[Senate Hearing 107-927]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-927

                           DROUGHT CONDITIONS

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION


                               __________

                            AUGUST 20, 2002

                               __________

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


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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

                              ----------                              
                                                                   Page

Hearing(s):

Drought Conditions...............................................    01

                              ----------                              

                        Tuesday, August 20, 2002
                    STATEMENTS PRESENTED BY SENATORS

Nelson, Hon. Ben, a U.S. Senator from Nebraska...................    01
                              ----------                              

                               WITNESSES
                                Panel I

Carlson, Merlyn, Director, Nebraska Department of Agriculture....    08
Chick, Stephen K., State Conservationist, USDA-Natural Resources 
  Conservation Service...........................................    04
Davis, Rebecca, Director of the Topeka Regional Office, Risk 
  Management Agency, U.S. Department of Agriculture..............    11
France, Susan, Division Manager of Water Administration, State 
  Department of Natural Resources................................    10
Wolford, Brian, State Executive Director, Nebraska Farm Service 
  Agency.........................................................    06

                                Panel II

Batie, Don, Farmer, Dawson County, Nebraska; on behalf of the 
  Nebraska Farm Bureau...........................................    15
Bruntz, David, Past President, Nebraska Cattlemen, Inc...........    19
Hansen, John K., President, Nebraska Farmers Union, Lincoln, 
  Nebraska.......................................................    17
Philippi, Joy M., Board Member, National Pork Producers Council..    21

                               Panel III

Dittrich, Keith J., President, American Corn Growers Association.    28
Klein, Lee, Immediate Past President, National Corn Growers 
  Association....................................................    31
Schweers, Mark, President, American Corn Growers Association.....    26
Stoddard, Ron, Executive Director, Nebraska Wheat Board..........    30
Vonderstrasse, James, Vice President for Legislation, National 
  Grain 
  Sorghum Producers..............................................    25

                                Panel IV

Cacek, Ron, Manager, North Platte Natural Resources District, and 

  Chairman, Natural Resources District Managers Committee........    40
Davis, Al, Rancher, Hyannis, Nebraska............................    42
Dueland, Dale, Farmer, McCook, Nebraska..........................    36
Duvall, Arthur, Soybean Grower, on behalf of Nebraska Soybean 
  Association, Ord, Nebraska.....................................    47
Kerkman, Jeremie, on behalf of the Central Nebraska Public Power 
  and Irrigation District........................................    39
Steinman, Vern, OGT Volunteer Manager, Operation Hay and Grain 
  Lift, Norfolk, Nebraska........................................    45
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    58
    Batie, Don...................................................    77
    Bruntz, David................................................    90
    Cacek, Ron...................................................   143
    Carlson, Merlyn..............................................    68
    Chick, Stephen K.............................................    59
    Davis, Al....................................................   150
    Davis, Rebecca...............................................    74
    Dittrich, Keith, J...........................................   109
    Dueland, Dale................................................   131
    Duvall, Arthur...............................................   168
    France, Susan................................................    73
    Hagel, Hon. Chuck............................................    66
    Hansen, John K...............................................    88
    Kerkman, Jeremie.............................................   136
    Letters of Pam Potthoff, a member of the U.S. Custom 
      Harvesters.................................................   121
    Phillippi, Joy M.............................................    96
    Schweers, Mark...............................................   107
    Steinman, Vern...............................................   159
    Stoddard, Ron................................................   117
    Vonderstrasse, James.........................................   104
    Wolford, Brian...............................................    62

                              ----------                              


 
                     HEARING ON DROUGHT CONDITIONS

                              ----------                              


                        TUESDAY, AUGUST 20, 2002

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                     Washington, DC
    The committee met, pursuant to notice, at 2 p.m., College 
Park, Hornady/Marshall Auditorium, 3180 West Highway 34, Grand 
Island, Nebraska, Hon. E. Benjamin Nelson presiding.
    Present: Senator Nelson.

   STATEMENT OF HON. E. BENJAMIN NELSON, A U.S. SENATOR FROM 
                            NEBRASKA

    Senator Nelson. Good afternoon, everyone.
    This hearing of the Senate Committee on Agriculture and 
Nutrition and Forestry is now called to order.
    The Committee has convened this hearing to discuss the 
devastating drought that has afflicted the Great Plains and 
most States west of the Missouri River. I would like to thank 
all of the panel members who are here today and members of the 
audience who are here for attending this important hearing 
about the most widespread drought since the Dust Bowl years of 
the Great Depression.
    Whether you read this morning's World Herald, where you see 
that water is off from running irrigators or you are 
experiencing it directly yourself, there is no question that 
this drought is truly a record-breaking drought and is causing 
heartbreaking losses for producers.
    Even worse, this is the third drought in a row in many 
regions causing producers to go into further debt instead of 
being able to recover from the previous losses. As you can see 
from the maps that we have been able to put up here for visual 
purposes, the drought has steadily consumed Nebraska. It is 
expanding from the Western States now to Iowa, and this 
illustrates just how dire a situation we are facing.
    In Nebraska, the drought has had a severe impact on the 
livestock producers, especially cow/calf operators, as is true 
in many neighboring States.
    In its most recent crop progress report, USDA found that 91 
percent of Nebraska's pastures are either in poor or very poor 
conditions. The combination of a very mild and dry winter, plus 
the drought, has resulted in very little grass growth in 
pastures and rangeland forcing ranchers to take the cattle off 
and spend a fortune to either move them to feed sources or move 
feed sources to them. In addition, many producers have culled 
their herds, and more expect to, selling them into an already 
depressed market.
    I have already heard many stories about how producers are 
suffering. We all have. One rancher from Valentine said that he 
estimated he would spend $90,000 to ship 600 cattle 250 miles 
away for 5 months so that they can feed on cornstalks. He 
expected at that cost, plus the money he would pay for hay he 
is having shipped from Wisconsin, it would completely wipe out 
his profits for this year.
    Another constituent from Custer County wrote to me recently 
saying that for the first time ever he was forced to sell 50 
cow/calf pairs over the last 3 months from in cow herd of 450 
head. He said that he had approximately $49,000 in added 
expenses so far this year from renting additional pasture, 
purchasing hay, weaning calves early, and transporting cattle 
to the feedlot. I have heard about how the worst has come to 
many ranchers who are having to sell their entire herds, ending 
a business that had been in the family for numerous 
generations.
    In addition to these stories, the cattle producers, in 
general, have faced additional costs due to grasshopper 
infestations covering vast areas of rangeland and cropland. 
None of these costs would have been incurred had Nebraska 
received normal precipitation in the last few years.
    Crop producers around the country are also facing tough 
times. In many areas of Nebraska, dryland crops will yield 
absolutely nothing. According to USDA's August estimates, 
Nebraska's 2002 corn crop is likely to be only 919 million 
bushels, at least 20 percent below recent production levels.
    Irrigated crops are faring better, but the lack of rainfall 
has reduced the water available. Constituents are telling me 
that their pumping costs have almost doubled from past years, 
not because of the cost of fuel, but the need for longer 
pumping hours.
    These circumstances make it crystal clear that our farmers 
and ranchers need help, and that is why the Senate Agriculture 
Committee has convened this field hearing as we discuss the 
drought and what to do in response. Much has been said recently 
about funding drought relief assistance by taking money away 
from programs in the new Farm bill.
    If that means taking money away from programs that won't be 
paying out this year, like loan deficiency payments, I am 
willing to consider it, but if it means taking away money from 
programs that producers do use and are looking forward to 
utilizing, like programs funding agriculture technology 
services, I am dead set against it.
    When people talk about these kinds of offsets from the Farm 
bill, it is necessary to keep a few things in mind.
    They need to remember that when we have had little carry-
over moisture from the previous year, when we have had a bone 
dry winter, when we have had only a quarter inch of rain in 
June, a quarter inch in July, and a quarter inch in August, we 
are not just having bad weather; we are suffering from a 
natural disaster. That is the point.
    This drought that we are experiencing is a natural 
disaster, the kind that has not happened since the Dust Bowl. 
What folks in Washington must be made to understand is that we 
need to treat it like we have treated every other natural 
disaster.
    When Florida gets a hurricane, for example, Congress sends 
out disaster relief. When California gets an earthquake, 
Congress sends out disaster relief. It is only common sense 
then that when the country has a recordbreaking drought, 
Congress should pass disaster relief.
    That is why I am cosponsoring Senate bill 2800 that has had 
four cosponsors, bipartisan in nature. It had four cosponsors 
when it was introduced on July 25, but now has 17 cosponsors on 
a bipartisan basis. This bill would provide disaster assistance 
needed to cover crop and livestock losses in both 2001 and 
2002.
    With the information that will be provided in this hearing, 
I hope that I can provide some perspective to those among my 
Senate colleagues who are thinking about funding relief through 
offsets that will hurt farmers, and I hope the concerns raised 
by the members of the panels and the producers in the audience 
today will help make the case that we need to treat this 
natural disaster like a natural disaster.
    Like any other natural disaster, this drought has hurt the 
very livelihoods of good, hardworking people who struggle every 
day to stay afloat even under normal conditions.
    Our testimony today will be divided into four parts. The 
first panel is comprised of Federal and State officials to 
provide a brief overview of the drought for all as a 
background. The second panel is made up of agriculture and 
commodity organizations to describe the impact that the drought 
has had on their membership. The final panel, a large panel 
that will be divided into two parts, is a producer/operator 
panel that will describe how the drought has caused shortages 
of both available land and available water and will describe 
what needs to be done to provide some help.
    Finally, if time permits--and we hope that it will--we will 
take a few questions from the audience. If you have questions, 
please put your name and address on some index cards that are 
provided so that the record can reflect your concerns, and 
hopefully we can answer your questions from the podium.
    In the interest of providing every panel member an 
opportunity to speak, I would ask that you would limit your 
spoken testimony to no more than 5 minutes, and to make sure 
that you do, Betsy is going to keep a timer to help enforce 
that in a friendly way, to make sure that we are able to get as 
much testimony as possible. Now, any written testimony can be 
submitted to the court reporter to become part of the record.
    Let me thank you all for being here today, and a very 
special thank you to the chairman of this committee. I want to 
say that Chairman Harkin has clearly understood why we need to 
have this hearing. He has submitted a letter, which we will add 
to the record in support of what we are doing here today. I 
thank you personally on behalf of him.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 58.]
    Senator Nelson. Then we have some representatives for our 
congressional delegation. Janice Nygren--Jamie, excuse me. 
Jamie Nygren. I know better. Jamie, identify yourself, from 
Senator Hagel's office--there he is. Jamie, if you had been a 
little closer, I would have known it was not Janice. I won't do 
that again, we have Adam Olson from Congressman Bereuter's 
office. There he is. We have Bruce Riker from Congressman 
Osborne's office. We are glad to have you here as well, Bruce.
    That is all the information we have to provide at the 
moment.
    Now we turn to the panel, and the first panel member is 
Steve Chick. Steve, we thank you. He will be here 
representing--as a State conservationist from the Natural 
Resources Conservation Service that showed me yesterday some 
very concrete examples of how the EQIP program is helping guard 
against erosion in southeast Nebraska. I appreciate that very 
much. Steve, we are anxious to get your remarks.

             STATEMENT OF STEPHEN K. CHICK, STATE 
            CONSERVATIONIST, USDA-NATURAL RESOURCES 
                      CONSERVATION SERVICE

    Mr. Chick. Thank you, Senator Nelson, and thank you for 
taking the time yesterday to visit us in the field.
    It is a privilege for me to be requested to provide 
testimony regarding actions taken by the Natural Resources 
Conservation Service to deal with the drought in Nebraska. My 
testimony will provide information about three main issues 
regarding the drought.
    The first one will be my perspective on the magnitude and 
the severity of the drought problem in Nebraska. Second, I will 
talk about the importance of the Environmental Quality 
Incentives Program for long-term drought prevention. Third, I 
will talk about NRCS' immediate actions in the short term to 
deal with the current drought.
    Let me begin with my perspective on the magnitude and 
severity of the drought problem in Nebraska. It is an 
understatement for me to say that Nebraska's farmers and 
ranchers are facing a very serious drought this year.
    In July I traveled to north central Nebraska near Ord and 
toured Rick Welniack's and Joe Navotny's farming operations. In 
one case I saw a nearly dormant pasture, which was the first 
pasture of a full year rotational grazing system, and yet the 
cattle were returning to that pasture in early July. Joe 
Navotny commented, ``The cattle will probably beat me back to 
the gate when I turn them loose in here.''
    I saw Rick Welniack's quarter section of irrigated alfalfa, 
which is supposed to be a cash crop this year, but instead will 
be used on the farm for winter feed. Rick had sprayed for 
grasshoppers three times, but the grasshoppers kept coming in 
waves wreaking further damage on the already stinted dryland 
corn crop.
    Two weeks ago I traveled to Perkins, Chase, Dundy, and 
Hitchcock Counties in southwestern Nebraska. The trip 
underscored for me the difficult conditions in that area. I 
specifically visited Pam and Harold Potthoff's farm near 
Stratton. Pam is the Nebraska president of the Women in Farm 
Economics and serves on our State Technical Committee. I saw 
their 300 acres of dryland corn, and it was just wilted right 
to the ground. We were only able to find one 6-inch nub of an 
ear of corn.
    As we drove south of Stratton with the Potthoffs, we saw 
field after field experiencing similar problems. Yes, the 
drought is severe in Nebraska.
    Let me turn now to the importance of the Environmental 
Quality Incentives Program for long-term drought prevention.
    Time and time again, farmers and ranchers have expressed to 
me that they are so much better off than some of their 
neighbors because of the conservation practice applied through 
the Environmental Quality Incentives Program and its 
predecessor, the Great Plains Conservation Program. The 
Environmental Quality Incentives Program is the main long-term 
Federal cost-share program available to farmers and ranchers to 
help them prepare for and withstand drought conditions.
    On our State's 26 million acres of grassland, we are using 
Environmental Quality Incentives Program funds to install cross 
fencing, water developments, and rotational grazing systems. On 
our 8 million acres of irrigated lands, we are utilizing 
Environmental Quality Incentives Program to install more 
efficient water conservation practices, such as center pivots, 
subsurface drip irrigation, and surge systems. On our 10 
million acres of dryland cropland, we are using Environmental 
Quality Incentives Program to install terraces, grassed 
waterways, and expand our acreage of conservation tillage to 
conserve valuable soil moisture.
    The Environmental Quality Incentives Program is our most 
valuable conservation cost-share tool for helping our State's 
farmers and ranchers prepare for drought on our working lands.
    Let me now turn to what NRCS has done in Nebraska to deal 
with the current drought. I go back to the Environmental 
Quality Incentives Program where we are offering a deferred 
grazing option.
    We are extremely concerned about the potential long-term 
impacts to our State's grazing lands in our most drought-
plagued counties. Thanks to the outstanding input of our State 
Technical Committee, we have made available funds from our 
fiscal year 2002 General EQIP Program for an incentive payment 
for prescribed grazing.
    This opportunity is being offered in the 16 counties that 
first received national drought declaration. Landowners in 
these counties may receive up to $2 an acre for prescribed 
grazing for the rest of the season, and from May 15th to July 
15th of next year. This will hopefully allow these stressed 
grasslands an opportunity to recover, assuming we receive 
adequate moisture this fall and winter.
    Second, we have offered a variance to allow grazing and 
harvesting of crop stubble. Landowners who participate in farm 
programs must meet highly erodible land requirements. Most 
highly erodible land plans rely on crop residues on the soil 
surface. Winter feed will be very short this winter. Landowners 
may need to bale and glean stalks to get by. We have provided 
guidance to our field offices that they may temporarily issue a 
variance allowing the use of crop residues on highly erodible 
dryland cropland for this purpose.
    Then, finally, under the Resource Conservation Development 
Program we are promoting Operation Hay Lift.
    We sent a message to our national network for RCND councils 
across the Nation in seeking them to reach out and get help and 
refer them to the Orphan Grain Train International in Norfolk.
    That is the summary I have today, and I thank you very much 
for the opportunity to speak here.
    [The prepared statement of Mr. Chick can be found in the 
appendix on page 59.]
    Senator Nelson. Thank you very much, Steve.
    Now Brian Wolford, the State Executive Director of the 
Nebraska Farm Service Agency. We are sandwiching the director 
of agriculture in between some of our Federal folks and others.
    Brian.

