[Senate Hearing 107-254]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 107-254
 
                AGRICULTURAL AND RURAL COMMUNITY ISSUES

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                             MARCH 24, 2001

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry


  Available via the World Wide Web: http://www.agriculture.senate.gov


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77-324 PDF                   WASHINGTON : 2002

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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                  RICHARD G. LUGAR, Indiana, Chairman

JESSE HELMS, North Carolina          TOM HARKIN, Iowa
THAD COCHRAN, Mississippi            PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            KENT CONRAD, North Dakota
PAT ROBERTS, Kansas                  THOMAS A. DASCHLE, South Dakota
PETER G. FITZGERALD, Illinois        MAX BAUCUS, Montana
CRAIG THOMAS, Wyoming                BLANCHE L. LINCOLN, Arkansas
WAYNE ALLARD, Colorado               ZELL MILLER, Georgia
TIM HUTCHINSON, Arkansas             DEBBIE A. STABENOW, Michigan
MICHEAL D. CRAPO, Idaho              BEN NELSON, Nebraska
                                     MARK DAYTON, Minnesota

                       Keith Luse, Staff Director

                    David L. Johnson, Chief Counsel

                      Robert E. Sturm, Chief Clerk

            Mark Halverson, Staff Director for the Minority

                                  (ii)

  
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing(s):

Agricultural and Rural Community Issues, Lewis, Iowa.............    01
Agricultural and Rural Community Issues, Spencer, Iowa...........   111

                              ----------                              

                  Saturday March 24, 2001, Lewis, Iowa
                    STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    01
                              ----------                              

                               WITNESSES

Askew, John, President, Iowa Soybean Association.................    07
Aust, Erwin, Shenandoah, Iowa....................................    33
Bentley, Rod, President of Pottawattamie County Cattlemen's 
  Association....................................................    36
Brownlee, Adair County...........................................    37
Carney, Sam, Vice President, Iowa Pork Producers Association.....    11
Duffy, Micheal, Professor of Economics, Iowa State University....    03
Fox Ridge Farms, Carson, Iowa....................................    36
Frederiksen, Shirley, Golden Hills Resource Conservation and 
  Development District...........................................    09
Hanson, Jim, New Market, Iowa....................................    40
Hopkins, Gayl....................................................    27
Jorgensen, Dan, Farmer, Audubon, Iowa............................    34
Lehman, Aaron Heley, Iowa Farmers Union..........................    13
Morgan, Dan, Farmer, Corning, Iowa...............................    39
O'Brien, Denise, Atlantic, Iowa..................................    23
Ortner, Bill, Farmer, Danbury, Iowa..............................    38
Shulte, Joyce, Southwest Community College.......................    30
Swanson, Harold..................................................    28
Williams, David, Farmer and Wallace Foundation Learning Center, 
  Page County, Iowa..............................................    05
Zellmer, Alan, Farmer/Producer...................................    30
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    44
    Askew, John..................................................    69
    Aust, Erwin..................................................    93
    Carney, Sam..................................................    78
    Duffy, Micheal...............................................    45
    Frederiksen, Shirley.........................................    76
    Lehman, Aaron Heley..........................................    83
    O'Brien, Denise..............................................    87
    Shulte, Joyce................................................    92
    Swanson, Harold..............................................    91
    Williams, David..............................................    64
Document(s) Submitted for the Record:
    American Coalition for Ethanol...............................   109
    Center for Rural Affairs.....................................   105
    Iowa Pork Producers Association News Bulletin................   106
    McGiven, Ed, EJM Farms, Inc..................................   103
    Oswald, Stanley, GMO, Starlink, Surplus Corn.................   107
    Vilsack, Thomas, Governor of Iowa............................   108
    Williams, David, Statement Given to the National Research, 
      Extension, Education and Economics Advisory Board..........    96
    Watershed Information Sheet..................................   101

                              ----------                              

                Saturday, March 24, 2001, Spencer, Iowa
                    STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Froestry..............   111
                              ----------                              

                               WITNESSES

Blundall, Joan, Executive Director of the Seasons Center for 
  Community Mental Health........................................   117
Hamilton, Mark H., Positively Iowa...............................   122
Harl, Neil E., Professor of Economics, Iowa State University.....   114
Mason, Don, President-Elect of the Iowa Corn Growers Association.   119
Sand, Duane, Iowa Natural Heritage Foundation of Des Moines......   124
Sundblad, Phil, Iowa Farm Bureau Federation......................   126
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................   154
    Blundall, Joan...............................................   175
    Hamilton, Mark H.............................................   182
    Harl, Neil E.................................................   155
    Mason, Don...................................................   178
    Sand, Duane..................................................   193
    Sundblad, Phil...............................................   195
Document(s) Submitted for the Record:
    Bernhard, David..............................................   211
    Biederman, Bruce.............................................   204
    Jensen, Carl.................................................   201
    Naylor, George...............................................   212
    Sexton, Keith................................................   205
    Sokolowsi, Lori..............................................   214
    Tigner, Ron..................................................   203
    Vilsack, Thomas..............................................   200


           HEARING ON AGRICULTURAL AND RURAL COMMUNITY ISSUES

                              ----------                              


                 SATURDAY, MARCH 24, 2001, LEWIS, IOWA

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The hearing was held, pursuant to notice, at 9 a.m., at the 

Wallace Foundation Learning Center, Lewis, Iowa, Senator Tom 
Harkin, ranking member on the committee, presiding.
    Present or submitting a statement: Hon. Tom Harkin.

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, RANKING 
   MEMBER, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

    Senator Harkin. Thank you very much. The meeting of the 
U.S. Senate Committee on Agriculture, Nutrition, and Forestry 
will come to order.
    I thank you all for being here. I apologize for being just 
a little bit late, a little bit of headwinds out there this 
morning.
    This field hearing on agriculture and rural community 
issues at the Wallace Foundation Learning Center is the first 
in a series of hearings that we will be having here in Iowa, in 
the Midwest, and other parts of the country, in order to get 
ready for the rewrite of the Farm bill, which expires next 
year.
    Some of the work will be done this year. We will be having 
hearings, getting input, advice and suggestions from different 
commodity groups and individuals around the country. There was 
some thought that we might do a farm bill this year, but I do 
not think that will happen.
    Senator Lugar from Indiana is the ranking Minority Member 
on the Committee. As you know, we have a unique situation in 
the Senate where it is 50-50, but Senator Lugar and I have a 
good relationship. We are working together to establish an 
extensive hearing record as to what we ought to be doing in the 
next Farm bill. We want to cover all aspects of it.
    This is the first outline. I am going to make a short 
opening statement and I then am going to recognize the panel of 
witnesses. I am going to ask them to keep their comments 
relatively short, 5 to 10 minutes. Their statements will all be 
made a part of the official record, the hearing record. Then I 
would like to open it to questions from the audience.
    We have an official reporter. I would ask you to take the 
mic, state your name, and if it is a really complicated name 
like Smith, just tell her so that the reporter can get the 
accurate name down for the record. I would like to have a 
fairly open discussion and suggestions from any of you who are 
here.
    First, I am told that we have a couple of other public 
servants here: Bob Anderson, who is a Page County supervisor is 
here. Please stand and be recognized. Also in attendance is Bob 
Anderson, Page County supervisor, and Bob Brown Union County 
supervisor. Bob Brown, thank you for being here.
    Now, again, are there any other elected officials that I 
should recognize that we just did not catch when you came in? 
Clyde Jones, Montgomery County supervisor. Anyone else?
    OK. I have one other person I will recognize. Secretary of 
Agriculture Patty Judge could not be here, so she has a staff 
person here. Mitch Gross who is with Secretary Judge's office 
is here. I do not know where he is.
    I will just make a couple of opening statements, and we 
will sit down for our panel.
    I am pleased to be holding two hearings in Iowa today--one 
here, and then another one this afternoon in Spencer--of the 
U.S. Senate Committee on Agriculture, Nutrition, and Forestry.
    The testimony from our panelists and from the audience will 
become a part of the official hearing record. Your comments, 
ideas, and recommendations will be a great help to me and my 
colleagues as we work to write new legislation and we hope 
improve programs affecting agriculture and rural communities.
    Let me also introduce my staff who is here. On my 
agriculture committee staff, Mark Halverson, who is my chief of 
staff on our side, on the Senate Ag Committee, and next to him 
is Alison Fox. Alison is also on our ag committee. This is her 
second visit to the Wallace Center here. She was here last 
summer. Some of you may remember.
    Also someone who worked on my staff for a long time and for 
the last 8 years has been the state director of our Farm 
Service Agency. She is back on my staff doing rural development 
work, Ellen Huntoon. Ellen is here. A lot of you know Ellen. 
She has done a great job in rural development and agriculture.
    Also on my Iowa staff is John Moreland who is working with 
agriculture and rural development issues as well. John Moreland 
is back there, and next to him, Pam Ringleb. Pam, hold up your 
hand so everyone knows you.
    Those are my staf. If you need to get anything to me as we 
run out of here to try to get up to Spencer, just speak to 
them. I am sorry that Congressman Leonard Boswell could not be 
here; but his staff member, Sally Bowzer is here. Sally, where 
are you?
    I just saw Leonard the other day, and he knew about the 
hearing. He could not make it. As you know, he is one of our 
great, strong supporters on the House side.
    Farm families and rural communities in Iowa and across our 
nation need new directions in Federal policies. They have not 
shared in our nation's prosperity. Although Freedom to Farm has 
positive features, it had serious shortcomings that I think are 
obvious.
    We have got to learn from this experience and make 
necessary improvements. We have got to start by restoring a 
built-in, dependable system of farm income protection that does 
not require annual emergency appropriation.
    We must also remember that farmers are the foremost 
stewards of our nation's natural resources for future 
generations. We should strengthen our present conservation 
programs and adopt new ones to support both farm income and 
conservation.
    I have authored legislation to create a new, wholly 
voluntary program of incentive payments for conservation 
practices on land in agriculture production. That approach--
improving both farm income and conservation--should be at the 
heart of the next Farm bill.
    To meet these challenges, the next Farm bill must address 
the broad range of farm and rural issues. We have got to do 
more to promote new income and marketing opportunities--whether 
that is through value-added processing cooperatives, creating 
new products through biotechnology, developing niche and direct 
marketing, and, of course, overseas trading.
    I see tremendous potential for farm income, jobs, and 
economic growth through clean, renewable energy from farms: 
ethanol, biodiesel, biomass, wind power, and even down the way, 
hydrogen fuel cells. We must also ensure that agricultural 
markets are fair, open, and competitive, and transparent.
    We cannot have healthy rural communities unless both farms 
and small towns are doing well. We have to do more in the next 
Farm bill to revitalize economics and improve quality of life 
in rural communities. That includes support for education, 
health care, telecommunications, closing the digital divide, 
water supplies, transportation, as well as access to investment 
capital for rural businesses.
    That completes my opening statement. I thank you all for 
being here this morning. I will now turn to our panel.
    Our first witness is Dr. Michael Duffy. I will just go down 
the line. Dr. Michael Duffy, professor of economics at Iowa 
State University, Dr. Duffy.
    Oh, excuse me, before you start, I am sorry, just a minute, 
Mike. I have got a letter here from Governor Vilsack that I 
want to be made a part of the record, dated yesterday. The 
Governor states, ``I encourage you to develop the next Farm 
bill to help farmers produce conservation commodities, improve 
their bottom line, and renew the public commitment to 
agriculture.'' Basically he focuses on conservation, but I just 
want to make that a part of the record. Thank you.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 44.]

STATEMENT OF MICHAEL DUFFY, PROFESSOR OF ECONOMICS, IOWA STATE 
                           UNIVERSITY

    Mr. Duffy. Good morning. I appreciate the opportunity to be 
here. As an extension comment, you know that five minutes is 
going to be very hard for me, so I will try to talk as fast as 
I can.
    What I would like to do is cover two areas. One is the 
current situation, as I see it, in Iowa agriculture and to give 
you what I think are some issues that should be considered in 
the new Farm bill.
    First issue with respect to the current situation is with 
respect to our income. We had the highest net income in 1996. 
Since then it has dropped every year. In 1999, it was 1.45 
billion. In 2000, it appears that it will be up, although this 
is still preliminary, but I think it is very important for us 
to realize that the government payments have been the backbone 
of that net farm income.
    In the 1990's, net government payments averaged 55 percent 
of the net, and in 2000, it appears as they will be very close.
    Second issue that I think is important with respect to the 
current situation is in our agronomics. We have a very narrow 
crop and income base in Iowa. Ninety-two percent of the 
cropland is devoted to just two crops. Two-thirds of the entire 
state is covered with just two crops, corn and soybeans. 
Eighty-nine percent of the cash sales comes from corn, beans, 
hogs, or cattle. This lack of diversity creates problems, pest 
problems, environmental problems, and so forth.
    Also in the agronomic area, we have seen a change in 
production practices that have resulted in more yields, 
increased sales, but less income for the farmers.
    Net income as a percent of the gross in the 1950's was 35 
percent. Today it is 20 percent, and if we take the government 
payments out, it drops to 12 percent. That means farms must 
have three times the sales just to stay even.
    It is important to note that size and efficiency should not 
be confused. The cost per bushel dissipates. The lowest cost is 
about three to six hundred acres. Farms are getting bigger 
because they have to earn an income, not because they are more 
efficient.
    Turn now to the demographics that I think are also 
important to the current situation. The average age of farmers 
is 52.4 years old, which is up a full 3 years from just a 
decade earlier.
    Today we have more farmers over the age of 65, Twenty-two 
percent, than we do under the age of 35, at 10 percent. We have 
more nonfarm rural residents than we do farmers, and I think 
this is a source of--can be a source of conflict, but I think 
it could also be a source of benefits, if we choose to move 
that way.
    Changing structure of agriculture is another area that we 
are all familiar with, but I think it is important for us to 
realize 50 percent of the farmers in Iowa had sales of less 
than 50,000. Another 37 percent had sales between 50 and 
150,000, which means that 87 percent of the farms in Iowa are 
small farms by the USDA's definition.
    What is happening now is that we have a few very large 
farms and a lot of small farms that, in my opinion, we are 
losing the heart of what made Iowa what it is, and that is the 
average family size farm. This is happening in all sectors, 
including processing, retailing, and so forth.
    Another area is the environment. We continue to have odor, 
water, soil erosion, a series of problems in spite of the 
record government payments. What we need to do is address some 
of these issues, recognize that the current system is seriously 
flawed.
    I would like to move on then to some issues that I think 
need to be considered for the Farm bill. First of these is 
energy.
    We have had a serious impact on the cost of production. My 
estimates for Iowa is that it was a 6-percent increase in 2000 
to 2001 for corn, and I concur with what you said, Senator 
Harkin, about we need to continue to look at alternative uses, 
alternative crops.
    We need to look at how on our farms we can make ourselves 
self-supporting in energy, and I think that what we need to do 
is to make sure that we continue to look at energy as we move 
into the future, because it is going to be even more important 
and we are not going to go back to where we were with the cheap 
fuel.
    Second major issue that I think needs to be addressed in 
the Farm bill is a change in the definition of a farm. The 
$1,000 of sales is antiquated, and I feel that it hurts 
everyone.
    In Iowa, 10 percent of our farms had sales of less than 
ten--or less than $1,000, and I think that is just ridiculous 
to call them farms, and then we have programs that are directed 
and, as I said, I think that it hurts everyone.
    Payment policies, I think we need to start looking at 
programs that are going to pay to support people, not 
commodities. To that end, I support the Conservation Security 
Act that you put forward.
    I have also submitted into the record a proposal, a modest 
proposal that we have, looking at some type of a guaranteed 
minimum wage for farmers.
    Regardless, we need to do something to support people and 
not just commodities. I am very concerned that what we are 
doing is bickering, and we are going to end up going to the 
lowest common denominator and not seeing any real changes. I am 
about out of time, so I will talk fast.
    Level of payments, I think it is extremely important for us 
to look at. That 55 percent has been factored into rents, land 
values, and even the infrastructure. If we go cold turkey, we 
are going to have a lot of problems, so whatever we do, I hope 
we proceed with caution.
    I would also like to encourage you to continue to look at 
programs for small and beginning farmers, but do not just throw 
money at them.
    Look at alternatives and options that concentrate on their 
resources. For too long we have tried to get rid of people, and 
now we need to try to help people in agriculture. A lot of 
people say this is inevitable, but nothing is. We just have to 
decide what type of agriculture we want and to go for it. More 
than just raw products should be in our future.
    Thank you.
    [The prepared statement of Mr. Duffy can be found in the 
appendix on page 45.]
    Senator Harkin. Thank you very much, Mr. Duffy. Great 
statement. Thank you.
    Next we will have David Williams, a long-time friend and 
conservationist and farmer from Villisca, Iowa. Dave.

  STATEMENT OF DAVID WILLIAMS, FARMER AND WALLACE FOUNDATION 
               LEARNING CENTER, PAGE COUNTY, IOWA

    Mr. Williams. Thank you. Good morning. Welcome to the 
Wallace Foundation for Rural Research and Development. I am 
David Williams, a family farmer from rural Page County.
    Senator Harkin, I am pleased to have you come to Southwest 
Iowa to visit us here at the Wallace Foundation.
    We are proud to host this event here today. For your 
information, for those of you who have not been here, we have 
1,200 members in 19 counties of Southwest Iowa. We house the 
extension offices here and some other organizations.
    We are very unique in that we have been able to pull this 
together to house this in a rural area. Some of our goals are 
not just research, but also outreach and education and site-
specific research that you will see on this farm, so we are 
very proud of this.
    I would like to address the 2002 Farm bill and the current 
Freedom to Farm Bill. The Freedom to Farm Bill, to my way of 
thinking, from the beginning was a--written by and for 
corporate agriculture. Simply put, allowing agriculture 
producers to plant unlimited acres of corn and soybeans without 
an acreage or bushel limit was a disaster that previous history 
revealed.
    The benefits of the Freedom to Farm Bill to corporate 
agriculture include increased sales of seed, fertilizer, 
chemicals, and the lower dollar grain prices to the 
multinational grain traders and lower prices that gave easy 
access to the grain and livestock producers. Corporate 
agriculture has welcomed and profited enormously by large 
supplies of cheap grain.
    Feed grain, excuse me--corn, soybeans, and wheat--in the 
Midwest have sold at a price below the cost of production and 
has allowed the integrators of industrialized agriculture to 
expand at a rapid rate. The expansion of the large corporate 
livestock operations has been especially evident in the huge 
expansion of megaswine farms.
    There is no way family farmers can survive producing grain 
and livestock below the cost of production. It is obvious with 
50 percent of the total farm income coming from government 
payments that Freedom to Farm has been a dismal failure.
    Here are some ideas I would submit for the 2002 Farm bill: 
Paying farmers who practice sustainable conservation practices 
would be a first step in protecting our soil and water quality.
    Monetary incentives would go to farmers who installed 
specific conservation practices. Those farmers not adopting 
those government conservation practices would not receive 
government payments. Paying farmers to manage the resource base 
will actually do more to improve their income than the current 
system.
    Senator Harkin, your Conservation Security Act has really 
brought that to the attention.
    We need to target farm programs that benefit medium-sized 
farms. These are the farms most at risk financially. Failure to 
do this will be the demise of family farms. The current farm 
programs follows the rule that the bigger you get, the more 
money you will receive. Thus, we subsidize megafarms, bringing 
higher cash rents and higher land prices.
    We should have a safety net that puts a floor under grain 
prices. A well-planned, on-the-farm grain reserve would also 
benefit the farmer and be a cushion for a crop failure. There 
are other parts of the safety net that I did not mention that I 
think are important.
    We need to close payment limitation loopholes. We need to 
focus the bulk of the support on each farmer's first $250,000 
of production.
    I obtained from the Page County NRCS office the total 
dollar amount requested for conservation construction practices 
that are on file for cost-share in our county. We have a county 
that had a very high percentage of conservation, and we have a 
3- to 4-year waiting list.
    Conservation practices moneys requested in our county for 
Federal and State government amounts to $4.7 million. Matching 
that 4.7 million means that we are putting $9.4 million of this 
conservation in our county in land, and that is to backlog the 
conservation practices in Page County.
    Some other comments: Encourage and provide loans to 
producers who come together in a cooperative to add value to a 
value-added product. Here in the Wallace Foundation we have got 
three different groups that we work with on livestock and put 
together a value-added grain.
    Pass the Agriculture Revitalization and Enterprise Act. I 
do not have that with me. It is in the packet, Senator Harkin. 
It is called ACRE. I will see that you get a copy of that.
    Enforce mandatory price reporting. That has been--kind of 
held up, and we need to see that that is happening.
    Scrutinize and enforce antitrust activities of the food 
system. This is critical to the independent producers, and I 
mean that, critical. It seems like we see three, four, five 
major food suppliers that are trying to control, especially the 
red meats and grains.
    We need to revisit the pork checkoff vote overturned by the 
current secretary of agriculture.
    In summary, we are at a serious crossroad in the 
industrialization of agriculture versus the independent farmer. 
Our farm organizations, commodity groups, our land-grant 
universities, and our state and Federal Government should draw 
a line in the sand and decide whether they are going to support 
independent farmers or corporate agriculture. These groups 
cannot continue to straddle the fence if independent farmers 
are to remain viable.
    To quote Aldo Leopold, this is something in my life that 
has been a part of my thinking. In fact, Mike and I serve on 
the Leopold Board at Iowa State. This is a quote that comes 
from his part of the land ethic, and this is the quote: ``We 
abuse land because we regard it as a commodity belonging to us. 
When we see land as a community to which we belong, we may 
begin to use it with love and respect.''
    To me, this speaks to the sustainability of the land and 
family farms. I appreciate the opportunity to share my ideas 
and thoughts with Senator Harkin and the Senate Agriculture 
Committee.
    [The prepared statement of Mr. Williams can be found in the 
appendix on page 64.]
    Senator Harkin. Thank you very much, Dave.
    Senator Harkin. Next, we will go to John Askew, president 
of the Iowa Soybean Association. Good to see you on home turf 
here, John.

  STATEMENT OF JOHN ASKEW, PRESIDENT, IOWA SOYBEAN ASSOCIATION

    Mr. Askew. Good to see you too.
    Senator Harkin. Well, thanks.
    Mr. Askew. Good morning. My name is John Askew. I am a 
soybean producer and family farmer from Fremont County, Iowa, 
and currently serve as president of the Iowa Soybean 
Association. On behalf of the members of the Iowa Soybean 
Association, the largest state row-crop association in the 
United States, I wish to thank the Senate Agriculture, 
Nutrition, and Forestry Committee and Senator Harkin for the 
opportunity to testify today on the important topic of the 
future of agriculture in the United States.
    As we rapidly approach the 2002 Farm bill, it is important 
that Iowa soybean producers provide input on many of the 
critical issues facing agriculture. Iowa is a leader in soybean 
and agricultural production. The future direction of the 
agricultural policy is critical for a state such as ours. As a 
future of agriculture goes in Iowa, so too does the future of 
our state.
    Many important decisions must soon be made regarding U.S. 
production agriculture. These decisions will cover a broad 
spectrum of issues, from current domestic farm programs to 
expanded trade opportunities and development. Iowa soybean 
producers understand that these decisions will have significant 
budget impacts.
    We hope these important budget decisions will carefully 
balance the social and economic needs of the farmer and rural 
communities and the need of the public for a wholesome, safe, 
and plentiful food supply.
    From the perspective of Iowa soybean producers, long-term 
agricultural policy and budget considerations surrounding the 
upcoming 2002 Farm bill should focus on the following key 
areas: First, agricultural policy should focus on enhancing the 
viability and the long-term global competitiveness of Iowa and 
U.S. producers.
    To this end, Congress and the administration should meet 
the unfulfilled promises of the 1996 FAIR Act. Such promises 
include the expansion of trade opportunities and markets, 
policies to increase domestic demand and utilization of 
agricultural products, increased funding for agricultural 
research, improvements in river infrastructure, and meaningful 
tax and regulatory reform.
    If these promises had been kept, the large government 
outlays that have been required in recent years to support farm 
income may not have been needed. Congress must complete the 
unfinished agenda and provide support to agriculture in the 
interim.
    We must address expanding our infrastructure capabilities. 
The development of local food systems and value-added 
processing and marketing systems is critical for the continued 
viability of rural America. Additionally, the establishment of 
a national energy policy which addresses increased 
opportunities for biofuel use should be a top priority.
    Additionally, any decision on the upcoming farm bill should 
address and work toward improving risk-management tools and 
subsidies for crop insurance.
    As an organization, we also believe that efforts underway 
to establish standards for financial and production systems are 
critically important. We are convinced that helping Iowa and 
U.S. farmers gain access to and understand the necessary 
information regarding their farming operations is a key to 
leveling the playing field.
    Second, we believe that soybeans should be treated 
equitably under the next Farm bill. Agricultural policy 
decisions must provide improved safety nets for producers. 
Policy should include the continuation of planting flexibility, 
maintenance of the current--current marketing loan rates and 
the loan deficiency payment structure, and the establishment of 
a counter-cyclical program.
    Specifically, current loan rate ceilings should be set as 
floors, including the soybean loan rate of 5.26 per bushel.
    A third and very important focus of upcoming farm bill 
decisions should involve land conservation practices and the 
environmental performance of agriculture. As the front-line 
stewards of the land, producers are uniquely positioned to work 
toward increased and improved environmental performance.
    We support Senator Harkin's leadership in proposing the 
Conservation Security Act. The Iowa Soybean Association is 
developing a voluntary, systems-based approach to improved 
environmental performance called Certified Environmental 
Management Systems for Agriculture, or CEMSA. We believe CEMSA 
could be a complimentary ingredient of future conservation 
programs.
    In conclusion, the Iowa soybean producers very much 
appreciate the opportunity to provide these comments. We wish 
the committee well in important decisions it must work on in 
the future of American agriculture. We are committed to working 
together in the 2002 Farm bill debate to develop the best 
possible farm policy for all Americans.
    Again, I thank the committee for its time and consideration 
today.
    [The prepared statement of Mr. Askew can be found in the 
appendix on page 69.]
    Senator Harkin. Thank you very much, John, on behalf of the 
Iowa Soybean Association.
    Senator Harkin. Next is Shirley Frederiksen, Golden Hills 
Resource Conservation and Development.

