[Senate Hearing 107-898]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-898

 AGRICULTURE IN RURAL COMMUNITIES DRAFTING AND IMPLEMENTATION OF A NEW 
                               FARM BILL

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                            AUGUST 18, 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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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                       TOM HARKIN, Iowa, Chairman

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

              Mark Halverson, Staff Director/Chief Counsel

            David L. Johnson, Chief Counsel for the Minority

                      Robert E. Sturm, Chief Clerk

              Keith Luse, Staff Director for the Minority

                                  (ii)

  
                            C O N T E N T S

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                                                                   Page

Hearing(s):

Agriculture in Rural Communities Drafting and Implementation of a 
  New Farm Bill..................................................    01

                              ----------                              

                       Saturday, August 18, 2001
                    STATEMENTS PRESENTED BY SENATORS

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

                               WITNESSES

Bierschenk, Gary, Benton County, Iowa............................    27
Bremley, Ron, Morley, Iowa.......................................    30
Demmer, Wayne, Livestock and Grain Producer......................    24
Dietrich, John, Policy Analyst, American Corngrower's Association 
  and 
  Farmer's Union of Nebraska.....................................    28
Ginter, Larry, Member, Iowa Citizens for Community Development, 
  Rhodes, Iowa...................................................    23
Gray, Walter, Delaware County, Manchester, Iowa..................    22
Heithoff, Jerry, Farmer, Nebraska................................    19
Helbling, John K., General Manager of Economic Market 
  Development, Alliant Energy....................................    10
Holdgrafer, Brian................................................    31
Holdgrafer, Carrie, Farmer.......................................    31
Holecek, Lloyd, Marion, Iowa.....................................    34
Holmes, Mary Swalla, ISU Extension...............................    08
Jennifer.........................................................    31
Jepson, Mike, Seattle, Washington................................    27
Krier, Jim, Ollie, Iowa..........................................    04
Lamb, Gary, Farmer, Chairman, Farm Service Agency State Committee    20
McGivern, Ed, Farmer, Keystone, Iowa.............................    29
Paustian, Ross, Farmer, Walcott, Iowa............................    03
Peters, Bruce....................................................    32
Petersen, Chris, Vice President, Iowa Farmer's Union.............    28
Ryun, Deb, Executive Director of Conservation Districts of Iowa..    06
Sand, Dwayne, Iowa Natural Heritage Foundation, Des Moines, Iowa.    33
Serbousek, Tony, Farmer, Johnson County, Iowa....................    35
Smith, Therese, Representative, Farm Service Agency County Office 

  Employees......................................................    35
Specht, John, Student, Mar-Mac...................................    20
Specht, Phil.....................................................    34
Stevenson, Rod, Farmer, Davis County, Iowa.......................    25
Thicke, Francis, Jefferson County................................    26
Wilson, Brad.....................................................    19
Zacharakis-Jutz, Jeff, Farmer....................................    28
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    38
    Bierschenk, Gary.............................................    67
    Demmer, Wayne................................................    78
    Ginter, Larry................................................    74
    Heithoff, Jerry..............................................    64
    Helbling, John K.............................................    59
    Holmes, Mary Swalla..........................................    57
    Krier, Jim...................................................    44
    Paustian, Ross...............................................    39
    Ryun, Deb....................................................    52
    Specht, Phil.................................................    80
    Stevenson, Rod...............................................    77
Document(s) Submitted for the Record:
    Schafbuch, Al................................................    88
    Schiffer, Lois J., Audubon, Senior Vice President, Public 
      Policy.....................................................    82

                              ----------                              


 
 AGRICULTURE IN RURAL COMMUNITIES DRAFTING AND IMPLEMENTATION OF A NEW 
                               FARM BILL

                              ----------                              


                       SATURDAY, AUGUST 18, 2001

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., at the 
Moose Lodge, 1325 North Cedar Street, Tipton, Iowa, Hon. Tom 
Harkin, [Chairman of the Committee], presiding.
    Present or submitting a statement: Senator Harkin.

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

    The Chairman. The U.S. Senate Committee on Agriculture, 
Nutrition, and Forestry will come to order.
    Today we are having one in a series of field hearings on 
agriculture in rural communities leading up to the drafting and 
implementation of a new farm bill.
    I am pleased to be holding it this morning here in Tipton. 
Sorry I'm a little late. I apologize. We had to fly in and 
there was some weather. We did get some good rain today. I am 
pleased to be having this hearing and the testimony from this 
panel will be made a part of the record.
    I want to say at the outset that I am going to ask each 
witness to talk for 5 to 7 minutes. I'll have some questions 
for them, but I'm going to leave enough time for people in the 
audience if you'd like to ask questions, make statements or 
make comments. I'll do as much as I can in the time that's 
allotted to us. If you've got something you want to say or 
something for the record, I think we have some microphones 
somewhere. Please state your name so she can get your name for 
the court reporter. If it's an easy name like Smith, you don't 
have to spell it. If it's a complicated name like Harkin, then 
you better spell it out for her.
    First, let me recognize a couple of people. Leroy Brown is 
our state conservation, natural resources conservationist. I 
saw Leroy here. Glad to have you here. Gary Land who is still 
the Chair of the state committee of the Farm Services 
Administration. Gary Land is back there, our State Committee 
Chair. Next to him is Ellen. You may remember Ellen was the 
state director for rural development for 8 years. The past 
administration, of course, has changed hands now and she did 
such a great job in rural development that we hired her. She is 
now a staff member of the Senate. Sitting right behind me is 
the staff director for the Senate Agriculture Committee, Mark 
Halverson, from around Tama. He actually is a hands-on farmer. 
It is nice to know that we have a hands-on farmer that is the 
staff director of our committee. Next to him is Stephanie 
Mercer who does all our economics work. She's a graduate of 
Iowa State in economics so she's with us here today also from 
the Agriculture Committee.
    Farm families and people who live in rural America have not 
shared in our nation's prosperity. We need new directions in 
Federal agriculture and rural policies. The Freedom to Farm 
bill may have had some positive features, flexibility and some 
conservation, but it took away some very critical farm income 
protection. Farmers need a better system instead of these 
annual kinds of bail-outs and emergency bills that we pass 
every year.
    The new Farm bill should begin to set a course that all 
farmers earn a better return and better share of the consumer 
dollar in the market. Right now the farmer's share of the 
consumer dollar is at the lowest point in our nation's history. 
We have to ask ourselves the question: Do we just continue down 
this road or do we try to add policies that will somehow get a 
better return of the consumer's dollar to the farmer or are we 
just going to go down the road and more and more of these 
government payments go out? That's really the essential 
question that we have to ask ourselves.
    It also should focus on building opportunities for families 
and people who live in rural communities. One out of fifteen 
people who live in rural America farm. The rest live in small 
towns and communities. They do rely on the farmers, they do 
rely on the ag economy overall, but in many cases they need 
off-farm income. We need jobs in small towns and rural 
communities. Value-added processing ventures, biotechnology 
products, new marketing channels and increased exports, all 
these can help.
    Farmers in Iowa and elsewhere have a tremendous ethic of 
stewardship of the land. Too often they don't have the 
necessary money to conserve natural resources as they want to 
do. The new Farm bill should extend and strengthen the current 
conservation programs. We need to create a new system of 
conservation incentives. I have bipartisan legislation that I 
have drafted to do that, to provide for more conservation 
support on working land, provide more income to farmers on 
their working lands.
    I intend to put a new title in this Farm bill, an energy 
title. I don't know how far it is going to get, but at least I 
intend to do it. When we talk about getting more money for 
farmers from the market I don't think we can just think about 
the food and meat market. We've got to think about the energy 
market also. That's things like ethanol, soy diesel, methane, 
biomass, even wind energy, things like that. We need a new 
title to do that.
    Again, I mentioned rural economic development for water, 
telecommunications, equity capital for investments. We have to 
take a look at that also and see what can be included in the 
Farm bill. Conservation, energy and a better conservation 
program, farm income protection, stronger support for exports, 
stronger support for rural communities and rural economic 
development, I think all of these things have to be addressed.
    If I have one complaint about what the House of 
Representatives did when they reported out their farm bill from 
their committee. It focuses simply on commodities. That's all. 
The Farm bill has to be much broader than that. Again, I'm open 
to any of your suggestions or comments on that.
    With that, I will now welcome our panel. We have Ross 
Paustian, a farmer from Walcott in Scott County, Jim Krier, a 
farmer from Ollie, Keokuk County, Deb Ryun, Executive Director 
of Conservation Districts of Iowa, Mary Swalla Holmes, ISU 
Extension and John Helbling with Alliant Energy. We appreciate 
all of you here because I think this is going to cover the 
bases of the things I talked about.
    All of your statements will be made a part of the record in 
their entirety. I read through them last night and coming over 
here this morning. What I'd like to ask you to do is to tell us 
in your own words what you think we ought to have in the Farm 
bill and where you think we ought to go. If you have any 
examples you'd like to talk about, we'd like to hear that. 
Please try to keep it to maybe 5 or 7 minutes, something like 
that. I'm not going to bang the gavel. Is that all right? With 
that we'll start with Ross Paustian. I hope I pronounced that 
last name right.
    [The prepared statement of Sen. Harkin can be found in the 
appendix on page 38.]

       STATEMENT OF ROSS PAUSTIAN, FARMER, WALCOTT, IOWA

    Mr. Paustian. Good morning. My name is Ross Paustian and 
I'm a farmer from Walcott, Iowa. Together with my wife and 
parents and my brother and his wife we raise corn and soybeans 
on a 900-acre farm. We also operate a farrow-to-finish hog 
operation. I've been farming for 23 years. I appreciate the 
opportunity to present my thoughts to the Committee on the Farm 
bill.
    The question that faces us is what type of program is 
needed to help farmers weather the down years while giving them 
opportunity in the up years? I believe Congress made the right 
decision to eliminate the old supply management programs and 
replace it with Freedom to Farm. At that time the Federal 
budget was a political issue and many in agriculture didn't 
want the same program with additional cost savings like 
payments on fewer acres. We wanted flexibility. We wanted the 
freedom to make our own decisions.
    I would offer my thoughts on the development of the farm 
policy in five different areas:
    No. 1, the new farm program must stay within the World 
Trade Organization amber box commitments. Nearly 50 percent of 
the crop producer's income and 13 percent of livestock 
producer's income comes from rural trade. We cannot afford to 
ignore the impact that international trade has on our bottom 
line.
    No. 2, I support continuation of the AMTA program. Payments 
to current contract holders should be continued, but producers 
should be allowed a one-time opportunity to adjust their base 
acres as provided for in the bill passed by the House Ag 
Committee. In addition, soybeans should be added as a program 
crop but producers must choose whether to shift planted acreage 
from a current program crop to soybean payments.
    Number 3, loan rates must be rebalanced. I support 
adjusting loan rates for corn and other program crops so that 
they are historical with the soybean loan rate. The soybean 
loan rate should remain at $5.26. The next Farm bill can 
provide additional marketing flexibility by allowing producers 
to lock in an LDP rate at any time during the crop-marketing 
year.
    No. 4, Congress can improve the safety net of the Farm bill 
by establishing a counter-cyclical income assistance program. 
This program should be revenue-based and must fall within the 
confines of the WTO guidelines.
    No. 5, conservation programs should be expanded in this 
Farm bill. Producers are facing increased pressures from 
Federal regulatory programs such as EPA's animal feeding 
operation rules, water quality standards and total maximum 
daily load. The next Farm bill should eliminate the limits on 
participation in cost share and technical assistance by larger 
livestock producers.
    I'm a family farm livestock producer and this farm supports 
three families yet we cannot qualify for any cost or technical 
assistance, yet we must meet increased state and Federal 
regulations. I want to commend Senator Harkin for his 
leadership to establish the environmental incentives programs. 
A program like the one proposed in the Conservation Security 
Act provides farmers like myself an opportunity to be rewarded 
for the practices that I already have in place.
    This Farm bill presents an opportunity to implement a long-
term strategy for agriculture while we address the short-term 
economic problems facing many producers. I support your vision 
to expand the scope of the trade title and provide more 
opportunities for value-added agriculture through the rural 
development title. I also believe this year presents us with 
the opportunity to expand agriculture's role in our national 
energy strategy. The last Farm bill was to be part of a three-
legged stool. Farmers would assume more of a risk and be 
responsible for their own management and marketing decisions. 
In return, Congress would expand our trading opportunities, 
reduce the tax burden on family farmers and provide us with 
regulatory relief. With the exception of tax relief, this has 
not occurred. In fact, regulation of farmers has increased. I 
urge you to look at the broad spectrum of policy issues that 
impact agriculture as you design a recommendation for the next 
farm program.
    In conclusion, farmers look forward to working with you and 
the Senate Ag Committee as we develop a new Federal farm 
program. Thank you for the opportunity to testify.
    [The prepared statement of Mr. Paustian can be found in the 
appendix on page 39.]
    The Chairman. Ross, thank you very much for your testimony. 
Now we turn to Jim Krier.