STATEMENT OF BRIAN WOLFORD, STATE EXECUTIVE DIRECTOR, NEBRASKA 
                      FARM SERVICE AGENCY

    Mr. Wolford. Good afternoon, Senator Nelson, and members of 
the audience. Thank you for allowing me to testify before you 
today. It is a pleasure to talk to you about what Nebraska Farm 
Service Agency is trying to do to assist producers in our 
State.
    As you are aware, a large portion of the United States is 
suffering from this moderate to extreme drought, and in 
Nebraska the drought has adversely impacted crop production and 
pasture grazing across our entire State, beginning in our 
western counties this spring and moving eastward throughout the 
growing season.
    County FSA offices, along with personnel from other USDA 
agencies, which comprise our County Emergency Boards, have 
monitored and reported crop and pasture production losses 
throughout the year. These reports describe the disaster 
conditions and provided estimates of crop and pasture losses in 
their counties.
    Upon receipt of these reports at the State level, we 
compile these reports and forward them on to the Nebraska 
Agricultural Statistics Service, which computes loss 
calculations compared to prior year averages. Those counties 
which had at least one crop or pasture enterprise with a 30 
percent or greater estimated loss were then recommended by the 
USDA State Emergency Board to the Governor for consideration of 
a Secretarial Natural Disaster Designation request.
    At the present time, 37 Nebraska counties have received 
such a designation. Nebraska Governor Mike Johanns has also 
requested a disaster designation for the remaining 56 counties 
in Nebraska, and these designation requests are pending. A map 
is attached to my handout that shows you the counties that are 
approved and the counties that are pending approval.
    Once the disaster designations are approved, the 
designations make available several things to producers: No. 1, 
a low-interest FSA Emergency Loan Program; No. 2, it allows 
eligible FSA direct loan borrowers in the primary or contiguous 
counties to be considered for Disaster Set-Aside Program; No. 
3, allows SBA to utilize a disaster loan program to assist 
businesses impacted from the disaster; four, serves as a 
documentation for the IRS allowing producers to defer income 
from certain livestock sales; and, finally, may serve as part 
of the county eligibility requirements for other FSA disaster 
assistance.
    Briefly, some of the disaster assistance programs that we 
are operating right now include:
    Conservation Reserve Program Haying and Grazing Release. By 
mid-July all Nebraska counties had been released for emergency 
haying and grazing, making available nearly a million acres for 
this effort.
    Emergency Conservation Program for Drought Assistance. ECP 
provides a water supply to the livestock when they must be 
moved to another pasture due to grass being depleted and there 
is no other water source in the pasture. As of August 16th in 
Nebraska, 12 counties had been approved for ECP drought 
assistance. Three counties had pending applications, and over 
$300,000 had been provided to producers through this program.
    The NAP program, Non-Insured Assistance Program. In 
Nebraska, we had over 2,200 applications this year, and that 
program is designed for producers who grow crops that are not 
covered by normal Federal crop insurance programs. Pasture is 
one of those crops. Producers are beginning to file Notice of 
Losses with our counties, and this is the first step that they 
go through to initiate benefit payments.
    The Emergency Loan Program that I mentioned earlier is 
provided to family size farms and ranchers in primary and 
contiguous counties. The producers must show that they could 
not receive credit from other sources. At the present time 37 
primary and 14 contiguous counties have the EM Loan Program 
available to them.
    The Disaster Set-Aside Program is a program that allows 
existing Farm Loan Program borrowers to extend their payment to 
the end of their loan as long as they can show repayment. The 
purpose of this program is to relieve some of the immediate 
financial stress caused by the disaster.
    To further respond to feed needs of Nebraska cow/calf 
operations drastically impacted by severe drought conditions, 
on the 12th of August Secretary Veneman announced a $150 
million cattle feed program. This assistance will ease the 
shortage of feed due to drought for the owners of Nebraska's 
1.9 million beef cows.
    Nebraska FSA is working hard on drought assistance as well 
as Farm bill implementation. Again, we thank you for this time.
    [The prepared statement of Mr. Wolford can be found in the 
appendix on page 62.]
    Senator Nelson. Well, thank you very much Brian.
    Our next panelist is the Director of Agriculture for the 
State of Nebraska, the Honorable Merlyn Carlson.
    I might mention, Merlyn, before you start, that the 
Governor requested that the rest of the State--the counties 
be--and I wrote a letter to Secretary Veneman requesting that 
this be handled as expeditiously as possible. I want to put my 
full support behind that effort.
    I also have a letter of position submitted by my colleague, 
Senator Hagel, on this issue that we would also like to put 
into the record.
    [The letter of Senator Hagel can be found in the appendix 
on page 66.]
    Senator Nelson. Merlyn.

 STATEMENT OF MERLYN CARLSON, DIRECTOR, NEBRASKA DEPARTMENT OF 
                          AGRICULTURE

    Mr. Carlson. OK. Thank you, Senator, for that support, and 
thank you for the opportunity to appear today, and members of 
the audience. I appreciate the opportunity to address the 
Senate Ag Committee and express the drought-related concerns 
and issues of the Governor and myself and of Nebraska 
agriculture industry. I am hopeful and trust that the testimony 
you hear today will provide the insight and the platform from 
which to build a Federal drought assistance package.
    My assignment today is to provide you with an overview of 
the drought situation in Nebraska and review action taken to 
date. Given the brief time I have to speak, I will try not to 
duplicate the message of my fellow panelists.
    Needless to say, it has been a long summer for all of us 
involved in agriculture. The set-up for the parched pastures, 
the dry streambeds, the grasshopper-shredded fields, and the 
shriveled crops that you see as you drive across the State 
began last fall, and even further back for southwest Nebraska. 
The State Climate Assessment Response Committee began sounding 
the warning bell months before spring planting and worked 
through its membership to get the word out to its producers to 
be prepared.
    Obviously, since that time, drought-related activities have 
continued to grow. Allow me to briefly recount our activities, 
keeping in mind these address mostly my biased agriculture 
background.
    The Governor has contacted USDA Secretary Ann Veneman on 
numerous occasions, both in writing and personally. In 
partnering with her office and the State Farm Service Agency, 
in particular, the Governor has worked to get Conservation 
Reserve Program acres released for emergency haying and 
grazing. The entire State was released, as you have just heard, 
in early July.
    He has requested, and will hopefully receive, designation 
of each of Nebraska's 93 counties as drought disasters, which 
would open up the opportunity for producers to access low-
interest loans and other potential assistance programs.
    The Governor, in cooperation with several of his State 
agencies, opened up Nebraska roadsides for hay, and, to date, 
producers have received 1,274 permits to hay roughly 6,860 
miles of roadside right-of-way, which is on a one-side basis.
    The Governor has lobbied for and received Federal 
grasshopper eradication dollars and designated matching State 
funds for the program.
    Both the Governor and I have been in contact with our 
congressional leadership, in writing and in person, to discuss 
the need for Federal assistance programs such as the Livestock 
Assistance Program and the Crop Disaster Program and other 
possible programs and assistance tools. I also had the 
opportunity in July to discuss these needs with White House 
official Chuck Conner, who, as you know, is the President's 
assistant on agricultural issues.
    Other issues. We have asked the Risk Management Agency to 
encourage insurance companies to make crop damage adjustments 
in a timely fashion and so that the remainder of the crop could 
be used for livestock forage.
    The Governor and I each have contacted our counterparts in 
other drought-ravaged States to build cooperation, 
communication, and collaboration on drought needs. Several 
agricultural leaders have written me back, noting that they too 
are contacting their congressional representatives to raise 
awareness of the need of assistance.
    Then, finally, Nebraska governmental leaders have been 
meeting, and will continue to meet on a regular basis, to 
assess the drought situation and make decisions on relevant 
actions. This includes topics such as pre-positioning of fire-
fighting equipment, on community water system checks and 
irrigation and stream flow issues. In fact, a regular meeting 
of this group is taking place in Lincoln as we talk right now.
    I want to pause here and acknowledge the positive response 
we received during our visits at the Federal level. The USDA, 
in particular, has been extremely open to listening and 
responding to our requests and our suggestions. Let me thank 
our congressional delegation as well for your understanding and 
your dedication.
    Then just last week Secretary Veneman announced the release 
of $150 million in emergency livestock feed assistance to 
qualifying cow/calf producers. We are fortunate Nebraska was 
included in the four-State program, and we appreciate that. We 
hope to have details on how that program will operate soon. 
Also on Friday Secretary Veneman announced the extension of CRP 
haying and grazing through November 30. The Governor had made 
the request based on feedback from producers, and we are 
extremely grateful for that approval.
    All these activities have not been enough to stop Mother 
Nature from robbing our State of its No. 1 economic driver. 
Figures compiled by University of Nebraska Agriculture 
Economist Roy Frederick in mid-July place the drought's impact 
on agriculture in Nebraska at roughly $686 million, and this 
figure includes estimated yield losses on corn, sorghum, 
soybeans, wheat, hay, pasture. and range. Dr. Frederick 
acknowledges the report is missing some significant factors. It 
leaves out losses for other nonprimary but important Nebraska 
crops. It does not include the increase in irrigation costs as 
producers pump around the clock to beat the dryness and the 
heat.
    My point is that $686 million in estimated agriculture 
losses and resulting statewide economic impact of $1.4 billion 
is probably substantially higher, as we look today.
    Is that a bleak projection? Yes. Is it overinflated? No. In 
fact, our State is already struggling through these tough 
economic times.
    We need a Federal drought assistance package, and we need 
it now.
    Based on these experiences, Senator, let me go through 
several other tools that I would like to suggest: changes to 
tax law governing capital gains on livestock sales during a 
drought disaster; more funding for grasshopper eradication with 
State match requirements eased; the release of surplus 
Commodity Credit Corporation grain for use in livestock feeding 
programs; raising the amount of coverage provided under the 
Non-Insured Crop Disaster Assistance Program; and, finally, 
release of funds to help supplement the cost of hauling forage 
supplies to needy producers.
    I realize the picture I have laid out for you today is not 
very pretty, but it is factual, and it is reinforced by low 
stream flow and reservoir levels and a forecast that is not 
very promising. I hope the information you receive from 
panelists today will be useful in your deliberations. I thank 
you very much for the opportunity to testify and I am happy to 
answer questions.
    [The prepared statement of Mr. Carlson can be found in the 
appendix on page 68.]
    Senator Nelson. Thank you, Merlyn.
    Now we have Susan France from the Nebraska Department of 
Natural Resources. Susan.

     STATEMENT OF SUSAN FRANCE, DIVISION MANAGER OF WATER 
              ADMINISTRATION, STATE DEPARTMENT OF 
                       NATURAL RESOURCES

    Ms. France. Thank you, Senator.
    Nebraska surface water laws are based on ``first in time is 
first in right''. The Department of Natural Resources 
administers surface water such that during times of shortage 
newer water rights are closed so that older water rights can 
use their appropriation.
    My testimony will indicate the severity of this year's 
drought on surface water users.
    This year water administration started 2 to 3 months 
earlier than normal in the Platte River Basin, which is our 
most heavily regulated basin. In mid-April, 54 water 
appropriations were closed because a 1993 instream flow 
appropriation was not being met. Instream flow requirements 
throughout the Platte Basin have not been met for most of the 
summer on the lower end, which causes all of the Platte, the 
Loup, the Elkhorn, and the Salt Basins to be administered for 
the 1993 date. Previously, such administration did not occur 
until late July.
    Also, in late July, we will normally regulate for some 
1930's permits on the Platte. This year, as of June 24th, we 
had closed 106 appropriations for priorities in the 1890's. In 
late July, we had as many as 220 appropriations closed, some of 
which dated back to 1884.
    Most of the larger irrigation districts located in the 
Platte River Basin and the Republican River Basin early in the 
year knew that they were not going to be able to deliver a 
normal supply because of the lack of storage water in 
reservoirs. Farmers were notified that they could expect to 
receive reduced amounts of water during the season. Several 
irrigations districts stopped delivering water by late July, 
when normally they operate through September. One irrigation 
district for the first time chose not to deliver any water 
because of an inadequate water supply.
    Several irrigations districts in the Panhandle borrowed 
storage water from a U.S. Bureau project located in Wyoming. 
However, there is a repayment of such water that may cause 
problems in future years. Our largest reservoir in the State is 
being drawn down to its lowest level since its construction in 
the 1930's to meet irrigation and power demands. Inflows to 
this reservoir so far this year have been the lowest of record 
since the reservoir was built.
    In the Big Blue River Basin, we closed appropriations 
junior to November 1, 1968, because State line flows required 
under a compact with Kansas were not met for the first time 
since the compact was enacted in 1971. This action included 
approximately 1,500 appropriators, mostly irrigators and 
storage owners. On the Little Blue River, users junior to 
November 1, 1968, were also closed twice because of the 
required compact flows not being met.
    In the Hat Creek Basin, the Department closed 55 
appropriations in an effort to satisfy a riparian right for 
cattle watering. This is the first time that such a closing has 
been required in the summer months.
    In summary, of the 12 water basins that we administer in 
the State, only two have not had severe administration, and 
that is the Missouri River trips and the Nemaha's, both located 
on the eastern edge. Everything else has been just a record 
administrative year. If things do not get better--there is not 
a lot of snowpack up in the Rockies this year and there is not 
a rainfall in Nebraska--it will be much worse next year.
    Thank you.
    [The prepared statement of Ms. France can be found in the 
appendix on page 73.]
    Senator Nelson. Thank you.
    Now we have Rebecca Davis, the regional service director 
for the Risk Management Services Office, and she comes to us 
from Topeka, Kansas. We appreciate your venturing to Nebraska.

  STATEMENT OF REBECCA DAVIS, DIRECTOR OF THE TOPEKA REGIONAL 
             OFFICE, RISK MANAGEMENT AGENCY, U.S. 
                   DEPARTMENT OF AGRICULTURE