    STATEMENT OF SHIRLEY FREDERIKSEN, GOLDEN HILLS RESOURCE 
             CONSERVATION AND DEVELOPMENT DISTRICT

    Ms. Frederiksen. Thank you, Senator Harkin, for allowing me 
to speak at the Senate Agriculture Committee hearing.
    Resource Conservation and Development is a program 
administered by USDA/National Resource Conservation Service 
providing technical assistance to private nonprofit 
organizations. Golden Hills RC&D is a nonprofit organization 
that encompasses eight counties in Southwest Iowa.
    The goals of the Resource Conservation and Development 
board focus on conserving the Loess Hills, strengthening the 
agriculture economy, developing small, rural businesses, 
increasing tourism, and assisting underserved clients. The 
board's vision is to strengthen and diversify the economy of 
rural communities in Southwest Iowa.
    I would like to focus today on some current projects of the 
Golden Hills RC&D board.
    First, the Loess Hills and tourism. The Loess Hills 
National Scenic Byway is a system of more than 220 miles of 
county and state roads through the Loess Hills, consisting of a 
main route and excursion loops.
    This tourism project is an excellent example of rural 
development for the 18 communities along the byway. Travelers 
stay at bed and breakfasts, stop at the old-fashioned soda 
fountains, eat at pie parlors and restaurants, and visit the 
local artisans.
    Scenic America, the nation's leading scenic byway 
organization, named the Loess Hills Scenic Byway one of the ten 
most outstanding scenic byways in the country. Each year more 
than one million people travel the Loess Hills Scenic Byway and 
visit its attractions.
    Another focus is the small business development. Prairie 
restoration in the Loess Hills is a project providing cost-
share to producers clearing invasive species from their native 
prairies so they can graze their cattle.
    Over 99 percent of Iowa's prairies are gone. The Loess 
Hills contain the majority of undisturbed prairie remnants and 
comprise the last intact prairie system in Iowa.
    The prairie restoration project has spurred many 
entrepreneurs to diversify their existing, traditional 
agricultural businesses. Some of the developing businesses that 
they have used as a sideline include: Tree-shearing, native 
grass seed collection, native grass seeding for hire, 
prescribed burn business, and other cedar utilization 
businesses, such as mulch and biochips.
    Strengthening agriculture is the third area I would like to 
discuss. Developing our alternative agriculture and local food 
systems is another developing project. One of the efforts 
underway by the Golden Hills RC&D board is to revive the grape 
and wine industry in Western Iowa.
    At one time Iowa boasted more than 6,000 acres of 
vineyards, 3,000 of which were in the Loess Hills. This 
distinct--The distinctive flavor of the fruit grown in this 
soil made the Loess Hills a perfect location for vineyards and 
wineries.
    For growers, the income potential in today's market with 
conservative figures is approximately $1,800 net per acre for a 
fully mature vineyard. Adding value to that grape by producing 
wine increases the profit potential to between $7,000 to 
$10,000 per acre. Of course, that is using conservative 
figures, since I am a conservative person.
    Golden Hills is very proud of the work that they have 
accomplished over the past 20 years, and with access to 
resources, project opportunities yet to be explored include: 
First, local food systems, integrating more locally produced 
food into the restaurants and food-service industry in Western 
Iowa.
    Second, alternative energy. There are a couple of ways to 
increase profits, and I hope Mr. Duffy will agree with these. 
One is to increase the prices of products, and two is to 
decrease purchased inputs. Utilizing alternative energy reduces 
input costs, thereby increasing net profits for farmers and 
businesses alike.
    Golden Hills RC&D would like to investigate wind and solar 
energy and the use of biomass as alternative energy sources for 
rural America.
    Third, is ag tourism. We have a wonderful traditional 
agricultural system here in Iowa, and by sharing that ag 
experience with visitors to the state, we can increase our 
profits again through tourism.
    In the next 20 years, we look forward to leading in the 
development of these projects and others.
    Thank you for the support of the RC&D program, because I 
know Senator Harkin is a large supporter of that, and for 
considering a strong rural development component in the 
upcoming farm bill.
    [The prepared statement of Ms. Frederiksen can be found in 
the appendix on page 76.]
    Senator Harkin. Thank you very much. Appreciate it. Thank 
you.
    Senator Harkin. Next, we have Sam Carney who is the vice 
president of the Iowa Pork Producers Association. Welcome.

 STATEMENT OF SAM CARNEY, VICE PRESIDENT, IOWA PORK PRODUCERS 
                          ASSOCIATION

    Mr. Carney. Thank you, Mr. Harkin. I am pleased to testify 
today on farm commodity programs and other policies that will 
ultimately become part of the next Farm bill.
    I am Sam Carney, and I produce hogs, cattle, corn, and 
soybeans with my brother and my son. Our farm supports these 
three families near Adair, Iowa. I am also vice president of 
Producer Services for the Iowa Pork Producers Association.
    My comments today will focus primarily on livestock 
components of the next Farm bill.
    While much of the discussion and debate on the next Farm 
bill will focus on grain production, please keep in mind a 
substantial portion of Iowa's corn and soybean crops are fed to 
livestock and poultry. The pork industry represents a major 
value-added activity in rural America and major contributor to 
the overall U.S. economy.
    While the issue at hand today is the future of commodity 
programs, I believe the next Farm bill must also focus on 
conservation, trade, market competitiveness, environmental, 
food-safety, and biosecurity issues.
    Agriculture is moving from an unregulated to a regulated 
industry in most aspects of our farming operation. Nonetheless, 
livestock farmers, except dairy farms, have operated in a 
marketplace without government subsidies and controls.
    However, we have a huge stake in the next Farm bill 
discussion. Approximately 60 to 65 percent of the cost of 
raising hogs is from feed costs. Corn and soybeans are the 
major components for our feed rations.
    Therefore, any changes in commodity programs that affect 
the price of feed have a profound financial impact on livestock 
operations. As major users of the grain and oilseed 
commodities, problems and issues of livestock producers 
ultimately affect grain and oilseed producer prices.
    As for conservation and environment, livestock producers in 
several states face or will soon face costly environmental 
regulations as a result of state or Federal laws designed to 
protect water quality. This includes Federal regulations under 
the Clean Water Act for TMDLs and the proposed new CAFO permit 
requirements. Federal regulators also are exploring the 
possibility of expanding Federal regulation of agriculture 
under the Clean Air Act.
    Since 1997, EQIP has accumulated a backlog of 196,000 
unfunded applications for approximately 1.4 billion in 
assistance, more than half of which is for livestock producers.
    Farmers and ranchers are on the verge of a new regulatory 
era, and it is impossible for us to pass on the costs of 
regulatory compliance. We are price-takers, not price-makers.
    While I believe all farmers are true environmentalists, a 
typical operation like mine cannot afford the investment it 
will take to comply with new regulations. I urge the committee 
to provide the assistance necessary to implement sound 
conservation practices to protect our nation's air and water.
    I urge the committee to support at least ten billion over 
the life of the next Farm bill in spending for USDA 
conservation practices to address livestock's environmental 
needs, specifically for water and air quality.
    These funds should be used to provide financial incentives, 
cost-sharing, and technical assistance to livestock, dairy, and 
poultry producers to develop and implement manure and nutrient 
management plans that are built on practices that protect water 
and air quality.
    Any successful conservation assistance program must be 
available to every producer, regardless of the type of 
production, whether confinement, open feedlots. Of course, 
payment limitations could apply similar to row-crop payments. I 
feel it is appropriate and fair that the livestock community be 
treated in the same manner as the row-crop producers through 
the use of similar payment limitations.
    As for trade expansion, U.S. pork producers became net 
exporters in 1995 for the first time. In order to sustain the 
profitability of our producers, we must do a better job of 
product marketing and doing away with market-distorting trade 
practices.
    Pork producers believe funding for the Market Access 
Program should be boosted. Also the trade promotion authority 
should be renewed and the U.S. position in the next trade 
negotiations for agriculture should include the total 
elimination of all tariffs, all export subsidies, and all 
trade-distorting support for the pork and pork products by 
other countries.
    In addition, we believe that the Global Food for Education 
and Child Nutrition Act should include pork, beef, poultry, and 
dairy products as well as commodities.
    As for animal diseases, if the current situation in the UK 
and Europe has taught us anything, it shows how important 
biosecurity issues are to U.S. livestock farms.
    Although the U.S. has not had to face foot-and-mouth 
disease since 1929, Congress and USDA must be diligent to 
ensure that all preventive measures are ready--are taken and 
that our effective and rapid response could be ready when 
needed. This includes surveillance, increased diagnostic 
capabilities, and a rapid response plan.
    While I believe most of these initiatives are underway, 
Congress should fund 380 million for renovation of the Animal 
Diagnostic Center in Ames. Quite frankly, this cannot happen 
fast enough.
    As for the concentration of livestock industry, while not 
directly related to farm bill discussions, I want to touch on 
livestock concentration issues. I have attached a summary of 
the IPPA activities on captive supplies in the livestock 
industry, which date back to 1975.
    Obviously, our work is not finished. Therefore, I urge 
Congress to continue supporting a free flow of market 
information, such as the mandatory price reporting legislation. 
That legislation was an important step in the right direction, 
and I thank you for helping USDA fund its implementation.
    I have also attached a bulletin on the pork checkoff, which 
I am not going in detail at this time.
    I appreciate the opportunity to be here today. I look 
forward to working with you, your staff, and your committee as 
deliberations on the next Farm bill continue. Thank you very 
much.
    [The prepared statement of Mr. Carney can be found in the 
appendix on page 78.]
    Senator Harkin. Sam, thank you very much for your 
statement.
    Senator Harkin. Last we have Aaron Lehman who is with the 
Iowa Farmers Union in Polk City, Iowa.

      STATEMENT OF AARON HELEY LEHMAN, IOWA FARMERS UNION

    Mr. Lehman. Senator Harkin, my name is Aaron Heley Lehman. 
I am the legislative director of Iowa Farmers Union, and I also 
farm with my family as the fifth generation on our family farm 
in Central Iowa. It is a pleasure speaking with you today on 
behalf of our family farmers.
    Senator, Freedom to Farm was adopted when commodity prices 
were high and expectations for agriculture were unrealistic. In 
reality, the promise of a broad, market-based environment of 
opportunity for farmers was shattered by an ongoing commodity 
price collapse.
    The dream of farmers less entangled in government 
involvement has turned into a nightmare of government 
dependency. While the government subsidies have provided relief 
to farmers struggling to survive, the payments have the side 
effect of fueling the trend toward larger and larger farms and 
concentration in agribusiness.
    We are not asking you to tinker around the edges of a 
failed policy. We are asking for a return to common sense in 
farm policy.
    We believe that a primary goal of the commodity program 
should be to provide economic stability and opportunity for 
farmers; a program which recognizes market realities, resource 
sustainability, and food security and safety issues.
    We believe that commodity loans should be dramatically 
modified to better reflect the cost of production for farmers. 
The current program artificially capped loan rates and ignores 
the marketplace, ignores the production factors, and ignores 
the rising costs of crop inputs.
    Our proposal would place that loan rate as high as 
possible, but not lower than 80 percent of the 3-year average 
cost of production. It is time our loan rate reflected economic 
reality and common sense.
    We believe that we must take steps to control our 
inventory. In this regard, no other production industry ignores 
the marketplace like agriculture currently does. We are foolish 
to expect a marketplace, foreign or domestic, to blindly comply 
with our inventory needs.
    To manage our inventories, we believe we should establish 
reserves to ensure our commitment to renewable fuels production 
and to humanitarian food assistance.
    Finally, we should establish reserves in a limited, farmer-
owned reserve program. Participants should receive annual 
storage payments in exchange for storing crops until prices 
reach the cost of production.
    In addition, no industry can expect to continue to produce 
in a volume that exceeds market demand. We believe the 
Secretary of Agriculture should have the discretionary 
authority to offer a voluntary set-aside program. We feel that 
farmers should be rewarded with a raise in commodity loan rates 
which reflects the level of their own set-aside.
    We feel strongly that program benefits need be directed to 
family size producers. Unrestricted government payments, which 
the current program effectively provides, leads to large 
farmers using government assistance to bid up land prices and 
cash rents to levels completely out of line with commodity 
prices.
    If farmers want to farm half the county, let them do it, 
but do not let them take taxpayer money to help finance it.
    As farmers, we have a responsibility for sound land 
stewardship. Farming, as in our family, stretches across 
generations. We do not own land as much as we borrow from our 
children and try to make the best use of it as our own 
contribution.
    Senator we strongly support the Conservation Security Act 
and we urge Congress to expand the Conservation Reserve 
Program.
    Enhanced rural development programs must be an integral 
part of the Farm bill discussion, and that enhanced cooperative 
development should be central in that discussion.
    Production research should be directed to creating value--
creating value that benefits family farmers, and funding should 
be targeted to the multi-functional aspects of agriculture, 
including less capital intensive technologies, alternative 
value-added products, energy conservation, and renewable energy 
development.
    Concentration of market power among a few large and highly 
integrated agribusinesses has reached an all-time high, and 
steps need to be taken to address this concentration, and until 
these steps are taken, a moratorium on agribusiness mergers 
should be immediately enacted.
    In addition, discriminatory pricing and packer ownership of 
livestock should be immediately halted. Checkoff program work 
should be targeted to the benefit of family size producers and 
should be accountable to producers. We feel that the producer 
referendum ballots should be respected and not ignored.
    In closing, Senator, your work in this next year on 
agriculture issues will leave a permanent mark on the direction 
of agriculture in the 21st Century.
    While I want our policy to make us leaders in production 
and efficiency, I want more so that our policy points us to a 
strong, healthy, rural Iowa and rural America. I want to pledge 
our efforts to help make agriculture policy responsive to 
farmers and rural communities while providing consumers with 
safe and secure food.
    Thank you for your time, and I look forward to answering 
any questions you may have.
    [The prepared statement of Mr. Lehman can be found in the 
appendix on page 83.]
    Senator Harkin. Thank you very much, Aaron. I appreciate 
you being here.
    Senator Harkin. Let me see if I can recap a little bit here 
some of the things we have heard. Dr. Duffy, you talked about 
the income of farmers and how it has dropped down considerably 
since the high in 1996, and made the point that 55 percent of 
our net income came from government payments and that 92 
percent of our cropland in Iowa is devoted to two crops.
    He said that in the 1950's the net income of farmers was 
about 34 percent of gross. Now it is down to 20 percent of 
gross. According to USDA definitions, 87 percent of Iowa farms 
are small farms with sales less than $250,000, is that correct?
    Dr. Duffy. Yes.
    Senator Harkin. Dr. Duffy made the point that we should do 
some things in the Farm bill, like looking at being self-
sufficient in energy on farms. Might want to question you some 
more about that.
    The program should support people, not commodities. He made 
a statement about some form of minimum wage for farmers. I 
would like to investigate that. It was also pointed out that 
the level of payments that we have had have been built into 
land values and rents and things like that and that we just 
cannot go cold turkey in terms of doing away with those.
    First of all, I have a question of the Wallace Center. Are 
you hooked up with the ICN?
    Mr. Williams. Yes, we are.
    Senator Harkin. I saw that. I thought that you might be. 
You have got a cable coming out here.
    Mr. Williams pointed out that over 50 percent of the 
payments were from the government. He suggested that in the 
Farm bill, we have good conservation practices to manage our 
resource base, and that we target our programs.
    He mentioned the use of a grain reserve and a safety net, 
and that we close payment limitation loopholes. Mr. Williams 
noted that there was a three- to four-year waiting list in Page 
County for conservation cost-share programs and that we have a 
long backlog of those.
    He also mentioned ACRE, which I have to have you explain to 
me, because I am not all that familiar with it. He mentioned 
the need for mandatory price reporting, and the need to 
investigate antitrust activities. Mr. Williams stated. that the 
pork checkoff should be revisited.
    Mr. Askew talked about balancing the social and economic 
needs of farmers and growth in rural communities. He said in 
the Farm bill that we have to focus on global competitiveness, 
expanding trade opportunities, research, and tax and regulatory 
reform.
    He mentioned energy policy and biofuels in the new Farm 
bill. Mr. Askew also suggested that we should look at risk-
management tools and insurance, and also the information flow 
to farmers. I assume you mean closing that digital divide, 
making sure that farmers get adequate information and up-to-
date information, and ensuring that soybeans were treated 
equitably in the new Farm bill. He mentioned the LDP structure, 
loan deficiency payment structure, and a counter-cyclical--need 
for some counter-cyclical-type of program. Lastly, Mr. Askew 
noted land conservation and Conservation Security Act and the 
program that the Iowa soybean producers have come up with 
called the Certified Environmental Management Systems for 
Agriculture, the CEMSA program.
    Shirley Frederiksen talked about the Loess Hills Scenic 
Byway, one of the ten best in the United States, and the 
prairie restoration project. You mentioned a number of 
different things regarding the grape and wine industry.
    I can remember as a kid my dad buying Betty Ann Wine. 
Anybody ever heard of that? You drank that wild stuff?
    I am not kidding you, there used to be big wineries over in 
Council Bluffs called Betty Ann Wine, and they had all these--I 
remember one time as a little kid seeing all those vineyards 
over there.
    Ms. Frederiksen indicated that wine could produce $7,000 to 
$10,000 per acre. She also spoke about local food systems, 
energy, solar, wind, biomass, ag tourism. Their thrust was 
really that we have to focus on rural development in our Farm 
bill.
    Mr. Carney, with the Iowa Pork Producers, said that we 
should focus on conservation, trade, market competitiveness, 
the environment, food safety, and biosecurity. He reminded us, 
as we always need to be reminded, that any changes in commodity 
programs do affect livestock operations one way or the other 
and that always has to be taken into account. Mr. Carney also 
mentioned that this EQIP backlog of 196,000 is what you 
mentioned in the EQIP program.
    Mr. Carney stated that we need a minimum of $10 billion in 
the Farm bill for conservation over the life of the Farm bill. 
He indicated that payment limitations could be used also in 
livestock as we do also in row-crop production.
    He also mentioned trade and boosting the Market Access 
Program and including meat products in the Food for Education 
Program. I assume you mean that that is that new school lunch-
type thing we are talking about.
     Mr. Carney mentioned the need for rebuilding and 
renovating the National Animal Disease Center at Ames. That 
$380 million mark, by the way, stands now at 446 million, so 
the sooner we get it built, the cheaper it is going to be.
    He indicated that concentration and really enforcing more 
and getting more enforcing for the mandatory price reporting.
    Mr. Lehman, representing the Iowa Farmers Union talked 
about the payments basically has fueled the trend toward larger 
farms, our goal in the Farm bill ought to be economic 
stability, opportunity to family farmers, resource 
sustainability, and food security.
    He pointed out that the loan rate, ought to be set at the 
minimum of 80 percent of the 3-year average cost of production, 
and that we need to control our inventories, like with 
reserves, renewable fuels, and some kind of humanitarian food 
assistance. Mr. Lehman indicated the need for a farmer-owned 
reserve and for annual storage payments for farmers for the 
reserve program. He said that benefits ought to be targeted to 
family sized producers.
    Mr. Lehman also referred to the Conservation Security Act, 
expansion of conservation programs, rural development, 
enhancing cooperative developments, and farmer-owned 
cooperative developments.
    He said our research should be to create value that would 
benefit the family farms, enforce antitrust laws, and stop 
packer ownership of livestock.
    Does that basically summarize the testimony? Again, I thank 
you, and what I would like to do is just--I have just a few 
questions, and then we will open it to the audience.
    For Dr. Duffy I just want to ask: If there are only modest 
deficiency payments from increasing farm size above 300 to 600 
acres, as your Iowa Farm Business Association data indicates, 
would you say that government payments which are directly 
linked to production and acreage might be offering alternative 
incentives to grow even larger?
    Dr. Duffy. I want to make sure that we are clear. What I 
was talking about was the cost per bushel dollars that it would 
cost to produce it.
    Senator Harkin. Yes.
    Dr. Duffy. Then, yes, because the larger you get, the way 
that the program is set right now, particularly with the LDPs, 
the more Federal money you get, the more you produce, and so as 
we move on out, basically what we have in the jargon is an L-
shaped average cost curve, so we have initial economies of 
size, and then those are dissipated, and then it flattens out, 
and the data for Iowa shows somewhere between three to six 
hundred acres is that low point, and then people just move 
along that cost curve. As they move out, the more bushels you 
produce, the more payment you get.
    Senator Harkin. What you are saying is there may be kind of 
a perverse type of an impact. In other words, we have the 
commodity program, we have the payments, the LDPs. I assume you 
are including the AMPTA payments on that?
    Dr. Duffy. Yes.
    Senator Harkin. Would I be right in saying or assuming that 
if you are bigger and you get more payments, then you get more 
money, that might enable you to bid up perhaps your neighbor's 
land in terms of getting larger? In other words, you get more 
money, so would it have a perverse impact of actually farms 
even growing bigger?
    Let me rephrase that. Do our farm programs today, in your 
estimation, lead to larger farms? That is about as simple as I 
can make it.
    Dr. Duffy. I believe they do, yes. Because, as you move out 
and increase the payments, the larger you are, that it 
encourages an increase in size.
    I also think that when you look, the payments that came 
out, I remember when the Food Security Act--or the Freedom to 
Farm was first passed, and I had a landlord call me and was 
asking about how this worked and so forth, and I said, ``Well, 
you are under cash rent and so you are not eligible for any of 
the payments.'' I had to wait until she was done laughing and 
said, ``Just watch me. I will get them.'' In other words, she 
just bid up the rent.
    It works in a lot of different--The programs are exerting 
all kinds of influences on rents, on land value, on the 
infrastructure. It is--We need to be very conscious of when we 
go in and we tinker with, if you will, that that has the 
intended as well as unintended consequences. The biggest reason 
farms are getting bigger is because they have to generate an 
income, and the reason they have to generate an income is 
because we have developed production technologies where we 
basically just pass money through the farm.
    This is a term coined by Lord Cochran about the technology 
treadmill, where we just--you need more land, so you buy bigger 
equipment. You buy bigger equipment, and your costs go up, so 
you need more land. Then you adopt technology so that you can 
farm more land. You have more equipment so you can farm more 
land, so you bid up the rent so you can justify the equipment, 
and around and around and around she goes.
    There is a variety of reasons, and I would be happy to go 
into it with you, but the government programs, do they cause 
per se? Maybe not. Do they not do anything to discourage? 
Definitely.
    Senator Harkin. I see what you are saying. In some ways you 
mean the System. Obviously, a farmer today with the new 
equipment and new technologies obviously can crop a lot more 
acres than a farmer could 50 years ago, 30 years ago, 20 years 
ago. There is no doubt about that, right?
    The farmer can plant and crop more acres with bigger 
equipment, faster equipment, better technology, better 
knowledge, better information on planting, better hybrids, for 
example.
    I guess my question is though, and I have often thought 
about this: Yet an individual farmer, I mean there is only 24 
hours in a day, only 7 days in a week, and a farmer has to 
sleep sometime, and they have to eat. They have to tend to 
their family. They have to do other things.
    I mean there is only so much time within that time 
constraint of a farmer. It seems to me there is just some limit 
on how much that farmer can actually do. I mean, I do not know 
where that is, but it may be a range, depending upon the land 
and the structure of the land and how clear the land is and all 
that stuff, but it just seems to me that there is some range in 
there where after you get to a certain point, farmers just 
simply cannot farm any more land and still be efficient. I 
guess I am talking about efficiency.
    Mr. Duffy. That is why occasionally within the data from 
the Iowa Farm Business Association I believe 7,000 acres is the 
largest farm that is in there, and we have farms bigger than 
that here in Iowa, but there is some argument that rather than 
an L-shaped, we actually have a U-shaped with a very long, flat 
bottom and then actually you reach a point where your costs 
start going back up, and you--primarily you are going to exceed 
your management ability.
    Senator Harkin. Yes.
    Mr. Duffy. You also shift from being a family farmer, in my 
opinion, to being a personnel manager, because you have so many 
hired men or women, and then you become--you are operating--you 
are managing people rather than managing the land.
    Senator Harkin. I see. I am going to throw it up to the 
panel, because it is general discussion here. You mentioned one 
other kind of a, if I might use the word ``provocative'' idea, 
some form of minimum wage for farmers. Do you want to tell me 
what you mean by that.
    Mr. Duffy. It was not intended to be provocative. It was 
intended to--I mean----
    Senator Harkin. I mean provoking thing.
    Mr. Duffy [continuing.] OK. I do not like to cause trouble.
    [Laughter.]
    Mr. Duffy. Not too much. Dr. Lasley and I were having a 
conversation 1 day, and we were talking about the current 
situation and where we are going and the concern that we have 
that people are at loggerheads and they are concerned about 
what is going to be just for them and not really looking at the 
whole picture, if you will.
    Senator Harkin. Yes.
    Mr. Duffy. Then we came up and we decided that--Paul 
suggested, well, what about if we have a minimum wage for 
farmers where we were paying people? I worked on and developed 
a proposal that I included with my testimony, and I have copies 
of it out there, and I would love for people to look at it.
    Basically the idea of the proposal is that a farmer would 
be paid based on the number of hours that they work and up to a 
full-time equivalent, and then beyond that they would get more 
payments, and less than that, only get paid based on what they 
worked.
    The way that they would get paid, the number of hours would 
be determined by the number of acres and the crops that they 
had, the amount of livestock that they had. We have fairly good 
estimates on the amount of time that it takes per litter or per 
acre, and then you would just multiply that out.
    That would give you your number of hours, and if that 
exceeded--and we used 8-hour days, 7 days a week, 50 weeks a 
year, and those are things that could be debated. That comes up 
to 2,800 hours, and so in a nutshell, but that is what we have.
    Senator Harkin. That is in this paper?
    Mr. Duffy. In the proposal, yes, sir. I do not know. To me, 
it is trying to support the labor that is involved. It offers 
all kinds of neat advantages, in my opinion.
    It is totally divorced from the market so that I feel that 
it would be a green box as far as WTO is concerned. You would 
have total freedom to plant. You could plant whatever you 
wanted. Offers a lot of different kinds of features. I offer it 
for yours and the group's consideration.
    Senator Harkin. That is what we need. We need to start 
thinking outside of the box, as well as inside the green box.
    Any other thoughts about--I am also concerned about the 
whole aspect of trade.
    Now, when you say ``soybean producers,'' we are in 
Washington talking about what is happening in Brazil and the 
expansion of crops here.
    Last year, for example, I was in China in August and 
discovered, boy, they have got a lot of land in production, and 
they actually were exporting corn. We thought there was going 
to be a market for us. They are actually exporting corn, but I 
do not know how many good years they have in a row. They are 
expanding their crop production in China too as well as 
soybeans. I do not know if they export soybeans or not. I do 
not know about that.
    I know they exported corn last year, so I am just wondering 
what we see in the way of trade overseas. I mean how can we 
expand trade? We looked at markets, but if Brazil is putting 
all this practically free land in production, and how do we 
compete with that? That is what I do not understand.
    Mr. Askew. Well, first we should look at sanctions' reform. 
We have sanctions against probably two-thirds of the people out 
there in this world, that we are not able to deliver food and 
we can. That is an important thing. Just the other day with 
Iraq, with one example of one way and then turn right around 
and go back the other way.
    It is important because we export half of our soybeans out 
of this country. Brazil and Argentina are competitors to us. We 
have to understand that. Are they more efficient than us? No. I 
mean logically look at this.
    They are using Case IH combines that are shipped from here 
in the United States down there. They are using seed that is 
very poor. They get so much rain. They have to use so much 
fertilizer, so many insect problems.
    It is not that great down there, and we just had a group 
that came back from Brazil and Argentina, and their first thing 
was, keep it up, because they are hurting down there, but are 
we going to run them out of business?
    We had a group up here this summer that were from 
Argentina, and we got to talking to them. There is a language 
barrier there, but you could get a pretty good indication, but 
you know what? Looking at them is like looking just out here in 
this group. They have the same concerns we do. They have 
farming in their blood. They are going to keep going as long as 
they can until they lose money, and they are losing money down 
there.
    The thing is, we bring our soybean prices up and we have 
that same--there will be land in production. It will take 50 
years to get it fully in production, but right now the 
bulldozers are not moving down in Brazil. They were back in 
1995 and 1996, but we had good prices back then.
    Now we are looking at that we have got to be the Number 1 
soybean exporter. We have got to be the dependable source, 
because, frankly, if we keep these sanctions in place, we 
cannot be the dependable source for soybeans or corn or 
anything else.
    We have got to address the problems inside our own 
boarders. As for the biotechnology, I think we all support 
biotechnology to a certain extent. That is going to be the way 
we compete in the world in the future, but we have got to be 
able to get by political aspects of biotechnology and look at 
the positive aspects, especially out there in the countryside 
where we are using less pesticides and we are doing more out 
there using some biotech crops than we ever did before.
    It has increased our production, but our soybean-use 
rations is tremendous. As we grow those beans, we are using 
them.
    We can use a lot more if we use renewable standards. It is 
very important.
    Ethanol, I think everybody out here is a big supporter of 
ethanol. We also have to be a big supporter of biodiesel.
    Senator Harkin. On the biodiesel, you know this. I might 
tell the audience. About a week ago I was in Cedar Rapids and 
poured the first gallon of soy diesel into buses.
    They have 32 buses in Cedar Rapids now running on soy 
diesel. It is an 80/20 blend, 20 percent soy, 80 percent 
regular diesel.
    The soy diesel is made around Sioux City someplace. If one 
percent of the diesel market in America were to use this soy 
diesel, in this 80/20 blend, I think it would take about 300 
million gallons. Estimates are that it might boost the price of 
soybeans as much as 15 cents a bushel. Plus it cuts down on 
hydrocarbons, it cuts down on pollution, and it cuts down on 
CO2 emissions. There would be a 70 percent reduction in CO2 
emissions if you use soy diesel.
    I am sorry, Mr. Lehman.
    Mr. Lehman. Well, in the area of trade too, we feel 
strongly we need to aggressively pursue trade opportunities. We 
need to keep in mind that those trade opportunities need to be 
fair for our producers.
    I use Monsanto products just like those farmers do in 
Brazil. They do not pay a tech fee.
    Senator Harkin. They do not pay what?
    Mr. Lehman. A technology fee that is attached to products 
we use, and when we ask why that is, it is because they do not 
have the same environmental standards for--that we have to have 
here. That is a cost of production that we face that their 
farmers do not face.
    We talked about China now becoming a competitor in--and 
becoming an exporter of corn. The labor standards for producing 
corn in China are nearly nonexistent, and if we really want to 
compare bushels produced in China and bushels produced in the 
United States, then at the same time we are producing--we are 
comparing how farmers are being treated in this country to how 
farmers are earning income in China as well. Those labor 
standards need to be taken into account too. We need to pursue 
those trade opportunities.
    Senator Harkin. Well, I agree with that. While I have been 
a supporter in the past of what they call fast-track 
legislation, the President's ability to move trade legislation 
rapidly through the Congress, I stopped.
    I stopped being a supporter when the trade agreements carve 
out any kind of environmental or labor standards. Because it 
seems to me that that has got to be a part of our trade laws 
too. I am just telling you what I feel, but they have got to be 
a part of our trade laws.
    Otherwise, we let people undercut by using basically slave 
labor. We allow people to just do environmental pollution, 
which affects the whole globe and undercut us.
    I have always said that if we can protect CDs, compact 
disks, I did not mean certificates of deposits. I mean compact 
disks. If we can protect the compact disks and take action 
against any county that would allow the piracy of compact 
disks, we ought to be able to take action against counties that 
do not meet certain environmental standards and labor 
standards.
    I would hope, and I make this statement forthrightly, I 
encourage all of the agricultural groups you represent and 
others that may not be here, that this is one place where I 
hope the agricultural--agribusiness section, including farmers, 
will break from the corporate business sector of America, 
because the corporate business of America is saying they do not 
want trade--they do not want environmental standards or labor 
standards in our trade agreements.
    I mean it is especially important, vital to our farmers, 
that we have those kind of practices. I encourage those of us 
involved in agriculture to take a separate stance, and that is 
just my own feeling.
    Any other thoughts on this, Sam?
    Mr. Carney. I do have a few, and as John mentioned, we have 
two-thirds of our--we have sanctions on two-thirds of the 
countries, and I guess what kind of upsets me is on our 
industrial tariffs we average four percent. On the agricultural 
tariffs, we average around 40 percent. This is a major problem.
    I am sure people out here have to borrow money, and if 
anybody had to borrow at 40 percent interest, you just as well 
walk out the door. You are done.
    We have got to get this changed. This is a major, major, 
major issue with agriculture.
    Senator Harkin. Say that again. Tariffs----
    Mr. Carney. OK. Industrial tariffs average about 4 percent. 
Do not quote me, but that is the average.
    Senator Harkin [continuing.] Industrial on industry coming 
into this country?
    Mr. Carney. Going out to other countries too.
    Senator Harkin. Tariffs we face on our exports?
    Mr. Carney. Yes. Maybe I did not explain it right, but as 
our exports on agriculture, we average 40 percent going out.
    Senator Harkin. That other countries put on our 
agriculture?
    Mr. Carney. Right. The main reason is we put so many 
sanctions on. This is the thing that we have got to change. To 
me, we should never have sanctions on a country unless we are 
outright at war with them. If you want to put sanctions on a 
country, I do not think it really helps.
    Senator Harkin. What you are saying, there are countries we 
have absolute total prohibitions on, but other countries you 
are saying we have one form or another?
    Mr. Carney. Correct. You know, we have got certain things, 
but what I am saying is: We should not use food or medicine.
    I just do not think that is right, and I do not think that 
really helps us help with other countries. This is something we 
should eliminate.
    Senator Harkin. I agree with you, totally agree with you. A 
funny little story: I remember once, one of my political heros 
was Hubert Humphrey from Minnesota. He is now deceased. He was 
on the Senate Ag Committee long before I got there, and he was 
talking about selling food to Russia and--during the height of 
the cold war, and someone said something to Humphrey about 
selling--selling this food to Russia, and he said, ``Well, I 
believe we should sell them anything they cannot throw back at 
us.''
    [Laughter.]
    Senator Harkin. I thought that sounded like a pretty good 
philosophy to me.
    [Laughter.]
    I appreciate that. I am going to open it to the audience 
now. You have heard a fairly good discussion here.
    I just want to make one other point here, that the 
conservation incentive. I appreciate a lot of you looking at 
the Conservation Security Act. Any further thoughts, 
refinements, suggestions that you have on that, please let us 
know. If we do a conservation incentive, it does shift the 
practices and less to the commodities, which I have heard a 
little bit of here today.
    I have got my little chart here. I am sure you can all see 
this real well. It shows the CCC outlays for the fiscal year 
2000. We had $32.2 billion in outlays, but we only had 1.7 
billion in conservation, so that gives you some idea of the 
small amount of money that we put out in conservation.
    I have always said, that we have got a lot of farmers out 
there practicing good conservation. I do not mean just CRP or 
set-aside, but I am talking about practicing good conservation. 
This takes time. It takes equipment. A lot of times it takes 
out-of-pocket money, but they get nothing for it. The 
Conservation Security Act is to convey to farmers, ``OK. Now, 
we are going to support you in your practices, and if you want 
to do more voluntarily, we will pay you.''
    Mr. Williams. Senator Harkin, there is also a direct long-
term societal cost to America in how we take care of our land.
    Senator Harkin. Yes, and I think that is going to be a good 
selling point to some of those who are now saying that we 
should not be putting that much money out in agriculture, that 
we are already hearing that kind of reaction coming back.
    OK. I am going to throw it open, and again, I ask you to 
please state your name so our reporter can get your name 
correct.