          STATEMENT OF JIM KRIER, FARMER, OLLIE, IOWA

    Mr. Krier. Chairman Harkin, I'm Jim Krier, a farmer who 
resides between the forks of the North and South Skunk Rivers 
in Keokuk County. My wife, Mary, and I raise 900 acres of corn 
and soybeans and finish approximately 2300 head of feeder pigs 
annually. It's an honor to appear before you today to discuss 
the needs of agricultural producers in terms of the pending 
farm legislation.
    First, I'd like to thank you for your leadership in 
attempting to secure an adequate 2001 crop year economic 
assistance package for the nation's farmers. As we all know, 
not only have commodity prices remained low, but production 
costs have risen dramatically because of the increased 
petroleum costs.
    Mr. Chairman, the current farm policy is not working. Since 
the passage of the Freedom to Farm in 1996, crop prices have 
declined almost 30 percent and input costs have increased. As a 
result, a much larger portion of my income has come from 
government payments and not the marketplace.
    While I like the planting flexibility contained in the 
current law, the rest of the program is far from adequate. 
Farmers want to receive a decent price from the marketplace and 
not from government assistance year after year. It's vital that 
the new Farm bill put greater emphasis on creating demand for 
our products and giving us the marketing tools to get a better 
price from the marketplace.
    Increasing demand in order to receive a decent price from 
the marketplace should be the goal of the new Farm bill. It 
should also contain a safety net that is truly a safety net. 
This new safety net should be based on what we produce, what 
our yields are and what our costs of production are in today's 
dollars. The current safety net is flawed because it is based 
on what I planted on my farm 5 to 10 years ago and what my 
average yields were 16 years ago. We certainly don't need a 
complicated safety net that doesn't reflect current costs of 
production and market prices.
    I would suggest raising the market loan rates and indexing 
them to the cost of production. This is simple. It only helps 
us when we actually need the help and it should only go to 
those who actually produce the crops.
    We also need to place a much greater emphasis on renewable 
fuels. It's no secret that we currently have an energy crisis 
as well as a farm crisis. The possible solution to both is the 
production of energy from renewable commodities grown right 
here in the Midwest, thus reducing our reliance on imported oil 
and keeping those trade dollars in the U.S. The formation and 
maintenance of a farmer-owned grain reserve could be used to 
level out the peaks and valleys of ethanol production and 
prices, thus helping to boost farm prices now and not several 
years from now.
    In addition, the safety net should be targeted to family 
farmers. To discourage larger operations and further 
consolidation, payment limitations should be strictly enforced.
    I would also encourage you to look at adopting a voluntary 
Flex-Fallow type of management program to help control excess 
production capacity. This program is necessary to provide 
flexibility for those times when supply continues to exceed 
demand. No business can produce all that they want forever. 
Agriculture is certainly no different. The Flex-Fallow program 
would allow farmers to receive increased loan rates in return 
for voluntarily idling their land.
    The new Farm bill's foreign trade policy should include 
country-of-origin labeling to ensure fair competition against 
imported produce, meats and grains. There should be tariffs on 
commodities and produce where differing labor and environmental 
regulations represent a substantial difference in the cost of 
production.
    Rural development is another important part of the Farm 
bill. I would like to see grants and development money to help 
farmers develop, manage, and own value-added enterprises such 
as ethanol plants, soy diesel, livestock processing, biomass 
energy, farm-to-market fruit and vegetable production to name a 
few. The farmer must be helped to do this in order to control 
his product from farm to retail market. This is the only way 
the farmer can capture more of the retail dollar.
    Mr. Chairman, I would urge you to write a farmer-friendly 
farm bill, a farm bill that provides balance and meaningful 
economic safety nets for those who raise crops, a farm bill 
that expands markets, a farm bill that reduces the negative 
impact of surplus production and above all a new farm bill that 
helps provide profitable prices for our commodities.
    I'd like to thank you for your time, Senator.
    [The prepared statement of Mr. Krier can be found in the 
appendix on page 44.]
    The Chairman. Jim, thank you very much for your statement 
and we now turn to Deb Ryun.

   STATEMENT OF DEB RYUN, EXECUTIVE DIRECTOR OF CONSERVATION 
                       DISTRICTS OF IOWA

    Ms. Ryun. Good morning. I will totally admit to having the 
weakest voice on the panel, so if someone can't hear me, please 
raise a hand and I'll try to speak up.
    I do thank you for having this opportunity to comment on 
the 2002 Farm bill. Conservation Districts of Iowa represents 
Iowa's 500 Soil and Water District Commissioners, some of whom 
are in the room today. Thank you for coming. Most are farmers 
or have a farming background. They have a vested interest, many 
have a life-long commitment in promoting wise land use and the 
conservation of our soil and water.
    While I might enjoy commenting on other aspects of the Farm 
bill, I do feel compelled to focus on the conservation title.
    Soil and water conservation must be a significant component 
in both concept and funding in the next Farm bill and receive a 
minimum of 25 percent of the funding.
    The programs must be focused and provide direction to 
achieve landscape and watershed objectives for water quality, 
resource protection and the entire range of conservation 
benefits.
    Flexibility must be built into the conservation programs to 
allow them to be tailored within the states. The role of State 
Technical Committees needs to be strengthened.
    We must meet public expectations for water quality, 
resource conservation and environmental enhancement within a 
framework that sustains family farms and ranches both 
economically and socially.
    Funding for research and education is critical. It's a 
critical component of the Farm bill.
    CDI strongly supports the concept of the proposed 
Conservation Security Act. We applaud this voluntary and 
comprehensive approach. Let's provide financial rewards to 
agricultural producers who are following sound natural resource 
conservation practices. Thank you, Ross.
    In the agribusiness world value added is a means to 
survival and the CSA may be an example of value added at its 
best. It would foster the development and implementation of 
whole-farm conservation plans. Producers would also receive 
financial support at a time when agriculture is struggling to 
survive. In addition, society as a whole would gain from 
increased environmental protection.
    Currently the USDA offers set-aside programs such as CRP 
and WRP designed to help farmers be good land stewards. 
However, set-aside programs only directly protect land that is 
taken out of production. If we are to have an adequate impact 
on quality of our environment, we need to target all working 
lands and achieve a better balance between working lands and 
conservation and set-aside land.
    It's important to reward those who are already good land 
stewards. Many producers have long farmed on the contour on 
slopes. They've re-established wetlands on hydric soils and 
pastured their highly erodible lands. They have set aside 
timbers and protected rare prairie remnants. It makes no sense 
to encourage producers to undo sound conservation practices in 
order to be eligible for incentive payments. We should 
compensate those who are voluntarily incurring personal cost to 
establish and to maintain wise land use practices.
    The current system provides financial assistance to a 
select group of producers. The Farm bill should provide 
incentive payments to producers of all types of products. It is 
important and fair to provide financial incentives to those 
farmers who have not traditionally benefited from this type of 
support.
    The next Farm bill should have elements which compliment 
and not replace other conservation programs. It should ensure 
maintenance of aging structures through programs like the small 
watershed rehabilitation program and fund them at appropriate 
levels. CDI supports continuing and expanding the current 
programs administered through the USDA by NRCS.
    General consensus among Iowa's conservation groups and the 
commodity organizations is that participation in USDA programs 
should require conservation compliance for direct government 
payments. Provisions established in the 1985 HEL-Sodbuster and 
Swampbuster provisions are important to protect land from 
erosion. Noncompliance should result in a person being 
ineligible for USDA benefits.
    Rural Americans who make a comfortable living on working 
lands can be considered a threatened, if not endangered, 
species. An even more rare breed is those of us who work to 
achieve more conservation on agricultural land. The House 
Agriculture Committee Farm Bill proposal reflects very little, 
if any, consultation with 3,000 soil and water district 
commissioners throughout the country. They've been working in 
this arena for over 60 years and we know what we're doing. We 
ask you to listen to our small but important voice.
    While CDI applauds the house proposal to increase EQIP 
funding to $1.2 billion annually, we are very much opposed to 
shifting the administration of this program to the Farm Service 
Agency. Shifting EQIP or any of the programs which require 
technical assistance appears to be part of the constant battle 
of power at the national level. The biggest roadblocks for EQIP 
to provide more conservation assistance are money for 
contracts, technical assistance funds, and the inter-agency 
concurrence requirements at the local level. The house version 
limits funds available for technical assistance and does not 
require the secretary to provide technical assistance.
    Technical assistance is something the producers should 
expect in a timely manner. Technical assistance has shrunk from 
60 percent of the conservation budget to about 30 percent since 
1985. The house proposal suggests that none of the funds for 
programs such as CRP, WRP & EQIP could be used for technical 
assistance. It severely limits Commodity Credit Corporation 
technical assistance funding to implement Federal programs. It 
overlooks the effective partnership delivery system already in 
place. It does little to address the tremendous workload of 
conservation assistance.
    The focus of the next Farm bill conservation title should 
be to reduce topsoil loss, improve soil health, improve air and 
water quality and provide wildlife habitat while at the same 
time provide assistance to financially struggling farmers. CDI 
hopes that this objective prevails. Conservation of private 
lands is important. I do thank you for this opportunity.
    [The prepared statement of Ms. Ryun can be found in the 
appendix on page 52.]
    The Chairman. Deb Ryun, thank you very much for your 
testimony. Now we'll turn to Mary Swalla Holmes, ISU extension.