    Ms. Davis. Thank you. Mr. Chairman and members of the 
committee, thank you for this opportunity to discuss how the 
programs of the Risk Management Agency are working to help 
producers survive this drought.
    I am Rebecca Davis, the director of the Topeka Regional 
Office for the Risk Management Agency. I grew up on a farm in 
Franklin County, Kansas, where my family still farms. My family 
has also carried multiple-peril crop insurance for nearly 20 
years. Believe me, when issues arise, I hear about them.
    The Ag Risk Protection Act of 2000, a sweeping bipartisan 
law that this committee worked on for nearly 2 years, 
significantly increased the ability of producers to manage 
their agricultural risk through crop insurance and other risk-
reducing strategies and programs. The act also established a 
new alliance consisting of RMA, reinsured companies, and the 
Farm Service Agency to help ensure program integrity and 
compliance.
    For the balance of my testimony, I would like to touch upon 
how some of these changes have benefited Nebraska farmers.
    In 2001, RMA provided Nebraska's farmers over $2.3 billion 
in protection through more than 101,000 policies covering 13 
million acres of crops. In 2001, at least $69 million in losses 
were paid to hard-hit family farmers.
    Based on 2001 NASS planted acres, multiple-peril crop 
insurance is protecting approximately 81 percent of the corn 
acres, 85 percent of the soybean acres, 84 percent of the wheat 
acres. All of these are above the national average for all 
three crops. For example, the U.S. average for corn is 80.3 
percent, soybeans is 76 percent, and wheat is 77 percent.
    Insurable crops in Nebraska are barley, corn, dry beans, 
grain sorghum, hybrid corn seed, millet, oats, popcorn, 
potatoes, rye, soybeans, sugar beets, sunflowers, wheat, and 
nursery. In addition, we extended coverage through written 
agreements for forage seeding and forage production.
    Although 2002 data is still being processed by crop 
insurance companies, participation levels will be similar to 
those in 2001. However, over $12.8 million in indemnities has 
already been paid. Since 52 percent of these payments are for 
wheat and drought conditions are continuing, we expect losses 
to grow significantly for spring planted crops.
    In 1998, due to the way premium subsidies were structured, 
the coverage level that offered the most coverage for the 
lowest price was at 65 percent of the producer's historical 
yield. As a result, the majority of the growers purchased this 
level of protection. Because ARPA made higher levels of 
protection more affordable by increasing subsidies at higher 
coverage levels, this number began to shift dramatically with 
the enactment of ARPA.
    Prior to 2001, the premium subsidy at the 70 percent 
coverage level was 32 percent. The ARPA increased the subsidy 
rate to 59 percent, and Nebraska producers have responded. For 
example, in 1998, only one in ten of the wheat producers had 
coverage at or above the 70 percent coverage level. By 
comparison, in 2002, 12 out of 20 producers are insured at the 
70 percent coverage level or higher.
    Corn, soybean, and grain sorghum producers have responded 
in a similar manner. Corn moved from 6 percent to over 69 
percent of producers having a 70 percent or higher coverage 
level; soybeans changed from 10.5 percent to over 74 percent; 
and grain sorghum rose from less than 5 percent to over 61 
percent.
    This movement to higher levels of coverage means that RMA 
and reinsured companies will automatically provide more 
assistance to Nebraska farmers when they need it the most.
    There have been a few 2002 program adjustments. In order to 
process claims quickly and speed assistance to producers, crop 
insurance companies have implemented appraisal modification 
procedures under RMA guidelines. Current appraisal 
modifications are permitted in Nebraska, if conditions warrant, 
for corn, popcorn, hybrid seed corn, and grain sorghum.
    Further, RMA and reinsured companies have quickly 
implemented a provision of the Farm Security and Rural 
Investment Act that will give producers more flexibility in 
determining quality losses. Prior to implementation, evidence 
of quality losses could only be determined by samples analyzed 
by a grain grader licensed under the authority of the United 
States Grain Standards Act or the United States Warehouse Act. 
Now evidence of quality loss may be determined by graders 
licensed under State law.
    In conclusion, the use of crop insurance is a widely 
accepted practice in Nebraska. Because producers are now 
participating at higher levels of coverage, USDA can 
automatically provide the assistance they need when they need 
it the most.
    Thank you for the opportunity to comment.
    [The prepared statement of Ms. Davis can be found in the 
appendix on page 74.]
    Senator Nelson. Thank you.
    My first question would be to Merlyn Carlson. In your 
estimation, how long has southwest Nebraska, just as one part 
of our State, been rainfall deficient?
    Mr. Carlson. It appears 3 years, Senator. It has failed to 
have spring for 3 years. It is in tough shape.
    Senator Nelson. Of course, the winters have not been 
productive in terms of snowmelt for the snow contribution.
    Mr. Carlson. Ms. France would say the water allocation has 
been jeopardized over that period as well.
    Senator Nelson. Steve Chick, as you mentioned, we yesterday 
toured in the field some acres that have been enrolled in the 
EQIP program and have been very satisfactorily repaired to the 
point where now that it is a positive situation for soil that 
is not very permeable.
    How many acres of Nebraska cropland and pasture land are 
currently enrolled in the EQIP Program, approximately?
    Mr. Chick. That is a good question, Senator. Approximately, 
we have about 2,000 contracts right now in the EQIP program 
that have been in place over the last 4 years. Acreage-wise, it 
is probably somewhere in the range of a half million acres. We 
had a request of $200 million this year for EQIP contracts, and 
currently our allocation is $11 million. The demand is still 
far greater than what we can meet.
    Senator Nelson. That is at this time. Do you have any 
thought about how much that is likely to expand in the new Farm 
bill?
    Mr. Chick. Well, this fiscal year was the first piece of 
the new Farm bill. That increased interest went from 3 times as 
many applications to 20 times as many applications money 
available, and I would expect to see that probably increase 
even more in the next couple of years.
    Senator Nelson. It is oversubscribed at the moment. At 
least there is an abundant amount of interest. Taking anything 
from that for any other purpose would begin to impact the 
availability of those dollars for people who are standing in 
line ready, willing, and able to participate. Is that accurate?
    Mr. Chick. As I said in my testimony, the EQIP program is 
the only real long-term Federal program we have for addressing 
saltwater conservation to protect it for long-term drought 
prevention. As I said, the demand is 20 times what we have 
available now. Even with the tough economy, farmers and 
ranchers are wanting to do more conservation.
    Senator Nelson. Thank you.
    Brian, what are the dollar limitations on FSA emergency 
loans at the present time?
    Mr. Wolford. The dollar limitations in regard to emergency 
loans--we do not have a specific dollar limitation. We can take 
the applications, and as we need money and build those 
applications and those dollars, we can request additional 
money. Presently, we have just a few applications. Keep in 
mind, our emergency loan program--you have to go through your 
production--your harvest and prove your production loss before 
you can apply.
    Senator Nelson. With whatever money might be available, do 
you think that will be adequate for what you would anticipate 
would be the applications coming in after harvest?
    Mr. Wolford. We are very concerned about a large number of 
applications coming in for this program. What we are doing is 
we are working with our lenders trying to promote the Guarantee 
Loan Program as well, and just try and encourage producers and 
lenders alike to start this process very early so we can be 
prepared and capture or request that money before other States 
do.
    Senator Nelson. Even though we are pleased that the loan 
program is available, isn't it accurate to say that most 
farmers who have experienced drought for several years have 
already had adverse economic conditions hit them? Maybe the 
last thing they need is another loan.
    Mr. Wolford. Being a former lender, I have heard that said 
before, and that is true in some cases. There are some people 
that that is what they need.
    Senator Nelson. One need not disparage the loan program to 
recognize that in some cases it simply is not the answer.
    Mr. Wolford. For some people, it is not.
    Senator Nelson. One of the questions that I would like to 
ask is--and it may have been answered in part by what Merlyn 
said.
    No matter how many pieces of relief we have been able to 
put out there--and, once again, no disparaging comments about 
these efforts would be appropriate. No matter how many we put 
out there, we are just not getting to where we need to be for 
many of our producers, both in the livestock and on the 
commodity side. Is that a fair statement? I am not trying to 
trap you, Merlyn. That is what I heard you say.
    Mr. Carlson. Well, that is exactly right. We need two 
things: one is money and the other is rain.
    [Laughter.]
    Senator Nelson. Well, in Washington today sometimes there 
is more rain than there is money, but at least there is a lot 
of fog.
    In any event, clearly putting together something, as you 
said, now is what is critical so that we don't delay and allow 
the aid to come when it is clearly too late.
    Mr. Carlson. Well, that is exactly right. You know, the 
attitude in the drought-stricken area is just extremely 
serious, and it is worsening as we talk, worsening each day. 
Aid and help are very much needed as we go into the fall and 
into preparing for winter feed, as well as worrying about next 
spring.
    Senator Nelson. Well, I thank you all for your very 
enlightened information and your statements, and for your being 
here today, and there will be more opportunity for us to 
discuss how this is moving forward.
    One final question of our friends who are administering 
some of the Federal programs. Are you going to be up against 
some administrative challenges in terms of having enough budget 
support for some of the programs that you might need to put in 
place or that you are currently administering?
    Mr. Chick. Well----
    Senator Nelson. It is a softball, but I wanted to throw it 
your way.
    Mr. Chick. That is certainly always a challenge, meeting 
the demand when you have increasing programs. We are 
appreciative that reimbursables come with those programs for 
us. We will do the very best job we can to try to meet the 
demands of the increasing programs.
    Senator Nelson. Brian, is that----
    Mr. Wolford. I would agree. We have a great staff that 
works very hard for our producers. They are implementing a new 
farm bill. If additional programs come their way, they will be 
glad to do that as well, but it will be increased workload for 
them.
    Ms. Davis. My comments would echo the other two USDA 
representatives. In this day and age, we got used to doing more 
with less, and we have been working well with the crop 
insurance companies to get a program out there that is 
hopefully meeting the needs of the family farmers.
    Senator Nelson. Well, again, thank you very much. I 
appreciate it.
    Senator Nelson. Well, on our second panel, as you can see 
from the names, we have representatives of some of the 
associations who are most directly affected because of the 
agricultural nature of their association.
    I start first with Don Batie from Farm Bureau. Don, would 
you, please, provide us with your thoughts.

  STATEMENT OF DON BATIE, FARMER, DAWSON COUNTY, NEBRASKA; ON 
               BEHALF OF THE NEBRASKA FARM BUREAU

    Mr. Batie. Thank you, Senator. Good afternoon, Senator 
Nelson and members of the committee. I am Don Batie, and I farm 
in rural Dawson County. I serve on the Nebraska Farm Bureau 
Board of Directors representing southwest Nebraska. I am here 
today representing Nebraska Farm Bureau, the largest general 
farm organization in the State, and wish to extend our 
appreciation to the Senate Ag Committee for holding the field 
hearing here in Nebraska concerning the drought.
    The drought we are continuing to experience this year in 
Nebraska is approaching historic proportions. My father, who is 
81, has told me this is much worse than the 1950's drought and 
is rapidly approaching the 1930's Dust Bowl conditions. Only 
our modern farming techniques have allowed us to raise at least 
a partial crop.
    The portion of agriculture that is currently being hit the 
hardest is the livestock sector, principally the ranchers that 
have cow/calf operations. The recently passed Farm bill and the 
crop insurance reforms made a few years ago have provided grain 
farmers risk management tools and will provide them with some 
safety net. Livestock operators, on the other hand, have little 
or no risk management tools available to them and have no 
Federal safety net. Growers of non-insurable crops, such as 
millet and other alternative crops, primarily grown in the 
western part of Nebraska, are also facing financial difficulty 
and great uncertainty at this time.
    Pasture conditions have been dismal all year with many 
grasses never breaking dormancy this spring. Our neighbors that 
have cows have been making some very tough decisions lately. 
Many ranchers have been forced to sell part or all of their 
herds. One young rancher in my neighborhood is selling half his 
cow herd just to pay for the feed for the remaining cows until 
October, when he can move them onto cornstalks after harvest. 
Unfortunately, with all the cows going to market right now, 
prices are very low.
    A very real concern most ranchers have is whether the grass 
will come back next year. While most of the native grasses will 
return when the weather improves, it will take a couple years 
to get back to normal. Hence, they will have increased costs 
and lowered stocking rates for the next several years.
    For these reasons, we think Congress should make the 
Livestock Assistance Program a priority in any drought 
assistance package under consideration. The LAP program is 
about the only form of assistance available to livestock 
producers having no opportunities for insurance or other risk 
management tools. As each day passes with no clear signal from 
Congress and the administration about the availability of the 
LAP, more and more cattle producers will be making lifelong 
decisions about the future of their operations, most of which 
have taken many generations and much hard work to establish.
    From a producer's standpoint, it seems we are caught in the 
middle of a political battle regarding how Congress should fund 
disaster legislation. We certainly understand the fiscal need 
for Congress to find budget offsets, and we do believe Congress 
could easily find budget savings from the lower anticipated 
costs anticipated this fall and next year in farm program 
spending. Regardless of if or how Congress deals with the 
budget offset issue, however, the bottom line for producers is 
we need disaster assistance enacted immediately and a clear 
signal from Congress that the LAP program will be funded even 
sooner.
    Compounding the drought is the grasshopper infestation. 
Many ranchers in central Nebraska have been forced to spray for 
grasshoppers. We could not wait for the Federal Government to 
act since the grasshoppers were spreading fast. All of us had 
to pay the entire costs ourselves.
    The drought is also causing major concern among the State 
irrigators, as you heard Sue France tell earlier. Part of the 
reason there is any crop at all in Nebraska this year has been 
due to the ground and surface water irrigation developed over 
the years. There is much concern that if the drought extends 
next year there will be little or no storage water available as 
the reservoirs in the whole system are at or near historic 
lows.
    From an organizational standpoint, Nebraska Farm Bureau has 
tried to keep a handle on the severity of the drought by 
initiating a Drought Scout Program. We identified 80 Farm 
Bureau members scattered across the State, who all summer have 
been making weekly reports on rainfall and crop conditions in 
their area to the State office. This information, in turn, has 
been shared with State and Federal officials to help develop 
drought response actions. Our most recent Drought Scout report 
has been attached to the written testimony.
    This drought will have long-term impacts on farmers and 
ranchers, and it may take years to get back to normal, from 
both a water supply and the forage capacity standpoint. The 
most helpful action Congress can do now is to fund the LAP as 
soon as possible. Crop assistance to grain farmers should be 
legislatively developed this fall after their needs can be 
greater assessed.
    In addition, Congress could consider other long-term 
assistance actions: extending the 2-year capital gain deferral 
for the forced liquidation of cow herds; increasing advance 
direct payments to crop producers; enhancing the non-insured 
crop assistance programs. We encourage more cooperation between 
Federal, State, and local agencies dealing with the shortages 
of water in irrigation reserves; increasing funding or fully 
utilizing any emergency funds to provide APHIS additional 
resources to help with the grasshopper control.
    Thank you for the opportunity to present testimony today. 
We look forward to working with members of the Senate Ag 
Committee to help develop a drought assistance package.
    [The prepared statement of Mr. Batie can be found in the 
appendix on page 77.]
    Senator Nelson. Thank you, Don.
    Now John Hansen from Farmers Union.

STATEMENT OF JOHN K. HANSEN, PRESIDENT, NEBRASKA FARMERS UNION, 
                       LINCOLN, NEBRASKA

    Mr. Hansen. Senator Nelson, on behalf of the over 4,300 
farmer and ranch families in the Nebraska Farmers Union, we 
thank you for sponsoring this critical hearing today. We also 
thank you for your cosponsorship of S. 2800, which, in our 
opinion and the opinion of 20 national organizations who signed 
on a ``dear colleague'' letter circulated by the National 
Farmers Union, is the most appropriate national emergency 
disaster relief proposal. I am attaching a copy of the July 30, 
2002, sign-on letter along with my testimony.
    In the limited amount of time available for testimony 
today, I want to focus less on the extent of the economic 
damage, which is massive, and more on what my organization 
believes is an appropriate national response to this natural 
disaster that is impacting nearly 50 percent of our Nation. How 
our government chooses to respond to this national emergency 
will decide whether or not thousands of our independent family 
farmers and ranchers will be in business next year or not.
    Our Nation is the largest food-producing nation in the 
world. It stands to reason that our Nation should have a 
national policy for dealing with the economic hardships caused 
by natural disasters that adversely impact our Nation's food 
and fiber producers. We had the opportunity to do just that 
during the development of the 2002 Farm bill. To the credit of 
the Senate, the Senate did include in their version of the Farm 
bill a permanent provision to deal with national natural 
disasters. That was the right approach.
    Unfortunately, because of the opposition of the House of 
Representatives leadership and the Bush administration, the 
Senate emergency disaster provision was stripped out of the 
conference committee during deliberations. Tragically, that 
leaves our Nation's family farmers and ranchers without an 
appropriate income safety net in times of weather-related 
natural disaster.
    It was particularly critical for the 2002 Farm bill to 
include that emergency disaster authority because of the 
counter-cyclical nature of the Farm bill income supports, which 
includes loan deficiency payments and deficiency payments. An 
obvious income safety net problem for crop producers exists 
when weather-related shortfalls in production cause commodity 
prices to go up, and commodity producers are left without crops 
to sell, LDPs to collect, or deficiency payments. The Senate 
version of the Farm bill did appropriately include permanent 
emergency disaster provisions.
    The issue of emergency disaster assistance could be quickly 
resolved if the House of Representatives leadership and the 
Bush administration would simply step forward and support ad 
hoc emergency disaster assistance paid for out of general 
funds. After all, that is how our Nation has been paying for 
emergency disaster assistance situations out of general funds 
and without offsets since 1989. In fact, when former President 
George Bush Senior and former President Bill Clinton both 
yielded to pressure from the rural community and threw their 
support behind the emergency disaster assistance authorization, 
Congress did, in fact, respond quickly and positively. I 
believe that our organization continues to support a national 
domestic food security principle, which includes the protection 
of food and fiber producers. We believe it would be a terrible 
mistake for our Nation to abandon our long-standing commitment 
to standing behind our Nation's food producers in times of 
weather-related natural disasters.
    S. 2800 is modeled after the year 2000 emergency disaster 
program, which is appropriate. We support S. 2800 because it 
includes emergency disaster assistance for both 2001 and 2002 
for both grain and livestock losses. That is critical. That is 
the kind of comprehensive approach that is needed to keep our 
farmers and ranchers in business, which should be the goal of 
emergency disaster assistance. To do anything less means that 
thousands of family farmers and ranchers will be forced out of 
business.
    We strongly oppose funding emergency disaster provisions by 
offsetting them out of the Farm bill, the budget of which is 
designed to mitigate the impacts of low commodity prices over 
the life of the Farm bill. It is not fair for one segment of 
agriculture that is facing economic disaster to help finance 
another sector of agriculture also facing economic disaster. It 
makes no sense to rob farm program dollars in a low-spending 
year knowing full well those dollars will be needed to pay for 
low commodity prices when more normal crop production returns.
    The rest of my remarks are included in my written 
testimony, and I will be glad to answer any questions. Again, 
thank you, Senator Nelson for coming here today and also, 
again, for your cosponsorship of S. 2800.
    [The prepared statement of Mr. Hansen can be found in the 
appendix on page 88.]
    Senator Nelson. Thank you very much, John.
    [Applause.]
    Senator Nelson. It looks to me like your popularity and 
maybe your membership just rose.