          STATEMENT OF DENISE O'BRIEN, ATLANTIC, IOWA

    Ms. O'Brien. Good morning, Senator Harkin. I am Denise 
O'Brien from Atlantic, Iowa. I can say that 25 years I have 
proudly been an organic farmer, and about 20 of those years I 
have given ag testimony within Iowa and Washington D.C.
    Senator Harkin. I am very appreciative of you. You have 
been there many times, and I appreciate it.
    Ms. O'Brien. I keep nagging, but someday something will 
change, and believe me, I have not got cynical yet. You know, I 
can still smile.
    First of all, I would like to make a comment about the lack 
of gender balance on the program. It is good that Shirley is 
there, but women do have a voice in agriculture, and to leave 
out that voice, we leave out----
    Senator Harkin. You take that up with the Pork Producers, 
the Soybean Association, and the Farmers Union. I just asked 
them to please have someone come testify.
    Ms. O'Brien [continuing.] I will take that up. It is really 
good if the organizations would have women represent them on 
these, because women do add a voice to solutions, so I would 
encourage all organizations to do that.
    Senator Harkin. Point well made.
    Ms. O'Brien. I am representing actually an organization 
called Women's Food in Agriculture, because we do not have a 
voice in a lot of organizations, so we have created an 
organization.
    Today I am speaking on behalf of organic agriculture, which 
has not been mentioned at all, and I think there is 
approximately now in Iowa 170,000 acres of certified organic 
crops.
    There is an alternative solution to some of this. It is not 
everybody's solution. I agree, but these farmers are 
profitable. They are making it. They are turning a profit, but 
I also want to say at the time that they are turning a profit, 
they are in grave danger of losing their economic--or organic 
status because of the problem with GMOs. We have not talked 
about GMOs this morning either, genetically modified organisms.
    When the organic crops get contaminated by genetically 
modified organisms, they lose their--the farmer who has the 
organic crops loses their market, and that market has been a 
market that has been increased, profitability for them.
    The National Organic Standards Board have made the 
standards now, and there is zero tolerance of GMO 
contamination, so I think that we have to consider what we are 
doing in this process of eliminating--or of contaminating these 
organic crops.
    Recently the Organic Farming Research Foundation released a 
state of the states report, and it is Organic Farming Systems 
Research at Land-Grant Institutions, so this report has come 
out about the state of organic research in the United States.
    I would like to say that because public funds support the 
land-grant system, we expect it to be responsive to the 
educational and research needs of the constituents, including 
organic farmers, and we have been totally left out.
    I know this from 25 years of experience. We have always--My 
husband and I have always been left out of any--all of these 
payments. We have been good stewards of the land. We have had a 
crop rotation when the set-aside was based on corn base. We 
never qualified for anything, not that we wanted government 
payments, but we never qualified for anything because it was 
really--we were--it was a disincentive for us to do what we 
did, but we believed in what we were doing.
    Senator Harkin. Are you suggesting that--and I am just 
asking, that there should be special provisions made in the 
next Farm bill that would help encourage organic farmers to 
give some better support somehow?
    Ms. O'Brien. You betcha.
    Senator Harkin. Do you have some ideas on how we do that, 
Denise?
    Ms. O'Brien. we have it right in this book here. I have 
given this book to Ellen, so she has got that.
    Senator Harkin. All right.
    Ms. O'Brien. There is no support of organic research. We do 
have--Iowa State has the only organic specialist in the 
country, Kathleen Delate, and she has--Mike is raising his 
hand.
    Mr. Duffy. I was just going to say that connected with the 
Armstrong Farm, we also have a long-term research project that 
is solely devoted to organic production. I thought I saw Bernie 
here, the farm manager who is running it, so----
    Ms. O'Brien. Yes.
    Senator Harkin. Somewhere here?
    Mr. Duffy [continuing.] Right back----
    Mr. Backhaus. The Neely Kenyon farm.
    Mr. Duffy [continuing.] The Neely Kenyon farm, which is 
connected with----
    Senator Harkin. Where is it?
    Ms. O'Brien. Adair County.
    Mr. Duffy [continuing.] It is connected with this----
    Mr. Backhaus. It is part of our farm. My name is Rob 
Backhaus. I am president of the Wallace Foundation.
    Ms. O'Brien. To go on with the question you asked me: There 
is 17 acres under research in Iowa, and many states have zero 
research going on into organics, and so with Iowa State having 
an organic specialist, she is totally overworked and totally 
unaccessible. I try to get ahold of her, and she is just 
understaffed.
    I know we have to take this up with Iowa State, and 
Practical Farmers of Iowa is doing that very thing.
    Senator Harkin. Now, again, in your practices, I will bet 
you do not get any kind of payments at all for your practices.
    Ms. O'Brien. Oh, no. We never ever have.
    Senator Harkin. Alison just reminded me under the 
Conservation Security Act you would.
    Ms. O'Brien. Well, now we changed our farming situation 
over the years and Larry is working off the farm now, and I do 
ten acres, so we have got--but that is an encouragement to get 
back in actually. It would be an encouragement.
    To continue with my testimony, I just want to say that the 
good news is that land grants in 39 states have research and/or 
resource development for organic producers. Land-grant 
institutions in 19 states reported research acreage net gained 
in organically, 12 of which have research land that is 
certified or in transition to certification.
    The bad news is, is that of the 885,000 available research 
acres in the land-grant system, only .02, or 150 acres, out of 
880,000 acres is devoted to certified organic research. That is 
a totally unbalanced situation.
    When we are looking for solutions, I think we ought to 
think about organic agriculture, and I am really proud to stand 
here all these years. I know people have thought I am kind of 
whacked out sometimes about my organics, but I am standing 
here.
    The private sector ag has taken on themselves to do the 
research, and the Organic Farming Research Foundation in 
California has funded programs in Iowa.
    I want to point out that the Heartland Organic Cooperative, 
grain cooperative that is located in Adair County, is now 
buying the Stuart elevator, and there is going to be access for 
semi loads of organic produce--or commodities, this is a 
commodity one, this is corn and soybeans. They are just taking 
over the Stuart elevator, so I think it is really relevant 
that--and they have operated 8 years in the black.
    Compared to other--Mark is telling me that I have to quit. 
Everyone who knows me knows that I talk too much, but I would 
just say that organic ag is a growing industry. It is an 
agriculture that can be a vehicle to help the floundering 
small- and medium-size farms survive and a vehicle to save our 
most valuable resource, the land.
    I would also like to say that a week from today at this 
very place at ten o'clock is a biomass--the Union of Concerned 
Scientists is--and Alan Teel, our extension agent in this 
county, is having a biomass meeting, and it is like from ten 
o'clock to noon next Saturday morning, so I would like to 
encourage the farmers to come here and learn about some biomass 
production.
    [The prepared statement of Ms. O'Brien can be found in the 
appendix on page 87.]
    Senator Harkin. Denise, thank you very much.
    I forgot to mention that we have a new member of our 
agriculture committee. Senator Ben Nelson from Nebraska is now 
a member of our agriculture committee. He could not be here, 
but his staff member, Sonny Foster is here. Where is Sonny? 
Thank you for being here, Sonny. If any of you want to get 
anything to Ben, Senator Nelson, please just give it to Sonny.
    I just want to followup before you start, sir, on what 
Denise O'Brien was saying. Maybe what Mr. Duffy was saying, 
that we have 92 percent in a couple of crops, and, sure, we 
have moved in that direction. I know that organic cannot be 
forever. It is not going to replace it all, but maybe there is 
a lot of other little things like that we can do around the 
state to help buttress and help provide some really good 
support and income support and--for rural communities. Organics 
is one of them.
    I know around the Washington D.C. area they have got a 
grocery chain called Fresh Fields. They cannot build them fast 
enough. People drive for miles to go to them, and they do all 
this organic food, organic lettuce, organic meats, and all 
that.
    Someone told me that they were selling pork, Sam, to this 
Fresh Fields, organic pork or something, and where was it I 
read this? Fresh Fields was buying all the organic pork that is 
being raised today, and they cannot get enough.
    There are some niche markets out there for operators. There 
are some niche markets out there. Perhaps we ought to take a 
look at that in the next Farm bill to see what we can do.
    I might just mention one other area, and that is energy 
production. Somebody mentioned biomass. We have a project going 
on down in Southwest Iowa. Any of you know about the switch 
grass project that we have? How many of you know about it? The 
information got out decently anyway.
    We have about 4,000 acres of switch grass going down there 
now, and we are burning it in the coal-fired power plant in 
Ottumwa. We just finished the first run this winter, and all of 
the results look very good and there is more B.T.U. in a pound 
of switch grass than a pound of coal.
    If we can utilize CRP acres for switch grass and use switch 
grass to provide energy, not going to replace all the coal, but 
I think I have seen figures that with just a modest use of our 
CRP ground in Southern Iowa, we might replace about seven 
percent of the coal coming into Iowa.
    That translates into several hundred million dollars every 
year that would stay in the state rather than going outside the 
state, so I think we have got to start thinking about these 
kinds of things, aside from wind energy and stuff like that, 
but I think there is a great potential for biomass.
    Mr. Duffy. May I interrupt? I am involved with that project 
down there. I have conducted and done the estimated cost of 
production of switch grass.
    Senator Harkin. Yes.
    Mr. Duffy. That publication, it is in the press right now, 
but one of the issues and the reason I wanted to bring it up is 
because right now our costs of production are a little bit 
higher than the coal that Alliant Energy, they can purchase the 
coal cheaper, and I guess the reason that I am bringing this up 
is because this is an area where maybe if we could look at an 
energy crop subsidy or something like that or definitely more 
research into trying to get the yields up. Because what we have 
found is obviously the higher the yields and then the lower the 
cost would be.
    Senator Harkin. Sure.
    Mr. Duffy. This does need more work, but I think it shows a 
lot of promise. That was what I was going to allude to. I am 
sorry to interrupt.
    Senator Harkin. Just a research project then?
    Mr. Duffy. That is correct.

                   STATEMENT OF GAYL HOPKINS

    Ms. Hopkins. My name is Gayl Hopkins. I am active in the 
Iowa Corn Growers and Environmental Issue Team, and before I--I 
would like to focus my comments concerning the Conservation 
Security Act, but before I do that, I would like to make just 
one response to what was said earlier.
    Their comment was about Dr. Duffy's provocative comments. 
My personal feeling is that maybe you have understated the 
importance of management and size, that the management skills I 
believe are an extremely important issue in size of operations.
    First of all, I would like to--just getting back to the 
Conservation Security Act, I would like to, first of all, say 
that I believe it is the hot issue in agriculture right now, 
and I would like to talk a little about why I think that is the 
case, and, second of all, I would like to talk about why we as 
farmers should support it.
    Mr. Askew here, his organization has come out in support. 
The American Soybean Association as well as the Iowa Soybean 
Association has supported it. The National Corn Growers have 
endorsed the concept of it.
    We had a delegation there this past week. The Iowa Farm 
Bureau had a delegation there this last week. The Farm Ag 
States Group, which is a group of ag commodity groups in Iowa, 
have been discussing this issue. Carol Balvanz from cattle has 
made some inquiries trying to understand what pasture rotation 
would mean, as far as payments for pasture rotation would mean, 
what about manure management and livestock. There has been some 
inquiries.
    I understand that the EPA has asked for conversations 
looking at what this would mean environmentally, so I really 
think this is an issue that is Senator Harkin's bill, our 
Senator's bill, and I think we ought to look at it hard, and I 
personally feel supportive.
    The reasons why I think we should support it is I was in my 
FSA office yesterday, and I think the LDP on beans was $1.17. 
There are--I do not want to change the payment--the way the 
farm program is working, but there are limits to trade-altering 
payments that a farmer getting $4 for his beans but getting an 
additional 1.17 from the Federal Government, what that does to 
trade. We can do some of that. That is built in to our trade 
agreements, but there are limits to what we can do.
    In the area of conservation, there are not limits. They 
talked about a green box earlier. We need to be looking at 
other alternatives to assist farmers besides these direct 
payments that we have been doing, or maybe I should say, in 
addition to them, because I do believe there is some limits, 
which I think is going to give us some trouble down the road.
    In our environmental issue team, we have been dealing with 
impaired waters, TMDL, which is Total Maximum Daily Load, of 
either phosphorus or nitrogen in streams and who does what and 
who should do what and things like this, and we have had--the 
EPA has come--bypassed DNR in Iowa and declared hundreds of 
water bodies in Iowa as impaired waters.
    We are facing--to have to deal with this. Now, as an 
organization, we can say things like, what about the cities? 
What about the 65,000, excuse me, contractors who in the 
evening clean gas stations, lots, parking lots, things like 
this? That all goes into the storm sewers.
    If we focus upon what is wrong with everybody else and not 
with what we can do to improve our own situation, we will be 
looked at like the tobacco industry as being in denial, and I 
think what we need is some way to assist farmers to make 
cleaner water and cleaner air, but when they passed the Clean 
Water Act of 1972, there were billions and billions and 
billions of dollars spent every year for these municipalities. 
We have challenges but no money.
    Senator Harkin. Gayl, I have got to move on. We have got 
some other people here waiting.
    Ms. Hopkins. OK. My last two points are: conservation needs 
broader support--excuse me, agriculture needs broader support 
if farmers are to receive payments. The public says, ``What is 
our money being used for?''
    The last thing I would like to say is that conservation, or 
being good stewards of the land, is the right thing to do.
    Senator Harkin. Thank you.

                  STATEMENT OF HAROLD SWANSON

    Mr. Swanson. Thank you for the invitation, Senator Harkin. 
It is nice to see you again.
    Senator Harkin. Yes. For her.
    Mr. Swanson. Harold Swanson. I am retired head of the Iowa 
Western Community College ag department and have a farm and 14 
years in ag business, fertilizer, ag chemical, and grain, and 
we have--so I am a member of Ag Connect Board of Directors, 
which is trying to connect farmers retiring with the current 
operators, retirees, and I also am on the--a member of the 
National Farm and Ranch Business Management Education 
Association.
    Senator Harkin. All right.
    Mr. Swanson. Which was started in 1952, and I was one of 
the original ones that started it as part of the Minnesota Vo 
Ag Farm Management Program in Minnesota in 1952.
    The grain company offered the Minnesota Department of Ag 
Education a nice grant to start a farm management program, and 
out of 500 ag teachers who were offered these things, 15 of us 
took the challenge. I have been with it, and I have a 
tremendous collection of records, so--but that is just the 
background.
    Senator Harkin. Right.
    Mr. Swanson. Now, I am going to pick a little niche with my 
discussion today, and I will give you a copy of it. I will just 
read it so we can get it over with real fast.
    Maybe Congress can change the LDP system a little this year 
to a program that will really benefit the small farmer, instead 
of set-asides that cannot be initiated because of the time 
factor and the provisions of the 1996 farm law. The regulations 
for the operation of the LDP program have not been absolutely 
set.
    Now, I am--Based on what I have read in the regulations, I 
do not think the final--because I see there is some changes in 
the way they have set up the LDP, so I am thinking that for 
2001 some things can happen.
    This is what I am suggesting: Let us set up an LDP so the 
payments will be made available to bushels produced or not 
produced based on a formula that calculates the portion of the 
crop that a farmer would be entitled to if he was producing 
what was his share of the estimates usage based on the 
percentage of the expected crop that is calculated in July when 
the total certified acres are known and the government has made 
the estimate for the average yield and the estimated usage 
figure for 2001-2002 period and the expected carryout as of 
September 1, 2002. This system would be an additional help for 
the farmers suffering from drought and other disasters.
    Here is how it would work: The bushels that a farmer would 
be able to LDP would be based on the percentage of acres needed 
to produce the usage figure at average national yield developed 
for the crop in relationship to total acres planted.
    If the acres needed would be 85 percent of the planted 
acres, then each farmers' share would be 85 percent of his 
planted certified acres times the national average yield as his 
LDP bushels, whether he produced them or not.
    This method provides some badly needed incentives to let 
the high-yield producers recognize that they are part of the 
overproduction problem, and since there is no willingness to 
set up alternative programs for producers on marginal land who 
have little chance for profit, even with the very favorable 
prices, but contribute heavy to the oversupply, this program 
would help the small farmer.
    Senator Harkin. Thank you. I have a vague idea. What you 
are saying is you take what the total national usage would be, 
you figure the amount of crop acres that would be needed 
basically on an average basis to produce that, then you get a 
percentage of what every farmer based upon, I assume, some kind 
of crop history or something like that, that they would be 
eligible for as their percentage of that total.
    The only question I have on that: Does that not still 
provide the bigger farmers with the bigger payments, and do we 
not still get back to the same kind of rut that we are in now?
    Mr. Swanson. No. Because, first of all, you are going to be 
dealing with the average national, so this guy that has got big 
acres, big high yields, is only going to get the--his LDP on 
national--on national yield.
    Senator Harkin. OK.
    Mr. Swanson. The guy who is producing 100 bushel on some of 
the marginal land, he would get the national average times his 
acres.
    It would be a very definite payment to the marginal 
producers, which we need some help.
    [The prepared statement of Mr. Swanson can be found in the 
appendix on page 91.]
    Senator Harkin. Give me that information. I will take a 
look at it. I do not know that I understand all of it.
    I am told by Mark we only have about 30 more minutes, and 
so I am going to try to move as rapidly as I can.

    STATEMENT OF JOYCE SCHULTE, SOUTHWEST COMMUNITY COLLEGE

    Ms. Schulte. Greetings, Senator Harkin, Joyce Schulte.
    Senator Harkin. Good to see you again.
    Ms. Schulte. Thank you. I am representing community 
colleges, students, work for a TRIO program at Southwestern 
Community College.
    Part of that criteria group are low-income students, many 
of them needing food stamps. Various things stand in their way. 
Now, I love to feed the world, but I would like to feed the 
world starting at home in our colleges.
    I do not know if there is some way to connect the students' 
academic success via a TRIO program and food stamps or not.
    I am going to be real brief and stop at that in contrast to 
my normal style. Thank you, sir.
    [The prepared statement of Ms. Schulte can be found in the 
appendix on page 92.]
    Senator Harkin. Thank you very much. Food stamps TRIO 
program. Got it.