         STATEMENT OF MARY SWALLA HOLMES, ISU EXTENSION

    Ms. Holmes. Yes. I'd also like to thank you for the 
opportunity to provide testimony this morning.
    Listening to my fellow speakers this morning reminds me 
again that Iowans are really smart and we really know what's 
happening out here in the Heartland.
    I have traveled the state of Iowa for 5 years as a 
community consultant working to develop sustainable 
agricultural opportunities. I'm here today representing my 
clients, family farmers who live on the land and grow fresh, 
nutritious food for their neighbors and for the small towns 
that welcome and support this new agriculture. I am also a 
member of Governor Vilsack's Food Policy Council and Local Food 
Systems Task Force and the Iowa Community Food Security 
Liaison.
    I believe that the new Farm bill must address the realities 
of the emerging global economy. In the rapidly consolidating 
and vertically integrating food and fiber chains trans-national 
companies will soon own or directly contract for all raw 
materials. Agricultural raw materials will be produced wherever 
it is cheapest and where social and environmental costs can be 
externalized. Current farm bill payments which directly 
subsidize production of commodities ultimately subsidize these 
mega-corporations. While profits accrue to the corporations, 
environmental and social costs are billed to our small 
communities.
    Iowa's water quality is already among the worst in the 
nation, our rivers and streams choked with soil, chemical 
runoff and fecal contamination. Our rates of rural poverty are 
high and in a land awash with corn and soybeans I continually 
see the battle of hunger and food insecurity. Farmers feel 
trapped, unable to break the dependency on farm payments that 
are based on production of cheap commodities even though they 
recognize how dysfunctional the system has become. They know 
that the price of competing as low-cost producers in a global 
system is to be locked into a downward spiral, forced to make 
choices that destroy their land, their community and their 
health.
    One ray of hope in Iowa has been a grass-roots movement 
toward developing local food systems. This movement is led by 
the Practical Farmers of Iowa and INCA, the Iowa Network for 
Community Agriculture. It connects farmers and consumers 
through direct marketing enterprises. The growth of the number 
and quality of farmer's markets and CSA's, Community Supported 
Agriculture Subscription Farms, in Iowa is being driven by 
consumers who are looking for a source of food they can trust. 
These consumers are willing to pay more for the food that is 
produced on a healthy, sustainable farm by a farmer they know 
by name.
    Widespread interest in local food systems was recently 
shown by over 300 people who signed up and that attended 
workshops held in five locations in Iowa. In fact, we turned 
people away from every one of those workshops. We were able to 
hold 60 people in each workshop and we turned away another 40.
    When Practical Farmers of Iowa announced recently that they 
would work with groups of producers to develop direct marketing 
enterprises, over 30 groups applied. With limited resources, 
they will be able to assist eight groups to develop marketing 
strategies and business plans.
    Working together with Iowa State Extension, the Leopold 
Center for Sustainable Agriculture and USDA Rural Development 
and NRCS outreach, small amounts of grant funds have been 
leveraged to assist the growing number of interested farmers. 
Additional support is needed to support farmers converting to 
new enterprises. Technical assistance in this area is also very 
needed.
    Under the current Farm bill there is little to encourage or 
support farmers who are converting to high-value, market-
oriented enterprises. In a recently completed survey of 
specialty produce growers in Iowa, 56 percent had less than 
twelve acres in production. With limited acres and no corn 
base, often they are not even considered farmers under USDA 
designation even though they often feed 20 to 60 households, 
supply the local farmer's markets and provide social, 
educational and environmental benefits to their communities. On 
the other end of the scale, 25 percent have 75-1500 acres under 
production, much of this in 7-year organic field crop rotation.
    As you re-structure the Farm bill, I urge you to consider 
these farmers and their communities. Direct payments that focus 
on re-building our natural resource base and reward farmers for 
conservation practices--uncoupled from commodity production--
will renew the countryside. I fully support the Conservation 
Security Act as a beginning. Please consider the amount of 
technical assistance that will be needed as cultural and 
economic restructuring takes place. The ACRE proposal which 
would support the development of cooperatives, networks and 
associations of producers and technical assistance, addresses 
this issue.
    One important piece of the Farm bill that I'd also like to 
talk a bit about is the designation and support of the 
Community Foods Security Initiative which builds and 
strengthens food systems at the community level. The Community 
Food Projects Grants Program has provided incomes for farmers 
while improving nutrition for citizens all over the country. 
The Farm to School initiative in particular seeks to improve 
access for local farmers to sell into local schools. In Iowa we 
are working to create a pool of producers that would sell 
ground meat products to Iowa schools. The Community Food 
Security Initiative is the centerpiece of a strong, secure 
America, weaving a tightly woven safety net of food access for 
all citizens.
    Thank you, Senator Harkin, for your work on this most 
important and far-reaching committee. Please design a farm bill 
that marks the turning point for America. We are ready to turn 
away from cheap production that destroys our land and our 
people and ready to turn toward a real future of abundance and 
health. Thank you.
    [The prepared statement of Ms. Holmes can be found in the 
appendix on page 57.]
    The Chairman. Thank you very much, Mary. Now we'll turn to 
John Helbling, General Manager of Economic and Market 
Development for Alliant Energy.