    David Bruntz from the Nebraska Cattlemen. David.

STATEMENT OF DAVID BRUNTZ, PAST PRESIDENT, NEBRASKA CATTLEMEN, 
                              INC.

    Mr. Bruntz. Senator Nelson, and members of the Senate Ag, 
Nutrition and Forestry Committee, my name is Dave Bruntz. I am 
a farmer and cattle feeder from Friend in East Central 
Nebraska. I am testifying today on behalf of the Nebraska 
Cattlemen, an organization where I served as president in 1997.
    Unfortunately, today's hearing conflicts with the Nebraska 
Cattlemen Board of Directors meeting in Alliance, which had 
been scheduled several months ago. The association's leadership 
felt it best to not reschedule this meeting at such a busy time 
of year, and they send their regards to you and your colleagues 
present at today's hearing.
    On behalf of the Nebraska Cattlemen, please include my full 
written statement in the record for today's hearing.
    My family operates a typical diversified family farm in 
eastern Nebraska. Our operation includes irrigated corn and 
dryland corn, irrigated soybeans and dryland beans, forages 
such as alfalfa hay and wild hay, dryland pasture, and cattle 
feeding and cow/calf operation.
    The drought of 2002 has had a tremendous impact on our 
operation. Hay yields have been cut in half and by more, and 
our dryland corn crop was harvested as poor-quality silage. 
Pastures and livestock watering ponds are being depleted before 
cows can be moved to cornstalks or other alternative forage 
sources. Our cows and calves are already in dry lot and being 
fed until cornfields are available after harvest.
    According to the August 12, 2002, Nebraska Weather and Crop 
Report, issued by Nebraska Ag Statistics Service, the drought 
has had the following impacts in Nebraska:
    Nebraska pasture and range conditions rated 64 percent very 
poor, 27 percent poor, 9 percent fair. These figures are well 
below the average, causing producers to continue to provide 
supplemental feed or dry-lot cattle, and/or cull deeper into 
their herds.
    Nebraska alfalfa conditions rated 40 percent very poor, 31 
percent poor, 18 percent fair, and 11 percent good. All well 
below the average.
    Nebraska corn conditions overall rated 34 percent good and 
excellent. On irrigated corn being rated 56 percent good and 
excellent, below the 5-year average of 76 percent. Dryland corn 
rated 4 percent good and excellent, far below the average of 47 
percent. The U.S. corn crop is rated at 39 percent good or 
excellent with the 5-year average being 62 percent.
    The Nebraska soybean conditions are rated at 28 percent 
very poor, 27 percent poor, 30 percent fair, 15 percent good, 
and 1 percent excellent. Well below last year's averages. The 
U.S. bean crop is 42 percent good to excellent, with a 5-year 
average being 58 percent.
    You can see how the cost of feed for these cattle herds 
will increase with a drought of this magnitude. Please find 
several charts also developed by Nebraska Ag Statistics Service 
attached to my statement. These charts provide numerous pieces 
of critical information.
    Graph 1 is hay prices, both alfalfa and grass. They have 
skyrocketed in the past 60 days. The June to July 2002 increase 
for all hay prices was $15 per ton, the largest month-over-
month increase since this data series was begun in 1949 and 44 
percent higher than July of 2000.
    Graph 2 shows that while December 2001 and May 2002 hay 
stocks are consistent with previous years, the tremendous 
decline in production is anticipated to have significant impact 
on December 2002 and future hay stocks.
    Graph 3, forecasted hay production for 2002 plus May 2002 
stocks are projected to be the lowest in the past 14 years.
    Graph 4 is a demonstration of drought conditions in 
Nebraska with pasture and rangeland conditions in 91 of 
Nebraska's 93 counties labeled at poor to very poor.
    As you know, the sand hills of Nebraska are noted for 
having excellent grazing and producing some of the best cattle 
in the United States. This reputation for cattle of this 
quality has been accomplished by years of genetic improvement 
by these ranchers. The cattle industry cannot afford to see 
these herds liquidated due to lack of assistance because it 
will take years to rebuild this genetic pool of quality cattle.
    Undeniably, Nebraska and several other Western States are 
experiencing a drought of historical proportions. This type of 
natural disaster too often creates scenarios where elected 
officials and Government agencies are forced to pick sides 
based on geographical boundaries or the type of commodity 
produced.
    Unfortunately, this drought will be no different. This time 
it is livestock producers who need your assistance. Under 
existing programs found in the 2002 Farm bill, crop producers 
will gain some relief through direct payments and federally 
subsidized crop insurance benefits.
    In fact, during this year's rewrite of Federal farm policy, 
many mainstream grain groups asked that emergency provisions of 
current law be scrapped in favor of counter-cyclical measures 
to protect farm income.
    This time around Congress listened, and these wishes were 
granted. More money has been funneled into the Federal crop 
insurance program to increase producer participation rates and 
to offset natural disasters such as drought facing Nebraska 
grain producers.
    Additionally, producers will continue to receive Market 
Transition payments in 2002.
    The rest of my testimony is in written testimony. I would 
like to thank you for allowing the Cattlemen to present at this 
hearing. Any questions, we will try to answer them.
    [The prepared statement of Mr. Bruntz can be found in the 
appendix on page 90.]
    Senator Nelson. Thank you, Dave. I appreciate your being 
here, and the rest of your testimony will be included in the 
record.
    We now have Joy Philippi from the Pork Producers. Good to 
have you here, Joy.

   STATEMENT OF JOY M. PHILIPPI, BOARD MEMBER, NATIONAL PORK 
                       PRODUCERS COUNCIL

    Ms. Philippi. Mr. Chairman, thank you for holding this 
hearing on the drought today.
    My name is Joy Philippi. I am a farmer and swine producer 
from Bruning, Nebraska. On behalf of the swine industry, I 
would like to thank you, Senator Nelson, for including our 
producers in today's proceedings.
    I am speaking to you today as a producer of corn, soybeans, 
and swine who has not had any rain since the 29th of May.
    Now, the day I wrote this, that was how it was. It did rain 
Saturday night. We do have a little bit of moisture now.
    Senator Nelson. Maybe I should have had this hearing 
earlier.
    Ms. Philippi. Well, we had 0.08, so that was double what we 
had between the 29th of May and that day. We were pretty 
pleased.
    Currently, I am a member of the Board of Directors of the 
National Pork Producers Council, and I have been involved in 
leadership with the Nebraska Pork Producers over the past 
several years. I have consulted with our leaders in order to 
write the testimony for today.
    Swine producers recognize the partnership between all 
producers in production agriculture. We appreciate the 
assistance that is being offered to our friends in the cattle 
industry, and we definitely recognize tremendous production 
losses in the grain industry.
    However, we ask that you recognize the challenges the 
drought of 2002 presents for the swine industry.
    Many times it is presumed that drought problems only affect 
crop production. Animal agriculture is the No. 1 consumer of 
grain products produced here in Nebraska and across the Nation. 
As the drought continues, we see our crops weaken and we 
continue to have increased worries as pork producers as to what 
effect that will have on our operations in the long term.
    In my written testimony today, I outline the crop drought 
conditions that were reviewed earlier by Mr. Chick and by 
several other members of the panel. As this year progresses, 
and on into 2003, all producer support will be affected to some 
degree by the emergency conditions created by this drought.
    For the diversified producers who are the masters of value-
added agriculture, these concerns are very great. As feed stock 
supply goes down, our cost of production goes up. We are caught 
in a catch-22.
    When grain price goes up, we get the assistance that we 
have from the Federal farm program from crop insurance and 
higher prices, but every time the price goes up for grain, the 
cost of production goes up for hogs. Here in Nebraska, 85 
percent of our producers operate diversified operations. That 
produces 65 to 70 percent of the swine marketed out of our 
State.
    Recently, Dr. Mike Brumm, Extension Swine specialist for 
the University of Nebraska, estimated that for every 10-cent 
increase in the price of grain, our cost of production per 
hundredweight goes up 50 cents.
    Over the past 14 trading days, our cost of production has 
increased a $1.50 to $2 a hundred. Today's market was $31. When 
you get to figuring that out, it is going to be hard to remain 
financially sound throughout the next year.
    These increasing costs, as well as the other production 
concerns, including poor rate of gain, some livestock losses, 
and some impaired salary breeding, stress our industry even 
further. In fact, I know of two producers who have made the 
decision recently to liquidate 500-, 600-head herds because 
they are living in dryland areas. There will be no crop 
available off of their farms, and they felt it was financially 
in their best interest to leave production.
    We do echo the sentiments of our friends in the beef 
industry and Farm Bureau and others that believe that the 
Livestock Assistance Program could be reworked and that we 
could look at some type of additions to that program that would 
include feed grain stocks.
    We believe that the program has some merit. It is a good 
shell right now. There are provisions there already for 
qualification. We would like to see those provisions adjusted. 
Right now, they are on your gross income, and that is not 
really the way to look at income in the livestock industry. It 
is better to look at, like, an adjusted gross income and look 
at those things to find profits.
    We believe this is one way that we can benefit all of 
animal agriculture through that program, and we would encourage 
you to look into that further.
    The one thing I will ask, though, is that as we look at the 
Livestock Assistance Program--that if it is appropriated, that 
those funds do not come from offset farm bill funding.
    Our producers tirelessly addressed the conservation title 
in the Farm bill. We felt that the EQIP funding was one way to 
benefit our industry and all of animal agriculture. It provides 
some risk management tools. It also allows us the opportunity 
to upgrade our facilities, according to the new rules in the 
EPA, and that we would be able to produce very safe product 
that the consumers want.
    I have to emphasize that. We believe that offsets are just 
like a self-funded emergency package. There is not many 
disasters where producers or the people that are affected have 
to put a down payment down in order to get their disaster 
relief. We would encourage you to work with your colleagues and 
stay away from the Farm bill funding for that program.
    I have outlined in my printed testimony the major points 
that we wanted to stress today, and being those I have 
mentioned, we also believe that we need to look at the capital 
gains tax. We believe that changes in that will be beneficial 
to our industry as well as to the cattlemen and others in 
livestock as they have to liquidate.
    We would also encourage you to address all of our needs in 
a bipartisan fashion. Right now, this drought is not 
discriminatory, and it is affecting all of us in different 
ways. We believe that, as we look at assistance packages, that 
is the same way that we would like to have that accomplished.
    With that, we would encourage you to speak with the 
Secretary of Agriculture. We believe that it would be 
tremendously important to our industry if she would consider 
using all the resources and her powers to aggressively move 
more pork and beef. We have a bulk product out there, and if 
she would help move some of that even farther into some of the 
Government food services, it would be good for our industry.
    With that, I thank you, Mr. Chairman. If there are any 
questions I can answer, I would be glad to do so.
    [The prepared statement of Ms. Philippi can be found in the 
appendix on page 96.]
    Senator Nelson. Well, thank you, Joy.
    My first question goes to Don Batie. I thought you had an 
excellent set of recommendations. I agree that those are things 
that we ought to consider as well, though I am trying to 
understand whether the Nebraska Farm Bureau is moving away from 
the American Farm Bureau's support of Senate bill 2800.
    I understand--and both you and Dave pointed out the problem 
with politics wrapping this issue around the axle in 
Washington, but you also said the disaster assistance needs to 
be enacted immediately, as does Dave. Your national 
organizations have endorsed the emergency legislation without 
pursuing and being required to pursue offsets.
    Are the local organizations of the same opinion that the 
national organizations are of, or on those opinions have you 
departed? I am just trying to understand.
    Mr. Batie. As far as Nebraska Farm Bureau, we have not 
disagreed with this policy of American Farm Bureau. However, 
you do have to realize that some political expediency--I am 
quite sure that the American Farm Bureau was supporting that 
bill before you went into your August recess, and the whole 
issue was let's get something passed soon. That is of the 
utmost importance, the sooner the better.
    The reason I was testifying about the offsets is the 
political realities. The President has said he will veto any 
bill that does not include offsets. I don't want to see a 
prolonged battle between Congress and the President. Therefore, 
the sooner the better. In my opinion, we might need to look at 
offsets.
    I agree with you in your opening statement. I do not want 
to jeopardize future payments or EQIP funding or another area. 
That is moneys that are not going to be spent anyhow. That is 
the money we are looking at offsetting.
    Senator Nelson. Well, I hope there is some of that.
    David.
    Mr. Bruntz. I believe some of these offsets will occur 
naturally due to the rise in grain prices. We will not have the 
LDP payments, which amount to a large part of the budget of 
agriculture, and I believe that will occur naturally.
    I do not believe we can come up with enough offsets to fund 
what is needed on the short term, and time is of the essence in 
the livestock industry.
    Senator Nelson. Well, one of the concerns is that it has 
been suggested that you can take--because of the expected lower 
payments that will be required because of, perhaps, some good 
fortune along the way, that there could be some savings. The 
problem is the CBO has not been directed to score that savings 
to where you can use that going into this program.
    Now, I am not going to try to justify Enron's accounting 
any more than anyone else would, nor do I want to support the 
CBO's decision on this, but that is the hangup that we have.
    If it was possible to do what you are talking about, and if 
that money then would not otherwise fall back into the farm 
program for the future, I could certainly look at that. So far, 
no one has been able to point out how we can do that.
    I want us to always think about what is possible. We do not 
want this wrapped around the axle in Washington, but the 
President has some power about whether is gets wrapped around 
the axle. The other party has some power whether it gets 
wrapped around the axle, and so do we.
    This is a bipartisan bill, by the way. Senator Helms and 
Senator Conrad Burns have signed on to it, and that was just 
before the break. There may be others who are looking to sign 
on to it as well. I appreciate your candor and your support.
    Joy, one of the questions that I might ask you is, from 
your knowledge, whether the U.S. livestock sector has ever 
sought a standing Federal disaster program other than the 
Livestock Assistance (LAP) program, and if not, whether you 
think that something like that might be good for the future, 
given the fact that we are ad hoc trying to play sandlot 
baseball right now rather than having something organized?
    Ms. Philippi. The reason we thought the Livestock 
Assistance Program is because of the qualification parameters 
being there already.
    On our board, we have not had official discussion with some 
of the members. We have discussed possibilities of expanding 
the insurance program--that Sapida project right now--bringing 
that into Nebraska and other Midwestern States as well. We 
think that would be a good risk management tool.
    The other thing is then when we look for disaster 
assistance, it would truly be disaster assistance, but we would 
also have that same assurance that the crop producers have.
    That is where our thinking has been going at this point. We 
have not expanded on that because, for us, right now is when we 
are really looking into what our losses could be from the 
drought.
    Senator Nelson. All right. It is hard to look forward when 
you are wrapped up in where you presently are, but I hope that 
at some point we begin to think about what other risk 
management tools we could put into place in the future so that, 
should we encounter something that is unparallel since the 
1930's, that we at least have some tools already in place, and 
that we are just simply supplementing rather than building 
something basically from scratch, even though the Livestock 
Assistance Program is there. It will not be enough. It is not 
going to get us where we need to be.
    Well, I appreciate very much, your being here. I may have 
another question. Just a second.
    Oh, I am supposed to remind everybody, we are going to have 
a 5-minute break after your panel here and before the third 
panel. I misspoke. There are four panels today. The third one 
is broken into two groups. There will be four panels.
    I thank you very much. I appreciate it and look forward to 
working with you to sort this out and smooth out the rough 
edges that we are facing. Thank you.
    [Recess.]
    Senator Nelson. We will come back to order. There should be 
enough time at the end of the panels to get some questions and/
or comments from the audience, which we hope to be able to do.
    All right. The first panelist, James Vorderstrasse. Did I 
get it right?
    Mr. Vorderstrasse. That is right.
    Senator Nelson. Pretty close enough? OK. Vice President for 
Legislation, the National Grain Sorghum Producers, please share 
your views with us.