           STATEMENT OF ALAN ZELLMER, FARMER/PRODUCER

    Mr. Zellmer. Senator Harkin, my name is Alan Zellmer. I am 
Alan Zellmer.
    Senator Harkin. Spell that last name for us.
    Mr. Zellmer. Z-e-l-l-m-e-r.
    Senator Harkin. OK.
    Mr. Zellmer. I am a local farmer/producer. I guess the 
first thing we raise is kids at our place, and then it trickles 
on down to corn, soybeans, cattle.
    I am going to come at you from the issue of: I have got 
involved with a group that produces cattle for a specialty 
product. It is Wagyu cattle.
    Senator Harkin. Yes.
    Mr. Zellmer. I can agree with the 40 percent tariff.
    Senator Harkin. I am familiar with that.
    Mr. Zellmer. We ran into that 40 percent tariff, and now 
the cattle that we do raise are sold domestically here to fine 
restaurants and markets.
    Senator Harkin. You have an operation up around Perry? 
There is somebody up there producing Wagyu.
    Mr. Zellmer. That could be.
    Senator Harkin. I just know, and they are doing a good job 
of marketing.
    Mr. Zellmer. You bet. I am from Atlantic, is where I am 
from.
    Senator Harkin. Where do you market yours?
    Mr. Zellmer. Ours actually ends up in the finer restaurants 
now here in the United States. There is enough Oriental people 
that travel here and live here that they are looking for the 
product.
    Senator Harkin. Interesting.
    Mr. Zellmer. The product in Japan sells for around $64 an 
ounce, and when they come over here, we can kind of sell it to 
them at a bargain rate.
    I have worked with an investor that ventured into this, and 
there is a potential to bring a premium to just area cattle 
producers. They do not have to change anything in their 
operation other than the semen that they are actually using 
with these cattle, and where the potential top is on this, we 
do not know. We are going to let the market dictate more so 
than we do in the corn and soybean part of our operation.
    Now we started a feedlot to work into this project, and now 
actually when we started in the project, we had an engineer 
come out and tell me, what do I really need to do as far as 
manure management and things like this.
    There was some pretty basic and simple things that we had 
to manage. Now I had my DNR visit, and it is my understanding 
that the EPA was sued and, in turn, put pressure on the DNR to 
bring this Clean Water Act up to date.
    Senator Harkin. Right.
    Mr. Zellmer. I agree that there are places that we need to 
change and fix things, but we also need a lot of time and a lot 
of definition as to actually what we have to fix.
    Senator Harkin. Yes.
    Mr. Zellmer. Because just being one producer, I cannot 
really get a straight answer from anybody.
    Senator Harkin. How many head of production do you have, 
how many cattle?
    Mr. Zellmer. I work 1,600 right now.
    Senator Harkin. You are over the 1,000 cap?
    Mr. Zellmer. Right. I hate to get into all those 
abbreviations, because I have not been involved with them 
enough to know them.
    Senator Harkin. Not all of that is Wagyu?
    Mr. Zellmer. Yes.
    Senator Harkin. You have got 1,600 of Wagyu. Is that right? 
You have got a market for all of that?
    Mr. Zellmer. Yes. The thing that--I am all for Southwest 
Iowa every way, shape, or form. It does not have to be just my 
operation, because there is other area producers that are 
saying, ``I will just shut down versus comply.''
    Senator Harkin. Yes.
    Mr. Zellmer. We are looking at $100 to $150 a head per pen 
space to get up into compliance and then we have operational 
costs besides, and everything that goes in the front of those 
cattle comes off the land, and everything that goes out the 
back----
    Senator Harkin. This is one area where we cannot forget 
about our livestock people in Iowa, this is both pork and 
cattle, for our value-added products.
    We have to recognize that we have to now meet some of these 
environmental standards. We have to recognize that.
    Mr. Zellmer. Sure.
    Senator Harkin. You cannot just dump it all on the 
individual producers. Just like I am talking about my 
Conservation Security Act, I think what we have got to do is 
figure out some way--now, I am looking for suggestions on 
this--on how we help people like you to meet these things 
without, you say $150 a head. I mean you cannot do that.
    We have got to figure out some way of coming in with some 
supportive mechanism both on the national and the state level--
--
    Mr. Zellmer. Yes.
    Senator Harkin [continuing.] Here in Iowa to keep you in 
business and keep our cattle producers in business and yet meet 
these more stringent environmental standards we have to meet.
    Mr. Zellmer. I would love to be involved with it.
    Senator Harkin. I am looking for suggestions, so if you 
have got any thoughts and stuff on that, I am open for anything 
that we can start building in, as I said, both national, but 
something has got to be done at the state level too. There has 
got to be two ways on that.
    Mr. Zellmer. I will stay in touch with you on what I can 
find.
    Senator Harkin. Any suggestions you have got on that, 
because I recognize we have got to do this. We have got to help 
producers meet these standards.
    Mr. Zellmer. Sure. OK. Thank you.
    Senator Harkin. Thank you.
    Mr. Askew. We need to be on the front line of this as for 
working out systems to document what we are doing out there. 
What we are trying to do is associate--and as we talked to you 
a little bit about the CEMSA program, but we are looking at 
environmental management systems for all of agriculture, so for 
the pork producer, for the cattle producer, also to have a 
framework out there to show--to be able to assess your own--
what you are doing on your farms, to look at what practices you 
can do, and then use these before regulations come out.
    Because with production agriculture, they will be coming, 
so we have to be on the front line of this, and we will work 
with you on that to help develop those processes.
    Senator Harkin. That is good. You are right. It is coming, 
so we better get on the front end of it. Actually, we should 
have gotten on the front end of the livestock situation some 20 
years ago. We did not do that then either. Yes, go ahead.

           STATEMENT OF ERWIN AUST, SHENANDOAH, IOWA

    Mr. Aust. Thank you, Senator Harkin. Glad to have this 
opportunity. I am Erwin Aust that lives in Shenandoah, Iowa. I 
am an assistant commissioner with the Page Soil and Water 
Conservation district along with Dave Williams up there, and 
also I am a board member of the Iowa Watershed.
    Our organization supports the planning and treatment of 
conservation needs of soil and water resource development--
watershed bases, and--because of conservation needs cannot be 
often solved on the individual farm.
    We certainly support or appreciate the support you have 
given to the conservation efforts, Senator Harkin. I would like 
to address primarily the Iowa Watershed Organization's supports 
project like the PL566, Little Sioux Water Quality Project, 
Hungry Canyons, and those type of programs.
    Today I would like to primarily address the 566 program. It 
is operated in about 36 counties in Iowa, and currently there 
are projects authorized in about 22 counties.
    Funding nationally was cut in half in 1993, and that was 
primarily to shift the money in the direction--the emergency 
Midwest flood that we had in 1993 with the intent we were told 
to restore 1994, 1995, and which has never happened.
    The program in Iowa had operated by a four, five million 
dollar level. Recently they have gotten about a million dollars 
a year.
    This year only $360,000 was allocated to Iowa. Back in the 
Page district, we do have the Mill Creek watershed. It was 
receiving some pretty good funding, and there is a lot of 
interest in the county, and it was helping with the land 
treatment work and so on and helped quite a bit in terms of 
trying to relieve some of the backlog of individual farmers 
that wanted to apply practices. Mr. Williams well-documented in 
his remarks kind of the backlog of interest that exists among 
individuals.
    This program, like the Mill Creek has not received any 
funding or very little in the last several years, since the 
1993 cutback.
    To wrap it up, there is over--like over 50 projects in Iowa 
that have made a large impact on rural development, meaning 
flood control, erosion control, water supply, recreation, 
wildlife improvement needs, and that sort of thing.
    I will wrap it up there to save some time, and mainly our 
comments address supporting the existing programs and--as well 
as addressing the new aspects, and that is one area of existing 
program that is successful, like to support.
    Senator Harkin. I appreciate it. We have got, I forget, how 
many small watersheds that we have got now that over the years 
have basically filled up, and they need to be cleaned out and 
refurbished. Several thousand in the state of Iowa, if I am not 
mistaken.
    Mr. Aust. In the neighborhood of 1,500 structures in Iowa, 
and there is probably hundreds of those that are approaching a 
50-year life, and some legislation was passed a year ago to 
allow funding to help local communities restore those, and that 
is part of that package also.
    Senator Harkin. Yes. 1,187 in Iowa, and there is 2,200 that 
need immediate rehabilitation. 284 in Iowa that need immediate 
rehabilitation. Thank you.
    Mr. Aust. Thank you.
    [The prepared statement of Mr. Aust can be found in the 
appendix on page 93.]

       STATEMENT OF DAN JORGENSEN, FARMER, AUDUBON, IOWA

    Mr. Jorgensen. Senator Harkin, glad to have this 
opportunity, and please bear with me. I have never done 
anything like this before. I am Dan Jorgensen. I am a farmer 
from Audubon County. I would like to address two issues, one is 
our energy issue, and as you see from my shirt, I am a Tall 
Corn Ethanol, building a plant at Coon Rapids, Iowa, and--as a 
value-added project for agriculture.
    This is a very important project, so I think whatever help 
you can give us in value-added projects as far as in the fuels, 
I think that is very important as far as less dependence on 
foreign oil, and then we develop a better market for our own 
commodities. It is a real plus, and I have been involved in 
this, and we hope we can make an impact on our area 
economically.
    The other area I would like to address, maybe I would like 
to put this in quotes. Maybe I am one of those ``evil, large 
farmers.'' We farm 4,000 acres. There are two husband-and-wife 
teams directly involved in management and ownership of this 
farm.
    Senator Harkin. Yes.
    Mr. Jorgensen. We impact six families. We rent from I think 
eight retired farmers. We rent from two investor farmers, and 
then we own a little bit of land ourselves, so I think as we 
talk about changing this, it does have a lot of economic impact 
on Iowa and on different farms. You know, we cannot just go in 
and cut everything down and say we are only going to help out 
that 300 acres. Maybe that is not a--Maybe that is a pipe dream 
of the past to some extent.
    Our economics have gone beyond that. I do not think--You 
cannot afford a $150,000 combine on 300 acres. It is--It just 
does not work out, and so the economics have driven this. As 
Dr. Duffy said, we cannot just go in and wipe everything out. 
We have to be very careful, and hope we can make these changes, 
and hopefully we can make some improvements on this.
    The idea of the minimum wage, just that struck me as, I 
would not want to pay the people that work for me minimum wage, 
and so often minimum wage gets tied to substandard living, and 
I do not think that is what we are looking for in agriculture.
    We need to--Just like when we are developing jobs, we do 
not want those as poor jobs. We want them as good jobs. I am 
not saying Dr. Duffy's idea does not have some merit to look 
at, but that to me is a little bit of a scary possibility. As 
we look at minimum-wage jobs in our society, they cannot 
support a family, and we are about----
    Senator Harkin. That is true.
    Mr. Jorgensen [continuing.] I enjoyed the fellow's comments 
about raising kids. I just had my granddaughter here this last 
week, and I still have her tape in the car, and we need to have 
good economic stability too. We cannot just cut everything off, 
and it would be a train wreck, and we went through that in the 
1980's.
    Senator Harkin. OK.
    Mr. Jorgensen. Thanks for your time.
    Senator Harkin. Two things I would just say on that, Dan: 
First of all, one on ethanol. One of the things we are looking 
at is changing some of the tax structures. The cooperative 
building of ethanol plants is kind of what we are looking at, 
what we are seeing happening out there, but you do not get the 
kind of tax advantages that, say, a private entity would get, 
so we are trying to figure out how to change the tax structure 
to give the same tax benefits to cooperative owners as to, say, 
the bigger, privately held ones, and so I think there may be 
some changes in that regard.
    Mr. Jorgensen. That is very important, because there are 
442 member--investor members, and the bulk of those are 
producer members in this cooperative, and so that is important 
to get that--some of that help, and also if--put in a plug 
maybe for the--I do not know the number of the bill or whatever 
it is, but on the Commodity Credit Corporation's reimbursement 
to--like the increase grind or increased usage of corn and feed 
grains.
    Senator Harkin. Yea.
    Mr. Jorgensen. We hope that may be expanded or extended, 
the time period on this, because that would be a real help in 
developing value-added projects in your grains.
    Senator Harkin. Exactly. I just want to make sure, I have 
never said this, that larger farmers are evil.
    Mr. Jorgensen. No. I use that--Like I said, I put that in 
quotes.
    Senator Harkin. The only questions we are asking basically 
and from the farm policy standpoint is: Do the programs, the 
Federal programs that we have now, does it tilt the playing 
field, and if it does, do we want to do that or do we want to 
do something else? I am just sort of asking those questions.
    Mr. Jorgensen. Yes, I would have never dreamed 15 years ago 
that we would farm that number of acres. It does tilt that 
playing field, to be honest about it.
    Senator Harkin. Yes.
    Mr. Jorgensen. I have never went out and asked anybody to 
rent their farm. To some extent some of those people--We did 
rent one other farm this year, and that guy came and said, I do 
not think--I am going to rent it out now so I can start selling 
some of my equipment because I cannot replace it with new 
stuff.
    Because the economics he was farming 300 acres, and the 
economics were not that we could pay--He is 62, and he was 
going to work for us part-time, to help us out part-time, which 
we were grateful for, so there is a lot of things involved.
    I just never would have dreamed that our farm would have 
got to be that many acres either.
    Senator Harkin. Thank you very much.
    Mr. Jorgensen. Thank you very much.
    Senator Harkin. I appreciate it.

           STATEMENT OF FOX RIDGE FARMS, CARSON, IOWA

    Fox Ridge Farms. Fox Ridge Farms, Carson, Iowa. I am one of 
those 13 percent, or we are, that--of the top dollar amount on 
it. I can remember farming, and I was in it when it was all 
organic. I have been around that long.
    As I listened here to all the discussion, it is all 
economics. Our operation, which is cattle and hogs, corn and 
soybeans, and alfalfa on it, we do it with two boys and myself 
on it.
    I would like to say that our income is not the 55 percent 
that we get from the government. There is evidently somebody 
getting a lot of money that we are not getting from the 
government, but I want to reiterate, we have had a livestock 
operation that has been very profitable, up until a few years 
ago. We dropped the hog operation, approximately 4,000 head at 
one time, because of the environmental people and things like 
this and cost, what we have to do to keep the operation going.
    Two weeks ago we sold our last cattle. Well, we got one 
head left, last cattle, on it, and we--in farming it seems like 
we have to deal with many government agencies on it, and we are 
getting to the point that we do not feel like we want to fight 
it anymore. We have to spend so much money to keep this 
operation going.
    We have personally put out--and we have terraced all of our 
ground and put out approximately $120,000 of our own money on 
it to do this in order to farm.
    Now in order to raise cattle, we are going to have to spend 
a lot more money, and at my age and my boys' age, I do not feel 
that we want to do this. This is--all these government agencies 
is going to close down many of the livestock organizations in 
this state, and it already has in the hog operation, and it is 
going to do it in the cattle operation on it.
    I would like to see, and I think the answer to your 
problems in agriculture is the overseas market. We do not have 
it.
    Like when Russia invaded Afghanistan and Carter shut down 
shipping agriculture products over, that cost me a lot of money 
when he done that, because I had a lot of beans on hand which 
was going to be shipped on it. You know, I would like to see 
what they can do to get our products overseas, and I do not 
know how you are going to do it, because their cost of 
operation is much cheaper than ours, and I think we are pretty 
efficient too on it. Thank you.
    Senator Harkin. Thank you very much. Appreciate that. Yes, 
sir?

  STATEMENT OF ROD BENTLEY, PRESIDENT OF POTTAWATTAMIE COUNTY 
                    CATTLEMEN'S ASSOCIATION

    Mr. Bentley. Hello. My name is Rod Bentley. I currently 
serve as president of the Pottawattamie County Cattlemen's 
Association, and on the pollution thing, we are very concerned 
about clean water. We want our kids and grandkids to have clean 
water.
    Senator Harkin. Sure.
    Mr. Bentley. The zero run-off 100 percent containment thing 
for most of us is going to make it very financially difficult 
to stay in business, as some of the other guys have said.
    We think filtration, sediment control and filtration, would 
be a viable project. We need more engineers to help design 
things.
    Senator Harkin. Yes.
    Mr. Bentley. That is----
    Senator Harkin. You are saying that the zero tolerance is 
going to be detrimental for you?
    Mr. Bentley [continuing.] It will put probably 90 percent 
of the cattle feeders out of business.
    Senator Harkin. Again, what I am looking for is--I am not 
certain I can overcome that, but what I am looking for is: How 
do we provide the necessary support?
    Because obviously it is a societal benefit. If we are going 
to start the project, everybody benefits, so why should the 
burden just be on you? Why should we all help in some ways to 
help build these structures or tanks or lagoons or whatever you 
need and to help support the proper application of that on land 
as a fertilizer?
    Mr. Bentley. Exactly.
    Senator Harkin. That is what we are trying to do, so if 
there is any advice you have on that or any ideas, I am looking 
for it, OK?
    Mr. Bentley. Well, I think filtration----
    Senator Harkin. Well, what we are talking about is better 
filtration strips and buffer strips and things like that, sure.
    Mr. Bentley [continuing.] Yes. The 100 percent containment 
thing is just you are going to put lagoons all over the country 
that have the possibility of busting----
    Senator Harkin. Yes.
    Mr. Bentley [continuing.] Possibly causing a lot of 
trouble. Grass filter strips, those things I think are just 
something that would be a better deal. There are places where 
there is feedlots that are not where they should be. We all 
know that.
    Senator Harkin. True.
    Mr. Bentley. Some of them need to move.
    Senator Harkin. I understand.
    Mr. Bentley. It is going to cost us a lot of money. We are 
the medium size I guess, and I have a son that farms with me, 
and we want to keep farming.
    Senator Harkin. Again, we have got to take a look at 
farming animal waste. You know, I never called it ``waste'' 
when I was a kid. Anyway, we never called it that, but anyway, 
we looked upon that as a pretty valuable resource.
    Mr. Bentley. Exactly.
    Senator Harkin. With some jiggling of the System and System 
supports it could be used once again, as we did in the past.
    Mr. Bentley. Sure.
    Senator Harkin. Absolutely.
    Mr. Bentley. Thank you.
    Senator Harkin. Thank you. Yes, sir? This is it. OK.

            STATEMENT OF RON BROWNLEE, ADAIR COUNTY

    Mr. Brownlee. I am Ron Brownlee from Adair County. I am on 
the Soil Conservation Board, and I am also a farmer in Adair 
County. One thing I think we forgot here is health care for 
farmers. I know in the last few years mine has nearly tripled. 
Mine went up 32 percent last year. That is a lot of increase. 
That is one thing I think we need to look at.
    Another thing, your conservation act. I have been excited 
about that ever since I heard about it. I was at the summit 
meeting in Ames last year, and I think this is the right 
direction for family farms to go, to give the money to the 
people that are doing the good job out here instead of 
rewarding the people that are causing the problem.
    Senator Harkin. Exactly.
    Mr. Brownlee. Another thing that I am concerned about is 
pasture land going into CRP. If we put pasture land into CRP, 
it has to be cropped two years, so we are encouraging people to 
raise a crop that we already are overproducing, so why are we 
doing that? If we are going to put pasture land in CRP, why do 
we not just put it into CRP? It is rough ground, probably 
should not be tilled anyway.
    Another thing is, we are not getting enough money for 
conservation. In our county, we probably--our REAP 
applications, we maybe get 5 to 10 percent of the applications 
approved because there just is not enough money for them.
    As far as value-added, I think soy diesel, our ethanol is 
the right way to go. We need to be processing more of our 
products here in our own state, instead of--we ship out 80 
percent of what we grow. We need to process it here and then 
ship it out. That would bring in employment into the state and 
would help our own state.
    Senator Harkin. Absolutely.
    Mr. Brownlee. Thank you.
    Senator Harkin. Thank you very much. You are right about 
health care issues. It did not come up here, but I hear a lot 
about it. I get a lot of letters and calls on the health care 
costs for farmers and their families. You are right about the 
pasture and the CRP.
    This is another one of the things we are looking at. We 
have for the about 34 million acres in CRP right now, and the 
authorized level is 36 million, 36 point something, but when 
the initial bill was passed, and I was involved in that in 
1985, we authorized 40 million, and it was dropped down to 36.
    There are some people pushing that the CRP thing ought to 
be raised. Again, a lot of the wildlife people and the hunters 
and that type of thing are pushing for 44 million acres of CRP, 
and I do not know.
    I am kind of thinking that may be a bit much, because maybe 
we could boost it to 34 million, up some closer to 40 million. 
I do not know. I do not know how people feel about that.

        STATEMENT OF BILL ORTNER, FARMER, DANBURY, IOWA

    Mr. Ortner. It hurts young farmers. Bill Ortner, Danbury, 
Iowa. My brother and I farm 4,000 acres, and we have two young 
sons that are trying to start farming, and our land around 
Danbury is very hilly, but we use good conservation practices. 
Our land is about all no-tilled or otherwise terraced, one or 
the other, and we have got two sons that are trying to start 
farming.
    As you talk, increasing the conservation program, it sounds 
very good to the public, but all it does is encourage outside 
investors to come in and buy our land and raises our land 
prices so we cannot start--I have got the only son here I think 
that is 20 years old that wants to farm, and I have been 
sitting here and listening to a lot of the rigamarole, and we 
have got to get back to the basics.
    We have got to be able to get young people. Mr. Duffy said 
it, we have got more farmers over 62 years old than we have got 
under 35.
    I am also a local Pioneer sales rep, and I have got 100 
customers. I lost nine customers last year. I will lose another 
ten this year.
    This thing is as serious as it was in the 1980's, and 
nobody realizes it. You can tell by my voice I am upset, 
because this is so important right now.
    What you decide in the next 5 years on this farm program, 
in my belief, will decide whether we have corporate farming in 
this country or whether we have family farms. We need--we need 
a grain reserve program so bad. Because another thing that is 
so unbelievable is that we keep trying to raise Federal crop. 
That is the wrong thing to do.
    When you raise Federal crop subsidies up and you make 85 
percent Federal crop, it lets the large farmers--I have got 
farmers in my area farming 17,000 acres, gives them the ability 
to go out and borrow the money and rent the land away from even 
us.
    I mean you are talking about 300 acre farmers. That is in 
the past. They all have full-time jobs, because Mr. Duffy said 
it: You make 20 percent return on equity. OK, an acre of corn, 
if you can produce $300 off of that is fabulous, but 20 percent 
is only $60 an acre. 300 acres is $18,000. No family can live 
on $18,000, because the man said, his health insurance went up. 
Most of our health insurance is between $5 and $10 thousand a 
year.
    I cannot believe it. We have all come here and talked, but 
we have really never said the true problem, and I would like to 
talk to you personally. I could talk a long time, or my brother 
has been calling you. Cannot think of your name.
    Mr. Moreland. John Moreland.
    Mr. Ortner. John Moreland, about once a month because we 
are so concerned, and I can see things changing so fast, and it 
is just a vital concern, but getting back to the CRP, I am 
sorry----
    Senator Harkin. What if most of that CRP was in the 
buffers?
    Mr. Ortner [continuing.] Well, that would be a good point, 
but, see, do not make it as CRP, because he has got to rent 
land. He cannot afford to buy it, so what we need is more set-
aside.
    Then--I know all of the Soybean Association, they do not 
want set-aside, but we have got to have it, because then the 
set-aside--and pay us for the set-aside to make buffer strips 
and to take the worst 10 percent of our soil out of production, 
because then he benefits from it and not the landlords. 
Otherwise, if you talk CRP, the landlord gets all the money, 
not the young person trying to rent the farm.
    Senator Harkin. Fair enough.
    Mr. Ortner. Thank you.
    Senator Harkin. I cut someone off.

         STATEMENT OF DAN MORGAN, FARMER, CORNING, IOWA

    Mr. Morgan. My name is Dan Morgan. I farm in Corning, Iowa, 
member of the Wallace Foundation for 10 years. I agree with a 
lot of what people said today. I disagree on a few things. I 
like the LDP program because it ensures me there is never going 
to be a surplus. I know 4th of July that I better have my grain 
sold because it is probably going to be cheaper.
    A few things: CRP program he is talking about, two-year 
history on CRP: I was paying $35 an acre two years ago for 
pasture. Last year it cost me 83 cents per cow/calf unit per 
day, $25 a month. That is what it figures out to.
    What they are doing in Southwest Iowa is taking the two-
years, getting it into the CRP, taking it away from myself and 
the young son I am trying to bring into farming. Exactly what 
he says. When young people--you start farming, they get the 
marginal land. The marginal land is now in CRP. What I rented 
for $35 an acre two years ago is 90 bucks an acre CRP now. No 
fool would rent it to you for that.
    Senator Harkin. Yes.
    Mr. Morgan. The second thing is: Don Stenholm the other day 
was having a hearing with the National Wheat Growers 
Association, and they said to him: ``We need more money.'' He 
says to them, ``There is no more money.'' ``If they cut the 
budget,'' he said, ``the only place that money will come from 
is Social Security and Medicare.'' I know damn good and well 
that two percent of the farmers are not going to be able to 
take on the aging population and take away their Social 
Security and Medicare. I agree with that.
    Third thing is, I think the LDP program works, but I think 
there needs to be a cap on the amount of bushels you can 
collect per year, and the reason I am saying that is because a 
year ago they had a drought in Indiana. Those guys raised 35, 
40 bushel an acre of corn some places. They do not get any LDP. 
We are raising a good crop. We get a big LDP. We need to take 
care of everybody, but we need to do it equitably.
    Senator Harkin. Make it a bushel-based program?
    Mr. Morgan. Right, exactly. The other thing is: I will seed 
down some of my land if you will give me the LDP I have had for 
the last two years.
    Senator Harkin. Yes.
    Mr. Morgan. I will not raise any corn or beans on it, and I 
will raise hay and pasture on it.
    Senator Harkin. Continue based upon what your history has 
been for the last couple, three years?
    Mr. Morgan. Right. It looks like to me it would be an 
economic incentive because you are guaranteed you are not going 
to get any of that--any more corn and soybeans from me, but if 
you will give me the average LDP. Thank you.
    Senator Harkin. I like that. That is a provocative idea.
    [Laughter.]
    They are trying to get me out of here. I have got to get to 
Spencer.