STATEMENT OF JOHN HELBLING, GENERAL MANAGER OF ECONOMIC MARKET 
                  DEVELOPMENT, ALLIANT ENERGY

    Mr. Helbling. Thank you, Mr. Chairman. I appreciate the 
opportunity to talk about something that's extremely important 
to our communities as well as Alliant Energy as a whole.
    We serve 1.2 million customers in four Midwest states. The 
minority of those are in urban environments. The majority of 
them are rural communities such as this bill hopefully will 
address.
    I want to talk about two issues that impact rural economic 
development of a whole broad spectrum. One is affordable 
housing and the second is biomass energy opportunities. I 
congratulate the Senator for his initiative on establishing an 
energy title in the Senate Agricultural Bill because I feel 
that this has been a long sector that the agricultural 
community has ignored and not taken advantage of.
    First, Mr. Chairman, I want to take the opportunity to 
thank you for your leadership in this issue. Your assistance 
enabled Iowa farmers to provide set-aside switchgrass to 
Alliant Energy for the biomass-to-energy demonstration project 
at the Ottumwa Generating Station which, as you know, is a part 
of the Chariton Valley Biomass Project. Thanks to your 
assistance that project continues to grow.
    I want to talk first, briefly, about housing. Alliant 
Energy's diversified holdings include Heartland Properties, a 
company that invests in and helps create affordable housing in 
communities served by Alliant Energy. Your support for the 
Eagle Bluff Apartments in Fort Madison is greatly appreciated. 
It is an example of the work Heartland undertakes along with 
other community developers to meet the rural housing needs of 
low income seniors. Eagle Bluff was made possible through the 
U.S. Department of Agriculture's Section 515 Rental Housing 
loan program which offers some flexibility to finance both new 
construction and the rehabilitation of aging rental housing.
    While construction costs and the need for quality 
affordable housing continues to rise, the program has faced 
congressional budget cuts over the past decade. Construction in 
rural areas costs nearly as much as the urban ones, but 
developers cannot charge anywhere near the same rent. The 
marketplaces will not bear it. If rents are too high, seniors 
and families are left with inadequate housing conditions or are 
forced to leave rural communities to look elsewhere for more 
affordable housing, either are significant blows to rural and 
small town communities. The low interest loans available 
through USDA are needed to keep rents affordable. Further, the 
program combines well with other housing programs, such as the 
Federal Low-Income Housing Tax Credit to reach very low income 
households. We recommend, Mr. Chair, that the decline in the 
Department of Agriculture Section 515 Rental Housing loan 
program funding levels be halted and that appropriations be 
maintained at the fiscal year 2001 level of $114.3 million to 
adequately address low-income needs in rural areas.
    The second issue I want to address is incentives for 
resolving what I think is a win-win solution for both ag waste 
management and agricultural energy needs. We represent and I 
represent an energy company. That's a strength that we need to 
focus on. Alliant Energy is committed to finding new and 
applying new and innovative solutions to energy and other 
problems today. I mentioned the Chariton Valley Biomass Project 
which involves testing whether switchgrass can be co-fired with 
coal to power a commercial generator to make electricity. We're 
extending this same question to other forms of biomass, 
exploring the practicality and profitability of converting 
animal waste, crop residue and other forms of waste and 
combinations of waste ultimately into electricity or other 
forms of energy such as steam.
    Presently, Alliant is working with the Iowa Department of 
Natural Resources to install an anaerobic digester fueled 
cogeneration facility at the Top Deck dairy farm in Westgate, 
Iowa. Digesters like this convert cow and swine waste to 
methane which is burned to generate electricity. Capturing the 
methane prevents it from escaping into the atmosphere and 
eliminates 90 percent of the odors from the waste. Runoff is 
dramatically reduced. The farmer's electric needs are 
supported, often entirely, while excess power is sold back into 
the grid, another revenue stream for the agricultural 
community. The waste from the digester can also be used as a 
marketable fertilizer product that has 50 percent higher 
quality than the unprocessed manure going into the digester.
    Biomass energy production is one of the most exciting 
applications of ag wastes if it works economically because of 
the numerous environmental and agricultural problems it can 
help farmers solve. Because this is an emerging technology it 
does need some incentives in order to make it work financially 
for the farmer. That is why Alliant Energy is supporting Senate 
Bill 1219 sponsored by Senator Grassley expanding the Section 
45 tax credit currently available for electricity produced from 
wind, solar, poultry waste and certain closed loop biomass to 
cover electricity produced from swine and bovine waste. We hope 
this bill will be added to any Senate Energy legislation 
considered later this year and also it could be considered the 
basis for the energy title.
    In addition, Alliant Energy supports SEC. 3102 of H.R. 4, 
legislation passed recently by the House relating to further 
expanding the eligibility of renewable open-loop biomass 
eligible for the Section 45 tax credit. Alliant Energy is also 
working with the Iowa DNR to set up a fast-track permitting 
process for biomass-to-energy projects. In Nevada, Iowa, we are 
working with the Iowa Energy Center on biomass conversion and 
we are beginning to explore how swine manure in particular 
might be complemented with other crop residues and ultimately 
converted to energy.
    It is important to remember that the technology we are 
looking at and the waste might work best to produce gas or to 
run a generator or to be co-fired with other fuels or to 
produce steam unable to be fired at a higher temperature. Any 
Federal support should be mindful that the technology and fuel 
sources are still fluid at this point and language assisting 
development should not accidentally cutoff what might end up 
being fruitful avenues of economic, technological and biomass-
to-energy development.
    Alliant Energy proposes that the Natural Resource 
Conservation Service expand their eligibility for matching 
loans for collection and retaining structures to include 
structures intended to hold manure for digesters. This would be 
under the Environmental Quality Incentive Program, EQIP, funded 
under the Section 4 USDA Waste Storage Management Code. Alliant 
Energy also supports any encouragement you can give to the 
Offices in the Department of Agriculture such as Energy Policy 
and New Uses and Agricultural Research and Technology Transfer 
to direct more of their financial support for innovative 
technology into early research and demonstration projects 
involving biomass and biomass-to-energy applications. The 
economic opportunities for the farm economy suggest that these 
are fruitful areas to pursue. Farmers need economic incentives 
to develop sound environmental practices that have both 
societal and economic benefits.
    One final word, Mr. Chair, on a program we conduct on the 
state level which should be of interest to the committee. 
Alliant Energy is offering a Demand Side Management utility 
program to farmers directly and specifically. These are 
incentives to farmers to acquire and to install energy-
efficient technologies at a much broader scale than had been 
done in the state of Iowa before. For farmers who have not 
sought energy efficiency in the past, the energy savings can 
literally be enormous. We are confident that the farm community 
will see significant savings in the years to come.
    In conclusion, Alliant Energy is actively committed to 
agricultural and rural economic development. In part, this 
means making farms and farmers more competitive and more 
efficient as businesses. In part, this means helping to make 
and keep our rural communities a place to live and work and 
grow in.
    Thank you, Mr. Chair, for this opportunity to testify and I 
look forward to answering any questions.
    [The prepared statement of Mr. Helbling can be found in the 
appendix on page 59.]
    The Chairman. John, thank you very much. I congratulate you 
and Alliant Energy for all of your forward thinking and getting 
involved in the alternative energy projects that you mentioned. 
I have some more questions about that. Let me just review, if I 
might, to make sure I understand what everyone said.
    We heard from Ross who said that basically with the WTO we 
have to make sure we're in the amber box in our farm bill, and 
that trade is about 50 percent of our crop income. Ross feels 
that we should continue the AMTA payments--correct me if I'm 
wrong--and that we should re-adjust loan rates but keep the 
soybean loan rate at $5.26, and re-adjust loan rates for 
historical averages. He wants a counter-cyclical support 
program, expansion of the conservation reserve program, and 
elimination of the limits on participation. He pointed out that 
he could not participate. He has three families that he 
supports and because of those limits he can't participate in 
the program. He mentioned an environmental incentives program 
they supported and an energy title they support. He supports 
and wants to expand the scope of trade in farming.
    Mr. Krier said that the current policy is not working. 
We've had 30 percent decline in prices. He mentioned the 
outdated bases that we have and proposed we raise the market 
loan rate and index them to the cost of production. He said we 
needed more renewable fuels, emphasis on that. Mr. Krier 
suggested we have a farmer-owned reserve--I think he said 
basically for ethanol or energy production. Mr. Krier says we 
should enforce the payment limitations, also mentioned a 
voluntary flex-fallow system was needed, mentioned in trade we 
need country-of-origin labeling plus environmental and labor 
regulations and said that in rural development we needed some 
value added enterprises and financial help for those.
    Deb Ryun mentioned that 25 percent, she believed, of the 
funding in the Farm bill ought to go for conservation. 
Flexibility should be built in to the program and research and 
education is critical. She liked the Conservation Security Act 
as a centerpiece of the new bill, mentioned that incentive 
payments should go to all types of farmers and not just a few 
and that it should compliment and not replace the existing 
programs. She also said that we should support the continuation 
and strengthening of the present programs and that conservation 
compliance is needed. Ms. Ryun opposed shifting the EQIP 
program to the Farm Service Agency and mentioned that the House 
bill provides less than 10 percent of the funds to producers on 
working lands. Maybe we'll cover that in a little bit.
    Mary Holmes said that basically the environmental costs and 
the social costs are billed to the rural communities and 
they're the ones that pay it, indicating we need that 
development of local food systems. She mentioned INCA in Iowa 
and the workshops that they have around Iowa were well 
attended, that there's little or no support in the present farm 
bill for changing practice if farmers want to change their 
practice. She also supported the Conservation Security Act and 
mentioned that the Community Foods Security Initiative that's 
in the present Farm bill needs to be extended.
    John Helbling mentioned both affordable housing and energy. 
On housing he mentioned the 515 rental program that we've had 
for a long time under Farmer's Home, now Rural Development. He 
mentioned the Eagle Bluff project that I'm familiar with in 
Fort Madison. He said that many elderly are being priced out of 
rental markets in our small towns and communities and mentioned 
that we needed to maintain a $114.3 million for section 515. He 
also said we need to extend the biomass to other items like 
animal digestives for direction of methane, also support Senate 
bill 1219 produced by my colleague, Senator Grassley and to 
expand Section 45 to cover methane. Now, he mentioned both open 
and closed loop biomass systems need to be supported, and 
because technology is very fluid at this point, we have to be 
very careful of what we do. He mentioned expanding the 
conservation program to build storage for manure for 
digesters--I think that's what you said. That's what I wrote 
down anyway, and mentioned at the end that Alliant Energy is 
providing incentives to farmers to apply energy saving 
technologies. I don't know exactly what all those are, but 
maybe we'll get into that.
    Mr. Helbling. I can provide those to you in detail, sir.
    The Chairman. Thank you all so much for your testimony. I 
have some questions for the panel and then we'll open it up for 
the audience.
    Let me just say at the outset how proud and privileged I 
feel to be the Chairman of the Senate Agriculture Committee. 
I'm the first Iowan to chair it since 1910. I feel very proud 
to have this opportunity and responsibility which I take very 
seriously. I've been on the Senate Agriculture Committee now 
for 17 years and 10 before that in the House. I've had 27 
years. I legislated a lot of farm bills. I have some real 
questions about what's happened over those years and the 
directions that we've taken. I say to those of you who perhaps 
think we need to change direction of the Farm bill--which I do 
also--that essentially we've been going down this road for a 
long time. It's pretty hard to turn everything on a dime. We 
may have to think about how long it's going to take to turn 
this thing and get it moving in a different direction. I just 
want to lay that out there. I don't know that everything will 
be changed all at once, but certainly some changes do need to 
be made.
    When I first took over chairmanship of the Agriculture 