     STATEMENT OF JAMES VORDERSTRASSE, VICE PRESIDENT FOR 
         LEGISLATION, NATIONAL GRAIN SORGHUM PRODUCERS

    Mr. Vorderstrasse. Thank you. Senator Nelson, fellow 
members of the Committee, I thank you for convening this urgent 
and important hearing today.
    My name is James Vorderstrasse. I farm 4 miles north of 
Chester in southern Nebraska. I am a dryland farmer, and raise 
grain sorghum, wheat, soybeans, corn, hay, and manage a cow/
calf herd on rangeland.
    I serve the National Grain Sorghum Producers as Vice 
President for Legislation, and also serve on the Nebraska Grain 
Sorghum Producers Board of Directors.
    The fact that I am here to discuss the grain sorghum 
situation should speak volumes about the severity of the 
drought in Nebraska and throughout most of the U.S. Great 
Plains. This is because grain sorghum is an extremely drought-
tolerant, resilient crop that is known for its ability to 
survive without water for long periods of time and bounce back 
when water again becomes available. Senator Nelson, this year 
there won't be much grain sorghum bouncing back for the Great 
Plains or Nebraska.
    Even grain sorghum is being victimized by the disaster 
facing U.S. farmers this year. The U.S. is predicted to harvest 
the smallest sorghum crop since 1956, in large part due to the 
magnitude of the drought.
    Early USDA estimates predicts that Nebraska sorghum 
production will plummet almost 60 percent from last year, and 
sorghum yields will range 25 to 70 percent of normal, with 
similar sorghum yields forecast nationwide. Meanwhile, on my 
operation, my soybeans will yield 40 percent of normal to zero, 
while expectations are for most of the corn crop to be cut for 
silage.
    As a result of the grain shortages, prices of grain are 
predicted to increase, but dryland farmers with little or 
nothing to harvest will not be able to take advantage of the 
higher commodity prices. Additionally, while we appreciate your 
work to craft and pass a much needed farm bill this year, 
higher commodity prices will likely mean no counter-cyclical 
payments.
    Grain sorghum farmers were pleased to see more improved 
treatment of grain sorghum in loan rates in the new Farm bill, 
but sorghum farmers with no crop to harvest will not receive 
any benefit from this either.
    Further, throughout much of the U.S Sorghum Belt, multiple-
year droughts on the Plains which have led to disaster 
assistance have destroyed guaranteed yields for crop insurance 
purposes, unfortunately making the program largely ineffective 
as a solution to this year's widespread disaster.
    Senator Nelson, we implore you and your colleagues to 
persevere in your work to address the situation, and we 
appreciate the early efforts that have been made so far, but 
some form of disaster legislation will be needed if farm 
families, as well as their rural communities and schools, are 
to remain viable in the face of the devastating conditions.
    Recently, the National Grain Sorghum Producers Board of 
Directors passed a resolution urging Congress to pass disaster 
legislation that would get much needed funds into the hands of 
affected farm families as soon as possible.
    Further, NGSP recommends that this disaster package be 
similar to past efforts and at similar levels as in the past.
    Senator Nelson, thank you again for convening this 
important meeting today. Please let us know if we can provide 
additional input regarding this dismal situation.
    [The prepared statement of Mr. Vorderstrasse can be found 
in the appendix on page 104.]
    Senator Nelson. Thank you, Jim.
    We now have Mark Schweers, President of Nebraska Corn 
Growers Association. Mark.

STATEMENT OF MARK SCHWEERS, PRESIDENT OF NEBRASKA CORN GROWERS 
                          ASSOCIATION

    Mr. Schweers. My name is Mark Schweers, and I am president 
of the Nebraska Corn Growers Association. I raise irrigated and 
dryland corn and soybeans near Wisner. I am here today 
representing dryland crop producers from across the State.
    First, I would like to thank Senator Nelson for his time 
and effort in addressing this serious challenge facing farmers, 
ranchers, and our country. I am sure by now you are well aware 
of the magnitude of this drought and its effects. As with any 
major disaster, there is no quick, concise answer, no silver 
bullet to fix all the problems, but, rather, a series of steps 
to begin the rebuilding process.
    I would like to offer some broad ideas on that disaster 
package, and then focus on specific areas of crop insurance and 
the effects of the drought on the livestock industry.
    There are several proposals that the Senate and House have 
under consideration. Each has strong points and weaknesses. 
Perhaps the toughest question is how to pay for a disaster 
package. I believe that this type of natural disaster, which 
has a broad effect on our whole economy, should have the same 
consideration as other catastrophes that affect our country. 
Therefore, emergency spending should be adequate to repair the 
economies of these drought areas.
    We have all worked long and hard to develop the 2002 Farm 
bill. The concern with offsetting funds from the budget before 
we have begun to implement the program raises questions for 
which I am having a difficult time finding answers. It is 
assumed at this time that counter-cyclical payments and LDPs 
will not be needed this marketing year.
    Some of the suggested programs have looked at the use of 
these savings to fund a disaster package. The Congressional 
Budget Office will need to conduct a thorough review of the 
status of these payments in regard to their scoring against the 
budget. Areas that should not be considered in any potential 
offset are those that affect the future budget of these safety 
net programs and the new loan rates.
    I would also like to address specific areas that should be 
considered in any disaster package, the first being crop 
insurance. I have a few points that I believe we need to keep 
in mind as we look at disaster aid and the interest in 
maintaining a viable crop insurance program.
    We need to be sure that producers who have utilized risk 
management be rewarded for their decisions more than those who 
choose not to use crop insurance. The protocol that some are 
considering would result in a noninsured acre receiving 95 
percent of the potential disaster payment compared to the 
insured receiving 100 percent. This is an unjust spread that 
rewards those who do not utilize crop insurance and penalizes 
the producers who use risk management programs. I would like to 
offer the idea of a difference of 30 percent between the 
payments to insure the incentive necessary to maintain 
participation in the crop insurance program.
    Many of the proposals being considered require producers 
who do not have crop insurance and receive disaster payments to 
purchase insurance in future years. I support this concept. I 
would also encourage you to look at increased participation and 
at levels of these requirements so they fit the goal of 
maintaining a viable crop insurance program and not result in 
minimum token policies. Those determined levels should be high 
enough to differentiate between producers who are willing to 
manage risk with crop insurance and those who choose to forgo 
disaster payments and remain self-insured.
    Another concern is that, under a scenario that may unfold 
this year, many producers who carried the high levels of 
insurance may reach a cap and will have to forgo payments. We 
should not penalize these people, but make some type of an 
adjustment so using insurance does not create a disservice. A 
possibility may be to raise the cap or to refund premiums.
    The other area I would like to focus on is support of the 
livestock community, which I believe has been hard hit by this 
drought. They are not only corn and soybean producers' largest 
customers, but also our neighbors in our communities. Their 
future is directly correlated to our future.
    Several efforts are under way in Washington to provide 
resources and support to producers, and I applaud this work. I 
would urge you to move as quickly as possible to address the 
needs of the livestock industry.
    One specific area that I would like to touch on is the 
consideration of extending the tax deferral time from 2 to 4 
years to livestock producers that have been forced to liquidate 
part of their herds. In many cases, herds have been reduced by 
over 40 percent, and some entirely. This loss, along with the 
tax burden, may be insurmountable for many operations to 
survive.
    There are many more ideas that are under consideration. I 
encourage you to explore each on its own merits and long-term 
consequence. I hope that over the upcoming months we can work 
together in these many areas that will help agriculture, our 
economy, and our country work through these challenging times.
    Thank you.
    [The prepared statement of Mr. Schweers can be found in the 
appendix on page 107.]
    Senator Nelson. Thank you, Mark.
    Now, Keith Dittrich from the American Corn Growers 
Association. Good to have you here, Keith.

   STATEMENT OF KEITH J. DITTRICH, PRESIDENT, AMERICAN CORN 
                      GROWERS ASSOCIATION

    Mr. Dittrich. Thank you, Mr. Chairman, and members of the 
committee. On behalf of the members of the American Corn 
Growers Association, I would like to thank you for the 
opportunity to provide our viewpoint of this organization to 
this esteemed committee concerning the impacts of these natural 
disasters on American's farm and ranch families.
    I am Keith Dittrich. I am president of the American Corn 
Growers Association and a Nebraska corn producer.
    In a normal year, about 12 percent of the U.S. experiences 
a drought of some type. This year, however, according to the 
U.S. Weather Service, about 52 percent of the country is facing 
drought. This is no small pocket of minor discomfort. This is 
an extremely serious and widespread disaster.
    Recently, I had the opportunity to travel from Omaha to 
southwest Oregon through Denver. From the air--I was lucky to 
have clear skies--I saw only brown the entire route except for 
irrigated fields, and when I got to the end of my travels, I 
was met with a forest fire of historic proportions in Oregon in 
the southwest part of the State covering 450,000 acres due to 
drought. I just wanted to mention that.
    You have heard many times today that Nebraska is facing a 
very devastating drought. I would agree. Right now Nebraska is 
projected to produce nearly 20 percent less corn, but, as we 
may find, as we did in 1995, by the end of the crop year, the 
final statistics showed that national average corn yield was 
another 12 bushels lower than the August 12th crop report. We 
do not know what will happen, but we fear that could happen 
again.
    Under the new Farm bill, current crop prices, though 
improved, will result in very little gain per bushel over 
income received in 2001 from all sources. Therefore, the 
projected production losses will translate almost directly into 
an equivalent gross income loss. Many of these losses will not 
be recovered from Federal crop insurance because of the 
deductible. A decrease in gross farm income of this magnitude 
is devastating to a producer, especially since in May, before 
any crop losses, USDA forecast that income from farming to farm 
operator households would be negative in 2002. That is USDA's 
statistics.
    The old-timers say that the 1930's, which has been touched 
on today as reflecting to the drought--would not have been so 
bad if it would not have been for the 1920's. The 1920's were a 
time of very difficult economic times in farm country, and 
looking at today, we can say that that could be the case here. 
We spent the last decade and a half in an economic turmoil in 
the country relating to agriculture, and farmers just do not 
have the means necessary to supply this drought without income 
assistance.
    Congress has provided disaster legislation, and the 
President has enacted disaster laws covering every crop year 
since 1988, with the exception of two, and three if we count 
2001. Today, we seek assistance for the 2000 crop as well as 
the 2002 crop--I said 2001 as well as the 2002.
    Nebraska had many losses in 2001, prior to the devastation 
of this year. For example, just 50 miles south of my farm, the 
Fullerton area has had severe drought and produced virtually no 
dryland crop in 2001.
    Therefore, many farm and ranch families need assistance due 
to disasters that occurred in 2001. Many more need assistance 
for 2002, and there are those who have been hardest hit by this 
disaster in both years.
    As you move forward with this legislation for both years, 
please make sure that if a producer qualifies for assistance in 
both years, that they are eligible for benefits for both years. 
It would be extremely unfortunate to discriminate against those 
who have suffered two consecutive years of drought.
    We also need assistance for livestock producers. We are 
leaning too much on CRP haying and grazing as the program of 
choice for emergency livestock assistance. We also must insure 
that those few standing programs remaining for disaster are 
properly funded, such as the Emergency Conservation Program and 
the American Livestock Feed Assistance Program.
    Finally, funding. Funding of a 2002 disaster program should 
be adequate to avoid any proration of payments in the event the 
need exceeds the initial estimates. This not only provides the 
essential level of program benefits, but it expedites the 
distribution of those payments.
    We also are vehement in our opinion that funding for a 
2001/2002 disaster program should not come from cuts or offsets 
from a recently passed farm bill. This is a disaster, and 
funding should not be at the expense of other essential 
programs. Even though there is $200 billion of agricultural 
activity in the country, only about 25 percent of that is 
covered under the Farm bill. We cannot ask that the rest of the 
75 percent be pulled out of that farm bill. That just does not 
seem fair to us.
    Finally, we find that--we are to understand that those 
wishing to find offsets in programs for disaster assistance 
would take all of the offsets out of one-fourth of the 
production agriculture economy to redistribute to the other 
three-fourths.
    In future years--and I will close--we propose an 
examination of a standing disaster assistance program and a 
reestablishment of a farmer-owned grain reserve to protect our 
livestock and ethanol industry, which we fear could be 
devastated if we end up with severe shortcomings in crop 
production.
    I thank this committee. I will offer my expanded remarks 
for written testimony, and I appreciate the time here today.
    [The prepared statement of Mr. Dittrich can be found in the 
appendix on page 109.]
    Senator Nelson. Thank you, Keith.
    Now, we have Ron Stoddard, who is the Executive Director of 
the Nebraska Wheat Board. Ron, good to have you here.

 STATEMENT OF RON STODDARD, EXECUTIVE DIRECTOR, NEBRASKA WHEAT 
                             BOARD

    Mr. Stoddard. Senator Nelson, my name is Ron Stoddard, 
Executive Director of the Nebraska Wheat Board. I want to thank 
the Senate Ag Committee for holding this committee hearing in 
Grand Island today in order for agricultural producers, 
agricultural suppliers, financial lenders, rural retailers, and 
others to have an opportunity to express their concern about 
the severity of the drought conditions present across Nebraska, 
in particular, and the Central Plains area, in general.
    Nebraska, like our neighboring States, is an agricultural 
State deriving a majority of its gross national product 
directly from the production of agricultural crops and 
livestock. I have personally been involved in production 
agriculture in Nebraska for the past 40 years, and I have never 
seen a year as severe as 2002 is proving to be.
    It is spooky to drive across the country and see one field 
after another severely damaged, if not nearly dead, from lack 
of moisture. Most of the irrigated crops are also suffering 
severely because it has been impossible to provide these crops 
with adequate water due to no rainfall and abnormally high 
sustained temperatures.
    The few crops that have somehow withstood the drought 
conditions are the feasting grounds for a huge influx of 
grasshoppers. When we look at the rangeland, one would think it 
was mid January if it were not for the 100-plus-degree 
temperatures.
    Grass has been nonexistent in the major cow/calf region all 
year. Due to the inadequate levels of soil moisture, the grass 
never attempted to green up this spring and is still as dormant 
today as it was last March. Several ranchers have been forced 
to either sell part, if not all, of their herds or haul them to 
expensive grass several hundred miles away.
    Let us talk about wheat issues in specific. Nebraska had 
mixed results in wheat production this year. Much of the wheat 
produced east of Grand Island had yields as good, if not 
better, than in recent years. There were several reports of 
dryland yields of 60 to 70 bushels per acre. However, the 
fallacy is that only 11.2 percent of Nebraska's wheat is raised 
east of Grand Island.
    The area from Grand Island west got progressively drier the 
farther west one goes. The common harvest yields this year in 
that area, west of Grand Island, would be in the 10-to 25-
bushel-per-acre range.
    This year's Nebraska wheat harvest of 46,400,000 bushels is 
22 percent smaller than last year's crop, and the smallest 
since 1944. This compares with the past 5-year average of 
70,660,000 bushels.
    The June 2nd crop report released by Ag Statistics reported 
that, at that date, the top soil and subsoil moisture levels 
across the State of Nebraska were rated mostly short to very 
short in the major wheat-growing areas, and the crop conditions 
were rated at 62 percent poor statewide.
    Moisture conditions continued to decline during the 
following month leading up to wheat harvest. The August 12th 
crop report from Ag Statistics showed subsoil moisture levels 
at 93 percent short and very short, which is the lowest level 
since 1974, and the report that I read this morning shows that 
the percentage is now 97 percent.
    The financial status of Nebraska's wheat producers was 
extremely fragile prior to this year's drought. It is 
encouraging to see wheat prices increase to levels around $3.80 
per bushel, almost $1 per bushel higher than 1 year ago. 
However, price is a nonissue if you do not have any production 
to sell.
    This year's production was 12,800,000 bushels less than the 
2001 crop year, which was not a banner crop year either. With 
wheat prices at $3.80 per bushel, the loss to Nebraska's wheat 
producers is $48,640,000. A dollar generated at the producer 
level will turn 7 times through the economy reflecting a loss 
of $3,404,800,000 to Nebraska's economy.
    The Nebraska Legislature just completed a second special 
session in order to balance the budget for this fiscal year. 
Over $100 million was cut out of very worthy programs and 
projects. The legislature may well need to hold other special 
sessions in order to keep the State's budget in check if this 
drought continues.
    Nebraska wheat farmers, as well as all agricultural 
producers, desperately need Federal assistance in order to 
withstand this economic devastation. The designation of 
Nebraska as a statewide disaster area is of great importance 
because it facilitates the opportunity for producers to apply 
for low-interest loans.
    In addition to low-interest loans, our farmers will need a 
strong Federal crop insurance program and assistance with 
obtaining crop input for next year's crops.
    I thank the Committee for this opportunity to make these 
brief comments of behalf of Nebraska's wheat producers. I 
believe that together we can survive, and Nebraska will 
continue as a strong wheat-producing State.
    [The prepared statement of Mr. Stoddard can be found in the 
appendix on page 117.]
    Senator Nelson. Thank you, Ron.
    Next, we have former Senator Lee Klein, who is the 
immediate past president of the National Corn Growers 
Association. We appreciate having you here, Lee.