           STATEMENT OF JIM HANSON, NEW MARKET, IOWA

    Mr. Hanson. I just wanted to make one comment to the 
gentleman, concerning that. You mentioned something about the 
buffer strips. We have seen this. Buffer strips has gotten a 
lot of publicity, but in a lot of cases though we are 
reestablishing buffer strips where a few years previous were 
naturally established, but producers have come in or people 
have bought this property and stripped them out, so we are 
paying for the raping of a land literally that should not have 
happened in the first place.
    I have never been a real--It took a long time for me to be 
a proponent of CRP. I realize all the good that has come up out 
of it, but in my county, a lot of the CRP did not--where we--
this was ground that would be farmed by the young farmers, as 
the gentleman said, and what happened, it became--the landlords 
and the people instead of passing it on just kept on and saw 
the availability of utilizing this to their benefit, and you 
cannot blame them, but a lot of them potential young farmers 
have left.
    Whatever program or however we develop a program, there is 
going to be some way that someone is going to find a way to 
counteract it.
    Senator Harkin. Well, we certainly know that.
    Mr. Hanson. Excuse me, my name is Jim Hanson. I am from New 
Market, Iowa.
    Senator Harkin. Never underestimate the ingenuity of 
farmers to beat this farm program.
    [Laughter.]
    Senator Harkin. Any other concluding statements before we 
take off from any of the panelists who are here?
    Mr. Duffy. I would just like to say thank you very much for 
the opportunity. You and your colleagues have a tremendous job 
in front of you, and I agree wholeheartedly. What you decide 
here is going to decide the fate of agriculture and which 
direction we want to go, and so I wish you well and God's 
speed.
    Senator Harkin. It is a heavy load.
    Mr. Williams. We have to look at the state of Iowa, the 
individual farms, and land we are on. We have to look at 
watershed. I was talking about a small stream runs through my 
farm, and I think the biggest thing that is happening right now 
in society is that the money that we have got to put in buffer 
strips, the filter strips, and I think we can do a tremendous 
job of cleaning up that water.
    Senator Harkin. All right, Dave.
    Mr. Askew. Yes. Thank you for the opportunity to speak to 
you. I know I cannot let you go without talking about our river 
infrastructure and support for the locks and dams on the 
Mississippi, and also we have the small river on the west side 
of the state, the Missouri, which we need to make sure with the 
plans that are coming out that we have--to use sound science.
    We have to understand that and realize that those river 
systems are vital to our exports and also just to our internal 
ability to market our grain. Thank you.
    Senator Harkin. I understand.
    I am glad you brought that up. I support that 
wholeheartedly. In order for us to get our grain to the ports, 
we have got to have our river traffic. We have got to upgrade 
those locks and dams.
    Quite frankly, to those on the environmental side that are 
opposed to that, I say that is the most environmental thing 
that we can do. If we do not repair those locks and dams and 
utilize the natural flow of water to haul our grain down to New 
Orleans, it is going to require I think a couple of million 
more trucks a year up and down those highways just to carry 
that grain, and that is environmental pollution. That beats up 
our highways. That tears things up. I mean this is probably the 
most environmental benign thing that they can do.
    Ms. Frederiksen. Just a comment about adding value to our 
crops here. That is very important, and anything we can do to 
streamline things such as soy diesel or ethanol or the 
alternative energy sources I think would be a great benefit to 
make it easier to adopt those items.
    Senator Harkin. I am looking again for these like niche 
little things. If there is something that people can start 
growing grapes or something again in the Loess Hills, there 
ought to be some way to really help them to promote that. I 
mean if they can provide some income for a couple, three 
families or half a dozen, that is good. We have to look at 
things.
    Mr. Carney. Senator, I want to thank you. I guess we have 
touched on conservation, trade, market, environmental, food 
safety, biosecurity today. I realize that new markets are 
important. Everything we talked about today is important.
    Personally, I figure the environmental and the new 
regulations that are coming and trade is probably our huge, top 
priorities, but good luck and if you ever need any help, call.
    Senator Harkin. Thank you, and I appreciate all of the 
input from the different associations, the Pork Producers, the 
Farmers Union----
    Mr. Lehman. I also want to thank you for coming today, and 
I hope to encourage you to do more and more of these meetings 
around the state.
    Senator Harkin [continuing.] This is the first. We have 
another one today in Spencer. Believe me, we are going to be 
having more of these kinds of hearings. I need all the input we 
can get before we start hammering down this Farm bill.
    I thank you all, some of you coming a great distance. 
Please feel free to either e-mail me, write, call. Some of you 
said you have been calling Moreland. Any thoughts, suggestions 
you have for input on this Farm bill, please let me know.
    Again, I thank you all for being here.
    [Whereupon, at 11:35 a.m., the committee adjourned.]
      
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           HEARING ON AGRICULTURAL AND RURAL COMMUNITY ISSUES

                              ----------                              


                SATURDAY, MARCH 24, 2001, SPENCER, IOWA

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 1:35 p.m., at The 
Hotel, Spencer, Iowa, Hon. Tom Harkin presiding.
    Present or submitting a statement: Hon. Tom Harkin.

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, RANKING 
   MEMBER, COMMITTEE ON AGRICULTURAL, NUTRITION, AND FORESTRY

    Senator Harkin. Thank you all for coming here today. I 
guess I am supposed to gavel this thing to order or something 
like that. I really appreciate you being here. Can you hear in 
the back all right? If I do not see any heads nodding, I am 
going to be worried here in a second. Can you hear me in the 
back? Can you hear in the back? You cannot hear in the back. If 
you cannot hear, raise your hands.
    [Laughter.]
    Senator Harkin. It is an old joke. I do not know what we 
are going to do if we do not have any loud speakers back there 
and you cannot hear. This is not acceptable. This goes back 
quite a ways. Do you suppose there is any way of getting any 
speakers back toward the back so people can hear? Because you 
have got both of them up here. I do not want to disrupt 
everything. We have got a limited amount of time.
    Audience member. We are OK now. They have improved it a 
little bit.
    Senator Harkin. Somebody has turned it up a little bit?
    Audience member. Yes.
    Senator Harkin. If you can hear me back there, raise your 
thumb, give me a thumbs up. OK. That is good enough.
    Anyway, thank you for being here today. I guess all of us 
better just drive these things and speak into them so everybody 
can hear. We just had a great hearing, not quite this big. It 
was pretty big. I thought it was big, but this outdoes that. We 
just had one down in Lewis, Iowa at the Wallace Foundation 
Center. We had a great turnout down there and a lot of good 
suggestions, good testimony. We will do the same thing here. I 
am going to make a short opening statement and recognize some 
people. I am going to turn it to the panel, go down the list, 
ask them to make a short, concise summary of their statements. 
I might have a few questions and interaction. Then I would like 
to turn it open to the audience. We have a standing mic 
somewhere, I hope.
    Back in the center someplace there's a mic that I cannot 
see back there. You have got a roving mic. OK. Good. Then I 
will just ask you since this is an official hearing, I am going 
to make sure you state your name for the reporter who is taking 
it down. If it is a difficult name like Smith, please spell it 
out, will you?
    Let me recognize some people who are here, some public 
officials. Iowa State Senator Jack Kibbie is here. Jack, where 
are you? Senator Jack Kibbie is here.
    Iowa State Representative Marcie Frevert is here.
    Kossuth County Supervisor Don McGregor is here. Don, thank 
you for being here. Clay County Supervisor Joel Sorenson is 
here. Thank you for being here.
    Clay County Supervisor Sylvia Schoer is here. Thank you for 
being here.
    Our soil commissioner for Cherokee County, Tom Oswald, is 
here. Tom is here. Thank you for being here.
    Buena Vista County Supervisor Jim Gustafson is here. Way 
back in back. All right, Jim.
    We have Dick Drahota, rural development from Storm Lake. 
Thank you for being here, Dick. Gene Leners, treasurer of Palo 
Alto County. Gene is here someplace back there. Tom Grau who is 
deputy undersecretary of USDA. Where is Tom? Thank you for 
being here, Tom.
    Did I miss anyone? Are there any public officials here that 
somehow slipped under the radar screen? I thank all of you for 
being here. If I did miss anyone, I sincerely apologize.
    Today I am pleased to be holding two hearings of the U.S. 
Senate Committee on Agriculture, Nutrition, and Forestry, in 
Iowa. The testimony from our panelists and from the audience 
will become a part of the Committee's official hearing record. 
Your comments, ideas and recommendations will be a great help 
to my colleagues and me as we work to write new legislation and 
improve programs affecting agriculture and rural communities.
    Again, let me introduce someone else to you just to make 
sure you know who everyone is here. My chief of staff on the 
Agriculture Committee is Mark Halverson right behind me. Many 
of you have worked with him in the past. Allison Fox is also on 
my Agriculture Committee and works mostly with conservation 
issues. Let us see. Where is Claire Bowman? Claire Bowman is 
also on my Ag Committee staff and is here today. Maureen 
Wilson, I want to make sure you know Maureen. She runs all of 
my Iowa offices out of Sioux City for western Iowa. Maureen is 
here. Right back there, Maureen Wilson.
    Farm families and rural communities in Iowa and across our 
nation need some new directions. They have not shared in our 
nation's prosperity. That is clear. Although Freedom to Farm 
had its positive features, it had some serious shortcomings 
which are now obvious. We have to learn from experience and 
make the necessary improvements. We have to start by restoring 
a built-in, dependable system of farm income protection that 
does not require annual emergency appropriations.
    We must also remember that farmers are the foremost 
stewards of our Nation's natural resources for future 
generations. We should strengthen our present conservation 
programs and adopt new ones to support both farm income and 
conservation. I have authored legislation to create a new, 
wholly voluntary program of incentive payments for conservation 
practices on land in agricultural production. That approach, 
improving both farm income and conservation, I think should be 
at the heart of the next Farm bill.
    Now, to meet the challenges, the next Farm bill must 
address the broad range of farm and rural economic issues. We 
must do more to promote new income and marketingopportunities, 
whether that is through value-added processing cooperatives, 
creating new products through biotechnology, or developing a 
niche and direct marketing. I see tremendous potential for farm 
income, jobs and economic growth through clean, renewable 
energy from farms: Ethanol, biodiesel, biomass, wind power and 
even, on down the line, hydrogen for fuel cells. We must also 
ensure that agriculture markets are fair, open and competitive.
    We cannot have a healthy rural America and rural 
communities unless both the farms and the small towns are doing 
well. We must do more in the next Farm bill to revitalize 
economies and improve the quality of life in our rural 
communities. That includes support for education, health care, 
telecommunications, water supplies, transportation, as well as 
access to investment capital for rural businesses.
    That completes my opening statement. I also have a letter 
from Governor Tom Vilsack to be made part of the record. I will 
not read the whole thing. He said, I just encourage you to 
develop the next Farm bill to help farmers produce conservation 
commodities and improve their bottom line and renew the public 
commitment to agriculture. I just ask that that be made a part 
of the record in its entirety.
    [The prepared statement of Governor Vilsack can be found in 
the appendix on page 108.]
    Senator Harkin. With that, again I welcome the panel, and I 
thank many of you for coming a great distance and for more than 
one time being witnesses for the Senate Agriculture Committee. 
Some of you have been there many times before. It has always 
been valuable input from all of you, and I appreciate you being 
here. We will just go down the line.
    I will start with someone who whenever I mention his name 
in Washington, everybody knows immediately who I am talking 
about. He is Perhaps the foremost agriculture economist in the 
United States today. We are just proud to have him here in Iowa 
and at my alma mater, Iowa State. If the Iowa State women just 
do half as good against Vanderbilt tonight as Neil Harl has 
done in his lifetime, we will blow Vanderbilt away tonight. 
Neil Harl, thank you for being here.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 154.]

 STATEMENT OF NEIL E. HARL, PROFESSOR OF ECONOMICS, IOWA STATE 
                           UNIVERSITY

    Mr. Harl. Thank you, Senator. I appreciate the opportunity 
once again to be before the Senate Agriculture Committee, and I 
will try to keep my remarks brief. I am always reluctant to be 
critical of the handiwork of the U.S. Congress, but I want to--
--
    Senator Harkin. Why should you be different?
    Mr. Harl [continuing.] Make it clear that I do think that 
the 1996 Farm bill has failed spectacularly. Let me just 
quickly mention why, and let me then follow that with some 
commentary as to what I think we might want to do.
    The legistion was supposed to reduce government outlays and 
phaseout subsidies, and it has not done that. We have reached 
record levels this last Federal fiscal year, $28 billion plus. 
I'll Return to that point in just a moment. It was supposed to 
produce increased exports. It has not done so. In fact, we have 
dropped about 18 percent. It was supposed to slow the land 
clearing process in South America. Instead more land entered 
production in Brazil and Argentina in the years since 1996 than 
in the 1990 to 1996 period. It was supposed to reduce 
distortions and economic decisionmaking. It has not. It has 
produced probably greater distortions than we had prior to 
1996. One item, we are consistently producing commodities below 
the cost of production, distorting the cost of commodities as 
inputs to others. It was supposed to keep government out of 
agriculture, get government out of agriculture. Instead 
government is probably playing a greater role than ever.
    Why did it fail? First of all, it substituted an adjustment 
model based on economic pain for a model of relatively painless 
adjustment. Farmers do not like economic pain and Congress does 
not either. At the first turn, when economic pain began to be 
obvious, farmers started receiving funds from Washington so 
that the adjustment process built into the bill really did not 
operate. I do not think politically it could operate. I do not 
think in an open, democratic system we can expect an adjustment 
model based on economic pain to work very well, and it has not. 
I remember in testimony both before the Senate and the House, 
on both sides of the aisle, in 1998 they showed great 
reluctance for economic pain to be the adjustment mechanism.
    Export projections were quite unrealistic. We were told we 
were going to hit $80 billion within a few short months, and it 
dropped instead. We forgot the lessons learned about 70 years 
ago that it takes a ton of money to replace lost income when 
you have inelastic demand. Once you let commodity prices fall, 
it takes an enormous amount of funding to replace that lost 
income.
    Agriculture is the only sector expected to produce flat 
out. Deere does not. Intel does not. Boeing does not. No one 
else except for agriculture. It is vital we recognize that some 
of the voices active in debate in 1996 now profit from all-out 
production. Those who are involved in handling, shipping, 
storing, exporting and processing all like flat-out production. 
Farmers need to begin marching to a drummer they have bought 
and paid for, not a drummer bought and paid for by someone 
else. As an example, if Deere had been operating under Freedom 
to Farm principles for the last three years, there wouldn't 
have been enough parking lots to hold the equipment. You could 
have bought a new tractor for less than my dad bought his first 
John Deere B in 1946 for $1,365. Of course, Deere did not 
operate that way. They slowed down the assembly line and 
eventually shut it off when they were in overproduction.
    What is the problem? In a word, it is production. Too much. 
Technology is marching us down the road faster than we can get 
it sold. If you think back over the last 70 years, what if we 
had had no technology in agriculture since 1930? What would 
corn be worth? A lot more than it is today. Would farmers be 
better off? Probably not. Because, as the world's best economic 
citizens, they would have long ago bid it into cash rents and 
bid it into land values. Land values would be a lot higher. 
There is an interesting link there.
    We anticipate that at some point funds may not be there. 
Let me talk about our three options, Senator. The first option 
is we can go back to Congress year over year and ask for funds. 
As long as we can get funding, then we can limp by. Loans will 
stay current. Lenders will be happy. It still leaves trauma. No 
doubt about it.
    What if we get an economic downturn? We are in the early 
stages probably of one now, although there is some difference 
of view. We may not have so much money sloshing around 
Washington as we have had in the last five years. Dealing with 
that second outcome is the second option.
    Another possibility is we could encounter a shift in 
priorities. What I was hearing from the administration until 
just the last few days was maybe we should reassess funding for 
agriculture. I hope that is not the case.
    Let us assume that we cannot get the funding and funding 
declines. What is likely to happen? We would see a 
decapitalization of land values because the evidence is clear. 
We have capitalized a very substantial part of our benefits 
into land values and into cash rents. We could see--with a cold 
turkey withdrawal of funding a 50 percent decline in land 
values. That is awesome. That destabilizes lenders. It 
destabilizes the entire rural community. It sucks a lot of 
equity out of the sector. I do not know of anyone in or out of 
Washington who wants to preside over that kind of an outcome. 
We are very vulnerable. We have become hooked on payments. That 
is a dangerous situation to be in. The farther we go, I fear 
the more the danger. Because we are building up larger and 
larger expenditures. The second option is one that would be 
very painful. If we can get the funding, which is No. 1, then 
start suffering a reduction, No. 2.
    No. 3, begin a shift toward less dependence on subsidies 
and modest efforts in other directions. Let me mention, first 
of all, an emphasis on conservation. I commend you, Senator, 
for the conservation security program. That is one of the 
bright spots. I am supportive of CRP expansion. I would support 
40 million acres. I would even support 45 million acres. That 
in conjunction with your program is an important part of this.
    Second, I really believe firmly that we need to return 
authority to the secretary of agriculture that was swept away 
in the brief euphoria of 1996. I would specifically mention the 
farmer-owned commodity reserve. It worked better than we give 
it credit for. It could work even better if it were fine-tuned. 
I do believe that is one important element in addition to 
emphasis on conservation.
    No. 2 also, in terms of authority of the secretary, I think 
we need to have some modest effort, on a market-oriented basis, 
to begin to try deal with our oversupply in years when our 
weather is so very good, as it has been. There are a number of 
good proposals. I have reviewed a large number. I like the so-
called flexible fallow program because it is market-oriented. 
It leaves the decision with the farmer. Each producer looks at 
their costs and bid in their land to a retirement program. It 
is likely to be more attractive in the periphery than it would 
be in the core area of production. That is what we should do 
rationally. I like that, and there are some other possibilities 
as well.
    We should also focus on the structural transformation of 
agriculture. I have circulated today copies of a paper I am 
giving next Tuesday at a seminar at the National Press Club. I 
will have the pleasure, Senator, of introducing you at that 
event. We really need to look very closely in addition to the 
traditional side of farm policy to start thinking about this 
structural transformation of agriculture, what I call the 
deadly combination of concentration in input supply, output 
processing and output handling, coupled with vertical 
integration from the top down. I consider that to be a deadly, 
deadly, deadly situation.
    We should do what is necessary to assure meaningful, 
competitive options for producers. For if you do not have 
meaningful, competitive options as a producer, you are going to 
get squeezed and you are going to end up being a serf. I do not 
use that term just to be inflammatory, but we have enough 
experience in the broiler industry to know where we are headed 
unless something is done. I would put a high priority on trying 
to maintain meaningful, competitive options. If you come to the 
end of a 5-year contract to produce hogs in Iowa and you do not 
like the replacement contract, you say, ``I cannot live on 
that''. Sorry. That is the best we are doing this year. You 
look around. If the nearest competitive option is 900 miles 
away and there is local dominance by the packer, then you know 
what is going to happen with the disparate bargaining power you 
have. I really would emphasize that.
    Let me just mention one other thing and then I will close. 
Senator, I think we need to start thinking about a global food 
and agriculture policy. We are in roughly the stage we were 
about 70 years ago when we were arguing, is there a place for a 
national forum policy? We went through the 1920's, a painful 
decade. We argued, is there any role for the Federal 
Government? The decision was, no, there is not really a role 
for the Federal Government in forum policy. We since have 
decided there is, and we operate under that assumption today. 
We are about the same position in terms of a global policy.
    Let me mention some of the components in a global food and 
agriculture policy. Leading the list is boosting Third World 
economic development. That is the last frontier for increasing 
food demand. The potential is awesome. I do not hear voices 
supporting Third World development where there could be a 
genuine increase in the demand for food as their incomes rise. 
There is almost universal support for that.
    Second is food safety. We are probably going through the 
period of greatest concern in my lifetime about food safety. 
This should be a front burner topic as part of a global food 
and agriculture policy.
    Food security is another one. We have not known hunger in 
our lifetime in this country, but that is not true elsewhere in 
the world. We need to assure people that there will be food 
security and that we will take the necessary steps. They still 
remember the 1973 embargo under the Nixon administration.
    Equitable sharing of germ plasm is another possible feature 
of a global food and agriculture policy. There is a lot of 
worry about that, especially in the Third World countries and 
in the tropics. Trade obviously must be a part of a global food 
and agriculture policy.
    Finally, inventory management. If we have to do something 
on the downside, then we should have commitments that they will 
do likewise. I do not believe, however, that what we do 
modestly on the downside has very much to do with South 
America. I honestly believe that there is no empirical evidence 
to support the assertion that modest efforts on the downside 
induce land clearing in Brazil. As said earlier, we have 
actually had more land entering production since 1996 in those 
countries than we had in the period 1990 to 1996.
    I thank you for the opportunity to appear. I would be happy 
to take questions down the road. Thank you.
    [The prepared statement of Mr. Harl can be found in the 
appendix on page 155.]
    Senator Harkin. Thank you very much, Dr. Harl. As usual, a 
very excellent statement.
    Senator Harkin. Next we turn to Joan Blundall who is the 
executive director of The Seasons Center for Community Health 
in Spencer. Joan.

 STATEMENT OF JOAN BLUNDALL, EXECUTIVE DIRECTOR OF THE SEASONS 
               CENTER FOR COMMUNITY MENTAL HEALTH

    Ms. Blundall. Thank you. I appreciate the opportunity to 
present testimony to you today. Frankly, if we had a farm bill 
that was working, I would not be at this table today. The 
things that I will report on are things that usually are not 
discussed in meetings relating to agricultural policy, but they 
are critical because what happens with agriculture policy 
ultimately comes back and impacts every farm and rural family 
in Iowa. I am not pleased to report that as executive director 
of Seasons Center for Community Mental Health in this corner of 
Iowa we have a 17.3 percent suicide rate which is six points 
higher than the national average as of a year ago. This year it 
will be even higher.
    Senator Harkin. Say that again How much was that, Joan?
    Ms. Blundall. 17.3. That is--and the national average is 
11.2. Suicide is just another indicator of other underlying 
mental health problems. At Seasons Center for Community Mental 
Health every day we hear scenarios from families where the 
consequence that the way that we live in rural America is not 
working for families.
    It was not too long ago that an honor student was referred 
by her school. At 17 she was suicidal, was unresponsive when 
the therapist asked questions until the therapist said, I hear 
your father is a farmer. Then the girl broke down about how 
difficult things had been within the family for years. We were 
able to avoid hospitalization by giving sample drugs and 
counseling. The family had no ability to pay for their 
services, did not fit into any category for services. The 
farmer sold the family antique china cabinet to pay for 
services. I wish he had not paid for services.
    We had a child this week at the age of 14 who was--who came 
in suicidal. The bills to take care of this child will be $200 
per week between medication, visits to the psychiatrist and 
therapy appointments. The family was ineligible for the State 
Medicaid program. They were $12 over the limit for state-
supported insurance program, and there is no mechanism to 
assist them. The family has decided to drop out of treatment 
and just seek services from the psychiatrist and get 
medication. This family unfortunately is in a situation where 
the choices that they have are either to give up the job in the 
grocery store, which is necessary income for the family, 
divorce or play Russian roulette with which part of medical 
care they can afford at the time. The categories we have to 
help farm families with different types of assistance are based 
on urban models. They do not fit the realities of our people.
    We have had a 12 percent increase in service as well as a 
25 percent increase in emergency calls. On average we have 140 
emergency calls a month for a population base of 108,000 
people. We class emergencies as a call where the individual is 
at risk to themselves or another person. The state hotline has 
also experienced an increase in mental health calls though they 
may not be classified as emergency calls.
    The families who seek services at Seasons often seek them 
for problems of marital discord. What we found when the family 
comes in, the family is a healthy family, but one of the 
members is severely depressed. If we can treat the depression, 
the family can remain whole. Our greatest increase in services 
in the area is between 13- and 15-year-olds. Children are the 
symptom bearers. Mental health concerns that are not taken care 
of at this age will crop up later on. We are creating an 
inventory of expenses for the future related to human costs.
    At a meeting just a week ago here in Spencer sponsored 
through a Federal program that I think is very effective we had 
well over 100 farm families attend. One of the things that is 
of major concern to me and something that I would not have 
predicted, in the survey that was given to the families we 
found that the major concern they had in one of the survey 
categories which was stress. I would have predicted that as 
being first. The second concern area for adults was mental 
health problems Farm families and rural people do not admit to 
mental health problems. It does not fit our culture. It does 
not fit with the realities that we have about stigmatization of 
care. This says to me that it is a red flag that we need more 
and more help. For children the health concern that was 
greatest had to do first with abuse, and second it had to do 
with lack of insurance or coverage for health care.
    If we look at what we can do about the situation and even 
if we can create a farm policy that is going to lead us to the 
stability that Dr. Harl talked about, we have a period of time 
where folks are hurting that are going to call for immediate 
attention. One of the things that we have to consider is what 
the consequences have been of not having cost-based 
reimbursement for mental health services as is done in rural 
health clinics. We have almost been crippled--and I say almost 
because we will not be crippled--in our response to the needs 
of our rural families in this part of Iowa. We have almost been 
crippled because of the adjustments that we have had to make 
because of the inadequate financial support for Medicare and 
Medicaid population. In a 14 county area we can document that 
we had to make $467,158.14 worth of adjustments because income 
from Medicaid and Medicare and the waiver program were 
inadequate. We would have been able to serve everyone who had a 
problem and do a lot of prevention if the basis was there.
    Second, I think that some of the requirements that are 
necessary regarding having physicians present in a clinic 
create barriers to access to care. We are in a health shortage 
area. We do not have those professionals there, and, therefore, 
we can get severe waiting periods. Tax relief and loan 
repayment for physicians who go through the national service 
corps can be helpful. We do not have enough psychiatrists and 
mental health professionals in the state of Iowa to assist with 
the needs that are coming. Rural health network grants and 
outreach grants have been a lifeblood in our being able to 
respond even though we do not have resources. I hope that 
continuation of these programs is something that can be worked 
toward. We need that kind of basis if we are going to be able 
to respond to the emergent needs that are coming now.
    Thank you very much.
    [The prepared statement of Ms. Blundall can be found in the 
appendix on page 175.]
    Senator Harkin. Thank you very much, Joan, for an excellent 
statement and rundown on what's happening here.
    Senator Harkin. Now we have Don Mason, president-elect of 
the Iowa Corn Growers Association. Don.