Committee I asked this question. I have asked this at every 
hearing: Should Federal farm programs continue to support every 
bushel, bale and pound that is produced and earned? I just ask 
that question. If the answer is yes, I would like to have the 
justification for it. If no, then I'd like to know what should 
replace it and where should we go? That is just an essential 
question that we have to ask. The next question is do we take 
into account all of the consequences of an action that we take? 
We say, we're going to do this and we know how it's going to 
effect one element. How does it effect other elements? How do 
we take those into account? Those are really the few 
fundamental questions we have to ask.
    First of all, let me thank all of you for the strong 
expression of support you made for conservation. That is going 
to have to be an essential part of the new Farm bill.
    Mr. Paustian, you say that you support continuing fixed 
AMTA fixed contract payments. I have some question about 
continuing those into the future. Since these payments are 
fixed and then they're written into the bill so we know what 
they are every year, do they not, then, become reflected in 
rental rates and land prices every year? Do we not create some 
kind of a bubble and it's reflected into increasing land prices 
above what the value of the commodity is that can be produced? 
If you have that same payment that everyone knows what they're 
going to get every year regardless of what the price, does that 
not get reflected in that price?
    Mr. Paustian. Yes. Possibly it does. It does provide a way 
for farmers who plan in that year as far as crop inputs and can 
plan a little bit ahead of that. When he has to go to his 
lender he can tell them what the projected income is and what 
his expenses are going to be.
    The Chairman. That's a question for everyone here and for 
you on the panel. It seems like our farm programs over the last 
20 years or 30--I don't have a definite cutoff here--the last 
20 or 30 years basically have had the unintended effect of not 
only increasing farm size but increasing land prices above 
really what the value of that commodity compares. We have what 
I call a bubble out there. It's been built-in. In other words, 
I ask this question. If you have a system that pays for every 
bushel and bale and pound that's produced--and since I'm not in 
the south I can use just bushels here in this audience--does it 
not mean that the bigger you are the more you get. That means 
you can bid up the price of land more than what your neighbor 
is farming and get it up and then next year you're going to get 
that too so you keep bidding it up? I ask that question because 
it seems like that's what's happening.
    Mr. Paustian. Yes. It appears that way. The larger farmer 
gets a bigger payment but that's over more acres too. When you 
look at it on a per acre basis I don't see that much 
difference.
    The Chairman. Well, that comes back to my question again. 
Is that good policy for us to do that? I don't care if a farmer 
wants to get big. If you can get big, God bless you. That's 
what the market's all about. Should the government and the 
programs sympathize and be making the payments that actually 
encourage and promote that? If a farmer can be more efficient 
and more productive, work harder, save money and increase their 
capacity, that's fine. I have no problems with that. I just ask 
the question about whether or not the government should be 
involved.
    Mr. Krier, you mentioned the cost of production and raising 
the marketing loan rate and indexing the cost of production. 
Well, I've wrestled with this a long time, but--It's very 
attractive. However, there's a wide variation in the cost of 
production for any given commodity, even for corn. It varies 
from farm to farm, region to region. If you're on the outskirts 
of Cedar Rapids it might be one thing and if you're in southern 
Iowa it might be quite another. How do you figure what it is 
because it various so much?
    Mr. Krier. That's difficult, I guess, because we're dealing 
with farmers all the way across the nation.
    The problem with the Farm bill is you're going to have a 
fixed bill for 10 years and the cost of production is going to 
be changing every year.
    The Chairman. If we reduce that on an average then to some 
farmers you're giving too much and for some you're giving them 
too little. That's the tough thing. Now, there does seem to be 
a difference here. I want to cover the size of livestock 
operations. Right now under the CAFO rules, Concentrated Animal 
Feeding Operation, if you have the equivalency of 1,000 head or 
more you are not eligible for the manure management program. 
There have been suggestions that that will be raised. There 
have been suggestions that we ought to just make it a money 
cut, up to a maximum amount of so much money regardless of your 
size. We have basically three things: Either keep the limits 
that we have now, raise the limits above 1,000 to some other 
level wherever it might be, or three, the maximum amount of 
money you could get we don't care how big you are. What do you 
say on that?
    Ross, you seem to think that the limit ought to be raised. 
Jim, you seem to think that the limit ought to be kept down.
    Mr. Krier. The limit needs to be set and kept there instead 
of coming in a year or two later and putting the pressure on 
and then upping the payment limits the way we have. We had the 
limits set, supposed to receive ample payments, maximum 
payments and these payments keep getting bumped. They need to 
set them.
    The Chairman. I'm just talking about the limits on EQIP for 
conservation.
    Mr. Krier. It would be the same thing because if you keep 
rolling the limits higher that allows the larger productions to 
keep getting money.
    The Chairman. Ross, what do you say?
    Mr. Paustian. The limits should be raised.
    The Chairman. Do you have any idea how high?
    Mr. Paustian. I can't say that right now. That's kind of 
tough. Definitely above 1,000
    The Chairman. Well, this is something maybe somebody else 
has got some views on in the audience. The point is that under 
the Clean Water Act the minimum was set and it was assumed that 
anyone who had over the equivalency of 1,000 units should be 
able to take care of their own manure management. They had to 
be subject to the regulations. It was over 1,000 subject to the 
regulations and therefore they had to pay for it themselves. 
Under 1,000, not subject to the regulations. We recognized in 
the Farm bill that this also contributed to environmental 
pollution so we wanted to support and encourage the smaller 
units to have a good sound manure management program so we 
provided EQIP money to them. That's where this is. If, in fact, 
we're going to open it up to above 1,000 we're going to have to 
put a lot more money into it. If we don't, then the bigger 
operations will get more money. They'll require a lot of the 
money and there will not be enough money left for the smaller 
operations. That's the dilemma that we're on right now on this 
thing.
    Ross, you mentioned rebalancing loan rates. You said keep 
soybeans at $5.26. That means we've got to raise the others. Do 
you have any thoughts on how high do we do it and if we do 
raise those loan rates in accordance would that just promote 
and encourage more production, more planting and thus more AMTA 
payments? Do you see what I'm saying? If you have a higher loan 
rate doesn't that just promote more planting?
    Mr. Paustian. Yes. The idea behind announcing that was that 
it appears that especially this year we're getting more soybean 
planting because of the imbalances between corn--in this area--
corn and soybeans. That's why it balances out. This year as far 
as more acres being planted there's only a certain number of 
acres in the state and if more acres of corn are being planted 
that's less acres of beans. I don't see that as being a real 
big problem. The total number of acre farms is going to be the 
same.
    The Chairman. Might be some shifting in there?
    Mr. Paustian. Yes. Just shifting.
    The Chairman. OK. Mary Holmes, you mentioned some things 
that I'm quite interested in in terms of developing local food 
systems and things like that. It is ironic that in a rich 
agricultural state like Iowa we import almost all of our food. 
That doesn't make sense, but then again how feasible is it, 
really, to think that we're going to change the system that we 
have in Iowa to get more local grown produce or whatever? I 
assume there's a certain amount of that we can do, but isn't 
that just a small part of our economic structure?
    Ms. Holmes. It is small, but it's growing very rapidly. 
Five years ago we had about six CSA's in the state. Today we 
have 60. I have communities calling me every week saying how do 
I reach out to farmers? How do I develop some of this in my 
community? I believe consumers more and more are concerned with 
the safety and the health of their food and they also are 
concerned with having farmers in their area. As we see the 
incorporation of the larger and larger farms we don't have 
those people in our school systems, we just have less people to 
go around in the communities. Communities are looking at it as 
a way to do both community development and economic structure.
    The Chairman. One thing you mentioned was that a lot of 
farmers don't even benefit from farm programs.
    Ms. Holmes. Absolutely. Right.
    The Chairman. What about farmers that have a long history 
of hay and stuff like that? They might not have a good base and 
so they don't----
    Ms. Holmes. Right. They don't have a corn and soybean base. 
If they don't have that then they don't qualify.
    The Chairman. We have a lot of people that have questions. 
John, again, I want to congratulate you. The biomass project 
that you've done in Chariton County is a great incentive you're 
providing out there. The fact that you're now looking at how to 
move into other areas like methane production, this is the kind 
of partnership that we're going to have to have Federal, state, 
local, private sector. You mentioned about the digesters and 
we're going to look at this and we're going to have an energy 
title, as I said, in the Farm bill. Do you have to have a huge 
operation for this to work? Can you scale this down?
    Mr. Helbling. Right now we're looking at dairy operations 
with 500 head of cattle and up. With hog confinement we're 
talking about 1,000, but technology is allowing us to bring it 
down. It is a matter of economics right now. Capital costs are 
quite high for some of these. It may get to the point where 
some producers--because of their neighbors or whatever--may not 
be able to get a permit to do the manure management the way 
they are. We think that the digester is growing. USDA has 
indicated it can help us bring that level of production down 
and make it accessible to lower and smaller levels of 
production. It takes right now about 750 head in order to make 
this thing close the cash-flowing out.
    The Chairman. Let me ask you a provocative question. If you 
move ahead--Technology is good. If there's a market out there 
you might find new technologies that could be applicable to 
smaller----
    Mr. Helbling. That is correct.
    The Chairman. I'd like to say this to all of you out there. 
The House of Representatives 2 weeks ago passed an energy bill. 
Most of the press was on the fact that there was a lot of 
drilling in the arctic national wildlife area. What they didn't 
mention is it provides up to $33 in tax credits, tax benefits 
for oil, gas and coal over the next 10 years. I mean, to my way 
of thinking that's 19th, 20th Century technologies. When I look 
out over a field out here I don't just see food, I see a lot of 
renewable fuel out there too. I just keep thinking that if we 
just had one-third of those tax breaks--What if we had $10 
billion that we could put out so that your consortiums and 
things could get together and build these tax write-offs and 
tax credits that they're going to try to give for drilling off 
the coast or something like that? Would that make an impact?
    Mr. Helbling. Not even talking about the closed-loop 
production, if you look at the waste recovery which is why 
we're focusing on methane right now which is a waste product, 
which is an environmental issue. If we harness all the methane 
that's being produced right now as a waste product and 
converted it to energy we could substantially meet all of 
Iowa's energy requirements. Right now most of that is not 
financially or economically feasible. There is enough methane--
there's enough energy there to provide it, but we can't afford 
that energy right now. We do need assistance and that's why 
we're asking for the Section 45 tax credits to be extended from 
closed-loops to open-loops to allow us to take advantage of not 
only the manure but other residual crop residues that also are 
generating methane and use that for renewable fuel.
    The Chairman. There's an ethanol plant I know of in Kansas 
that's using all of their heat source for the making of ethanol 
from methane from I think both landfill and from feeding 
operations.
    Mr. Helbling. We are currently working with five----
    The Chairman. This is the last one for the panel. Just one 
question before I open this up. What is a closed-loop and an 
open-loop?
    Mr. Helbling. The closed-loop under the tax code right now. 
Closed-loop is an agricultural product that is grown 
specifically for the generation of energy. Switchgrass in this 
case would be considered a closed-loop biomass source as 
opposed to open-loop which is--We look at it as the waste 
streams of other agriculture production. It was not grown for 
the specific purpose of generating energy and that is a tax 
code issue more than a science or a technology issue.
    The Chairman. I understand. Thank you all very much. I'm 
going to have to ask that you give your name as clear as you 
can for the reporter and I am going to have to ask you to limit 
your comments to a minute to give everyone a chance. I'll just 
go back and forth.