STATEMENT OF LEE KLEIN, IMMEDIATE PAST PRESIDENT, NATIONAL CORN 
                      GROWERS ASSOCIATION

    Mr. Klein. Thank you, Senator Nelson, and thank you for 
being here today.
    As you said, my name is Lee Klein. I am a farmer from 
Battle Creek where I grow--when there is rain--corn and 
soybeans and hay. I am the chairman of the board of directors 
and the past president of the National Corn Growers 
Association, the Nation's largest corn grower organization.
    Senator, it is dry. You know that, and a lot of farmers in 
Nebraska and other parts of the Corn Belt are hurting. After 
the low prices of recent years, this disaster hits us hard.
    The previous panelists have pointed out the severity of the 
problem. The question is how to mitigate it.
    Yesterday, I stopped at a neighbor's place where trucks 
were unloading 300-plus cows that they were bringing home early 
from pasture. Ten days ago they brought home the calves from 
those cows. His cost per pen in the pasture was less than 90 
cents a day. It was very close to that. Today, his cost, 
without labor, to provide feed for them is $2.10.
    Also, I remind you that the retired Knox County rancher, 
where they pulled these cattle from, got three-fifths of his 
rent for the year. There are going to be a lot of culled cows, 
and it takes 7 years to repopulate a cow herd.
    I am in the business of selling corn without cows to eat 
it, without hogs to eat it, without the poultry to eat it. We 
are in trouble. I mean, PETA would be happy with what is going 
on.
    Finally, the NCGA strongly recommended the immediate 
establishment of the task force to conduct comprehensive 
evaluation of the losses caused by drought conditions over the 
last 2 years. We believe it is important for the Department to 
receive input from affected producers as to the extent of the 
drought, its effects, and practical actions for the mitigation. 
Such an entity would be worth value to both producers and the 
USDA. We hope to hear from the Secretary soon. Sadly, the USDA 
has inherited a lot of work regarding the Home Security Act.
    Assistant Secretary Moseley told me in his office a while 
back that he and his staff are spending over 80 percent of 
their time working on this issue. Secretary Hawks, who works on 
the regulatory issue, said that his office is spending a lot of 
time with that.
    I believe this has caused the droughts to be, literally, 
put on the back burner, if you do not mind the pun. The reason 
we have not seen some of the administration jumping in line on 
this is the fact that their people that would have been out 
looking at this have been tied up on other issues.
    The National Corn Growers Association has established its 
own disaster task force comprised of producers from areas 
suffering from drought and from the areas blessed with rain. 
Our decision to appoint a task force was a result of 
collaborative efforts between NCGA and grower leaders from 
State corn grower and checkoff organizations.
    The mission of this task force is to make sure that clear, 
timely, and accurate information on the impact of the disaster 
situation gets to policymakers and program implementors. The 
other thing is to share information between growers in States 
on assistance programs and options to assist crop and livestock 
producers in responding to the disaster, and to set a course of 
further action for national corn growers with respect to 
disaster response. Our task force will meet by phone again 
tomorrow to discuss and take action on this issue.
    Senator you have supported the recently enacted farm bill. 
We applaud your support. You share with us the concern that any 
disaster assistance might come from farm program funds. We 
strongly oppose funding disaster relief from current USDA 
programs.
    Recent Federal assistance to victims of hurricanes in 
Florida did not come from Florida's share of Federal 
transportation funds--I robbed that from you--nor did payments 
made to Western States suffering from wild fires come from 
Federal funds otherwise budgeted to them.
    Again, we do not believe that disaster aid should come from 
so-called savings from reduced payments due to higher commodity 
prices or any other change in the Farm bill. Once that happens, 
I believe the final things that can happen might be funding the 
World Trade Center out of reduced expenses. We are not 
interested in that at all.
    We are also concerned that this disaster might be used as 
an argument against the renewable fuel standard you worked so 
hard to get adopted in the Senate energy bill.
    True, we are talking about a major drought having serious 
impacts on farmers and ranchers in many States. However, I want 
to point out that we will have a corn crop exceeding 8.7 
billion bushels. There is and will be plenty of corn to produce 
ethanol.
    This disaster has a human face for many in agriculture, but 
the strength of our American agriculture ensures our ability to 
meet the challenge of being part of the solution for our 
Nation's energy problems.
    The solution for assisting those suffering from this 
drought will not come easily. The producer members of the 
National Corn Growers Association pledge to you, Senator, and 
to our friends in Congress and the administration our 
commitment to working toward an equitable policy that assists 
those who need help, and preserve the programs so important to 
farmers and ranchers in our rural communities.
    Finally, as you pointed out, Senator, loans are not always 
the answer. Let me tell you, this disaster will be the 
proverbial straw that broke the camel's back. We will be losing 
more producers, and some of them will not even realize the long 
tail that exiting production in agriculture will have.
    We allow a no-tax liability on $500,000 worth of selling a 
home to a couple that have owned it for 5 years and lived in it 
for 2, but not to the individual who quits farming. After the 
banker extracts his share, come March the IRS will be waiting 
with open arms.
    I ask you to please grant an exemption to those people so 
they can get on with their lives. If we can give a $500,000 
exemption in income to a homeowner, why can't we do $250,000 
exemption for people forced out of agriculture?
    Thank you, Senator.
    Senator Nelson. Thank you. I thank the panel for the very 
appropriate presentations from your organizations.
    As I think about the question about getting something 
accomplished in a timely fashion, and with an emergency so that 
we can do it immediately, is there anyone who feels that we 
ought to wait to see if you can get some offsets, even if they 
were outside the Farm bill?
    Lee, you have spent enough time in Washington. You visit 
our office on many occasions when you are back there in your 
role as the president of the National Corn Growers Association. 
Do you have any thoughts about what the effort to get offsets 
might involve, in terms of timeframe?
    Mr. Klein. Well, I don't think there is time, especially 
for the cow/calf producer. Like I said, it takes 7 years to 
rebuild a herd.
    I honestly, Senator, do not think that there needs to be an 
offset on an emergency funding basis. It was pointed out by one 
of the panelists earlier. John Hansen said that the Senate 
version had an emergency assistance package in it. It got 
buried in the conference committee. If we are going to that, it 
needs to be budgeted for ahead of time. I do not want to see 
that farm bill opened up.
    Senator Nelson. Any other thoughts from the rest of the 
panelists?
    Mr. Dittrich. Well, Senator, I am very concerned about 
offsets also, and we strongly oppose any offsets. We do not 
think that is necessary. I am concerned that it is possible 
that there is an attempt to really undermine the integrity of 
the Farm bill by using offsets to cut loan rates, for example.
    The question is: Where are you going to take them? Are you 
going to take them out of the counter-cyclical payment? Is that 
not going to be needed this year?
    We do not know yet. We do not know where market prices are 
going to go. We hope they go hope. They should go up. The past 
2 days corn has been down 10 cents the last time I saw it, 
about noon today. We just do not know. We are very concerned 
about attempting to use any of those offsets.
    As you mentioned, CBO will have to score some--if you are 
going to take money out of the farm program, they are going to 
have to score it by taking away funds and taking away from 
program benefits. That is how they will do it. It really will 
work.
    Senator Nelson. Any other thoughts from the panelists?
    Mr. Schweers. Well, I guess I just echo much of Lee's 
comments. Once you open up that farm bill for offsets, we do 
not know what else is coming down the line. It is just going to 
open it up for other people to raid into the Farm bill. We also 
do not know what is going to happen in the future. That is our 
safety net, and we want to leave that intact.
    Senator Nelson. Jim.
    Mr. Vorderstrasse. As far as counter-cyclical payment, the 
CBO--when they score it--they figure money saved in 1 year will 
possibly be used in the next year, if there is more money 
needed. If we start taking it out of this year when we do not 
need it, down the road we are going to run short and be left 
standing with nothing.
    Senator Nelson. Well, Ron, I will not leave you out in case 
you had some thoughts you would like to give.
    Mr. Stoddard. Well, Wheat certainly agrees with the panel 
here that the farm program should not be opened up again and 
that offsets should not be used as way of funding disaster.
    Disaster is needed immediately and, as mentioned before, 
the cow/calf guy is probably hurting more than the wheat 
producer is, although most wheat producers are a cow/calf 
producers as well.
    Senator Nelson. For many of those producers, when we say 
now, in their mind it is already yesterday.
    Mr. Stoddard. Yes.
    Senator Nelson. Immediate, right away, emergency--all those 
words mean--even though we are trying to do it as quickly as we 
can, it is still a delay for many of the producers. No matter 
when we get it done, it is not soon enough in many cases.
    Well, I thank you very much. I appreciate it. Very 
enlightening.
    One of the things I wanted to do here is--I neglected to 
introduce the folks who are up here supporting me.
    First of all, most of you probably already know Dale 
Williamson, who is the head of the Natural Resources Commission 
and Office under six Governors, including myself. I have always 
teased Dale about his age. As a retired general, he has been 
around just a little while. Just the other day he was telling 
me about how bad the 1920's and the 1930's were.
    [Laughter.]
    Mr. Williamson. I have a tractor for sale, too.
    Senator Nelson. Oh, and he has a John Deere tractor for 
sale. It runs good, but it is missing the steering wheel and 
seat. It is ideal for the person who has lost his backside and 
does not know which way to turn.
    [Laughter.]
    Senator Nelson. He thought he was going to get me on that.
    Then we have Betsy Garbucz who is working with us. Ben 
Hanson, who is are legislative assistant, who has recently 
joined us from Superior. He has some family here. We are very 
happy to have him. Then Stephanie Mercier, who is from Senator 
Harkin's staff, through whose courtesy and support we are able 
to have this committee hearing here. We appreciate very much 
her invaluable assistance to us along the way.
    Now, having said all that----
    Mr. Williamson. Senator, we also have Mary Crawford with 
Senator Hagel's staff. You couldn't see out there. Mary, are 
you out there?
    Senator Nelson. Here we are. OK. Thanks, Mary. We 
appreciate your being here.
    I have some items I would like to introduce in the record. 
I would like to submit the letter from Pam Potthoff of Women 
Involved in Farm Economics--WIFE--as they support S. 2800, no 
offsets, as well as a collection of letters written by members 
of the United States Custom Harvesters, which we will make all 
a part of the record for this hearing.
    [The letters of Ms. Potthoff and members of the U.S. Custom 
Harvesters can be found in the appendix on page 121.]
    Senator Nelson. Now, we are having a potpourri group of 
panelists for the fourth and final panel today. As they are 
preparing to get situated--they are going to be batting 
cleanup. If it has not been said, they are probably going to 
say it, but if it has been said, they are probably going to say 
it again. We appreciate you very much for being here today.
    First, Dale Dueland from McCook, whom I have known from the 
time that he was crawling on the floor of his parents' home 
many, many years ago. He says that he is a dryland farmer from 
McCook. It almost seems like an oxymoron to say you can be a 
dryland farmer today under these conditions.
    Dale, we appreciate your being here. Please give us your 
thoughts.

      STATEMENT OF DALE DUELAND, FARMER, McCOOK, NEBRASKA

    Mr. Dueland. Thank you.
    As the Senator said, my name is Dale Dueland, and I live in 
McCook, Nebraska. I manage and operate a diversified family 
farm in nearby Frontier County, which includes land that my 
great-grandfather homesteaded in 1890. I have operated this 
farm since graduating from the University of Nebraska in 1976, 
and also have had several years of part-time work experience in 
ag finance and farm and ranch real estate sales. I currently 
serve as director and officer of our local farm cooperative and 
have for the past 10 years.
    According to the McCook Daily Gazette, last Friday was the 
35th day this summer of a daily high temperature of 100 degrees 
or more. This is, unfortunately, very close to the record of 37 
days back in 1936.
    I might add, this morning they were forecasting 100-degree 
temperatures for the next 2 days as well. That record is within 
the target, and we could be over that by the end of the week.
    As of Friday, McCook had recorded 8 inches of rainfall for 
the year. That is one-half the normal, with most of the 
shortfall occurring in the last couple of months. Our farm has 
received just one-half inch of rain since late June.
    The extreme heat, coupled with lack of rainfall, has 
devastated the dryland crop production in our area. Just last 
Friday, our crop insurance adjuster appraised our nearly 900 
acres of dryland corn at a zero yield, something a few weeks 
ago we would never have thought possible due to drought.
    Our normal annual rainfall usually does not provide 
excessive moisture. In 1981, we adopted conservation farming 
practices to conserve every drop of rainfall we receive. It has 
served us very well over the years, as I do not recall ever in 
my farming career having a crop insurance loss claim due solely 
to drought. We have had a claim occasionally due to hail, but 
not drought. We thought we had a fairly bulletproof plan to 
produce crops up until now.
    Our long-term dryland corn yield averages are 80 to 90 
bushel per acre, generating normally about $200 gross revenue 
per acre from grain sales. Multiperil crop insurance coverage, 
which we have purchased as long as I can remember, will produce 
a little over $100 per acre, leaving us about $100 an acre 
short. Now, this totals close to $90,000 of uninsured lost 
income from our dryland corn crop alone.
    It does not end there. When you add losses from our cattle 
operation due to lighter calf selling weights and higher feed 
costs, and add losses from the irrigated farmland due to 
reduced production from heat stress and higher pumping costs, 
our total uninsured farm losses for our operation should easily 
enter the neighborhood of $200,000.
    Multiply this times the number of full- and part-time 
family farmers in our area, and you realize that this has 
enormous consequences, not only for the farmers, but also for 
rural communities that supply farmers with goods and services.
    I have many friends in McCook that are small business 
owners, and I depend on them to keep my farm running.
    As you can see, losses of this magnitude test the financial 
strength, management abilities, and emotional fortitude of the 
families who operate the farms. The combination of low crop 
prices the last few years and an accumulating effect of drier 
weather patterns in our area are pushing many farm operations 
to the brink.
    In spite of larger price support payments the last few 
years, many operations have operated at breakeven, at best, and 
will have a very difficult time producing profits to overcome 
these shortfalls. With losses accumulating as quickly as I 
mentioned above, even farm operations that were strong 
financially can have their equity positions quickly diluted.
    This drought is a disaster. It is as severe and as much of 
a disaster as any flood, tornado, hurricane, or earthquake that 
you could imagine. It has been sinister. It has tempted and 
teased us for 2 years with moderate dry spells, and this year 
unleashed an unbelievable 90 days of extreme heat and dry to 
scorch the earth.
    Multiperil crop insurance has been a great help to our 
operation. We have purchased CRC coverage at the basic levels 
and are comfortable with the risk that we have assumed. It is 
good coverage at a reasonable cost.
    Our area is about one-half rangeland, and cattle are a 
large part of our farm and ranch incomes. The Livestock 
Assistance Programs are needed and should be closely examined 
to assure that they provide appropriate assistance in a fair 
and responsible manner.
    Regarding the EQIP program, I would suggest that additional 
or reallocated funding for EQIP in the drought area be 
considered. This program has been short-funded the past few 
years, and there has been a backlog of projects to be 
completed. These projects stop soil erosion, aid rainfall 
conservation, promote efficient livestock grazing, and promote 
irrigation efficiency conserving the high plains aquifer. They 
are private/public partnership projects that will help the 
farmers battle the effects of the drought.
    Our farm is in the Middle Republican Natural Resources 
District. At their monthly meeting last week, the McCook 
newspaper reported there were 192 applications requesting $3 
million in cost share funding for EQIP projects districtwide. 
These are projects that the district conservationist has 
reviewed and deemed worthy of funding consideration. The 
current allocation of funding for those projects is $496,000. 
At this rate, it would take 6 years to work through the list, 
not counting any new applications.
    Another thing to consider here is most these projects 
require contractors and other supply items from local 
communities. This would be a way to boost these businesses and 
rural development as well. I submit these projects will most 
likely not be done without EQIP cost share, as financial 
pressures from the drought will prevent farmers from spending 
money, which brings me to the last area I want to touch on, the 
money issue.
    When my banker and farmer friends heard I had been invited 
to come here today, they commonly offered one request, half 
serious and half tongue in cheek. The request was: Just tell 
them to send money. Don't we wish it were all that simple.
    Even with the insurance proceeds and direct Government 
assistance, it will be a long time before farmers and ranchers 
recover financially from this drought. I do not think any 
farmers or ranchers I know expect to be made financially whole 
from the Government assistance. They expect risk in agriculture 
and take steps to reduce their exposure to it. Not to recognize 
that risk can be financial suicide.
    One thing we generally do not need today in agriculture is 
more loans, especially Government or private loans that are 
made irresponsibly. I would not encourage a large Government 
direct loan program to counter the effects of the drought. I 
feel we must offer as much direct disaster aid to producers 
that we can practically afford and rely on the banking and 
credit system we have in place to manage the rest of this 
problem.
    Generally the system is very good with adequate capital and 
personnel to service agriculture. Ag bankers know their 
customers and their credit capacity pretty well and would be 
the best judge to administer any financial restructuring that 
may be needed.
    For the most part, this has been a hot, frustrating summer 
for producers. In a normal year, we would be enjoying a late 
summer break, appreciating the growth and progress of the 
summer crops, and looking forward to a fall harvest that would 
have rewarded us for a spring and summer of hard work.
    Normally, in the fall, including some harvesting we do for 
neighbors, we would run our combine over about 2,000 acres of 
crops. It looks like this year we will harvest about 350 acres 
of irrigated crops that will produce maybe a half to two-thirds 
the normal yield. The other roughly 1,700 are at zero yield. At 
first glance, it does not look like there will be much to do.
    For me, though, it feels like the work is just beginning. 
We will have to break out of our routine and make a number of 
different decisions which have important consequences for our 
future.
    We may be witnessing just the first chapter of this 
drought, and I hope and pray that we are not. At the moment, 
there is no indication that there is a big rain coming, but if 
it did, we would still not see much effect until the growing 
season of 2003.
    Immediate rains would get the wheat crop off to a good 
start and would charge soil moisture reserves for a corn crop 
next summer, but there would not be much help for feeding the 
cattle herd. In fact, a cold, snowy winter would actually cause 
more expense in feeding and caring for the herd.
    A continuation of the drought will certainly drive 
production losses and producer despair deeper. Today, looking 
into the future, it appears we will lose complete grain and 
pasture crops until this drought breaks.
    This outlook does not encourage those businesses in our 
rural communities either. Please understand and do not forget 
that they are very dependent on dollars flowing through the 
agriculture economy. Their financial future is directly tied to 
the outcomes of the drought and governmental assistance. It is 
important to remember that not only our farms' but also our 
rural communities' welfare is at stake here.
    Thank you for the opportunity to share my views.
    [The prepared statement of Mr. Dueland can be found in the 
appendix on page 131.]
    Senator Nelson. Thank you very much, Dale.
    Jeremie Kerkman, from the Central Nebraska Public Power and 
Irrigation District. Jeremie.