   STATEMENT OF DON MASON, PRESIDENT-ELECT OF THE IOWA CORN 
                      GROWERS ASSOCIATION

    Mr. Mason. Good afternoon. Thank you, Mr. Chairman, for 
offering my organization this opportunity to testify in front 
of your committee to present our views on the direction of 
American farm policy. Again, my name is Don Mason. As you well 
know, I farm about 800 acres of corn and soybeans about 45 
minutes south of here in the little town of Nemaha. In my spare 
time my partner and I also raise about 5 to 6,000 head of hogs 
per year. I am the president-elect of the Iowa Corn Growers 
Association, a farm organization that represents over 6,000 
growers in Iowa. I am a former Peace Corps volunteer. I worked 
for four years in South America and have seen a good share of 
the world. When I came back to Iowa--as soon as I got back to 
Iowa, I seized the opportunity to get my hands into the Iowa 
soil and work the soil. It is my goal in the position that I am 
to make sure the young men and women in Iowa, my potential 
replacements, if you will, have the same opportunity to get 
their hands into Iowa soil and work the land.
    I am reminded of a comment I heard some time ago with 
regard to farm policy that I think is very applicable in this 
situation. A former secretary of agriculture asked a group of 
farmers what direction they hoped Congress would go with the 
Farm bill. A farmer stood up and said, Mr. Secretary, I would 
like you folks to work together to create a farm bill that will 
allow me to thrive rather than just survive. That is very aptly 
put, Senator Harkin. I would sure like to see a program that 
encourages Iowa's farmers to thrive, not just to survive.
    I believe that the process that you, Chairman Harkin, and 
your counterparts in the House have laid out and have embarked 
on will bring all commodity groups to the table to have some 
fruitful and honest discussions of where we go next.
    Last year U.S. farmers experienced the lowest corn prices 
in more than a decade, the lowest wheat prices in 8 years, the 
lowest soybean prices in nearly 30 years, and the steepest 
decline in milk prices in history. Just two and a half years 
ago as a pork producer, I saw the lowest hog prices since the 
depression years.
    Why is the farm economy in crisis? Can you lay the blame 
entirely on the Federal Agriculture Improvement Act and Reform 
of 1996? Probably not. In large part the crisis is being fueled 
by four consecutive years of record global grain production and 
combined with a weak export demand, both of which are beyond 
the scope of the 1996 Act. U.S. ag exports are projected to be 
lower again this fiscal year after reaching a record high of 
nearly 60 billion in fiscal year 1996. Large global production, 
the Asian and Russian economic crises, and a strengthening 
dollar have all contributed to a weakening of those exports.
    We do support some of the underlying principles of the 1996 
Farm bill. We like the ability to plant what we choose and what 
the market demands, to let the market help us make decisions on 
the farm rather than Washington bureaucrats.
    A more appropriate question is: Is the 1996 act doing or is 
it capable of doing all that farm policy could and should do to 
help deal with the problems we face now and to help with 
recovery? Clearly the answer to that is no.
    Now, I will not delineate all of the supplemental emergency 
titles that Congress has had to enact since passage of the 1996 
bill except to comment on a fundamental shift that we find 
quite troubling, and that is the amount of our net farm income 
that comes directly from the government. Dr. Harl has already 
alluded to this. Our chart, shows very graphically the amount 
of government assistance as a percentage of U.S. net farm 
income. It has risen dramatically over the last four years. If 
you talk to most farmers, certainly not just corn growers, they 
will tell you that we would rather make our income from the 
market and not from the government.
    Having said that, I would like to quickly summarize our 
vision for agricultural policy. Our discussion of farm policy 
is guided by eight fundamental principles: First, that 
agricultural policy should not artificially impact land values 
and stimulate overproduction around the world.
    The Federal Government should not and cannot guarantee a 
profit, but it should help producers manage risk.
    Ag policy should continue and expand environmental programs 
such as CRP. Payments for conservation practices should be 
fully supported and liberally funded.
    Policies should promote value-added processing of 
commodities--example, ethanol production, which we have got 
quite a bit of going on in Iowa, particularly where the value-
added is captured by farmers. Just an aside here, I would 
mention that in efforts to promote value-added projects by 
farmers we have to be careful not to penalize farmers because 
the value-added enterprise that they develop happens to have 
the wrong legal structure or happens to be a few million 
gallons of ethanol too big or something like that. Let us be 
careful in developing programs.
    Policies should retain the planting flexible of Freedom to 
Farm.
    Policies should make a commitment to reducing trade 
barriers and sanctions. As the Senator well knows, I have spent 
some time lobbying for improved relationships with Cuba and 
trading relations with Cuba and so on. We made some ground, 
headway last year. I would say that we have got to remain 
vigilant so that the intent of that legislation is carried out 
and that we do not slam that door shut again.
    Policies should be directed to improving our infrastructure 
such as upgrading the lock and dam system on the Mississippi 
River.
    Finally, policies should support research, development and 
marketing programs for commodities.
    After weighing all of these needs and concerns including 
addressing the need for a safety net to deal with price 
downturns and disasters, we also believe that an integral 
component of the new Farm bill should be some kind of a system 
of counter-cyclical payments. Our group is currently 
considering a proposal to create such a payment, and we are 
hopeful that our national president will be able to present the 
National Corn Growers Association's findings on this proposal 
to the House Ag Committee and, of course, to this committee as 
well by the end of April. We have noted with great interest a 
lot of proposals out there, and we look forward to presenting a 
very novel approach to counter-cyclical payments in the very 
near future.
    The Iowa Corn Growers Association believes that any reform 
initiatives should promote conservation. We also see 
considerable promise in the Conservation Security Act. We think 
it is a great effort. We are committed to the voluntary nature 
of conservation programs, and we applaud your efforts to reward 
producers for the conservation practices that they have 
undertaken or intend to undertake on their own initiative.
    In trade policy we also believe that we should continue our 
efforts to eliminate trade barriers, to honor our commitments 
to WTO negotiations. Therefore, we oppose policies that would 
continue to directly interfere with our WTO obligations and 
stimulate overproduction.
    In conclusion, given various proposals presented by farm 
organizations to address the problems of the farm economy, we 
understand that it is going to be a little bit difficult and it 
is going to be quite a job to reach consensus on a farm bill. I 
remain hopeful that we can do that. To paraphrase Robert Frost, 
we have miles to go before we sleep. I am also hopeful that a 
farm bill process continues to be conducted in such a way as to 
promote a very thoughtful dialog about where we need to go 
next.
    Senator Harkin, I look forward to working with you to 
define proposals in a farm bill that will help Iowa's farmers 
to thrive and not just survive. I commend your work on this 
committee, and I appreciate this opportunity to express the 
Iowa Corn Growers Association's views. I will be happy to 
answer any questions that you might have.
    [The prepared statement of Mr. Mason can be found in the 
appendix on page 178.]
    Senator Harkin. Don, thank you very much for a very strong 
and forthright statement. I appreciate it very much.
    Senator Harkin. Next we turn to Mark Hamilton with 
Positively Iowa. Mark is also the publisher of the Times-
Citizens newspapers of Iowa Falls, Iowa, and he is secretary/
treasurer of Positively Iowa.


          STATEMENT OF MARK HAMILTON, POSITIVELY IOWA

    Mr. Hamilton. Thank you, Senator. It is an honor to be here 
today. I want to discuss a serious threat to agriculture's 
future and to Iowa's future that goes well beyond farming.
    Rural Iowa as a whole is dying. There is a relentless 
geographic cleansing that is going on in more than half of Iowa 
that not only threatens the existence of communities, but also 
endangers Iowa cities and farming as an industry.
    Demographic trends tell us that mathematically the rural 
Iowa population base cannot sustain itself.
    The farming industry and Iowa cities seriously 
underestimate the damage to their interests if rural 
communities are allowed to decline. In agriculture, where off-
farm income is becoming a more necessary component to financial 
success, rural nonagricultural jobs are becoming fewer and 
further from the farm. Cities, which sometimes view rural 
communities as unworthy competitors for development resources, 
fail to recognize the traditional source of over half of their 
growing labor needs.
    Clearly, the demographics of the existing indigenous rural 
population dictate depopulation. A resettling of rural Iowa 
must occur. The question is under what set of policies and 
goals will that resettlement take place. The current policy 
record has produced a low-skill, low-wage resettlement result--
jobs our own state college graduates do not find acceptable. 
Different initiatives can drive a more attractive and more 
acceptable route to resettlement.
    I have four suggestions I would like to briefly bring to 
your attention.
    No. 1, we need a support system for competent professional 
developers at the local level.
    I submit that the National Main Street and Main Street Iowa 
model has been, by far, the most effective program for rural 
Iowa communities that I have seen in the last 20 years. It 
saved downtown Iowa Falls and has saved many other Iowa 
downtowns as well.
    The model requires local financial and human commitment and 
leverages that with State and Federal training, expertise and 
matching financial support. It also requires the local 
communities to follow tested development models if they want to 
participate. I suggest you look to that model in the area of 
rural economic development.
    No. 2, when we talk about rural problems, we often hear 
about rural poverty. What is more crucial to this discussion is 
the staggering level of rural wealth. Sixty percent of Iowa 
farm land is debt-free. That translates to $35 billion in 
unencumbered assets. There must be incentives to move just a 
small portion of those assets into a pooled, risk-shared system 
to resettle rural Iowa with good high-skilled jobs. You need 
financial and tax experts to take a look at this. I am 
certainly no expert. Local banks are required to invest locally 
through the Community Reinvestment Act. Why not farmers as 
well?
    We offer farmers incentives to treat their land in the 
public interest. Why not expand that concept to the use of 
their government-created wealth for the greater public good?
    No. 3, one of the most difficult hurdles for local 
communities is to overcome the 150-year-old definition of 
community boundaries that were made for a horse and buggy 
economy. The state of Iowa and its neighboring states may 
suffer in much the same way. Regional coordination of state and 
Federal laws and regulations could be improved among the north 
central states in a number of areas. A joint effort among 
neighboring states pointing to a reduction of jurisdictional 
barriers would be productive and worthwhile for rural 
revitalization. We ask communities to look beyond their 
boundaries for improved alliances and economies of scale. The 
states in the region should do the same thing.
    Northern Great Plains, Incorporated, a five-state regional 
nonprofit rural development organization, which I believe, 
Senator Harkin, you were instrumental in creating back in 1994, 
is bringing out recommendations on such a project next week I 
think it will be worthy of serious Congressional consideration.
    No. 4, how do you coordinate a sensible, efficient approach 
to resettlement of rural Iowa? This is where I think real, 
effective, affordable progress can be made immediately. Our 
organization, Positively Iowa, has led a private sector, grass-
roots issue development process for the last 6 years.
    Our single goal now is the creation of a Center for 
Community Vitality for Iowa. The Iowa 2010 Strategic Planning 
Council proposed this idea. Iowa State University Extension and 
the College of Agriculture have endorsed the concept. The 
center can be modeled after the Leopold Center for Sustainable 
Agriculture. It would be unique in that rural leadership that 
is actually working in the rural development trenches will 
guide it in concert with existing academic and development 
organizations.
    I am suggesting a decision making body that might be called 
the Rural Regents. It could direct and coordinate rural 
research and communication and really offer rural areas the 
information and resources needed to make better decisions as 
they chart their own routes to diversification beyond 
agriculture.
    This center could lead research, dialog and deployment of 
resources to make better and more coordinated decisions. I 
believe an appropriation of no more than $1,000,000 could 
establish this center The Iowa legislature is currently 
considering a resolution of support. I hope you will give this 
final recommendation your careful consideration.
    The job of bringing back rural Iowa gets harder with each 
passing day. The Center for Community Vitality is an idea whose 
time has come today. Thank you for your consideration.
    [The prepared statement of Mr. Hamilton can be found in the 
appendix on page 182.]
    Senator Harkin. Well, Mark, thank you very much. That was 
excellent. We will get back to that. I have got some questions 
for you on this one.
    Senator Harkin. Next we will go to Duane Sand, who is with 
the Iowa Natural Heritage Foundation of Des Moines.

 STATEMENT OF DUANE SAND, IOWA NATURAL HERITAGE FOUNDATION OF 
                           DES MOINES

    Mr. Sand. Thank you, Senator Harkin, especially for this 
invitation to speak about conservation needs and farm policy. 
We are grateful for your long history of conservation 
leadership, Senator. We hope the Ag Committee will work with 
you to better balance conservation programs and farm subsidies 
in the next Farm bill. We ask the committee to address both 
needs in the same bill.
    Last fiscal year Federal farm support payments were about 
ten times greater than USDA conservation payments. Farm 
subsidies enable the cultivation of some highly erodible lands, 
flood plains and grasslands that would not be cultivated in the 
absence of subsidies. Congress and USDA should do more to 
prevent and mitigate subsidized environmental degradation.
    We strongly endorse the Conservation Security Act as a 
means to help balance conservation and farm support. Senator, 
your sponsorship, leadership and staff support for the 
Conservation Security Act is greatly appreciated.
    Farmers and taxpayers can get more benefit from farm policy 
if CSA is enacted. The 1996 Farm bill did little to correct 
unsustainable farmland uses. Billions of dollars in production 
subsidies only encourages more cheap grain. CSA can help 
farmers transition to sustainable land uses and conservation 
practices. Farm policy can buy soil, water, air and wildlife 
benefits in addition to food security.
    We think CSA has three major improvements for farmers. 
First, the public pays more of the farmers' cost of providing 
conservation benefits. Too many farmers cannot afford to do 
conservation. The public should pay a hundred percent of real 
costs of many practices.
    Second, it can apply to all agricultural lands. Stewards of 
the land are eligible, and a history of environmental abuse is 
not needed to make the land eligible for incentives.
    Third, it is readily available and well funded. 
Conservation payments will become as accessible and dependable 
as farm subsidy payments.
    We also think CSA has four major advantages over current 
farm policy. First, conservation payments are not considered 
distorting of free trade and are not subject to the subsidy 
limits set by World Trade Organization.
    Second, more producers will voluntarily sign up, thus 
agreeing to the conservation compliance requirements for 
wetlands and highly erodible lands. By the way, Senator, we 
especially appreciate your efforts to strengthen conservation 
compliance and Swampbuster by restoring the ties to crop 
insurance and revenue assurance. Senate support is even more 
important now because of the recent Supreme Court ruling on 
Section 404 wetland regulations.
    Third, there will be more urban support for farm programs 
because CSA will benefit the environment in large parts of the 
Nation that historically have not participated in farm 
subsidies.
    Fourth, CSA is a legitimate alternative to the Freedom to 
Farm promise that farmers would transition to market prices and 
farm subsidies would end in 2002.
    CSA is a sustainable agriculture transition program that 
can provide help if Congress no longer supports market 
transition payments.
    I will take a couple minutes to give an example what CSA 
can do for Iowa. The map on display is the watershed for the 
Iowa Great Lakes complex. This 62,000-acre watershed which is 
partially in Minnesota provides drinking water for several 
thousand residents, provides recreation for roughly one million 
visitors annually. This area has growing small communities 
because of high quality natural resources. It shows that water 
quality contributes to rural development because people move to 
attractive recreation areas.
    Agricultural runoff is a great concern to local citizens 
and their water utility managers. Sediment, phosphorous, 
pesticides, and microbiological contaminant problems require 
much more work for water protection. Best management practices 
and wetland restorations to filter farm pollutants are greatly 
needed to prevent lake pollution.
    Phase one incentives under CSA would greatly expand 
nutrient management, manure management, integrated pest 
management, and conservation tillage practices on the 37,000 
acres of cropland in the watershed, which is gold in color on 
that map.
    Phase two incentives would help adjust land use on targeted 
soils. It would pay for buffer strips, cover crops, 
conservation crop rotation, establishment of pastureland, or 
for the restoration of wetland prairie or other wildlife 
habitat. The small dark blue spots and lines are areas that 
deserve those kinds of land use changes in order to protect the 
lakes which are the large blue areas.
    Phase three incentives would help pay for on-farm research, 
demonstration, and establishment of whole farm conservation 
systems. Such systems might include organic farming 
transitions, the building of soil quality through carbon 
sequestration, better manure management using alternative 
livestock systems, the control of invasive exotic species that 
affect wetlands or natural areas, and the comprehensive 
pollution prevention for farmsteads and feedlots.
    Farm conservation programs are now used in the watershed, 
but progress is still too slow. The Conservation Reserve 
Program, the Wetland Reserve Program, the Environmental Quality 
Incentive Program each make important contributions to this 
watershed and deserve much greater Federal support. However, a 
Conservation Security Act is needed to supplement these 
efforts. CSA creates the means for serious planning and serious 
funding to support sustainable systems on working farms.
    We urge the Senate Ag Committee to authorize CSA to enable 
major new spending for the conservation of America's natural 
resources.
    Thank you for the chance to comment.
    [The prepared statement of Mr. Sand can be found in the 
appendix on page 193.]
    Senator Harkin. Duane, thank you very much for giving me a 
good rundown on the CSA. That is pretty good.
    Senator Harkin. Now we turn to Phil Sundblad with the Iowa 
Farm Bureau Federation from Albert City, Iowa. Phil.