                     AUDIENCE PARTICIPANTS

    Mr.  Wilson. My name is Brad Wilson. We've had some great 
discussion here and I'd just like to focus on clarity, that we 
be clear about things. It's so confusing sometimes, this farm 
policy. First, keep in mind what are the core issues. I find 
that as issues that have the power to destroy family farms and 
dole out subsidies to corporate welfare activists or on the 
other hand to really help farmers. Of course, we have the 
fringe issues and we have had some excellent discussion up here 
with some good definitions. I'm going to speak for the other 
side and talk about the other definitions that are used by 
politicians coming out of Washington on some of these things. 
One general point is a statement that we can't go back to the 
field programs of the past. What that means is we can't update 
successful commodity programs from the past. Instead, we only 
go back to corporate welfare and Hooverism. Another term that 
we heard----
    The Chairman. I'm going to have to ask you to sum up. If 
there's room at the end you can go around a second time.
    Mr. Wilson. There's still happy days I'd like to add. A 
hearing is a place where you call the office of the senator and 
you're told you'll have 3 minutes. If you actually show up 
you'd find that after an hour and a half three-fourths of the 
time the people back here will have less and less time to 
speak.
    The Chairman. Yes, sir.
    Mr. Heithoff. Good morning. My name is Jerry Heithoff. I'm 
a farmer from Nebraska and I raise corn, soybeans, hogs and 
cattle. Mr. Chairman, first of all I'd like to congratulate you 
on your new position and thank you for letting me voice my 
opinion. I won't be able to read everything I have here, but 
I'll try to sum it up quickly.
    The Chairman. If you have statements, I'll put them in the 
record.
    Mr. Heithoff. The current system of decoupled welfare type 
payments is not a substitute for a fair price in a competitive 
marketplace. If you ask for a show of hands in any room full of 
farmers whether they want decoupled welfare type payments or a 
fair price in a competitive marketplace, the fair price in a 
competitive marketplace wins every time, yet many of the 
politicians and commodity organizations that are supposed to be 
representing us farmers continue to tinker with a farm bill 
that most farmers are fundamentally opposed to.
    Senator Harkin, I think you agree with me and most farmers 
that ag markets are a long way from either fair or competitive. 
The 1996 Farm bill makes an already bad situation worse. Thanks 
to the 1996 Farm bill the marketplace value of my corn and 
soybeans has collapsed.
    Some ag producers do not fully understand that until 
farmgate prices exceed the marketing loan rates their incomes 
will not actually go up. As long as the cash market is below 
the marketing loan rates, they are either getting more income 
from the market and less in LDP's or less from the market and 
more in LDP's. Either way, their total income is about the same 
and well below their cost of production. This is why a new farm 
bill must force the grain traders to pay us a fair price for 
what we produce in the first place.
    Why should I sell my products for less than my cost of 
production? In order to get higher prices for what I produce, I 
want the marketing loan rates to be set at a minimum of 100 
percent of my full cost of production.
    Our current trade policy is a dismal failure. In 1996 our 
ag balance of trade was $27 billion. Last year it was down to 
$12 million. The only Farm bill proposal that I have seen that 
would maintain planting flexibility while also forcing the 
grain trade to pay farmers a fair price for what they produce 
and staying within the budget guidelines is the American Corn 
Growers Association and the Nebraska Farmers Union farm bill 
proposal. I hope you give that approach serious consideration. 
Thank you for your time.
    [The prepared statement of Mr. Heithoff can be found in the 
appendix page 64.]
    The Chairman. I do have all the proposals from all the farm 
groups. My staff has been going through them on a continual 
basis.
    Mr. Specht. John Specht, a student at Mar-Mac High School. 
Specht, S-p-e-c-h-t.
    If, through the opposed free trade agreement of the 
Americas, every nation in the western hemisphere besides Cuba 
will be able to freely exchange goods including commodities, 
what's to stop countries like Argentina and Brazil from 
completely dominating the beef, corn and soybean markets in 
other countries of North and South America?
    How can this and other free trade agreements be beneficial 
to the farmers of Iowa and the rest of America besides those 
which are owned by corporations which also control ag 
production in Argentina and Brazil?
    The fact that these free trade agreements are spawned by ag 
giants as being beneficial to small farmers only proves the 
fact of their total dominance of the current system which 
rewards increased production when as anybody who knows anything 
about economics knows the greater the supply the lower the 
demand and lower prices. Thank you.
    Mr. Lamb. Senator, first I'd like to thank and commend you 
for coming out to the very heart of the heartland and giving 
these good people an opportunity to express their thoughts and 
concerns on a public policy that effects every person in this 
country in some way, shape or form. My name is Gary Lamb. On 
October 7th of this year it will mark 49 years since my father 
lost his life in a farming accident and I took over the family 
farm. In that half a century I've seen it all, Senator. I've 
seen every sight you can imagine. I've seen high prices and low 
prices and good production years and bad production years and 
floods and droughts, but I can honestly say I've never 
experienced in a half a century anything like I've seen in the 
last 3 years when all of our major commodities are at 20, 25-
year record low prices. To give you some measurement, in terms 
of real dollars even with inflation the market price of a 
bushel of grain the last few years would buy less goods and 
services than the market price of a bushel of grain did for my 
father and grandfather in the Great Depression of the 1930's.
    I also have served in the last 8 years as chairman of the 
Farm Service Agency State Committee. As you well know the 1996 
Farm bill was based on the principle that we would have 
transition payments for 7 years and then we'd phaseout all 
income protections and price supports. As you well know we have 
had appropriation aid packages in the last 4 years. To give you 
some measurement of that in my home county alone, Tama County, 
we pumped out $30,528,000 to 1272 farmers. If you average that 
out that's an average of $24,000 per farmer in Tama County. 
Now, if anyone in this room or this nation thinks if you remove 
that $24,000 from each Tama county farmer and you remove that 
$30 million from Tama County and you remove nearly $5 million 
from the Iowa economy--If you for 1 minute think we wouldn't be 
looking at a gigantic economic trainwreck of great proportion 
out here then you don't understand agriculture and what it's 
all about.
    I would like to remind us all here today of the thoughts 
and the words of the last U.S. Secretary of Agriculture from 
the State of Iowa, the great visionary and innovative ag 
leader, Henry Wallace. When they first implemented Roosevelt's 
farm program his response was rather simple: I've never met a 
farmer yet that didn't want to get his price from the 
marketplace.
    If we truly understand the inherent weaknesses and 
vulnerabilities of production in agriculture and what makes it 
uniquely different from any other industry, then we would 
understand the need to have in place the checks and the 
balances and the mechanisms that will encourage or at times 
force the marketplace to give the farmers a decent price. What 
other entity other than government can do that? Those words, 
Senator, are probably even more true today than they were 60 
years ago because of the lack of enforcement of antitrust trust 
laws, with the rapid mergers--[Applause].
    As much as we would want it that way, as much as we would 
wish it that way, it's virtually impossible to think about a 
fair competitive marketplace giving us a decent price.
    I may be able to best express my thoughts, Senator, by 
telling you about a dream I had recently. I dreamt that the 
small rural community of Chelsea was alive and vibrant again 
much like it was when I graduated from high school in 1955. I 
dreamt that the three grocery stores and the three implement 
dealers and the three feed stores and the two elevators and the 
two drug stores and the hardware store and the lumbar yard were 
all open again, vibrant.
    We established that understanding that we needed those 
businesses in that small community to provide our needs on the 
farm and those businesses needed us out on the farm to keep 
them in business. I dreamt that on a summer night you could go 
into Wednesday night band concert night and you'd see literally 
hundreds of people visiting and buying groceries and listening 
to the music. I dreamt that on a cold winter night you could go 
into the local high school gym and watch the local high school 
team play teams from other communities. I dreamt that if you 
drove through the streets of Chelsea on a warm summer evening 
you'd once again see retired farmers sitting on the porches in 
the summer twilight watching their grandchildren play while 
their parents shopped and visited downtown. I dreamt that I saw 
a couple of kids on the back of a pony on a lane of a farm 
going nowhere and going everywhere. They were beginning to 
learn and understand the wonders and the values of rural 
America.
    You see, then I woke up and I realized that that was but a 
dream because all of those things I speak of gradually 
disappeared through the years. The only question that remains 
unanswered is can we save those small rural communities that 
still exist out there?
    If you remember, Senator, you had a hearing much like this 
in Ames, Iowa in 1984 or 1985. One of the people who testified 
was a reknowned economist. You asked him the question about all 
the farmers that were being forced into bankruptcy and 
foreclosure and how they were going to effect our communities. 
His answer was that these small rural communities contribute no 
economic value to our nation whatsoever. That may be, Senator, 
but to us they're the most important place in the world because 
to us they're home. This is where we were born, this is where 
we were raised, this is where we put our roots down, this is 
where our parents and grandparents are buried and this is where 
1 day we too will rest. I want to commend and thank you for 
your efforts to try to preserve those places across the rural 
roads of this country that are still important to all of us.
    The Chairman. Thank you very much. That's a little bit long 
there because he speaks poetry. He has a wonderful way of 
expressing himself.
    Mr. Gray. Walter Gray, Delaware County, Manchester, Iowa. 
Senator Harkin, I think the state of Iowa is very fortunate to 
have you in a powerful position, Chairman of the Senate Ag 
Committee and the other committees you are on. I really am 
impressed today with this young man that spoke earlier. I guess 
what we're here today about is to make sure that that young man 
has a place in agriculture. To do this I think this new farm 
program has to look at price supports to a realistic level per 
producer. Crunch the numbers and see whether that's 500 acres, 
800 acres or 1,000 acres that will be supported, not only corn 
and soybeans in this base but also grass and hay. After you do 
this, then let's see what the economists say. If bigger is more 
efficient, support bushels up to this acre level and after that 
turn them loose on the global market and let the bigger 
produce.
    We also have to have country of origin labeling. Now, 
people do want to know where their products are coming from. As 
you look at the trade deficit that we have as a nation--and I 
believe I'm correct that it will exceed $30 billion a month--
how long can a great country stand this?
    We need a competition title in this bill. Earlier you 
mentioned that you supported the competition title in this 
bill. I'd like to see some hearings on that and that title 
included.
    Earlier this year a free democratic process was taken away 
from all swine producers. A free, fair democratic vote was 
overturned by compromise. This is not what this great country 
was built on. This injustice must be corrected and not 
repeated.
    Complacency and compromise have lead to the ruination of a 
lot of great societies. This Farm bill needs to include parts 
that brings back our free markets, our competition and breaks 
up the mergers that ruined our agriculture. Thank you.
    The Chairman. Thank you very much. We are working on 
including a competition title into the Farm bill. I just want 
you to understand, though, that we have some jurisdictional 
problems here. Antitrust and things like that fall under the 
judiciary committee jurisdiction. Having said that, we're still 
looking at how we might work around that and do some things 
that fall within our jurisdiction to be able to address that. 
When it comes to antitrust we just don't have jurisdiction. 
There may be some other things we can do. I invite any of you 
that have some ideas and suggestions to let us know.
    Mr. Ginter. Thank you, Senator Harkin. It's an honor to be 
here. It's also an honor to followup behind Gary Lamb, one of 
the great orators of family farm life production.
    My name is Larry Ginter and I'm a member of Iowa Citizens 
for Community Improvement. I'm from Rhodes, Iowa and I've lived 
on the same farm for 62 years except for a 2-year stint in the 
military. I've been involved in this political and social fight 
to preserve family farms since 1961. During this timeframe I've 
seen farm policy go from bad to worse.
    Since 1952 trillions of dollars have been robbed from rural 
America because the New Deal legislation that matched the 
support price to the yearly inflation of farm input costs was 
scuttled. It is safe to say the farm programs over the past 40 
years have driven farmers off their land and concentrated food 
production into fewer and fewer hands.
    Since 1952 there's been a great tug of war between those 
who favor raising the support prices each year to match 
inflation on farm inputs and a grain cartel that wants to 
monopolize and control the market. Sadly, each year the 
monopolizers like Cargill and ADM buy more political influence 
and curry more favor from our elected officials and each year 
more farmers leave the land and the marketplace becomes less 
democratic and competitive.
    With that said, Grass-roots groups like Iowa CCI, Missouri 
Rural Crisis Center, the Western Organizational Resource 
Councils and 30 other groups that are part of the National 
Family Farm Coalition have come together and agreed upon a new 
farm policy called the Food From Family Farms Act.
    We propose that Congress raise the current loan rate to 
reflect true costs of production which would stop the need for 
farm subsidies and use a non-recourse loan--not a marketing 
loan--to set a reasonable floor under grain prices. We need a 
fair price, plain and simple.
    Congress should establish a farmer-owned grain reserve to 
ensure food security in times of scarcity and price stability 
in times of plenty, maintain flexible planting options and 
establish conservation measures that help protect the water and 
land and help avoid overproduction.
    We demand that all branches of the Federal Government 
enforce antitrust laws and stop waltzing with the agribusiness 
giants who are trying to control food production. Our trade 
policy is a sham because it's designed to enrich the pockets of 
corporate agriculture and not family farmers. Trade policies 
should reflect the needs of farmers, laborers and consumers and 
every nation must maintain its right to develop its own 
domestic food policy and protect its environment. Under the 
policies of NAFTA and GATT, coupled with the help of an 
unelected and undemocratic World Trade Organization, that right 
has been eroded worldwide.
    Finally, with regard to the mandatory pork, we need to end 
it now. Last fall, over 30,000 American hog producers voted 
down the pork tax by a clear 53 percent to 40 percent margin in 
a democratic and legally binding referendum. In Iowa we voted 
down the pork tax 60 percent to 40 percent. Despite this, Ag 
Secretary Veneman cut a back-room deal with the National Pork 
Producers Council and now she's trying to flush our vote down 
the drain. Thousands of people are outraged because Veneman and 
the Bush administration have declared war on one of the most 
basic principles that this country was founded on; the right to 
vote and the right for our votes to count.
    CCI and other member groups of the Campaign for Family 
Farms are fighting Veneman's decision in the countryside and in 
court. We need you, Senator Harkin, to stand with us and demand 
that Veneman honor our vote and end the pork tax now. Anything 
less is a blow against democracy and fairness in our land.
    I worked 6 hours to try to get this thing put together and 
they told me I had 3 minutes. That's exactly 3 minutes. This is 
a farm hearing and this is about democracy and justice of 
family farmers, Senator, and it's time that senators in all of 
the states understand what this battle is all about. It's not 
about complacency and it's not about kissing up to the big 
agriculture giants.
    [The prepared statements of Mr. Ginter can be found in the 
appendix on page 74.]
    The Chairman. You said more in that 30 seconds than you did 
in the 3-minutes before that. If you've got a written statement 
I'll put it in the record. I'd rather hear from your heart what 
you got to say if you have any personal kinds of insights or 
something like that.
    Mr. Demmer. My name is Wayne Demmer. I'm a livestock and 
grain producer from Dubuque County. I guess I'm here today to 
ask you to support the small family farms in this country. The 
first place is farm bills should start by capping the amount of 
money that goes out. I have several counties here that the Des 
Moines Register posted with the top 10 farmers of each county. 
I'll present them to you today. This is why my sons who want to 
farm can't compete against farmers that are getting a half a 
million dollars, $1 million from the government. We have to be 
able to farm the farm. We've got to remember if dad makes a 
profit his sons will farm too. What has happened today is we're 
going to lose our next segment of agriculture because our 
family, our sons can't farm. They see dad and everyone else 
trying to survive. I guess what I'm trying to say here today is 
if we keep family farms, the cities and towns of Iowa will 