        STATEMENT OF JEREMIE KERKMAN, ON BEHALF OF THE 
         CENTRAL NEBRASKA PUBLIC POWER AND IRRIGATION 
                            DISTRICT

    Mr. Kerkman. Thank you, Mr. Chairman.
    My name is Jeremie Kerkman, representing the Central Public 
Power and Irrigation District, and I will discuss the 
conditions in the Platte River Valley.
    The North Platte River, the Platte River, and associated 
reservoirs supply irrigation water to approximately 608,000 
acres in Nebraska. Surface water irrigators in Nebraska's 
Platte River Valley from the Wyoming border to Kearney rely on 
a combination of precipitation, naturally occurring flows in 
the river, and water stored in Wyoming reservoirs and Lake 
McConaughy to meet the demands of their crops. The lack of rain 
and low river flows have placed unsustainable demands on 
storage supplies in Lake McConaughy.
    Flows in the Platte River have been low since June of 2000, 
and record-low flows began to occur in mid-April of 2002. 
Cumulative inflows to Central's system of canals and reservoirs 
since January 2002 have been less than half the normal inflows. 
To illustrate the severity of the situation, the difference 
between inflows this year and in a normal year would be enough 
water to irrigate 150,000 acres.
    Irrigators on Central's system will receive the full amount 
of water contracted to them in 2002. However, because of the 
lack of precipitation, in many instances the amount of water 
provided by their contracts and delivery systems will not be 
adequate to meet the full demands of the crop.
    Precipitation is needed to provide adequate moisture for 
grain fill. Corn grown in Central Nebraska requires 24 to 27 
inches of water to meet the regional evapotranspiration demand. 
That water requirement is normally met by a combination of 
moisture stored in the soil, precipitation, and irrigation. On 
average, South Central Nebraska receives 11.75 inches of rain 
during the growing season. This year, rainfall has totaled only 
4.6 inches.
    The effects of this drought on Lake McConaughy have been 
mounting for 3 years, but have now reached a critical juncture. 
Lake McConaughy currently contains one-third of its capacity, 
and Bureau of Reclamation reservoirs in Wyoming, which are 
filled primarily with snowmelt runoff from the Rocky Mountains, 
are extremely low.
    Lake McConaughy depends primarily on return flows from 
upstream irrigation projects in eastern Wyoming and western 
Nebraska. The amount of water available to the Bureau of 
Reclamation irrigation projects ultimately affects the amount 
of water that finds its way back to the North Platte River and 
into McConaughy. With Wyoming's North Platte reservoirs storing 
less than 30 percent of their capacity, the possibility of 
McConaughy filling in the next couple of years is remote.
    Central has estimated Lake McConaughy's ability to 
withstand continued drought conditions. At this time, we 
believe it is very likely that McConaughy will contain 
sufficient water to irrigate the 110,000 acres under contract 
with the Central District in 2003.
    However, should drought conditions persist through next 
summer, the lake could fall to as little as 15 percent of 
capacity, which would make it extremely difficult for the lake 
to recover sufficiently to meet irrigation demands during the 
2004 season.
    Central and the producers to whom we provide irrigation 
water are making every effort to conserve water resources. 
Since the drought of the early 1990's, numerous improvements 
have been made to our delivery system and customers' on-farm 
systems at a cost of more than $25 million to ensure that 
Central's portion of the Platte Basin's water supply would be 
sufficient to meet irrigation needs.
    We have informed our irrigation customers of the current 
circumstances at Lake McConaughy to encourage conservation and 
have reduced releases for hydroelectric power generation. The 
conservation and education efforts implemented to date have 
been effective, resulting in a reduced demand for water from 
Lake McConaughy. However, the total financial impact of the 
drought on producers will not be known until after harvest. It 
is likely that the reduction yields and revenues will be 
significant.
    Without a timely end to the current drought conditions and 
above-normal snow pack in the Rocky Mountains of Wyoming, the 
situation could become worse. Continued drought may very well 
interfere with Central's ability to deliver a normal supply of 
irrigation water in 2004.
    Thank you for this opportunity to provide you testimony.
    [The prepared statement of Mr. Kerkman can be found in the 
appendix on page 136.]
    Senator Nelson. Thank you, Jeremie.
    Now, Ron Cacek from the North Platte Natural Resources 
District from Scottsbluff.

         STATEMENT OF RON CACEK, MANAGER, NORTH PLATTE 
  NATURAL RESOURCES DISTRICT, AND CHAIRMAN, NATURAL RESOURCES 
                  DISTRICT MANAGERS COMMITTEE

    Mr. Cacek. Thank you, Senator Nelson, for this opportunity 
to testify today on the effects of the drought in Nebraska. My 
name is Ron Cacek. I am testifying today as manager of the 
North Platte Natural Resources District, and also as chairman 
of the NRD managers committee, made up of the managers of 
Nebraska's 23 natural resources districts.
    Senator Nelson is familiar with Nebraska's system of 
natural resources districts, but for the benefit of the others, 
let me explain that the State is divided into 23 natural 
resource districts known as NRDs. NRDs are local units of 
government, each with an elected board of directors. State law 
gives NRDs a charge to conserve, protect, develop, and manage 
the natural resources of this State and assigns them a broad 
range of responsibilities and authorities to carry out this 
mission.
    Protecting and conserving groundwater is one of the NRD's 
key responsibilities. Many NRDs can tell you that the current 
drought has put severe stress on groundwater across much of 
Nebraska.
    Virtually, all of Nebraska has felt the effects of the 
drought, but it has been most severe in the Panhandle. 
Scottsbluff receives an average of 14 inches of precipitation 
yearly. A typical year for us would be considered a drought in 
many areas. The year 2002, by any standards, has been 
especially dry. Since January 1st, Scottsbluff has received 
3.87 inches of precipitation, according to the National Weather 
Service, about one-third of normal amount.
    Along with the drought has come extreme heat. June's 
average temperature was 6 degrees warmer than normal, and 
July's average mean temperature was 4.5 degrees warmer.
    The drought has put extreme stress on the entire system of 
surface water and groundwater in the North Platte Valley. 
Several large reclamation projects on the North Platte River 
provide water to irrigate more than 300,000 acres of crops in 
the Panhandle. These projects rely upon winter snowpack in the 
mountains of Colorado and Wyoming, but this last winter there 
was not very much snow. The snow that did fall mostly soaked 
into the soil, and not much ran off into the streams and 
reservoirs. This left the North Platte Project with scarcely 
more than a third of a full water supply this spring. For 
irrigators, this has translated into enough water to last an 
average of 65 days, when the normal irrigation time is 122 
days.
    The North Platte River provides water to protect for 
appropriators with a priority date of 1884. The last time that 
administration on the river occurred, back to this date, was 
about 1954. The North Platte River is not much more than a 
trickle.
    On June 24th, the Department of Natural Resources measured 
a flow of 17 cubic feet per second at the gauge at Lewellen, at 
the upper end of Lake McConaughy. This is the lowest flow on 
record at this location. The previous low was 44 cubic feet per 
second, measured in 1954.
    The effects that I have listed so far are visible for 
anyone to see the dry river bed, stunted and wilted crops, and 
scorched grazing land, but this drought is having other effects 
that cannot be seen. It has severely stressed groundwater in 
the North Platte Valley. There are several reasons for this.
    First, surface water irrigators whose canals dry up will 
turn to groundwater to get them through the summer, if they 
also have a well. This will obviously result in the pumping of 
much more groundwater than a typical year.
    A second reason is that most of the groundwater recharge 
comes from the irrigation canals. When they dry up earlier than 
usual, that means less groundwater available to pump. In other 
words, most of our groundwater is recharged from the surface 
water irrigation projects.
    The combination of less groundwater and more pumping has 
already led to problems for groundwater users. Some counties 
have received approval for emergency assistance through USDA to 
drill new livestock wells. This assistance has been helpful, 
but should have been made available sooner.
    There have also been reports of cities in Nebraska 
restricting the use of water by residents. Since early summer, 
the NRD has received numerous reports of significant problems 
with domestic and livestock wells, and even irrigation wells.
    In some cases, the wells that provide water for farm homes 
and livestock operations have dried up. The NRD measures water 
levels weekly in a number of wells, and we have charted 
declines in water levels as a result.
    One result of the groundwater problem has been an even 
higher demand to drill new wells. So far in 2002, the North 
Platte NRD has issued 112 well permits. This is more than the 
NRD has issued before in an entire calendar year, and about 
double the number of permits issued in most years.
    In conclusion, it is becoming clear to us that the drought 
of 2002 is unprecedented. Longtime residents who can remember 
the 1930's cannot remember it being this dry before. The 
effects have been severe, and indications are that they will 
get worse.
    Even when this drought has passed, it is likely to take a 
long time for surface water and groundwater resources to 
recover. Steps need to be taken now to lessen the long-term 
impacts of this drought.
    Thank you.
    [The prepared statement of Mr. Cacek can be found in the 
appendix on page 143.]
    Senator Nelson. Thank you, Ron.
    Now we have Al Davis, a rancher from Hyannis. Good to have 
you here.

       STATEMENT OF AL DAVIS, RANCHER, HYANNIS, NEBRASKA

    Mr. Davis. Thank you, Senator Nelson. I would like to thank 
you for giving me the opportunity to testify this afternoon 
before the Senate Ag Committee about Nebraska's widespread 
drought and its economic implications. My name is Al Davis. I 
am a rancher from Hyannis, Nebraska, which is small community 
60 miles east of Alliance.
    This is not the first year of the drought, but 2002 has 
expanded the area of dryness, and many believe that Nebraska's 
rangelands are in worse shape today than they were in the Dust 
Bowl days of the 1930's.
    A drought is a natural disaster. It is no different than a 
hurricane, a flood, or an earthquake. In those instances, aid 
arrives immediately because the damage is visible, sudden, and 
shocking, and it draws the attention of the media. A drought is 
silent and often ignored, but just as deadly.
    In the extremely dry portions of Nebraska, the rancher is 
out of options. He needs assistance immediately or he needs to 
liquidate. Most ranchers cannot even wait for their traditional 
bred cow sale in October to liquidate their herd.
    It is my hope that the House, Senate, and executive 
branches will move beyond partisan politics to find a quick 
solution for our problems. Otherwise, it will be too late for 
most of us.
    The cattle rancher is essentially a farmer, a grass farmer, 
and the cow is the vehicle that converts the grass into cash. 
It is the cow that pays the bills on a ranch. She makes the 
land payments, pays the utility bills, buys tractors and 
pickups, and pays for the repairs. The cow pays her own bills 
as well. She pays the feed store and the vet. She pays wages, 
housing, and benefits for the workers who take care of her. If 
that is not asking enough of the cow, she must also fund the 
local government entities through property taxes. She enables 
the ranchers to buy goods and services that garner State and 
local sales taxes.
    In fact, the cow is the foundation of the economy in a huge 
portion of Nebraska, and anything which reduces her ability to 
prosper has a grave impact, not just on the rancher, but on all 
Nebraska's economic entities from State government to rural 
villages.
    If you have been outstate in Nebraska, you have seen the 
visible result of the drought. Pasture and forage production is 
running at 25 to 50 percent of normal. The drought's old 
friend, the grasshopper, has exploded in numbers. Reports from 
Custer County indicate levels in excess of 1 million 
grasshoppers per acre on some pastures. That is approximately 
23 grasshoppers per square foot.
    Most ranchers turn cattle into their summer pastures in 
May, knowing that they were short of forage, but hoping for 
moderate weather. The weather flipped 180 degrees in June. Hot 
winds were common much of the month, and little moisture fell 
to bring on the warm season grasses.
    July brought unrelenting heat with many communities 
breaking records every day. At our ranch, we had our last 
measurable precipitation on July 6th, when we had 1.5 inches, 
bringing the total for the year to 7 inches.
    Ranchers follow the seasons in making management decisions. 
They move to summer pasture when the grass is growing, move to 
winter pasture at the conclusion of the growing season, and 
begin supplementing cattle with hay in January or February as 
their cows prepare to calve.
    Most summer pastures played out in Nebraska in late July. 
Ranchers in our area are now grazing their winter pastures, 
which normally take place around November 1st. Winter pastures 
will be gone in a month, and most of us will be out of options 
by October 1st, with no grazing available to carry us through 
to traditional hay feeding season in February.
    While the Hyannis area has received about half the normal 
amount of precipitation, the Scottsbluff area is much worse off 
with only 25 percent of normal rainfall. Scottsbluff County has 
never seen such meager amounts of rain, even during the Dirty 
Thirties.
    Ranchers in the McCook area were weaning calves in June, 
months ahead of the usual weaning season in October.
    The effects of the moisture deficit will be long-lasting 
because it will take an exceptionally wet winter to bring 
grasses on next spring.
    It is important to view all this with consideration of the 
fact that the cattle market has been severely depressed for 
some time. Bred heifers sold for $850 to $1,000 last February. 
Today, this same heifer, with calf by her side, might bring 
$650 in a livestock auction barn.
    If Nebraska's ranchers are forced to liquidate herds under 
these depressed prices, it is unlikely that many will be able 
to fully rebuild. Many ranchers have already thrown in the 
towel and are liquidating portions of their herd. Deep culling 
will eliminate all animals over 6 years old at one neighbor's 
ranch. At Angora, several ranchers are liquidating their entire 
herds.
    Rural communities that are heavily dependent on the ranch 
economy will suffer, too. Loans that were fully collateralized 
last year may be called this year as the price of cattle 
declines in response to the drought.
    Implement dealers, feed dealers, veterinary supply houses, 
and vets will all be directly affected by the drought. Fewer 
cattle on the ranch means less money spent for these items.
    Ranchers I spoke with offered several suggestions. They 
include: One, all ranchers would like to see a revision of IRS 
rules on restocking after a drought. Current law provides that 
the operator must restock within 2 years or pay capital gains 
taxes on the deferred income. Ranchers would like to see an 
additional 2 years added to IRS regulations. Pastures may not 
fully recover in 2 years or the drought might continue for an 
additional period.
    As individuals rush to restock, an artificial bubble may 
develop in the price of bred cows. Ranchers who pile on debt to 
repurchase these cows in an attempt to avoid further capital 
gains taxes may be forced to borrow more money than they can 
adequately service. Extending the buyback period to 4 years 
would help keep debt levels low and manageable and would allow 
for slow and safe restocking, which makes sense from an 
ecological standpoint.
    Aid could come in several forms. During the drought of 
1989, many ranchers were dismayed when hay doubled in price 
shortly after USDA announced that it would pay half the cost of 
purchasing additional feedstuffs. The beneficiaries of 
Government assistance that year were the producers of hay and 
roughage, who saw the price of their commodity double 
overnight.
    Producers I spoke with offered the following suggestions:
    Consult with NRCS to determine the carrying capacity of a 
particular ranch. Consult the rancher's inventory records to 
determine how many head of cattle he is running on that 
particular ranch, and then pay the rancher a lump sum amount 
which is related to the number of cattle on the ranch, but no 
greater than the carrying capacity of that particular ranch. 
The objective here is to assist all ranchers, but to avoid 
reinforcing behavior which is not conducive to overstocking 
their pastures.
    B, assist the rancher through Federal rebates to local 
taxing entities who would then lower property taxes for the 
affected ranchers. This would require the coordination of 
various levels of government, but would free up money for the 
rancher to use for feed purchases. In Nebraska, property taxes 
are often the second largest expense for the rancher, and they 
are due and payable on the land even if no cow can survive on 
it.
    C, all ranchers would like to have flexibility to purchase 
feeds that most suit their operation. It may be more cost-
effective to move the cows to a feedlot for a few months rather 
than to bring high-priced feed into the ranch. This option 
needs to be available to the rancher.
    An extremely flexible program is needed to meet a variety 
of circumstances. Ranchers would appreciate your help in 
emphasizing to urban Senators that the rancher does not receive 
subsidy for his normal activities from the Farm bill.
    While we would prefer to use money allocated in the 2002 
Farm bill, we all feel that time is running out for the 
industry in our area, and extensive wrangling in the Senate and 
House over where the money is to come from will be detrimental 
to the region. Therefore, we would support additional funding 
above and beyond the Farm bill, if it is required, and can be 
delivered in a timely manner.
    Finally, Secretary Veneman recently announced a $150 
million assistance program for our area. Surprisingly, local 
FSA offices have no information available about this assistance 
program, although this information appears to be available to 
the large feed corporations.
    Press releases by the Department of Ag, which are prepared 
and distributed before guidelines are compiled, are not 
helpful, and I would urge you to consult USDA and request that 
they immediately develop guidelines for this program.
    I appreciate your efforts on behalf of Nebraska's ranchers, 
and thank you for the opportunity to come here today.
    [The prepared statement of Mr. Davis can be found in the 
appendix on page 150.]
    Senator Nelson. Thank you, Al.
    Now we are pleased to have Vern Steinman, who is the Orphan 
Grain Train Volunteer Manager of Operation Hay and Grain Lift, 
and he is from Norfolk. Maybe, Vern, you could tell us a little 
about that operation.