    STATEMENT OF PHIL SUNDBLAD, IOWA FARM BUREAU FEDERATION

    Mr. Sundblad. Thank you, Senator Harkin. As you said, my 
name is Phil Sundblad. I live near Albert City with my wife, 
Brenda, and our two children. I farm with my father. We have 
about a thousand acres of corn and soybeans. I appreciate the 
opportunity to be here today on behalf of 155,000--plus members 
of the Iowa Farm Bureau.
    Farm Bureau members from across the country debated the 
future of farm policy at our annual meeting in January. Based 
on that debate Farm Bureau supports maintaining the basic 
concepts of the 1996 FAIR Act including direct payment program 
and planting flexibility. In addition, we are seeking an 
additional $12 billion to accomplish our goals within the farm 
program of an improved safety net, expanded conservation 
programs and more funding for trade promotion activities.
    We are very concerned about the approach taken by the House 
Budget Committee to provide this funding. The budget resolution 
provides for additional money for farm program, but makes it 
available contingent on passage of the Farm bill by July 11. 
The next Farm bill will have long-term implications for the 
future economic health of agriculture as well as our rural 
communities. Good policy takes time to develop. If this trigger 
is maintained in the budgeting process, it is likely that only 
the commodity titles will be addressed.
    The Farm bill is about more than program crops. It is about 
trade, conservation, rural economic development, risk 
management and credit. The program crops comprise only 22 
percent of the gross cash receipts in agriculture. A farm bill 
that addresses only those program commodities ignores the 
majority of agriculture. We cannot support this approach. We 
urge the Senate to provide this funding without a contingency 
to ensure adequate time for debate on a farm bill that includes 
all titles, not just commodity titles.
    Farm Bureau's proposal for the next Farm bill includes 
these components: The next Farm bill should be WTO compliant. 
Our participation in the World Trade Organization's agreement 
on agriculture is critical to allow our producers access to 
foreign markets. Ninety six percent of the world's consumers 
live outside the United States. We cannot afford to shut the 
door on those markets.
    We support continuation of a direct payment program based 
on current payment rates and base and yield calculations We ask 
that oilseeds be added as a program crop, making permanent the 
assistance that Congress has provided over the past 2 years for 
oilseed producers.
    Rebalancing loan rates to be in historical alignment with 
the soybean loan rate. In addition, we support flexibility in 
the loan deficiency payment program to improve its usefulness 
to producers as a marketing tool.
    Implement a counter-cyclical income assistance program to 
provide an additional safety net feature for producers.
    Conservation programs should be expanded in the Farm bill. 
Producers are facing increased pressures from Federal 
regulatory programs such as the EPA's animal feeding operation 
rules, water quality standards and total maximum daily loads. 
Voluntary, incentive-based conservation programs are proven to 
work, but these programs have been significantly underfunded 
and targeted primarily to row crop producers. We support an 
additional $3 billion investment in conservation programs to 
expand the Environmental Quality Incentives Program and to 
establish an environmental incentives program similar to the 
Conservation Security Act which you proposed, Senator Harkin.
    Congress should increase funding for trade programs 
including market access development and Foreign Market 
Development cooperator program. Removing barriers to trade is 
only the first step. We must then convince the consumers in 
those countries to buy American agricultural commodities. In 
addition, we must fully utilize the Export Enhancement Program 
and the Dairy Export Enhancement Program to the fullest extent 
allowable under the WTO agreement. We are unilaterally 
disarming ourselves against our competitors if we do not use 
these programs.
    In conclusion, farmers look forward to working with you and 
the Senate Agriculture Committee as we develop a new Federal 
farm program. I believe we have proposals that take the best 
features of the 1996 FAIR Act and combine them with some 
additional income safety net protection and expanded 
conservation and trade programs to help agriculture share in 
the economic success that this country has felt over the last 
several years.
    We cannot design a successful farm program isolated from 
other policy considerations. Congress must recognize that farm 
policy is about more than just the program crops. Our success 
or failure on the farm is dependent on many factors including 
market exports, Federal monetary policy, corporate mergers and 
acquisitions, tax and regulatory policies and transportation to 
name a few.
    Thank you for the opportunity to testify today before the 
Senate Agriculture Committee.
    [The prepared statement of Mr. Sundblad can be found in the 
appendix on page 195.]
    Senator Harkin. Phil, thank you again Thank you very much 
for a very good statement, Phil.
    Senator Harkin. Thank you all. These were good, concise, 
straightforward testimonies. I am going to do a quick run-
through to make sure that I heard you clearly. Then we will try 
to open it up for some questions
    Basically to recap, Dr. Harl said that he felt that the 
bill had failed. Last year there was over $28 billion in 
subsidies and no increase in exports, which were in fact, down 
18 percent. The land clearing process in South America did not 
stop. In fact, we have even greater distortions and more 
production now. It did not help in getting government out of 
agriculture. He asked the question why. Because Congress does 
not like economic pain. Boy, is that a truism. We forgot the 
lessons that as income falls, it takes a ton of money to 
replace it. He basically said that the essence of it is that 
overproduction is the problem. Technology is increasing at a 
rapid pace
    Dr. Harl, basically you said that we had three options. 
First, just to keep up the annual payments, just keep them 
going and get by. You also raise the question, what if we have 
an economic downturn? Is Congress just going to give us the 
money?
    Second, a reduction of payments. Then you point out what 
that might do to land values if we do that.
    The third was a shift to less dependence on direct 
subsidies and a shift to something else.
    You mentioned the CSA, raising the CRP perhaps to 40 or 45 
million acres which was in the initial legislation we passed in 
1985. You said the authority of the secretary of agriculture to 
do other things like the Farm Loan Reserve. It needed to be 
fine-tuned. To deal with oversupply you mentioned the flexible 
fallow program and some structural changes might be needed in 
terms of concentration of the inputs and the output end along 
with vertical integration. You were suggesting by that that 
ought to be something that we look at in the Farm bill. We need 
to basically have meaningful, competitive options for farmers. 
You mentioned that we should to now be thinking of a global 
food and agricultural policy rather than just a national one. 
You mentioned some of the elements that that would entail.
    Joan Blundall reminded us all of what happens to policies 
that we enact. It has human dimensions to it. Things happen as 
a result of these. It was quite shocking to learn that the 
suicide rate is 17.3 percent and that is just in this area, I 
assume, in your area, which is well over the national rate. She 
related some stories of families under stress selling their 
family heirlooms to pay for health bills. That we have a 
problem in that--and I have to look at this--that a lot of our 
assistance is based on urban models and is not applicable to 
rural areas. I will take a look at that, and I need some more 
information on that. Just the lack of insurance for health care 
that we have in rural America and the need for mental health 
professionals in rural America and that we just do not have 
them. We need more rural health outreach grants.
    Don Mason with the Iowa Corn Growers, you basically said 
that we need a policy that makes us thrive and not just 
survive. That is good. He Talked about getting all the groups 
to the table. Again, Mr. Mason went through the lowest corn 
prices in a decade, wheat in eight years, soybeans in 30 years, 
and milk. Four years of record production globally and the 
strengthening of the dollar. Saying that there is a lot of 
dimensions to why we are in this problem.
    Mr. Mason said he liked the flexibility of the 1996 Act to 
make their own decisions, but the amount of net income from 
farming is disturbing. He had the chart to show that. Basically 
Mr. Mason said that in the policy--and I wrote these down as 
fast as I could, we should not inflate land values 
artificially. We should not guarantee a profit. We should 
expand environmental programs. He mentioned the CRP. We should 
do more to promote value-added products, retain the flexibility 
of the Farm bill, reduce trade barriers and sanctions and 
mentioned research programs and the river problems that we have 
with our locks and dams on the Mississippi. You also mentioned 
that we need a counter-cyclical payment. You said that the Corn 
Growers would be presenting this to us by the end of April. I 
look forward to a novel approach as you said. I am looking 
forward to that. Then also mentioned the Conservation Security 
Act in promoting conservation.
    Mark Hamilton with Positively Iowa talked about rural Iowa 
dying and resettling must occur. How do we do that? What 
policies? He had four suggestions. To support a system for 
local developers. He mentioned National Main Street and Main 
Street Iowa. Something that I had not thought about, he talked 
about the rural wealth that we have. We always talk about the 
problems, but we have $35 billion in land that is debt-free in 
Iowa. Then you talked about incentives for people that have 
this wealth to invest in rural Iowa. I would like to examine 
that more. That is an interesting, provocative idea. I do not 
know how we do it, but that is a lot of assets.
    Third, he mentioned that 150 year old definition of 
community boundaries and mentioned the Great Plains Initiative 
that we started. The Great Plains was to try to start breaking 
down some of the those old, artificial boundaries. Last you 
said, how do we coordinate this resettlement? Talked about 
creating a Center for Community Vitality, requesting a million 
dollars to establish the center. I understand that the Iowa 
legislature, you say, is also looking in to assist in this, as 
I understand it.
    Mr. Hamilton. Although they are not considering funding at 
this point because of the states--they are right now 
considering endorsement of the concept and hoping that funding 
will come from elsewhere.
    Senator Harkin. Like us?
    Mr. Hamilton. Yes.
    Senator Harkin. All right. I understand that. I got that 
picture. Duane Sand talked about that Federal payments were ten 
times greater than our conservation. In fact, I have a little 
chart which I am sure all of you can see quite well. All this 
shows is that the CC outlays for last year, $32.2 billion total 
and only 1.74 billion for conservation. You said ten times. 
More than 10 times. Fifteen maybe, sixteen times.
    Mr. Sand. I included some conservation operations, some 
personnel in my figure. That is all.
    Senator Harkin. This is just CCC outlays. You can see it is 
quite distorted. He mentioned the need to balance conservation 
and commodity needs in the Farm bill. Strong endorsement of the 
CSA and the fact--he gave a good description of what CSA would 
do, that there would be three major improvements. The public 
would pay more for conservation; it would apply to all ag land; 
and it would be readily available. He mentioned how it would be 
within the green box of the WTO, voluntary. Would help us get 
more urban support and mentioned those aspects and then had an 
example of how it might work in the Great Lakes complex here 
and ran through the three levels that we have in the CSA, the 
three different levels of participation.
    Phil Sundblad with the Iowa Farm Bureau mentioned that the 
National Farm Bureau wanted to continue the direct payment 
program and flexibility in any new bill. There was a concern 
about the House Budget Committee that said we had to have a 
farm bill by July 11. He said that was not time enough. I can 
assure you that is not time enough, Phil. He went on to say 
that the Farm bill is broader than just a commodity program. We 
have to think about trade and conservation and rural economic 
development, risk management and credit within a farm bill. He 
said there were six things we had to keep in mind in a farm 
bill. It should be WTO compliant. We need a direct payment 
program, and you said we should include oilseeds with that. We 
have to rebalance the loan rates to get them more in line again 
with the soybean rate. There should be a counter-cyclical 
program. Conservation programs need to be expanded. You say 
they are underfunded. You mentioned the need for $3 billion for 
the EQIP program, for example, and then talked about the 
Conservation Security Act. Then mentioned the need for funding 
for the Market Assistance Program, for the Foreign Market 
Development Program and the EEP, the Export Enhancement 
Program, that we need. He said keep the best features of the 
1996 Act and combine with the above recommendations for a new 
farm bill. Again closed by saying that the farm policy is about 
more than just program crops.
    Again, all great testimony, and I appreciate it very much. 
What I would like to do is just ask a couple of questions. Then 
I am going to open it to the audience for suggestions and 
comments.
    First I want ask to Dr. Neil Harl and the rest of you, I 
heard some talk this morning about CRP. Now, again you 
mentioned--in the 1985 Farm bill when we first started the CRP 
program, we authorized 40 million acres. Then that was cut back 
to 36 million acres. We got about 34 million acres in right 
now. Now, I have been getting a lot of input from a lot of 
sectors, wildlife, sportsmen, people like that, others and some 
farm groups and others saying we need to expand the CRP program 
to 40 to 45 million acres. Now, I heard this morning from some 
people saying that, well, that would not be wise because what 
about the availability of land for young farmers, that this 
bids up the rental value. If there are young farmers who want 
to farm, this hurts them especially, I guess, in southern Iowa 
where I was this morning. I do not know about this area. I just 
wonder if you have any thoughts about that and how careful we 
have got to be and how concerned we have to be about that 
aspect.
    Mr. Harl. I am very sensitive to the plight of the young 
farmer, and I think we should continue to be sensitive. 
However, as I was saying, if we have income, it is going to get 
capitalized into land values. The more income we have, the 
higher land values are going to be because farmers bid it in 
every time. They always have. The only way you can keep land 
values low is to (a)reduce government payments or (b)shrink 
margins even more which would be exceedingly difficult to do 
because there is very little to capitalize in land values right 
now. While I am very sensitive to it, I really think that that 
should not be a determining factor here. We are dealing with 
trying to boost farm income. That will necessarily provide some 
buoyancy in land values.
    Senator Harkin. If farm payment programs were geared more 
to the producer and production practices of that producer 
rather than tied to a commodity, would that be a divorce that 
we might want to look at in terms of worth of land values?
    Mr. Harl. It would a separation. I am not sure it would be 
a divorce, if you can permit me that distinction.
    Senator Harkin. OK.
    Mr. Harl. The problem we have is this: Let us say that we 
have a program in place that targets the more erosive land, the 
marginal land as CRP does, and we double the payments on those 
for practices. You have to use those practices on that highly 
erosive type land. On the other hand, let us say we reduce 
payments on the best land that has no erosive capability. What 
will we see? We will see the value of the best land fall. We 
will see the value of the erosive land rise
    Senator Harkin. That is right.
    Mr. Harl. That even though we separate those, as long as it 
is tied to land, to a specific type of land, it is going to 
have the same effect basically. It is going to get capitalized 
into those values. You will find people bidding up. We saw that 
with the CRP. In southern Iowa where I am from in some of our 
counties down there, Decatur, Wayne, Appanoose, and Davis, 
actually that program raised the bottom end of the land values 
because there was an assurance of income.
    Now, there is one other argument that I think is a potent 
one. That is, it hurts input suppliers. There is no question 
about that. You do not sell machinery. You do not sell 
fertilizer. You do not sell chemicals.
    Senator Harkin. That is right.
    Mr. Harl. Those areas are hurting anyway. They are going to 
hurt no matter what. What we are dealing with here is the 
potential over the next several years of seeing what I call the 
core of production for corn and soybeans actually shrink 
because we are not able to sell our products as rapidly as we 
are increasing yields. If you look at the current yields that 
are being reported by some of the contest participants like Mr. 
Childs from Delaware County, we know that it is possible, 
physically, to produce over 400 bushels to the acre.
    Senator Harkin. That is right.
    Mr. Harl. Everybody will slowly march in that direction. 
Unless we can increase the demand for corn at that rate, we are 
going to see a shrinkage of the cornbelt. What we need to do is 
be sure we have in place programs to encourage the idling 
peripheral land. hat is the most rational economically, to 
encourage the peripheral land to shift. That is what Freedom to 
Farm would have done had we stayed the course, but nobody likes 
that because it squeezes everybody. In the process of squeezing 
the peripheral people enough that they go out of business or 
shift to another crop, it squeezes even those on the best 
soils. No one likes that. We have to take that lesson, I think, 
and see if we cannot encourage that land to shift. Especially 
where it is erosive I think the CRP program is a very good 
program. It has proved that since 1986 when the first bidding 
occurred.
    Senator Harkin. Any thoughts on this, Don?
    Mr. Mason. I was going to just make one quick comment. That 
is that one of the great attractions to CSA is the fact that it 
does make that separation between the land and the payment and 
apply it more to a practice. Not only that, but as I understand 
the provisions of CSA, it would be available to folks in prime 
farm country as well as marginal areas. It would be less likely 
to cause that distortion there between those areas.
    Senator Harkin. Thank you for mentioning that. Thank you 
for telling me about my own bill. I forgot that. Because he is 
right. Don is right, there are also other things in CSA, like 
water quality, for example, that is taken into account rather 
than just erosion.
    Mr. Harl. Relatively speaking would an owner of relatively 
flat Clarion-Webster silt loam be getting as much or be 
eligible for as much relative to what they are now getting? 
Would those who have the erosive land probably be eligible for 
more than they are presently getting? I would say that is 
probably the case.
    Senator Harkin. That is probably the case. That is true. It 
still would be open.
    Mr. Harl. It would have to be attractive to the people who 
have the best land who do not have the erosion problem, 
typically. They have other problems, runoff, nonpoint source, 
all kinds of other things. It is a question of the detail. As 
the old saying goes, the devil is in the details.
    Senator Harkin. I can see someone on that kind of flat land 
that might say, ``Gee, they would like to put in some buffer 
strips, maybe even a few windbreaks''. Pretty the countryside 
up a little bit. Just for things like that that just might help 
and that they get a nice payment for those practices that they 
are engaging in. Then they might want to say,``Well''--on tier 
one there are still farmers on that kind of soil that are not 
doing conservation tillage.
    Mr. Harl. It is true.
    Senator Harkin. They could do that. That is tier one there. 
They get in that tier one.
    Mr. Harl. It is a question of the attractiveness, the 
feasibility and the attractiveness to the individual as a 
practical matter.
    Senator Harkin. That is true. That is true.
    Mr. Harl. I am not saying----
    Senator Harkin [continuing.] There will be some who will 
say to heck with it. I know that. It is Better to go the 
voluntary route and to get people to think about it. Hopefully 
they will be more community-minded and they will think about 
it. These payment levels would cover more than their cost of 
complying or doing that, at least in the first tier anyway.
    Well, rental rates. If we do get set asides or flex fallow, 
do we need to be concerned about the impacts on feed costs and 
livestock industry? I am constantly reminded by my cattlemen 
and my pork producers that do not forget about us. It is not 
just a commodities program.
    Mr. Harl. The answer to that is clearly yes. It would 
increase the cost of feed. Cost of feed is now below cost of 
production, so we have a distortion occurring. Generally the 
livestock industry will adjust. If you have cheap grain, that 
normally leads eventually to cheap livestock. The livestock 
industry can adjust to slightly higher feed prices. What they 
find difficult is great volatility in feed price. I would agree 
that it would raise the price of feed, I think fairly modestly, 
but it would raise the price of feed compared to the ultra-low 
levels existing now. There probably would not be any $1.30 or 
$1.40 cent corn, for example, if you had some buoyancy built in 
there with some provisions to reduce supply. What we are after 
is to try to get those prices up.
    Senator Harkin. You are arguing for a balance.
    Mr. Harl. That is right. Exactly.
    Senator Harkin. Arguing for a balance. What should we do 
about South American land, anybody, coming into production? 
does anyone have any thoughts about that? We have looked at the 
same data, and we see the same thing. It just comes into 
production. I do not know what we do about it.
    Mr. Harl. Senator, there is a book out, a very good book, 
published by Iowa State University Press 1999 by Philip 
Warnken, The Growth and Development of the Soybean Industry in 
Brazil. It cites the reasons why that country essentially 
forced the development of the soybean industry. I have pulled 
out from the book several factors that were involved. No. 1 was 
the embargo of 1973 that sent a clear message around the world, 
including Brazil, that we are not a dependable supplier. That 
was a niche for them. No. 2, we supplied them with varieties of 
soybeans that were appropriate for their climate. No. 3, we 
trained plant breeders. No. 4, they plowed about $4 billion 
U.S. dollars between 1970 and 1990 into the soybean industry in 
Brazil. No. 5, had subsidies on inputs for a while. They had 
preferential tax policies. There is not one mention, not one 
mention in the entire book, about U.S. farm policy. Not one 
mention. There were other factors, I think, that were clearly 
responsible. My own assessment is, Senator, I do not think that 
what we do modestly on the downside is going to have much 
effect. They are going to continue developing that land. I do 
not think there is much that can be done about it. We just 
simply have a huge competitive problem on our hands. Their 
variable costs are a little lower than ours. Some argue our 
land values are too high. Remember, we learned about 160 years 
ago that land values are not price determining. They are price 
determined. We capitalize into land values whatever there is in 
expected profitability. There really on a competitive basis, is 
no necessary relationship between land values and perceived 
competitiveness. There is for individual producers, but not on 
a competitive basis between the two countries.
    Mr. Sundblad. Senator.
    Senator Harkin. I am sorry, Phil.
    Mr. Sundblad. Just as a comment, recent groups have come 
back from South America. We probably lost our No. 1 status in 
the world as soybean producer to them, but also there is a fair 
amount of corn being grown down there. The original thinking 
was that the climate was not very good for growing corn, but 
not the case. That is also a concern that we need to have. 
Their corn production can be very high also, and they have the 
acres to do that.
    Senator Harkin. I was in China in August and they are 
producing a lot of corn in China too. In fact, last year they 
exported corn from China. I do not know what is happening this 
year, but last year they did. We thought they were going to be 
buying stuff from us. I have never been to Brazil, so I do not 
know what is going on there. I see the data and I see the 
figures, and you are right.
    Mr. Sand. Senator, I have a quick comment about what do we 
do about South America and their land use decisions. I would 
say we set a good conservation policy and ask the rest of the 
world to become good conservationists like we are after we get 
a real conservation program in place. We still have issues of 
what about U.S. policy and the amount of land we are bringing 
into production. With wetland regulations we now have reduced 
net loss to agriculture, net loss of wetlands to cropland, to 
only about 30,000 acres a year. It is still net loss in spite 
of everything that the government is doing to restore wetlands. 
Likewise on grasslands we still have a net loss of grasslands 
because more land is still being brought into production in 
spite of what we are spending on CRP and our other conservation 
programs.
    I would just go back to the point we have got to bring 
conservation programs into balance with the subsidy programs 
because we are distorting our land use decisions too. We do not 
yet have a good system when a farmer says, I am throwing good 
money after bad to continue to farm these flood plains and to 
continue to farm these eroded, poorly productive hillsides, to 
give them the ability to put that land back into grass where it 
is a sustainable use. That is why we are so supportive of 
Conservation Security Act.
    Senator Harkin. I appreciate that. Again I say to all of 
you on this Conversation Security Act, we introduced it, but we 
are reworking it. Again, any suggestions and advice--any of you 
in the audience, please take a look at it. If you need it, you 
can get it from my office. I am getting more and more co-
sponsors for it. I hope to make it the heart of the Farm bill 
and sort of build the other programs. We have to have some 
counter-cyclical programs, direct payment programs and things 
like that involved also, but to make this conservation one that 
we can hinge it around. Because as you point out, we do tend to 
get some urban support for that.
    One other aspect of the Farm bill I want to mention--and I 
am really glad Mark Hamilton is here--that we have got to focus 
on, and that is this whole area of rural economic development 
and how we get more funds. I am looking at things like digital 
device, how we get broadband access into small communities, any 
kind of tax proposals that would help us in that regard, also 
new funding mechanisms to get capital here.
    Mark, have you heard about this proposal from the Federal 
Home Loan Bank Board which would issue CDs, certificates of 
deposit, not the other little CDs--based on a Standard and Poor 
500 index? It is an interesting proposal. I am going to get it 
to you. You take a look at it. It is a way that they think of 
getting money to small rural banks. For example, like those of 
us who live in small towns, I mean, you do not get much return 
on a CD. If that bank could take that CD and tie it to a 
Standard and Poor's 500 stock index so that you would benefit 
on the upside, but you would never lose more than what you have 
got in it, but you could gain on the upside. That this might 
help get some money down to some of our smaller rural banks for 
the purpose of investing locally. I want you to take a look. I 
am going to get it to you. I want you to take a look at it. It 
is an interesting proposal, sort of just kind of new, just 
started. I want you to take a look at it. Some things like that 
we have just got to deal with in this Farm bill.
    I know that, Joan, like you say, a lot of this is tied to 
policy, but it all works together. If we are going to resettle 
rural America as Mark Hamilton says, we ought to be doing it. I 
believe that. I believe there is a role for that. I believe 
that people would live here if, in fact--as long as we got--I 
do not want to get on my soapbox. If we have got the best 
schools for their kids anywhere in America, that is economic 
development. That is economic development. Think about that. 
That brings people here. People will give up a lot if they know 
their kids are going to get the best education anywhere in 
America.
    Second, if we have--if we have not the low wage, but some 
different types of job opportunities for people here. That 
means if they can get on broadband and they can become part of 
this new economy, why not live here rather than live someplace 
else? They do not have any traffic problems and things like 
that. To the extent that we can get continuing education from 
our universities and our community colleges around the state of 
Iowa and more fully utilize the Iowa Communications Network for 
that so that people can continue lifelong education. These are 
the kind of things that tend to bring people to Iowa. That has 
got to be a part of this Farm bill mix in some way. Any further 
suggestions I would appreciate it.
    I am going to open it to the audience unless someone has 
some other things that you want to bring up or mention or hit 
me with here at all. No. I am going to try to open it up to the 
audience here. What I need to have you do is, like I said, just 
say your name. If it is difficult, just spell it out so the 
reporter can get the proper spelling. We have a mic that 
Claire, I guess, is going to pass around. Here is a man right 
here already.
    Mr. Rose. My name is Frank Rose. I live in Spencer, Iowa. I 
am not a farmer. I am a farm owner, but not a farmer. I am 
concerned about the farmer. You are talking about a farm bill 
that is in the future. We need something now. We have just gone 
through eight years where there was not a policy for the fuel 
and whatever. It has lacked that. As a consequence, we are 
paying for it with higher fuel prices, higher fertilizer 
prices, things of this nature which is a determining factor for 
the young farmer. I believe that the Federal Government caused 
this, so they should take the responsibility. I believe that 
they should take what the average cost would be for the farmer 
in a normal year, what it is going to be for this year, and I 
think immediate payment should go to the farmer for this.
    Senator Harkin. Are you talking about energy costs?
    Mr. Rose. Yes, sir.
    Senator Harkin. I see.
    Mr. Rose. The energy costs--because the past 8 years 
Clinton did not have an energy program. It has an effect on it. 
Neil Harl made the statement that the Freedom to Farm did not 
have the exports. Two years ago I went across the street to Tom 
Latham's office, and I talked to him about this. He brought out 
the fact that three years in a row in Congressional records 
they voted additional money for the Clinton administration to 
use for export enhancement and the Clinton administration did 
not use one dime of it.
    Senator Harkin. Export enhancement?
    Mr. Rose. That is right.
    Senator Harkin. Export Enhancement Program.
    Mr. Rose. That may be what happened to our exports deal. We 
need something immediate. Thank you.
    Senator Harkin. You are right about the Export Enhancement 
Program. It was not fully utilized under President Bush or 
under President Clinton. Keep in mind the Export Enhancement 
Program--and the one problem I have had with it is it has 
mostly gone for wheat. We did not get much help in corn on 
that. Plus we had problems with Europe on the Export 
Enhancement Program because we ran into problems on the WTO 
compliance nature of the Export Enhancement Program, so we have 
had some problems with it. That is no excuse. It is just to say 
that there have been some real problems with it. It needs to be 
geared more toward corn. My staff says virtually no corn has 
been used under the Export Enhancement Program. It is been all 
wheat, and that is not right, that is not fair.
    On energy though, I really take to heart what you say about 
energy. Someone mentioned this morning in the hearing--and I 
bring it up for your thinking--that we who are charged with the 
responsibility of developing the Farm bill, and by the way, it 
is not too far in the future. We are talking about this next 
year--is that we got to start looking at some things that we 
can do on energy in agriculture. How can farmers become more 
energy self-sufficient, for example? Well, we know that the 
most plain ones are ethanol. We mentioned soydiesel. If we 
could just get 1 percent of diesel to be soydiesel, that is 
about 300 million gallons. That would boost soybean prices by 
at least 15 cents a bushel. Last week I was in Cedar Rapids and 
poured a gallon of soydiesel into a bus. There are 32 busses in 
Cedar Rapids running on soydiesel. It works just fine. They 
have solved all the problems in it. Now we just have to make 
sure that we try to get it used nationally.
    How can farmers themselves become more energy self-
sufficient? There are proposals for wind energy which you are 
familiar with in this area. Solar. Biomass. Of course, that is 
more applicable to CRP land. We have that project ongoing now 
in southeast Iowa where we have 4,000 acres of CRP land growing 
switchgrass, and the switchgrass is being burned in a boiler in 
Ottumwa, the Ottumwa power plant. Some of the initial results 
were pretty good, again depending upon the yield of the 
switchgrass itself. That is a possibility. There is a lot of 
different possibilities like that that we ought to be looking 
at.
    Mr. Rose. May I just say one other thing?
    Senator Harkin. Sure.
    Mr. Rose. In 1996 Congress voted to drill oil in Alaska, 
and Clinton vetoed it. OK. That would put out a million barrels 
a day. What would that do to our farm economy had he not vetoed 
it?
    Senator Harkin. I do not know a heck of a lot. I do know 
that you are talking about the Arctic National Wildlife Refuge 
up there. To access oil would supply about as much as we use in 
six months plus it would take over seven years to get it to 
market. It would not be available for seven years. Ninety-five 
percent of Alaska's north slope is already open for 
exploration. Ninety-five percent is already open. The natural 
gas that is there cannot get here because we do not have a 
pipeline for it. Quite frankly, I think the only reason they 
want to drill in ANWR is so they can get the oil to sell it to 
Japan. It is not going to help us one bit.
    I will say this: We need natural gas. Canada has more 
natural gas than they know what to do with. We are supposed to 
have a free trade agreement with Canada. What I do not 
understand is why we are not getting more Canadian natural gas 
down here. That is why two months ago I asked for the GAO to do 
an investigation. I want to find out what happened. We were 
told a few years ago we had a couple hundred years of natural 
gas, not to worry. We had more natural gas than we knew what to 
do with. All of a sudden we have one winter that is a little 
colder, and all of a sudden we have no natural gas. Something 
is not ringing true here. I want to find out what happened to 
the natural gas. Why are we not getting natural gas from 
Canada? What happened to all that natural gas they told us a 
few years ago that we had in abundant supplies for the next 
foresee--for as long as our lifetimes and our grandchildren's 
lifetimes? Something funny is going on out there, and I would 
like to get to the bottom of it on natural gas.
    Yes, ma'am.
    Ms. Sokolowski. Hi. I am Lori Sokolowski from Holstein. I 
would like to express a thank you to you, Senator Harkin, for 
allowing local farmers to give our input into the new Farm 
bill. The program that I am going to talk about today most 
people do not know about because it is a new program that we 
are starting in Iowa. I will give just a brief history and 
where we are up to date. It is a local food connection farm to 
school program. I introduced a new project on local food 
connections in the Iowa Farmers Union. The background for this 
program started in 1999 when I started networking with a group 
of local producers marketing our own food products together. 
Our organization is called Northwest Iowa Meat and Produce. 
Last summer we started developing an institutional market in 
the Cherokee County community. We began working with the Sioux 
Rivers RC and D on our rural supermarket project. Northwest 
Iowa Meat and Produce became a test program for their food 
project.
    This past November the food service director from the 
Cherokee County school and I attended a local food connection 
farm to school conference in Ames. We were recognized as being 
the first local food connection in the state for providing 
ground meat products in a local school system.
    Senator Harkin. Good.
    Ms. Sokolowski. I learned from that conference that Iowa 
has been approached to join a Federal school lunch program 
along with nine other states. In January of this year I put 
together a group of people who could create a new program for 
the development of a statewide institutional market. This is a 
way for producers in Iowa to be able to network together. In 
the two months since we have had our meeting each agency and 
organization has found ways to make changes in the current 
programs and be able to collectively work together on being one 
team for this initiative. We will meet together again on March 
30. Iowa is now a pilot project program for the Federal school 
lunch program. We will be introducing a complete food nutrition 
package offering both meat and produce from local farmers.
    Senator Harkin. That is good.
    Ms. Sokolowski. Iowa has the oldest population age in the 
United States. However, our state is rich in resources. We need 
to take steps to turn this State around in agriculture and to 
help farmers find other alternatives in their current farming 
operations. We need to find alternative markets for their food 
products. It is time for local farmers to take control of 
marketing their own food products. It is time for producers to 
have more input on the current agricultural programs in our 
state. It is time to have programs that support local 
producers, not large corporations. It is time for local farmers 
to keep the retail share of our products and to share those 
profits in our communities. It is time for us to stop the 
importing of food products into our state, especially the items 
that are not labeled with the country, state of origin.
    I would urge everyone to support the program that we have 
started. It is a challenge that we face. Sometimes we have to 
buck the system to get this started, but we have a lot of 
support out there. After March 30 we will have a new update on 
our new development.
    Senator Harkin. I commend you. this is the type of out-of-
the-box kind of thinking and little things that we can do in 
the state of Iowa. It was said this morning that 92 percent of 
our productive land in Iowa is for two crops, soybeans and 
corn. Maybe we ought to be thinking more about livestock 
production, how we do different types of livestock production, 
different types of livestock. Again, this is not going to 
replace it all, but little niche markets, little things that 
are going on around. I met a producer this morning who was 
producing Wagyu beef. I do not know. It is expensive. He has 