prosper, not be left vacant.
    We've got to remember the House bill has already summarized 
they want to raise the checkoff limits. They say that the big-
size farms are much more efficient than the small ones. We need 
cap. We've got to get it back. We need government grain 
reserves so we can put a bottom on the cost of production 
floor. Let the big grain purchase our product for at least what 
it costs us to produce it.
    We have a lot of alternatives out here. You talk about 
conservation and I agree with you 100 percent, but we have one 
farming program promoting beans in the hills of Iowa and we 
have another program that says we have to have a CRP to stop 
the erosion. We're competing against each other.
    You have to remember that I raise hay, I raise oats, I 
raise grain and I raise beans. I'm doing a conservation 
program. I have fields that are 2, 3, and 4 years seeded out. 
You should benefit the people that are already conserving the 
soil, not the people that are abusing it.
    In closing, as the two gentlemen before, I've been very 
active in the pork checkoff. It's time--60 percent of the 
producers in Iowa voted to end it. We voted it in, we voted it 
out. It's time for you to stand up and support the pork 
producers of Iowa and support democracy and our right to vote 
for it to the court.
    [The prepared statment of Mr. Demmer can be found in the 
appendix on page 78.]
    Mr. Stevenson. Hello, Senator Harkin. I'm Rod Stevenson and 
I farm 820 organic acres in southern Iowa.
    The Chairman. What county are you from?
    Mr. Stevenson. Davis County. First of all, I'd like to say 
that this talk of lowering the value of land to make our 
commodities more competitive worldwide scares me to death. I 
don't make any money on my farm now and all I've gained over my 
lifetime is tied up in the value of that land.
    What I really came here to talk about is value added 
agriculture. I don't want to take anything away from Mary 
Swalla-Holmes because, frankly, her agency has given us more 
support than anyone else we've gone to. Thank you, Mary. To add 
to what she has to say we need to focus on value added 
agriculture that serves our more conventional Iowa farm in 
addition to the small market gardeners. We can't all raise 
vegetables for each other. I personally am involved in three 
different value added agricultural efforts and anything you can 
do in our farm bills to enhance that and provide us technical 
support and the kind of expertise we need to run these as value 
added co-ops, that will give a big boost to us as farmers and 
serve all of rural America. We don't have MBA's here and the 
kind of skills that are required to run these sophisticated 
businesses on a competitive level. I have a statement----
    The Chairman. Let me ask a question. You say you 
organically farm?
    Mr. Stevenson. Yes.
    The Chairman. What do you raise?
    Mr. Stevenson. My cash crop is tofu soybeans.
    The Chairman. You raise soybeans of a particular----
    Mr. Stevenson. Several varieties.
    The Chairman. Do you have to clean them and all----
    Mr. Stevenson. Right. They have to be bagged and cleaned.
    The Chairman. Where do you market them?
    Mr. Stevenson. Mine goes to the Heartland Organic Marketing 
Co-op and goes to Japan. The domestic market is developing in 
soy milk as well.
    The Chairman. Do you raise anything else organic or just 
beans?
    Mr. Stevenson. I haven't had any success with my rotation. 
That's one of the reasons I'm so dependent on farm programs. 
For instance, this year I didn't get any corn planted because 
of the wet spring. I have neighbors who never got any crops 
planted. My wheat that I had the corn and wheat both 
contracted. My wheat got taken by the weeds because it rained 
through the harvest period. I'm still hoping to get some of 
that. My beans were planted a month later than I normally 
plant. It's a tough year for me.
    The Chairman. Do we have anyone here who is a member of the 
Practical Farmers of Iowa? When I was in Washington in July we 
had Maria Rosen--Ron and Maria Rosen farm out in Shelby County. 
It was interesting because we had all the witnesses lined up 
there, we had the different farm groups and everything and 
Maria was the last witness. She pointed out that her and her 
husband farm 600 acres, they do not have any off-farm jobs, 
both of their sons work in the summertime, they had one full-
time hired man year-round on 600 acres and they're making it. 
About 12 or 13 years ago they shipped it to all organic. They 
raise those beans too and they raise organic barley, organic 
hogs, they raise organic chickens. Her biggest complaint was 
that in the slow transition period they had practically no help 
at all from all of the arms of the Federal Government to the 
extension service to Iowa State in terms of research and 
technical support. She said we need more emphasis in a new farm 
bill about this. You just said that. Maybe this isn't for 
everybody, but to the extent that some people want to do that 
there at least ought to be the technical assistance, support 
and research and incentives that enable them to do so.
    Mr. Stevenson. I agree. Thanks.
    [The prepared statement of Mr. Stevenson can be found in 
the appendix on page 77.]
    Mr. Thicke. My name is Francis Thicke, T-h-i-c-k-e, from 
Jefferson County.
    Senator Harkin, I'd like to address three of the questions 
you asked. You asked if we should support every bushel. I say 
we should not support every bushel. We need to get out of 
denial. What we're doing to the farmers is a transfer 
mechanism, transferring money from the government to the large 
corporations. The more we support every bushel the more we 
support that. This gentleman had an alternative. There are 
alternatives to that. Of course, the Conservation Security Act 
is I think the ultimate alternative. We need to decouple. Let's 
face it. Let's not be in denial. Let's not try to continue in a 
process that's going to take us down to handing over 
agriculture to the corporations.
    You ask, Senator Harkin, do we need to take into account 
all the consequences of our actions? I say we do not. We also 
work with the WTO. Publicly we do. What we're doing I think 
here is handing over world agriculture to the corporations 
again. In Iowa we think by providing the people with corn we're 
going to support the hungry in the third-world countries. We 
are not. The world trade organization is actually going to 
destroy the agriculture in these countries as well as in our 
country. We need to wake up and stop that now.
    The last thing you asked is if we should limit the payments 
for CAFO for the manure treatments. Yes, we need to limit it 
because otherwise we're going to perpetuate this.
    The Chairman. In response to somebody who just spoke a bit 
ago, Mark just handed me this note. I'm not saying that you've 
got to lower land values. That's not my point. My point is to 
ask the question if the system of the farm program payments we 
have now simply go through the fingers of the producer in the 
higher rents, higher land values, all that stuff, go right 
through their hands for equipment purchases and things like 
that, have we promoted a bubble where land prices are here and 
the value down here? You bring the value of the commodity up to 
match what the value of the land is. That's my point.
    Mr. Jepson. Hello. My name is Mike Jepson, J-e-p-s-o-n, 
from Seattle, Washington. I'm here visiting my grandparents. I 
have a question. What scares me from what I've observed and 
being very ignorant on agriculture and just knowing my family 
and seeing my grandfather being sharecropped in the 40's and 
50's, is that the farmers aren't getting support. As a consumer 
working in the school district where it's a Federal lunch 
program I read on the carton of orange juice that it is from 
China and Brazil. Another example would be in the grocery 
stores out there. When I see meat imported from Canada I put it 
down. By putting it in the other packaging I don't know if it's 
domestic or imported meat. The question I would say is I hope 
that the labelling would be better and that they'd get out 
their message. I'm afraid it's all going to be corporate bail-
outs and there's nobody representing the small farmer. A good 
example of that would be people who--I keep hearing the word 
export but the problem is nobody's addressing the word import 
in the domestic market that you already have. We're going to 
get slaughtered because there's nobody watching us. Thank you.
    The Chairman. Thank you very much.
    Mr. Bierschenk. Thank you, Mr. Harkin. I want to thank you 
for two things. I want to thank you for going after those extra 
market assistance payments. That was great for farmers here in 
Iowa. I'm sorry that you didn't get what you asked for. At 
least you asked.
    Second, I'm very proud to have you as my senator because 
you're at least willing to speak at these ag committee hearings 
where a lot of times in the past especially in the House you 
couldn't even get up to speak at that time.
    My name is Gary Bierschenk. I farm over in Benton County. 
I'm also on the board of directors for an organization called 
Organization for Competitive Markets. We're a multi-
disciplinary group of farmers, ranchers, academics, attorneys 
and businessmen dedicated to reclaiming competitive markets in 
agriculture for independent farmers, ranchers and rural 
communities.
    I have a couple suggestions. I'm glad that you think that's 
important because I believe there's only two places to get the 
money for the farmer; one is on the marketplace and the second 
is from the government. That's been unbalanced in the past. 
There's no reason that we can't get our money from the 
marketplace if things are managed correctly. As far as USDA is 
concerned and their regulation enforcement, I believe the Farm 
bill should create a special council for the competition within 
USDA that is Presidentially appointed with the advice and 
consent of the Senate.
    [The prepared statement of Mr. Bierschenk can be found in 
the appendix on page 67.]
    Mr. Zacharakis-Jutz. My name is Jeff Zacharakis-Jutz--I'll 
give you the spelling later. My wife and I farm about 20 miles 
west of here and I'd like to point out there's a lot of people 
in this audience that helped us get started. We didn't have 
families to inherit land from. We didn't get any of that to 
start. We got started with $20,000 that we had saved.
    The point I want to make is simply that we need to do more 
to promote new farmers. The new farm program is one way. We 
need to be looking more at grass-based dairies, ways that we 
can convert CRP for opportunity. As it is now most of the CRP 
in our area is a retired package for farmers who struggled 
while they were farming and are doing quite well thanks to CRP. 
I just think we need to do more to help new people get into 
farming. I hope the new Farm bill does that.
    Mr. Petersen. I'm Chris Petersen, vice president of the 
Iowa Farmer's Union.
    No. 1, I hope, Senator, you can leave a legacy of saving 
the family farm. You're on the right track. We need to get away 
from a policy that eliminates family farmers. The government 
has been guilty of this and the farm bureau and commodity 
groups. I enter a 60-Minutes tape as evidence of that. We need 
a new farm bill centered around family farms, conservation. We 
need a competition title and we also need to keep EQIP funding 
for CAFO down so it helps the family farmers. Thank you.
    Mr. Dietrich. My name is John Dietrich. I'm a policy 
analyst for the American Corngrower's Association and Farmer's 
Union of Nebraska. I also advice a number of other fellow 
organizations around the country on agricultural policy.
    Thank you for the opportunity to talk in Iowa today, your 
home state. I hope people from Iowa recognize that you're 
viewed nationally and have been viewed nationally for many, 
many years as a leader and a rural advocate for rural 
communities and farmers for many, many years. You're very lucky 
if you're in Iowa to have Senator Harkin. Today I'd like to say 
that all these statements by all these people today boil down 
to one thing in the end; Specific legislation must be put 
together by the agriculture committee that addresses the 
concerns of all these people's needs like this around the 
country and that's a very, very difficult job.
    Over the past 2 years my organization and other 
organizations that we work with have put together a farm bill 
proposal called the Family Farm Agriculture Recovery and 
Maintenance Act. That's a proposal that was put together by a 
number of individuals and organizations based on the things we 
hear. We listen. It's the only farm proposal that does three 
things; improves market price, improves farm income over 
current levels and maintains or stays within the budget. I'd 
like if I could--I know I'm running over--address two 
particular items that you have interest in particularly; 
targeting, which everybody has an interest in, and rural 
development.
    Our proposal targets farm price supports to buy maximum 
volume of bushels or pounds produced. The limit would be simply 
based on a family farm unit which would consist of the 
operator, spouse and minor children. The limit would apply to 
that unit whether that unit was--whether those names appeared 
in a single operation or in multiple entities. One individual 
limit would be set for that unit. It will do a number of 
things. I need to get into more specifics with you, but it's 
based on volume rather than dollars--bushels and pounds rather 
than dollars. There's enormous value differences in cotton and 
rice, for example, compared to soybeans and wheat and corn. We 
would bypass those things by basing the limits on volume.
    What I'd like to talk about second is rural development. As 
you mentioned, I think you said one out of fifteen in rural 
communities are farmers. We believe that if you design a farm 
program that enhances farm products and saves program 
expenditures that that money and those years of cost savings 
should--some of that money should be redistributed into the 
rural communities so that communities can immediately see the 
positive benefits of higher farm prices. They need a share of 
it just like we do. That's all. Thank you.
    The Chairman. John, thank you very much. At the end of this 
I am going to have a statement to make about the pork checkoff.
    Mr. McGivern. Thank you, Senator. I'm Ed McGivern from 
Keystone in Benton County, Iowa. I have been farming for more 
than 50 years. I want to congratulate and commend Senator 
Harkin for his work he's done not only lately but throughout 
his political career with farming.
    We all know that there is a crisis. We are already at the 
accident. There are people bleeding whether we can see it or 
not. We need to stop the bleeding and then let's work on 
something to revive the patient.
    We need to have a new farm bill. I believe very strongly 
that that bill should not exceed 5 years. God forbid we would 
have a 10-year one like we have now. We also need to make some 
things simple and we know that that's not always possible. We 
need higher loan rates, we need a conservation program and we 
certainly need a conservation reserve--not only for energy 
security but for national security. Those of us old enough know 
what happens. When we have 100 people we have anarchy.
    Again, Senator, thank you very much for your time. We 
appreciate this.
    I want to just say one thing. The senator is working hard 
on our behalf. He cannot do it alone. He needs our help and if 
it means standing up and taking the first stand, let's do it. 
Let's support him. Thank you.
    The Chairman. I see we're losing people, but I had a number 
of questions that I wanted to ask and get a show of hands. I 
wonder if I should do that before too many people leave. Is 
that OK?
    I wanted to get a sense of how people felt here about 
certain things. I just want to get a show of hands. They may be 
general-type questions. They're not real specific. I wanted to 
get a feel of how you feel about these things. I have about six 
questions.
    Should we raise commodity loan rates? How many think we 
should?
    [Show of hands.]
    How many feel that there should not be any raise in the 
marketing loan rates?
    [Show of hands.]
    Should we restore the farmer owned reserve? How many people 
believe we should have a farmer-owned reserve?
    [Show of hands.]
    How many people don't believe we ought to have a farmer-
owned reserve?
    Should Federal programs incorporate some kind of type of 
payment limitations? I'm not saying where or what. Generally, 
should they incorporate a payment limitation? How many think 
they should?
    [Show of hands.]
    How many don't believe there should be an effective farm 
payment limitation? How many say no to that?
    [Show of hands.]
    Should we have some kind of a voluntary set-aside program 
for a shorter period of time? I don't know the number of years, 
but some shorter period than the CRP. Should we have that? How 
many believe we should have a voluntary set-aside program?
    [Show of hands.]
    How many don't?
    [Show of hands.]
    EQIP, should we limit the eligibility for cost-share 
payments for livestock operations? Should we limit them under 
the CAFO limits of 1000 head or should we go above that? How 
many think we should limit eligibility for cost-share payments 
for livestock under EQIP?
    [Show of hands.]
    How many people don't think we should?
    [Show of hands.]
    Should the length of the Farm bill be--The house passed 10 
years. Should the length of the Farm bill be--Put it this way. 
How many people favor a 5-year farm bill or a 10-year farm 
bill? How many people think we ought to do a 10-year farm bill?
    [Show of hands.]
    How many people think we ought to do a 5-year farm bill?
    [Show of hands.]
    I'm just trying to get some idea whether it ought to be 
longer or shorter. I hope that's fair. All right. Thank you 
very much.
    Mr. Bremley. I'm Ron Bremley from Morley, Iowa. We ought to 
have a 5-year plan for a farm bill. If it works, continue it. 
If it doesn't work, I don't want to be suffering what we've got 
now. There should be an energy title in the next Farm bill 
because I think we have a renewable product out here with corn 
and soybeans for fuel. The farm subsidy should be raised, but I 
think we shouldn't be using the Federal Government to subsidize 
someone for getting huger and huger all the time. There should 
be a cap on that. I got a lot more to be said, but I want to 
hear the other people.
    Ms. Holdgrafer. My name is Carrie Holdgrafer. My husband, 
Brian, and I farm in east central Iowa east of Maquoketa. I 
guess the issue that I would like you to clarify is what 
exactly is a family farm? My husband and I are part of a family 
farm. It's my husband, his brother and his father. Sometimes it 
is more family than I can stand. It's also large and it's grown 
