer "the only alternative" -to revitalize ailing segments of agriculture. This entrepreneurial spirit led Soren-sen, of Julesburg, to think that there was something more profitable to do with his hay than plow it back into I Commerce nominee a sure bet for Reagan Agno Frano-PmM pho President Reagan escorts C.

William Verity Jr. away from reporters after Reagan announced he would nominate Verity as commerce secretary. Verity said he should wait for confirmation hearings before answering questions. By Elaine S. Povlch Chicago Tribune WASHINGTON By all accounts, President Reagan sought out C.

William Verity Jr. to be commerce secretary because the President likes him, because Verity is a likely shoo-in for confirmation by the Senate and because he reminds a lot of folks of his predecessor, Malcolm Baldrige. When "Mac" Baldrige died in a rodeo accident late last month, Reagan was faced with finding someone willing to join his Cabinet in the last 1 8 months of his administration and help guide tricky trade negotiations. The nomination of Verity came as a surprise in Washington, where Deputy Commerce Secretary Clarence Brown, U.S. Ambassador to France Joe Rodgers and Commerce Undersecretary for Trade Bruce Smart led the speculative list.

Reagan plucked a man whose experience as the head of Armco Steel Co. qualifies him for the administration job generally tagged as the one that represents business. That experience also sets Verity up as something of a trade expert, although the argument can be made that the U.S. steel industry in general has not coped very well in the changing world marketplace. Verity also has experience at the fringes of government, having been chairman of Reagan's task force on private sector initiatives in 1981 and cochairman from 1979 to 1984 of the U.S.-USSR Trade and Economic Council.

He also was chairman of the U.S. Chamber of Commerce in 1980 and 1981, lobbying for business interests. The 70-year-old Verity "is a tough cookie, and he's been so successful he brings a peculiar strength to the job, in that he doesn't need it," said William Lilley III, president of the American Business Conference, a lobby group. Another business representative, who preferred to remain anonymous, noted Verity doesn't need to "pad his resume" with the Cabinet job and can concentrate on pushing Reagan's programs rather than initiating his own in the short time left in Reagan's presi- dency. "He wasn't on anyone's short list but the President's, said Alexander Trowbridge, president of the National Association of Manufacturers and a member of the 1981 'private sector board that Verity led.

White House, and other government officials agreed, noting Reagan was impressed with Verity's performance on the board, which came up with a report listing areas where private enterprise could take over traditional governmental functions. A man who associates say likes to be" called "Bill' Verity will likely continue Baldrige's informal style at the Commerce Department, according to friends and government officials. "He's such a tough-minded, independent, fair person he sort of calls things as he sees them," Lilley said. "He brings many of the strengths Mac brought to the job." One of Baldrige's strengths the ability to work behind the scenes with Congress will be crucial in the next few months as the House and Senate struggle to reach a compromise on a comprehensive trade bill. But first Verity will have to be confirmed by the Senate.

All signals point to an easy confirmation, which is one of the reasons Verity was selected. "Lord knows, we've got a lot going on," said an administration official who requested anonymity. The official mentioned the contentious nomination of Robert Bork to the Supreme Court, the looming battle over aid to the Nic-araguan contras and budget fights this fall as the major congressional concerns of the White House. Senate Commerce Committee Chairman Ernest Hollings S.C.) indicated he saw no trouble with confirming Verity and plans a hearing on the nomination as early as possible after Congress gets back to work Sept 9. Aides said he expects just a day or two of hearings, while hearings on Bork's nomination are expected to take at least two weeks.

"I do not see any reason why we should hold up Mr. Verity's nominal tion," Hollings said. "I know we wilj not agree on every issue, but he is the President's choice. He is competent and has good, solid business creden' tials." Even with swift confirmation, Veritjl have, to be extraordinary to play a lead role on the trade bill, on which other government officials have beer working for years. 'That is likely to strengthen the hand of Treasury Secre4 tary James Baker in negotiations with; Congress over the bill.

Reagan is opposed to many elements in the trade bill, including sections that would restrict his power to combat un fair trade practices by other The extent to which Baker is willing to; Continued on page 4 No-smoking policies tied to better profits WEST LAFAYETTE, Ind. (AP) A Purdue University study shows that companies that initiate stop-smoking programs see improvements on the bottom line, as well as in employee health. 1 "We already knew that healthy employees tend to be more productive, but we've found that employers can save substantially on health insurance costs when workers quit smoking," said Roger Seehafer, associate professor of health education. Sechafer and former graduate student John Sciacca conducted a seven-year study with 58 employees of Blue Cross and Blue Shield of Indiana. They compared the health care costs of 29 of the employees after they participated in a quit-smoking program with those of the other 29, who did not participate.

"What we measured were the actual savings in health care costs for smoking lifestyle-related diseases, including respiratory disease, emphysema, bronchitis, peptic ulcers and cancer," Sechafer said. In the first two years after employees in the study quit smoking, the savings in health care costs were the highest more than $6,000, or averaging $206 a person actually paid out by the insurance company. And, when claims go down, insurance premiums tend to follow suit, said Seehafer. "For companies employing hundreds or even thousands of individuals, this adds up to significant savings," he said. Some of the most common stop-smoking programs employers initiate include clinics and counseling, as well as restrictions and outright bans, Sechafer said.

"If companies were to become more aggressive in initiating such programs, they'd make a significant contribution toward eradicating the single greatest cause of unnecessary illness and premature death-smoking," he said. IT 30 Industrials; daily dose; H-HolkJay In billions ol dollars; Monday dose 20 municipal bonds; Friday dose 27 key commodities; Friday dose 240 230 2800 liwr 86 '76 ill if I 220 210 2100 22 29 3 10 17 24 31 7 14 6.5 29 8 1210 262 1017 2431 7 14 710 19 22 29 1 6 June 6 13 20 27 3 July Aug. 200 29 6 1219 26 2 10 1724 31 7 14 -May June July Aug. Soma: Commodity Ratourea Buraau June My Aug Chicago Trlbun charts May June jury Aug. Sauna: Bond Buyar oufor Fadatal Raaarve.