got a market for it. Not everybody can do it, but I am just 
saying there may be things like that. What can we do to promote 
that and help take away some of the economic disincentives for 
doing things like that?
    Organic farming. We are getting more and more organic. What 
was that mentioned this morning? A hundred and some thousand? I 
forget. 140,000 acres in Iowa right now to organics. Evidently 
it is growing. There is more and more of a demand for that. 
Again, it is not for everybody, but, gee, if this helps bolster 
some local income. We had a thing about what do we do to help 
people if they want to get involved? The CSA, by the way, 
Conservation Security Act, will help organic farmers because 
they will be able to do some conservation practices and get 
paid for it. Otherwise they would not get anything. I just ask 
you to start thinking about things like that, some of the 
things that came up this morning.
    I am sorry. Yes. Go ahead.
    Mr. Rohwer. A Chinese proverb says, unless we change our 
direction, we are likely to go where we are heading.
    [Laughter.]
    Mr. Rohwer. I used to think it was a joke. They say the way 
we are heading pretty soon there will be one farmer per county 
and his wife will have to work in town to put groceries on the 
table.
    Mr. Rohwer. The relevance of this can be seen in the 
Economic Research Service finding that the top 10 percent of 
the farm subsidies get 60 percent of the subsidies. The top 10 
percent nationally get 60 percent. In Mississippi 83 percent, 
and even in Iowa it is most of 50 percent. I propose that, as 
one gentleman said, we disconnect the subsidy from commodities 
and direct it toward people. If that is done, it can be done in 
a number of ways. One way would be to have a limitation that 
amounted to something. Incidentally, do not leave that 
limitation to the discretion of the current secretary of 
agriculture. That would not work at all well.
    Flexible fallow will be the same thing without a 
limitation. It will again exacerbate the bulk of the benefits 
going to those who are already the wealthiest. Of course, the 
two of the biggest difficulties with the 1996 bill is that 
there is no provision for beginners whatsoever, and there was 
provision for people who were not even farming anymore. That is 
not good.
    The idea of urban support, every farm bill has in the 
preamble that this is for the family farmer, and then the 
benefits go to the top 10 percent again. We could get some 
significant urban support.
    Now, I should not say this because I have talked to the 
devil. I visited with Larry Bohlen at the farm forum who is the 
man that started the StarLink fiasco. He says that his 
supervisor wants him next to work on family farm issues. Well, 
if all that political generation of power could be devoted to 
family farm issues, think what we might have.
    My plea is that we have a limitation on the subsidy per 
farm household. There are a number of possible ways that that 
could be done that I will not go into. I am sorry. I am Robert 
Rohwer from Paullina, Iowa, an active farmer and a landowner.
    Senator Harkin. I am sure that we will have a debate once 
again on payment limitations. We do. Sort of as day follows 
night we will have a debate on it. I do not know where it is 
going to go, but we keep having a debate on that every time we 
come around. I do not know. Neil, do you have any observations 
on his----
    Mr. Harl. Let me just add this: Under flexible fallow the 
benefits would go to those who would enjoy the better prices, 
including the ones who did not bid their land into the program. 
Plus there would be a higher loan rate for those who did. Now, 
to the extent that that benefit falls unevenly, it would do as 
Mr. Rohwer says. The problem that we face is, is it politically 
feasible to impose tough limits? In 1999 we had a $40,000 
limit. In 2000 it was raised. The sum today of everything you 
could collect would be something over $400,000, from all the 
programs. We have a limit, but it is not a very effective one. 
That is a worthy objective. With each passing day it becomes 
less and less possible because of the growth of the supersize 
operation.
    Senator Harkin [continuing.] If anything I think--and 
again, this is my sixth or seventh farm bill--it comes up every 
time. Now I recognize more of a support or at least thinking 
that we do not need to subsidize every last bushel and every 
last bale of cotton. We just do not need to.
    [Applause.]
    Senator Harkin. I sense this more and more, that it is just 
leading to all kinds of distortions. Obviously if you subsidize 
every last bushel and every last bale, then it does, of course, 
I should not say this in front of an economist, it does seem 
that it really promotes larger farming operations because the 
bigger you are, the more money you get. Then you can outbid 
someone else for land. Therefore it just promotes getting 
bigger. Our farm policies basically have the perverse kind of 
an effect. It is really actually promoting larger farmers if we 
subsidize every last bushel and every last bale.
    Mr. Harl. Senator, in my view this is one of the threats to 
continued subsidization in agriculture. The nonfarm world is 
very supportive of funding if they think it is going to family 
farmers in trouble. The polls have shown for years that 60 to 
65 percent of the people, uniformly, regularly indicate that. 
If they think it is going to the huge operations, that support 
drops and drops sharply. we do have a threat here that we need 
to deal with in terms of maintaining a flow of funding for 
family size operations.
    Senator Harkin. Absolutely. Yes. Back here. We have a whole 
lineup of people back here. Go ahead here, and there are a 
whole lineup of people.
    Mr. Solberg. My name is Linus Solberg, and I am from 
Cylinder, Iowa.
    Senator Harkin. Hi, Linus.
    Mr. Solberg. It gives you that they let radicals in here, 
does not it, Tom? They did not frisk me or anything. I want to 
thank you for having these hearings out in the country and 
testimony from farmers and not lobbyists. I would like to talk 
about a lot of things, but I am just going to talk about the 
pork checkoff. I am just going to talk about only the Farm 
bill.
    In America it seems that you can only get as much justice 
as you can afford. When Congress debates the next Farm bill, 
family farmers will not be able to afford much justice, but 
corporate America will. Why do we continue to force family 
farmers to subsidize corporate America with overproduction?
    In 1996 I told my Congressman, Tom Latham, that Freedom to 
Farm would be a disaster. Any farm program that forces farmers 
to plant fence row to fence row so that corporate giants can 
purchase cheap grain for export and cheap feed for the 
industrial livestock operations is doomed to fail. Forcing 
farmers to produce as much grain as possible in order to milk 
the government out of deficiency payments is ridiculous. Never 
in U.S. history have farmers been forced to maximize their 
government payments by predicting when grain prices will reach 
an annual low.
    The new Farm bill needs to give our new secretary of 
agriculture the authority to manage grain supplies. For decades 
we have received ridiculous promises of increased exports. 
Farmers have heard all the propaganda. Corporate America 
brainwashed many of us into believing that GATT, NAFTA, WTO and 
Fast Track will save the family farm. Every farmer and rancher 
supports more exports. However, we need to face the facts. Most 
industrial nations have their own overproduction problems, and 
the poor nations that need our food cannot afford it.
    If the Ford Motor Company operated like the American 
agriculture, it would run all its assembly lines at full 
capacity 24 hours a day while actively seeking technology to 
produce even more cars. Rather than reducing output and meet 
demand and make a profit, they would continue to overproduce 
even though they were losing thousands of dollars on every car 
they make. If Ford executives behaved this way, they would be 
asking their stockholders to subsidize the company's losses on 
their cars. That is exactly what is happening in American 
agriculture. Congress and administration wants taxpayers to put 
billions of dollars into a system that is producing more grain 
than the market can handle. Now, you did not write this. OK? No 
American business operates this way.
    Freedom to Farm was written by corporate America to sell 
seed and chemicals and make available piles of cheap grain. 
Farm Bureau and our commodity groups have been on the bandwagon 
since the beginning. Supporters of Freedom to Farm promise that 
the export explosion would keep prices high forever. They lied.
    Senator Harkin. Linus, how much longer? Thanks, Linus.
    I did not want to cut you off. I just wanted you to sum it 
up was all.
    Mr. Solberg. I would like to have you solve the problem at 
the end. I will give you a copy.
    Audience member. Good summary.
    Senator Harkin. It is a good summary. I just wanted you to 
summarize it. I did not mean you to sit down. Go ahead.
    Mr. Nolin. My name is Karl Nolin. I am the president of 
Nolin Milling, Dickens, Iowa. If there was a Neil Harl fan 
club, I would have been an original member. I only--I got lots 
of thoughts, but I only want to talk about one thing. We are 
going to develop new seeds. I want these new seeds that are 
going to do wonders for our environment to either be owned by 
the colleges or by some entity of the government. These new 
seeds are going to be perennial crops that we plant once and 
harvest year after year after year. They are going to do 
wonderful things for the environment. We have to make sure that 
all the new crops that are going to be developed and all kinds 
of new traits have some public domain because there is going to 
be contracts on these crops that you will not own, you will 
rent the plant. When you rent the plant, I would rather rent it 
from Iowa State college than a private entity. It is going to 
happen. It has to happen. It has tremendous things to be said 
for the environment because we are going to plant that crop. It 
is going to hold our soil. It is going to keep our water from 
being polluted. We are also going to have nitrogen fixing so 
that we do not have to use nitrogen fertilizer which cleans up 
East Lake Okoboji so it looks like West Lake Okoboji.
    There is a lot of really good stuff coming down the 
pipeline, and we got to get in the Farm bill lots and lots of 
research money so this becomes public domain and we are going 
to develop all types of specialty seeds. Corn is not going to 
be corn. Corn is going to be corn with special proteins so we 
do not have to add any soybean meal to feed. Corn is going to 
be 35 percent oil corn. Maybe we can raise corn instead of 
soybeans. We can change anything around.
    The other thing, we can do this. There is a new corn plant 
that is a perennial, will grow year after year, that has been 
found in Mexico. We do not have to use gene splicing. It is 
just a matter of standard plant breeding. It is going to take 
us a long time if we do it with standard plant breeding, but we 
can do these things.
    Senator Harkin. Corn that just grows year after year?
    Mr. Nolin. Yes, we just go harvest.
    Senator Harkin. How does Pioneer feel about that?
    [Laughter.]
    Mr. Nolin. Pioneer understands this. Pioneer understands it 
completely. Pioneer will not sell us seed. You are talking to a 
man that sells a machine that transfers seed. We are out of 
business with that machine. Pioneer understands it. They do not 
have to sell you a bag of seed. They rent you the plant, and 
you pay an annual fee. We also farm a little bit. I want to pay 
my annual fee to somebody that is easier to do business with 
than--well, I just assume Iowa State college--easier to do with 
than Monsanto. You got the point. I would like to have you look 
into it.
    Senator Harkin. Thanks, Karl. I will do as many people as I 
can here.
    Mr. Biederman. My name is Bruce Biederman. I am from north 
Iowa, Grafton area. I have a farm bill that I have been pushing 
for the last couple years, and I have been working on it for 
the last 15. It basically addresses what Professor Harl has 
been talking about. I call it the zero cost farm bill because I 
go with the loan rather than any subsidy payments whatsoever. 
Support, not subsidize. What I call it is cost of production 
loan on all storable commodities, corn, wheat, beans, oats, 
cotton, anything. It would be set up so that in the fall is 
when you decide whether you are going to be a participant of 
the program, and this year's crop would be eligible for the 
cost of production loan. Then the next spring you determine--
you set aside maybe a small percentage of your land to start 
with. It would be like conservation reserve acres to start with 
rather than----
    Senator Harkin. Is this a nonrecourse loan?
    Mr. Biederman [continuing.] The loan would be set up so 
that when it came due that the price was not at or above the 
loan rate. It would default into a farmer held reserve. Then 
once it gets into there, it would have a little bit like Bob 
Brooklyn's program, like 125 percent release and then 150 
percent call rate. Then the size of the reserve would determine 
how much of that particular commodity would be up for program 
the next year.
    Another stipulation would be that it figures out to about 
like a 1,500-acre farmer would be about the maximum size that 
you would subsidize or support this way. Once you get certain 
crop--or commodity up to a certain level, that you would maybe 
shift to another one or whatever. You do not have to set aside. 
You would modify the price. It would bolster it to at least the 
cost of production or above, and you would be guaranteed a good 
price if it did go on the reserve. It would be self-regulating 
because the size of the reserve could be determined by the 
production.
    Senator Harkin. Do you have some paper on that?
    Mr. Biederman. Yes, I do. I have several copies.
    Senator Harkin. Thank you. Thanks, Bruce. If any of the 
panel up here have any thoughts or suggestions, just yell out. 
Yes. Go ahead. I am sorry. Go ahead, please.
    Mr. Wimmer. My name is Perre Wimmer. I am a local livestock 
broker. Talk daily, weekly with a lot of pork producers in 
northwest Iowa, southwest Minnesota. A lot of the topic today 
has been on grain. However, I guess my question is in regard to 
the pork checkoff recent vote that occurred. In talking to most 
pork producers they feel and realize they need to promote their 
product. However, a lot of them very concerned that the recent 
referendum that was clearly won in the favor of those producers 
has been circumvented and overturned without any regard to 
those persons that voted. Just wondering if there is any input 
from your part on that?
    Senator Harkin. Well, I was going to ask if that is right. 
We had the pork producers this morning. Well, if you are asking 
my view on this, look, we are facing a difficult situation. It 
looked as though the district court in Michigan was going to 
throw the whole thing out. I understood that Secretary Veneman 
had to try to reach some agreement on this and to strike some 
kind of a deal. I understand that. My only question is why it 
had to be a two year? Now it goes to 2003. That seems to be way 
too long. We intend to have her down before the Ag Committee to 
ask about this. I do not know exactly what the next step is in 
this.
    I will tell you one of the things I am thinking about 
working on in the Farm bill that I have not mentioned here but 
I would like to have feedback from you on it. The whole 
checkoff issue as I talked to both sides on this issue, raised 
a really serious question in my mind as to all these checkoffs 
that we have. We have corn checkoff, soybean checkoff, cattle 
checkoff, pork checkoff, chicken checkoff, turkey. We have all 
these checkoffs. It seems to me that when you have a mandatory 
checkoff system like that, that periodically it ought to come 
up for a vote of the producers.
    [Applause.]
    Senator Harkin. I am just saying every five years there 
ought to be a vote among those who participate as to whether 
they want to keep it or not. That might have a salutary effect. 
There was some legitimate concern on the part of some pork 
producers that the council----
    Audience member. NPPC.
    Senator Harkin [continuing.] Yes. The checkoff people were 
too close together and that they were not separated and they 
were not really getting value for the checkoff money they were 
putting in. Well, if a vote has to come up even in court or 
anything every 5 years, then maybe the people who are handling 
all that money will be more responsive to the producers and go 
out and be a little bit more careful. Like anybody here that 
has got to run for reelection. You pay attention to your 
constituents.
    Mr. Wimmer. I guess my concern of the whole thing was that 
it was a democratic process that was gone through, and that 
vote was made. Whether NPPC liked it or not, that was the will 
of the people. Al Gore even got a chance to take his court to 
the supreme court. It appears to me that the pork producer was 
just circumvented at that point. Just the principle of it. 
Whether you are for it or not, the principle of how that was 
handled is of concern.
    Senator Harkin. It is of great concern. It was not handled 
well. Like I said, the court case was one that was hanging over 
their heads. Perhaps--and I just throw this out--I do not know 
that both sides like this. I have suggested that maybe we ought 
to just have another election. Maybe just have another vote out 
there. Well, those who won the vote said we had the vote. I am 
not certain that we just cannot--maybe we have to go through 
that process again. I do not know.
    Audience member. Vote until you like the outcome?
    Mr. Christensen. We have another example here that could be 
stated. Carl Jensen has one.
    Senator Harkin. We are facing the situation now that I do 
not know what to do about it other than try to have another 
vote or have it come up sooner than 2003. That is the only 
thing I can think of unless somebody has some ideas on this. 
Yes.
    Audience member. I think when----
    Senator Harkin. You better get a mic so everybody can hear 
you.
    Ms. Bowman. We have a couple people waiting for really 
quick comments. We are running really short on time.
    Senator Harkin. I will get back to you.
    Mr. Taylor. I am Steve Taylor from Hartley in O'Brien 
County. I guess I am maybe one of the dying breeds of farmers 
that my sole family income does come from the farm.
    Senator Harkin. You are a young man.
    Mr. Taylor. I am hoping to keep it that way, I guess. One 
of my things or thoughts is I do not think you have realized 
that we have not lost a ton of farmers over the last 20 years 
with the farm policy, but we have lost a lot of people like me 
that have solely lived off the farm. If you would take them 
numbers, you would find that you have maybe errored in your 
ways.
    Coming back to the idea of subsidizing production, so it is 
the fairness issue. When I first got thinking about farm 
policy, I always thought we needed the government out. Let us 
work on our own. You know, I am ingenuitive enough I can make 
it work. When I got to start working and competing with 
government dollars, it is almost impossible for me to do. The 
longer I think about it, the more I realize and the more I get 
involved, we are not going to get the government out. They want 
their hands in.
    The way we do that, we have got to change. If we are paying 
anybody over the cost of living, we are unfairly subsidizing 
production. Neil Harl talked, if we cut payments altogether, we 
are going to decrease our values in land and rent. Well, we 
need to cut them 30 percent to bring them back in line from 
what we have skewed with what we have done since 1996 I guess 
my feeling is that we need to look at this--you are never going 
to make a program fair to everybody. You have to decide which 
side of the fence do you want to stand on. Do you want to 
support the rural communities, or do you want to support the 
guy that is going to grow and grow and grow? I guess that is 
about as simple and plain as I could put it. I have got a lot 
of other details, but I could go on and on and on.
    Senator Harkin. You have summed it up pretty accurately, I 
think. That is just about the divide right there.
    Ms. Bowman. We have several----
    Senator Harkin. Right here. We had this man right here 
wanted to say something. Claire, right here.
    Mr. Braaksma. I am George Braaksma from Sibley, Iowa. I 
guess I have been taught in this country that our vote should 
count. In the direction of in the general public's interest 
that is what America was built on was a vote. When them votes 
do not count, that creates people to think different about our 
country. That goes to our election that was last fall, also 
here in agriculture the same example with the pork issue. That 
has got to be brought up that maybe this changes people's 
attitude when it does not count, that we do not have full faith 
in our country. That is disappointing.
    Also on an issue with the--I am in a situation with a four-
lane road going to go through some of my property. With that in 
hand, that is in the general public's interest for better 
roads. I am all for better roads. I am all for issues that is 
for the general public.
    It goes back to Mr. Sand over here with conservation 
matters. I feel strongly with conservation matters, that we 
look at that as if the water was a road and that we take care 
of them type of things that human beings need. That is, to 
survive we need food, we need water. We look at energy as one 
of the things that is something that is above food and water. 
We need to exist with food and water. Conservation practices to 
me in the Farm bill is one of the highest priorities because it 
is what we need to raise that livestock and all them things. I 
am going to let that go at this time.
    Senator Harkin. Good. I appreciate that. We are going to 
make it, I hope, one of the highest priorities.
    Mr. Hartman. I am Joel Hartman, a farmer and cattle feeder 
here in Clay County, Iowa. I served the Iowa Cattlemen's 
Association as the chairman of their environmental policies 
committee. I will try to keep my comments very brief here. I 
have a concern with your farm bill proposal, Senator. It is 
Section Prime E dealing with annual payments not being able to 
be used for the construction and maintenance of animal waste 
storage facilities, as several panelists have mentioned the use 
of the EQIP program in employing practices to help us protect 
our water resources. As you know, the EPA is considering some 
extremely expensive regulations, regulations which will cost us 
about a billion dollars to comply with. Some that by their own 
estimates will incur $5 of cost for every dollar of benefit. If 
the cattle feeding industry is going to be expected to shoulder 
that kind of a cost, we certainly are going to need some 
Federal assistance in doing that.
    The EQIP program right now is part of the current Farm bill 
and is the only mechanism we have to work with that, but the 
program is woefully underappropriated. Only about $200 million 
has been appropriated this year in through the program. Here in 
Iowa it is about 5.7 million, and yet there was over $15 
million in requests made of that program. We need a lot of 
money in there.
    There are also some restrictions on that program that make 
it inoperable for our livestock producers to use, that being in 
particular, the restriction of the 1,000-animal unit cap. A 
1,000-animal unit feedlot is a capital investment approximately 
equal to 140 acres of Iowa crop ground. The EQIP program does 
not make a restriction on how large a farmer can be in acres to 
receive a direct cost share benefit, but they are doing that 
with the livestock producers and doing it at the very level 
that EPA is targeting for the most expensive programs to be put 
in place. That is one problem that we need to have addressed. 
We really cannot wait for the Farm bill to do it. That is 
something that could be done right away.
    The other problem with the EQIP is the prohibition on the 
use of EQIP moneys for engineering. EPA requires that their 
NPDS permits be signed off by a licensed engineer. The EQIP 
program will not cover that expense. For those smaller AFOs 
that is a major part of the expense. We need to have that issue 
addressed. With that, I thank you, Senator.
    Senator Harkin. Just a second. I did not know this about 
the engineering. I was just asking my experts back here on 
this. Evidently EQIP covers technical assistance and everything 
like that, but it does not cover third-party engineering or 
something like that. This is new to me.
    Mr. Hartman. No, sir. The word that I have from NRCS is 
that it will not cover the third-party engineering. The 
projects are basically pre-engineered by NRCS people. The 
technicians will come out and help install, but EPA still 
requires the NPDS permit to be designed by a licensed engineer. 
The cost of that engineer is about the same irregardless of the 
size of the operation. If you are looking at 500 head versus 
5,000, that 500-head operation will incur a ten times larger 
engineering expense. We think that could be addressed by simply 
removing that requirement, or that restriction, excuse me, from 
the EQIP program along with that thousand animal unit 
restriction. It is very discriminatory and does not make any 
sense.
    Senator Harkin. Right. Both are duly noted. Thank you for 
the engineering. This is new to me. I did not know about that, 
obviously about the CAFO limit of a thousand. We are looking at 
changing that, maybe expanding that somewhat. We do not know 
where and how much. Also the EQIP program, you are right, we 
have got three to five times more requests than we have had the 
money for. We have got to get the money in there, and hopefully 
we will have room in the budget this year for it. Again, we 
talked about the budget. It was Phil mentioned something about 
the budget earlier. I do not know about the House side, but on 
the Senate side it looks like our budget was proposing perhaps 
about a seven percent cut in some of our discretionary 
programs. I do not like that at all.
    Mr. Hartman. Please be sure that that type of funding will 
be available under your proposal, Senator. It is a little 
contradictory between part E and I think an earlier part in 
your program.
    Senator Harkin. We were focused only on land. We thought, 
we will leave the EQIP program to do the facilities, see. That 
was going to be the dividing point. Maybe there has to be some 
melding of the two somehow. Thank you. Duly noted.
    I am told we have three people left. I just want you to 
know if any of you have any written comments, just please get 
me written comments any time or you can e-mail me at my 
offices. This is going to be an ongoing process. I will be 
having more hearings in Iowa with the Ag Committee, so do not 
worry. We will be having some more in Iowa here in the months 
coming up. Who else is left? Here. You have got a young man 
right behind you.
    Mr. Meyer. There are three things I have got to address you 
with. First of all, Don Meyer. I live up by Harris. Anyhow, one 
is this conservation and CRP ground. I had the very same thing 
confirmed by a man alongside of me a long distance away. 
Anyhow, in our area I can point to you farms that were bought 
and then put the whole farm in and then they go on down to 
Florida or Texas and were being paid so much for the acre. 
Actually the Government is buying the farm because they put a 
down payment in it, and then after that they got so much an 
acre. After while the thing is paid for. That is one.
    Then the second is I do not care what direction you go down 
the highway. You see the monument, the silo, and the empty 
feedlot and the empty--this Iowa has lost--that is what I would 
call a monument to a dead industry. Am I right, guys, or not?
    Then the estate tax. My father bought 240 acres for me back 
in about 1963, 1964. It worked out he paid 80,000. Then I had 
to wait for Mother to die in order to inherit that, get it. I 
had to pay just the amount what Dad paid for it in 1962 or 1963 
for estate tax. All of a sudden I owned a piece of dirt if I 
could pay estate tax of 80,000 on that piece of dirt. Then it 
would be mine. There is one there, this estate tax.
    Senator Harkin. We are addressing that hopefully in the tax 
bill, and we are going to raise some of the levels. Right now 
it is 675. What is it now?
    Mr. Harl. It is 675,000. If there is a business involved, 
it is 1,300,000 including the family on business deduction, 
plus a special use valuation cuts the value of farmland very, 
very substantially. Those are doubled for husband and wife 
together. I have indicated my support for raising that to 2 to 
2.5 million per decedent.
    My concern--and I am opposed to the repeal of Federal 
estate tax for reasons that we do not have time to go into. I 
do not think it should impact adversely what I call mere 
mortals. What I worry about are people up here in the 
stratosphere in terms of wealth. We need a Federal estate tax.
    What is more important for agriculture is the new basis of 
death, a wipeout of the gain at death. That we could lose if we 
are not careful here, so it is a very complex issue. If you 
would like to have more information, I do have some 
publications on the arguments for and against repeal.
    Senator Harkin. I can assure you that we are going to raise 
the level of estate tax exemptions for farms and small 
businesses. That will be raised. I do not know exactly what the 
level is going to be. It will probably be somewhere in the 
neighborhood of as much as $3 or $4 million perhaps, somewhere 
in that neighborhood, which will just about cover everybody. It 
will be in that neighborhood. I can assure you that is going to 
happen.
    Mr. Jensen. Carl Jensen, a cattle feeder from Everly, Iowa 
and chairman of the marketing committee of the Iowa Cattlemen's 
Association. I wanted to thank you for holding this hearing. I 
have written up the comments, and I will hand them in to you. I 
am just going to summarize real quick what I have got in here. 
Basically the livestock mandatory price reporting bill has been 
stolen by the bureaucrats, and it is not the bill that we 
intended to be passed to put into effect. What has happened to 
the law because of this 360 Rule, which I am sure you are aware 
of about the three packers or one packer having more than 60 
percent of the business, those figures cannot be reported. 
While the new mandatory bill gives us more historical 
information that economists can use, like Dr. Harl and others, 
to analyze what happened, we are actually going to have less 
information for cattle feeders to use to market their cattle 
and know what their cattle are worth. We need to see if there 
is something that you can do.
    An example of what happened, the 360 Rule also applies to 
the boxed beef trade which becomes mandatory. They ran a 
simulation of Wednesday's boxed beef report that came out. In 
that simulation by applying the 360 Rule, which takes effect 
April 2, 40 percent of the items that were reported on 
Wednesday will no longer be eligible to be reported because of 
the 360 Rule. This is just ludicrous that this has occurred. We 
certainly need your input and Chairman Lugar and Senator 
Grassley and the rest of the Iowa delegation to see what they 
can do to correct the situation. It is coming up here very 
fast. I have submitted written copies for you to see more 
detail, but I just wanted to summarize it.
    Senator Harkin. Again, I can assure you, Carl, this is 
something that has not gone unnoticed. I know about it. My 
staff knows about it. You are right. We have got to get to the 
department and get that rule changed quickly.
    Mr. Tigner. My name is Ron Tigner. I am from Fort Dodge, 
Iowa. I used to milk cows with my dad until milk prices hit 
about $11 a hundred weight. Now they are about 850. I am sure 
there is going to be lots of farmers going out of business here 
soon. In fact, some of the big corporates are hurting bad too.
    My comments are--I was not going to talk about this at 
first, but I will now, about the pork checkoff, because you 
talked about it. A 5-year period between referendums is much 
too long a period. The corporate integrators are going to put 
people into contracts, and they are going to put the 
independents out of business till they get it to a point where 
they will have the checkoff referendum in their favor, what the 
vote is. They are going to limit the number of people who are 
going to be eligible to a small timeframe, which they did in 
the pork checkoff. It has got to happen within a few years 
between timeframes. A 3-year timeframe for the pork checkoff is 
going to be too long. 2003 is going to be way too long. They 
are going to work their tails off to make sure independents 
cannot vote in it.
    Now, my overall comments that I had thinking of coming in 
here were in asking the question of what new directions we need 
in Federal farm policies. It seems to me we need to go to the 
beginning. By this I mean in 1908 a national commission decided 
that resources, people, money and so on need to be moved from 
rural areas to urban areas. Prior to those years we had always 
seen in the United States an increase in the number of farmers. 
Since then for every year there has been a steady decline. In 
the 1950's our own government studies said those trends should 
continue. Even the best known farm organization in the United 
States's national president said that should continue. We all 
know that our philosophy is we need the lowest cost of 
production for food and the fewest farmers farming as possible. 
That is our national policy, and it continues today.
    I do not feel we will improve farm communities and bring 
back more farmers until we have a new national philosophy, a 
new national policy that says we need more people farming and 
fair market prices. We need an affordable food policy and a 
sustainable agriculture and rural community policy. We need to 
ditch the old philosophy.
    We also need a moratorium on mergers and acquisitions in 
the food sector and vigorous enforcement of the packers and 
stockyards act with improvement in antitrust legislation to 
reflect its impact on farmers, not just consumers and not 
just----
    Mr. Tigner [continuing.] Not just when it reaches some high 
threshold of monopolization, rather when the effect in the 
marketplace by a combination of factors is the same as a 
monopoly. Thank you, Senator Harkin.
    Senator Harkin. Thank you. I appreciate it. One more.
    Mr. Bierman. Thank you, Senator Harkin. I am Tim Bierman 
from Larrabee, Iowa, farmer, pork producer, also on the board 
for the Iowa Pork Producers Association. I wanted to talk to 
you about two things. One of them is last year you appropriated 
nine million for the funding of the National Disease Center and 
National Veterinary Services. We need to continue in that so 
that Iowa State and the USDA facilities can move forward. In 
lieu of that, as we all know, the European union over there has 
foot and mouth disease. We need to be more concerned about the 
foreign animal disease coming into this country, so we need to 
increase our surveillance. We know there is an increased 
regulation of producers using human waste products in this 
country because we know they are coming in on ships and planes 
and other things. It can come in on those--foot-and-mouth 
disease can come in on those ships and whatever. This year if 
it comes into the United States, it will not matter if we have 
a checkoff because we will not have any hogs to be raising in 
this country. We will be slaughtering them like the European 
union. It moves on to the cattle. Then it will affect the grain 
farmers because how much grain do we eat up? This ought to be 
No. 1 and then to make sure we survive. We can live if we can 
keep that out of this country. Thank you.
    Senator Harkin. Tim, thank you. I am glad you brought that 
up. I did not mention this earlier, but I went to the National 
Animal Disease Lab yesterday. I watched the disposal of some of 
the sheep that was there. It is being done in a very safe 
manner, humanely. They are now examining the brain tissues of 
the sheep. It just points up again, I think, what is happening 
in Europe, the need to rebuild for the next century the 
National Animal Disease Center at Ames. Now, again, the price 
tag is high. We are looking at about somewhere in the 
neighborhood of about $400 million to rebuild it. Keep in mind 
Europe is losing over $100,000,000 a day in their losses. It 
has already cost Great Britain $5.3 billion. We need a National 
Animal Disease Lab that is a actually a world center more than 
just a national center. We have the basis for it in Ames, but 
it is 40 to 50 years old. They need new equipment. They need 
new labs. They need new research components. They need new 
disposal facilities. Not only for that, but to fight 
bioterrorism and for food safety. We have to be prepared for 
this in the future. I am going to do everything I can to ensure 
that we rebuild and refurnish that laboratory at Ames. I am 
hopeful that--I mean, no one would wish this. With what is 
happening now, maybe some of my colleagues now in the Congress 
who did not think it was a very high priority item now will see 
that this is a high priority item for our country. We need to 
rebuild it, so I am glad you brought that up, Tim. It is 
something that we cannot continue to put off year after year.
    With that unless there is something else from the panel, 
you have been very patient and kind to sit there. If there are 
any last things that any of you wanted to say before we 
adjourn, I would sure----
    Mr. Harl. Could I just add one note? Mr. Nolin made a point 
about germ plasm in the public domain.
    Senator Harkin [continuing.] Yes. You talked about it.
    Mr. Harl. I testified before the Senate Agriculture 
Committee in October 1999 on that and said we need to fund at 
least a half dozen plant science centers at state-of-the-art 
levels, and we need to be sure that the results go into the 
public domain, not into the hands of the big transgenic hybrid 
producers. We are down to five of those on a global basis. We 
will be down to three in about 3 years in my view. That is 
awesome concentration. We have got to do what Mr. Nolin says.
    Senator Harkin. Again, that ought to be part of the 
research component of our Farm bill.
    Mr. Harl. Exactly.
    Senator Harkin. Any help, Neil, you can give us on how to 
write that and what to do with it, I need your help on that. 
Anybody else? Joan.
    Ms. Blundall. If I look at one issue that comes up in 
therapy which is rather surprising from rural populations--it 
happens over and over again, and I think there is a danger in 
it. When a populus believes that they have no shot for 
stability, we are at risk. It is not atypical to hear people 
talking about concentration in the food industry, about not 
having access because we do not have the technology or the 
resources. Somehow we have got to build some bridges for 
opportunity, and we have got to do something about 
concentration.
    Senator Harkin. That is just about the proper note to end 
on. You are absolutely right. We do have to do something about 
concentration, and we are going to focus on that. The hour is 
getting late. You have all been very patient to be here. This 
has been a great hearing. I have gotten a lot of good 
information. I can assure you that the suggestions and advice, 
consultation that I got here today will be part of the record. 
We will continue to have hearings here in Iowa as we go through 
this year to develop the next Farm bill. I take to heart 
everything that I have heard here today. This is just vital to 
our survival. I take to heart what Phil said from the Iowa Farm 
Bureau, that this has got to be more than just commodities. You 
got to look at credit, and you got to look at everything. You 
got to look at rural development, all these things. You have 
got to look at all this stuff. We are going to keep that 
together in the Farm bill I can assure you.
    Thank you all very much. The hearing will be adjourned.
    [Whereupon, at 3:50 p.m., the committee was adjourned.]
      
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