significantly in the last few years, enough so that I left a 
career with a Fortune 500 company to stay home and work on the 
farm. It's grown and it will continue to grow. As I look around 
and see the average age of the farmer in America and rural 
America today, it's going to have to grow because somebody our 
age has to farm those acres someday. The peers that I went to 
school with, I went to college with, many of them chose not to 
go back into production agriculture. Some of them didn't have 
the opportunity. Some of them chose not to. It's hard work and 
they had other interests and other things they wanted to do. 
Our age group is going to have to take responsibility. 
Somebody's got to farm the acres. If we don't, Brazil will.
    I guess another thing I'd like to say is that when I was 
young girl my mom and dad said if you sell a lot of Girl Scout 
cookies, you're going to win the contest and I did. When I went 
to college they told me, if you build a good resume you're 
going to get the best job offers and I did. They told me when I 
started farming with Brian, if you work hard and you work long 
hours and you're innovative and you're aggressive you will grow 
your acres and you'll make it and we have. I hope that we will 
not be kept from growing--even though we're a family farm--by 
limitations if the reason we're growing is because we are 
aggressive. We skip things our friends go to because we work. 
We run extra custom businesses. We do things to make extra 
money and to make our input costs low. We're not growing 
because of an AMTA payment. We're growing because we work hard 
and we work aggressive and we're going to keep doing that 
whether the money comes from the government or not.
    Ms. Jennifer. My name is Jennifer. I want to ask you 
something. My aunt and uncle owned a farm up in Dyersville and 
they could not make it in farming because everyone was just 
buying up everyone else. They have no one to sell their hogs to 
but IBP in Waterloo so why can't they have one in Dubuque 
that's closer? Could you explain that problem?
    The Chairman. What's the question?
    Ms. Jennifer. They want more marketing to sell their 
products to.
    The Chairman. We just don't have enough packers out there. 
That's what we're talking about by putting a concentration 
title in the Farm bill.
    Mr. Holdgrafer. My name is Brian Holdgrafer and I can't 
believe a group of farmers could sit here for two and a half 
hours and talk about a farm bill and never bring up one good 
thing that's come out of the last program and that is 
government assistance and CRC Federal profit program. All the 
money that you guys are kicking into second payments, if you'd 
rethink that once and channel that money putting it into CRC--
putting it into the premium we pay and taking it from $30 down 
to $10 or $12 which most of us like to pay we don't need all 
this safety net because the Federal crop program will take care 
of itself just like every other insurance in the world takes 
care of itself for automobile accidents and everything.
    I guess one other point I just want to say is everybody 
that voted to have a set-aside, I hope you remember that every 
acre we do not farm Brazil will farm. Somebody will produce the 
corn and the beans. If you want to let them do the farming and 
us do the set-aside, that's fine, but I hope you remember that. 
It don't matter what we do, somebody will grow it.
    Mr. Peters. My name is Bruce Peters and I thank you very 
much, Senator Harkin, for coming to the middle of America and 
listening to all the farmers. It provides me with a great 
opportunity to be here, to be able to see. I'm originally from 
Kansas. I grew up on a small farm in Kansas. I'm one of the 
farm casualties of the 1980's. I went back to farm and because 
the prices were climbing at the time I lost my farming business 
and had to go back and work in industry. I'm working for a big 
industrial company on the Fortune 500 now which is not what I 
really like to do. I look out here and I see the average age of 
farmers here is probably 50's and up and I certainly appreciate 
you trying to help get small farmers started. That's one thing 
that I think the Farm bill should really help.
    The other thing is that every time I drive through--We have 
corn in Kansas too and every time I drive by a farm field I see 
an oil well. I applaud you for your opportunity to look at 
vision because when you compare the cost of farming in Brazil 
and the cost of farming here, they can grow soybeans and they 
can grow corn a lot cheaper than we can. On a global basis it's 
hard for us to compete. We do need some safety nets to help us 
in low prices because for the last two or 3 years farm prices 
have been pressed to the point where we're selling our products 
for less than we produce it. Prices will go up in the future, 
but we need more markets is what we really need. We need the 
opportunity of the Federal Government to help us get into 
ethanol markets and get into soy diesel. Right now the gasoline 
that we sell in America, only 1 percent of it has ethanol in 
it. If you compare that to Brazil, 22 percent of the gasoline 
in Brazil is ethanol and it's going up to I think 28 percent. I 
would like a new-based agriculture and not the old agriculture 
where you have all these safety nets and everybody depends on 
the government. We need more vision. We need to look forward to 
providing value-based agriculture and getting the farmer to be 
able to compete with farming. That's the real problem that we 
have. We just can't compete.
    The Chairman. I'd just like to respond to the last couple 
of people. If all we're going to do is to continue to try to 
compete on the global market on a who-to-defeat basis, we're 
going to have our lunch handed to us. First of all, recognize 
we are in a global market. We are there. The doors are open. We 
may wish we could turn the clock back, but it isn't going to 
happen. If all we're going to do is compete on a food and feed 
basis Brazil is going to beat us. They can grow soybeans so 
much easier--and corn.
    I was in China last summer. I remember when the Freedom to 
Farm bill was passed in 1996 thinking China is going to be 
buying corn, they're going to be improving their diets, they're 
going to have this growing economy. Last year China not only 
fed one billion people, it exported corn and they have hybrids. 
They've got corn just as good as anything you'll see out here 
and they've got more land to put in production. I visited those 
farms and mile after mile is some of the best corn you'll see 
anywhere. Guess what, none of the farmers own that land. They 
don't have that cost. The government owns it all. I don't like 
that system. I don't think it's a good system, but you have to 
recognize the reality. I believe just what you've said and 
others have said. We've got to look for new markets. It's not 
just taking land out of production. That could be a dead-end 
street. Obviously we have to have conservation. I'm big on CRP. 
We'll expand it. I have my Conservation Security Act. We've got 
to look at energy. Now, our energy needs are not going to go 
down and we know that we can compete on that basis. It may take 
some up-front money.
    Second, value added other processes, building materials and 
other things that we can make out of the crops and residue that 
we have. We can look at pharmaceuticals and biotech. Some of 
you may be opposed to biotech, but it's here. We can't turn 
back the clock. Through biotech we can raise different types of 
things out there. Farmers might be able to market their beans, 
their oil seeds, their rice, their corn, their soybeans for 
other things in terms of pharmaceuticals, other things that we 
might want to get from that for different purposes. I see all 
that out there and I think I understand the thrust of it and 
that is that we can do more than just grow food and feed.
    I have a picture in my office taken in the year I was born, 
1939. It's a picture of Henry Ford, the old guy, the first one. 
He's got a baseball bat in his hand and he's hitting the trunk 
of a 1939 Ford with a baseball bat. He's hitting the trunk of 
the car. He was demonstrating that this trunk wouldn't dent and 
wouldn't break when he hit it with a baseball bat and it was 
made out of soybeans. That was 1939. Henry Ford predicted that 
the car of the future would be built from soybeans. With all 
the things that they had--plastic--it would be built out of 
soybeans. What happened to that? World War II. We needed oil 
and we needed petrochemical products. We built that whole 
industry up and we've lived on it ever since. Even the 
visionaries of the past recognize what else we can do with this 
great productive capacity we have out there on our 
countrysides. In the 21st century that we have to think about 
it too and what we can do with that great productive capacity 
out there may not just be food. It may be a lot of other 
things. Before you race out of here and say, oh, Harkin doesn't 
want to produce food anymore, I'm not saying that. I'm just 
saying we need to build new markets. There are other things we 
can do with that productive capacity. I didn't mean to take so 
long, but I just wanted to respond to some of the things.
    Mr. Sand. I'm Dwayne Sand with Iowa Natural Heritage 
Foundation in Des Moines. We want you to know how much we're 
depending on you to provide leadership in the Senate and to get 
a good farm bill. You've got your work cut out for you. I'll 
just mention four of the really bad ideas that are coming your 
way from the House side.
    First of all, the intent is to duck Swampbuster. The effect 
on that--while some farmers would like it--is that the economic 
research service shows that Swampbuster keeps 13.2 million 
acres out of production that could otherwise be farmed. The 
impact of that if it were to happen would be a reduction from 
$1.6 to $3.2 billion less net farm income every year in the 
long-run. We want you to save Swampbuster.
    Second, we're concerned about rewarding farmers who bowed 
out and created more crop land. The most recent USDA inventory 
showed 12.7 billion additional acres plowed out from grasslands 
to wetlands in the 5-year period of 1992 to 1997. We're 
concerned that the provisions in the house bill will just 
accelerate that trend, especially the way it rewards soybean 
production.
    My third point is what they've done to EQIP as far as 
ducking the watershed program. Their intent is to spread the 
money over far more areas. However, in Iowa we've got 157 water 
bodies. We really depend on that watershed money if we're going 
to have any hope to clean up farm requirements under the 
Federal Clean Water Act.
    The fourth comment I wanted to make to you relates to your 
funding of CAFO. The House would allow $200,000 per feed lot 
with no limit on size. I would suggest to you that we ought to 
be looking at a fourth option beyond what you mentioned as the 
three.
    The fourth one is the use of the clean water state--funded 
by EPA in every state. These things could be used for and in 
many states are used for livestock manure management, for 
businesses that are regulated and their competitors have 
already complied with regulations. If we really have an 
economic hardship we really ought to be talking about loans 
rather than grant moneys, especially for these large 
operations. We've certainly worked with your staff to explore 
that and we've worked with farm groups to explore that. Thank 
you.
    Mr. Holecek. My name is Lloyd Holecek from Marion, Iowa. 
The answer to your question about every bushel is an 
unequivocal no. There's no reason that every bushel should 
count. The farmers that are best at farming the farm programs 
are the ones that are able to buy out their neighbors. Those 
people that take the half a million dollars, of course their 
values are up so they can buy out their neighbors that don't 
have that same thing. Their values are down.
    What we need to do is you need to support the conservation 
type programs and I think there would be enough money there to 
keep up farmland prices.
    The Chairman. Thank you very much.
    Mr. Specht. My son spoke earlier, but I wanted to address 
something that hasn't been addressed, the dairy. I milk 130 
cows near McGregor. The current farm legislation has been 
tilted against pay and forge crops tremendously. They're giving 
hundreds and thousands of dollars to guys that have corn and 
beans. If you grew and cared for the land over decades you have 
lost the ability to compete in a neighborhood against 
subsidized cash grain operations in our counties that are 
driving family farmed dairymen out of business and planting 
soybean on hills where they do not belong. I've got a couple 
points. My neighbor's got a quarry. He called Jim Jeffords the 
man who saved the country. Please allow dairy compacts, the 
ability of dairymen to set a minimum price for milk like would 
be a minimum wage to extend to the rest of the country. Give 
dairymen a chance to set a minimum price for milk. Thank you.
    [The prepared statement of Mr. Specht can be found in the 
appendix on page 80.]
    Mr. Serbousek. My name is Tony Serbousek. I live in Johnson 
County and I've farmed basically all my life. One of the issues 
that hasn't been touched on here today is the high value of the 
dollar. When you take the high value of the dollar against all 
the other currency of the world we are the Nation of last 
resort to sell our products. Now, the rest of the world is 
turning around and producing these products. A lot of this 
problem would go away on all these issues if the government 
would address the value of the dollar against all the other 
currencies of the world.
    Now, the import to export ratio is going way out of sight. 
We're importing way more than we're exporting and one of these 
days it will catch up to us. In fact, I ain't so sure it hasn't 
already started. One of the other issues that I want to touch 
base on is--When you're talking about this new Farm bill, in 
1995 Congress passed a farm bill that gave the most 
discretionary power ever to USDA to interpret. This is what has 
happened. We have a lot of things going on in the 1995 Farm 
bill that was not the intention of the Congress that passed the 
law. I feel for one thing that Congress has to take back 
control of our elected officials and make the decision, not 
USDA. Thank you.
    Ms. Smith. My name is Therese Smith and I'm a 
representative of the Farm Service Agency County Office 
Employees. I represent the eight states in the Midwest area. I 
wonder why we can't work doing the farm program together with 
NRCS and FSA--delivering the farm program together. To me it 
seems the most efficient and the most effective way of 
delivering. One of the things that the farmers in this room--
They don't care who delivers the program as long as it's 
delivered. If we would combine the two administrative portions 
of those agencies together and work this program together we 
can do it. Thanks.
    The Chairman. First of all, thank you all very much. That 
was a good exchange. I said that I would comment on the pork 
checkoff and I will. Immediately after the USDA announced the 
results under Secretary Glickman there was a meeting in a court 
case file that was tied up in court. It was not clear at all 
whether the Court would have allowed them to end the checkoff 
or not because there were questions about it in the court. Then 
the administration changed and Secretary Veneman had to deal 
with it. Again, earlier this year it was not clear whether or 
not the Court would allow them to end the checkoff. In fact, 
the Court issued a temporary restraining order to continue the 
checkoff. Veneman, faced with this, agreed to a compromise. 
Under that compromise the checkoff would continue, but the Pork 
Board would be separated from the National Pork Producer's 
Council. The two of them would be separated. Also there would 
be a survey taken to see whether or not pork producers wanted 
to hold a new vote in 2003.
    Now, here are the points I want to make. The case is still 
being argued in the Michigan court. It has not come to a 
closure. There has been a Supreme Court case recently decided 
dealing with mushrooms from Tennessee in which the Supreme 
Court held that because certain mushroom producers did not 
agree with the type of advertising they could not be compelled 
to pay into a checkoff. Big decision. Now it looks as though 
maybe the Court just may influence what the Court's going to 
decide in Michigan on whether or not people can be compelled to 
make that stance.
    The checkoff should be decided fairly on the law. The case 
in Michigan has yet to be decided. I'm sure that there will be 
briefs filed by the lawyers on both sides arguing that the 
mushroom case should apply or should not apply on that and then 
we'll see what happens after the Court makes its decision. Now, 
having said all that, it is my opinion that all of these 
checkoffs, every single checkoff we have, ought to come up 
periodically for an automatic vote. This ought to be put in the 
Farm bill. Every so many years, every 5 years or so, there 
should be an automatic vote. There won't be a vote to see if 
you have a vote. There will just be an automatic vote by 
producers to see whether or not that particular checkoff ought 
to continue.
    With regard to pork checkoff I think basically we're in a 
situation where we--basically I think Secretary Veneman did 
what was reasonable and responsible. With the pending case in 
Michigan----
    Audience member. You've only told one side of the story.
    The Chairman. If you want to go with the temporary 
restraining order, that's going to continue the checkoff 
without separating the boards. At least Veneman separated the 
boards out.
    Audience member. Let someone tell the other side of the 
story.
    The Chairman. That's where we are right now with the pork 
checkoff right now. As I said, I'm going to put this in the 
Farm bill and we're going to have a vote every 5 years on all 
the checkoffs.
    Audience member. I voted a legal and binding vote. The ones 
that voted for it did the same thing. Independent farm 
producers voted to end the mandatory pork checkoff. We won that 
vote in a legal and binding vote. You're supposed to stand up 
there for democracy and tell Secretary Veneman that she did not 
do what was right. Now, there's a court case involved in 
Michigan, but that judge did not hear all sides before that 
ruling was made and before Secretary Veneman acted. She acted 
out of line. You should stand up and say that she acted out of 
line.
    The Chairman. That's why it's in Federal court. I don't 
know which way they're going to decide. I don't care. I mean, I 
do care, but we're going to put it in the Farm bill.
    With that the hearing is adjourned.
    [Whereupon, at 12:55 p.m., the hearing was adjourned.]
      
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