 STATEMENT OF VERN STEINMAN, OGT VOLUNTEER MANAGER, OPERATION 
             HAY AND GRAIN LIFT, NORFOLK, NEBRASKA

    Mr. Steinman. Thank you, Senator Nelson, and thank you for 
taking your coat off and making me feel right at home.
    Senator Nelson. Yes, exactly.
    Mr. Steinman. I am the only one that did not wear a coat. 
It was awful cold in here earlier, and now it is warming up 
after I am beginning to speak.
    I would like to introduce two gentlemen, first of all, who 
started Orphan Grain Train. Pastor Ray Wilke and Clayton 
Andrews started Orphan Grain Train 10 years ago, and it has 
been providing relief in all kinds of disasters ever since.
    I am going to paraphrase my remarks here and just hit the 
high spots. I know what Al is going through. We have received 
over 200 calls for hay. My remarks are going to be made to you 
to help us release some more hays that we can get to these 
folks.
    You and I both know that a cow herd survives on hay, but 
there are some things we can do and that we have helped do to 
survive some ranchers. My remarks are going to be survival 
remarks.
    I harken back to the days of Winston Churchill, when 
Winston Churchill said--the town was falling. They were being 
bombed every night and everything else, and he said never, 
never, never give up.
    Our whole issue here with Orphan Grain Train and Hay Lift 
is we are not going to give up. We are going to help--we are 
going to go to the last cow to try to help these folks out with 
some hay and grain.
    We have an 800 number established to call for hay and to 
donate hay. Amazingly, the Maker up above does wonderful things 
because daily now I am getting calls donating hay.
    Senator Nelson. Before you go further, would somebody here 
like that 800 number? I know you could gather some hands.
    Mr. Steinman. We are using a donated cell phone--Orphan 
Grain Train works on almost all donations--402-640-5528 is our 
Hay Lift number.
    Senator Nelson. Now, try that a little bit slower.
    Mr. Steinman. Oh. I am sorry. I am a Dutchman. I talk fast. 
I will slow up.
    Senator Nelson. Let us get that number.
    Mr. Steinman. 402-640-5528.
    Senator Nelson. All right. Thanks. I did not mean to 
interrupt you, but I thought----
    Mr. Steinman. That is fine. I like a participatory 
challenge anyway.
    Senator Nelson. All right. Sounds fair.
    Mr. Steinman. As of this morning, we had 190 people 
request, and that is different than you have in your notes 
because it goes up hourly. We needed 4,010 ton. We have filled 
67 of those requests as of this morning, and we have filled 
1,304.4 ton, which is a fantastic job. Farmers love to help 
farmers, and they will come forward, if asked.
    We have 24 donors right now that have contributed 1,453 
tons. We are needing a lot more hay to fill the requests that 
we have.
    We appreciate the deadline increase on the CRP. That was to 
the end of the month, but that has been moved up until the end. 
After out-of-state donations, we have had some calls. We have 
shipped some out-of-state hay.
    We feel the secret to saving the cow herd, and everything 
that you have heard here today, is we have to get them hay. 
That is all there is to it. We have to find some way to get hay 
to these folks. We can move cows. We have done a lot of that 
already fellows that brought cows to eastern Nebraska.
    It is amazing your map and my map, down here with the pins 
in it--where the donors are, and where the hay is going is 
exactly the drought map there. We are so fortunate in northeast 
Nebraska that we have been able to catch some timely rains and 
get some hay. That has helped us.
    I put in there a donator sheet. We verify everybody that 
calls us. We call either the Extension Service or the Farm 
Service Agency and verify the person says who he is and so we 
can guarantee the donor of the hay will be going to a recipient 
that is in need of hay.
    Last week, on August 12th--or 2 weeks now. Time is going 
pretty fast for an old volunteer like me. I am full-time 
service now, it seems like, but still volunteering. We had a 
meeting last week. One of the worst things in a disaster like 
this is the emotional toll on families. If you could sit on the 
telephone, as I have done the last few weeks, and listen--and 
you know who calls in for hay? That is the wives. The wives 
call in and it is an emotional time for these folks. I mean, it 
is the biggest tragedy that I have been involved in.
    We, as a organized group of churches, went together, and we 
are lined up with Nebraska Community Action Organization. We 
are lined up with the Inter Ministries. We are providing 
services for those in stress that need counseling, and 
counseling is a big part of this.
    OK. What do we need? We would like to see you look into 
maybe harvesting more of the CRP acres. We harvested 50 
percent. We could harvest another 25 percent of those and have 
very low impact on the wildlife, we feel, because where we 
harvest it already, the regrowth of that harvested acre has 
been tremendous when we have some rains.
    If you could help us there with getting some more of that 
CRP--and my understanding was that the Conservation Reserve 
Program in the first place was installed for emergencies like 
this where we need roughage. We need roughage.
    OK. We instituted a grain program where we know that we 
take CRP hay it cannot be fed alone. It has to be fed with some 
energy source and a protein and mineral source. We have 
instituted a program where we are asking people to donate grain 
so we can start to supply the same producers with grain to 
supplement the CRP hay.
    We have an excellent organization. I have worked with what 
I refer to the old USDA. They have been most supportive. Brian 
has really taken a hold on that. The Extension Service has an 
excellent point for helping these farmers--how to feed CRP hay, 
how to feed cornstalks. We are now initiating a cornstalk 
program where we are going to harvest cornstalks and try to get 
those shipped. Still, that is where we are coming from.
    I will entertain any questions you might have later. Thank 
you.
    [The prepared statement of Mr. Steinman can be found in the 
appendix on page 159.]
    Senator Nelson. All right. I thank you.
    Art Duvall, who is a soybean grower, representing the 
Nebraska Soybean Association, from Ord. Art, we are glad to 
have you here.

        STATEMENT OF ARTHUR DUVALL, SOYBEAN GROWER, ON 
         BEHALF OF NEBRASKA SOYBEAN ASSOCIATION, ORD, 
                            NEBRASKA

    Mr. Duvall. OK. Thank you very much, Senator.
    My wife Tanya and I have a soybean and corn farm near Ord, 
and that is located 65 miles north of Grand Island. I have been 
a member of the Nebraska Soybean Association, the Nebraska Corn 
Growers, and Nebraska Farm Bureau for many years. I am 
currently serving as chairman of the Nebraska Soybean 
Association. I am also an independent crop insurance adjuster, 
working with both hail and multiperil claims.
    I am here representing the Nebraska Soybean Association, 
but the drought has affected all areas of crop and livestock 
operations. I will not limit my comments to just soybeans, 
since our farm, like many others in Nebraska, is a diversified 
operation.
    I would like to thank you, Senator Nelson, and your staff 
for conducting this meeting and for allowing me to have the 
opportunity to relate to you the drought conditions that we are 
facing in Nebraska.
    I would like to convey to you the drought conditions on my 
farm, the drought conditions that I have seen as I travel 
across this State and visit with other farmers as a crop 
insurance adjuster, and the effect the drought has had, and 
could have, on my community.
    Our farming operation consists of around 500 acres, of 
which 45 percent is non-irrigated. Since June 7th, for 60 days, 
we did not receive any measurable amount of rainfall. The 
temperature was in the upper 90's to 100 degrees. We also had 
many days of high winds.
    I watched as my dryland corn and soybeans withered and then 
died. I will not harvest any grain from these fields. Because 
of the drought conditions, the nitrate levels in the damaged 
corn is so high that it is not safe to graze or hay. My dryland 
soybeans are from 6 to 8 inches tall, and I may be able to get 
some hay off of these. If you are interested, I have some 
pictures of my dryland crops that I would share with you after 
my comments are over.
    Even the irrigated soybeans are much shorter than normal. 
They are setting pods, and beans are starting to form. Our 
average yield on irrigated soybeans is 50 bushel per acres. I 
feel that this year we will be 15 to 20 percent lower due to 
the extreme heat and winds.
    Our irrigation system, although running full time, could 
not keep up with the crop water demands. Most irrigation 
systems are designed to supplement the normal rainfall and 
could not apply enough water fast enough this year.
    Also, we normally start watering soybeans when they begin 
to set pods, usually around late July. This year we were forced 
to start watering over 30 days earlier, which will add a 
considerable amount to our production costs.
    The irrigated corn is in much the same condition. Extreme 
heat during the pollination period has caused a reduced yield. 
We have also had a plague of grasshoppers this year. 
Grasshopper control has been expensive and, in most cases, 
ineffective.
    The irrigation costs are much higher than in normal years. 
My average corn yield is 150 bushels per acre, and similar to 
the soybeans, I expect to see 15 to 20 percent lower yields 
this year. This is on the irrigated ground. I would like to 
reiterate, on the irrigated corn and soybeans, our yields will 
be lower, and our production costs will be much higher.
    I, like most farmers, carry multiperil crop insurance, but 
crop insurance alone will not be enough. We are in the third 
year of a drought. It is more widespread this year and 
receiving more attention.
    In the year 2000, we produced no dryland crops. In 2001, we 
had about one half of a crop. This year we will again raise no 
dryland crops. We need a drought assistance program to keep our 
operation viable.
    As a crop insurance adjuster, I have traveled over a large 
part of central and western Nebraska. The crop conditions that 
I see on my farm are being replayed on farm after farm that I 
visit. I have been in hundreds of corn and soybean fields that 
have absolutely no potential. Some irrigation districts have 
shut off water because the lakes and canals are so low.
    This is a critical time in grain production, with kernel 
development in corn and pod fill in soybeans. Having their 
irrigation water shut off now will drastically reduce their 
yields. Farmers have expressed to me that their irrigation 
costs have been extremely high, and grasshopper control costs 
range from $8.50 to $11 per acre. Most operators have sprayed 
the borders of their fields several times, and I have talked to 
some farmers who have sprayed entire fields up to three times. 
I have had several producers tell me that, without some 
financial assistance, they may not be farming next year.
    The alfalfa crop was also very short. Most producers 
harvested a fair first cutting, but between the drought and the 
grasshoppers, second and third cuttings were greatly reduced or 
not at all. Ranchers are also facing a very serious situation. 
Pastures are completely gone. They have been forced to wean 
calves early, and reduce their cow herds dramatically. The 
normal 5-month grazing season has been reduced to 2 or 3 
months, and if they can find hay to buy, it is very expensive.
    As I visit with area agricultural businesses, they are 
concerned that the full effects of the drought on their 
business have not been felt yet. When fall arrives, and harvest 
is complete, farmers' cash income may not allow for any 
nonessential purchases.
    Area bankers have expressed concern that when loan renewal 
time comes, generally mid-winter, the farmer may not have 
enough funds to pay these loans off.
    I hope I have relayed to you the conditions here in 
Nebraska. I know that I have painted a bleak picture, but the 
situation is bleak. This drought is a natural disaster, just 
like a hurricane, flood, tornado, or forest fire.
    The victims are the hard-working farmers and ranchers, the 
agricultural businesses, and the communities, and eventually 
everyone in this State.
    As I visit with the older generation of Nebraskans, they 
tell me that this year is drier than the 1930's. If it were not 
for irrigation, we would be living in a desert.
    As you contemplate your decisions, remember that a healthy 
agriculture economy is essential to a healthy economy, not only 
in Nebraska, but also across this entire country.
    My farm, the area farmers that I work with, and our rural 
communities need a drought assistance program. I invite you to 
come with me to area businesses and see the look of concern on 
their faces as they talk about the impact this drought will 
have on them and their communities. I invite you to come to my 
farm and walk through my corn and soybean fields. I welcome you 
to ride along with me for a day as I work with farmers across 
this State who are watching their fields and very possibly 
their livelihood and way of life dry up and blow away.
    Thank you.
    [The prepared statement of Mr. Duvall can be found in the 
appendix on page 168.]
    Senator Nelson. Thank you, Art.
    This is a question to Art. Because of your experience with 
the crop insurance program, do you think that participation in 
crop insurance should be a prerequisite for receiving disaster 
assistance, as some have suggested?
    I have heard other suggestions as well. Someone said 
perhaps it ought to be part of the requirement for disaster 
assistance.
    Mr. Duvall. Yes, it probably should be a prerequisite. I 
also do not think we should punish the people who do have 
insurance by paying the ones that do not have insurance the 
same amount. I mean, farmers should take advantage of all the 
risk management tools available, just not be rewarded if they 
do not take advantage of those.
    Senator Nelson. Now, I know that cow/calf operators may not 
be paying as close attention to the insurance side of it, but, 
Dale, what are your thoughts?
    Mr. Dueland. On the same question?
    Senator Nelson. On the same question, yes.
    Mr. Dueland. We went through this a couple years ago with 
catastrophic policies and requirement for eligibility for farm 
payments, and I understand as a producer of the risks in 
farming, and I agree that if producers are not willing to take 
advantage of some of these risk management techniques, that 
they should not benefit from a payment that----
    Senator Nelson. It might be a disproportion, at least, to 
recognize that you are trying to reward those who take 
advantage of the risk management----
    Mr. Dueland. I visited with a farmer the other day, an 
elderly gentlemen, and there are not many farmers today that do 
not purchase crop insurance, but he was one. He is financially 
well-to-do, and even his position--he is nearing retirement 
age. He made the comment that maybe I should start buying crop 
insurance after what he saw this year. Of course, in his 
lifetime he has never--his farming career probably spans 50 
years or so. He has not seen this----
    Senator Nelson. You were probably suggesting life 
insurance, too?
    Well, Vern, if we were able to get some transportation 
dollars to you, would that help you get the donated hay to the 
cow/calf operators that are looking for it?
    Mr. Steinman. To get transportation dollars----
    Senator Nelson. Yes. If there was a way to get some 
transportation----
    Mr. Steinman. Definitely would help because it is a huge, 
huge problem to transport hay.
    We get about 30 of these big large bales on a 45-foot 
trailer. That is about 1,300 pounds per bale. To keep some of 
these cow herds going, it is going to take a yeoman's effort. 
The other problem we have is--and now alluded to it bringing 
those cows to eastern Nebraska, that is going to be a 
transportation thing also.
    You are going to need transportation help there to get 
those cows moved back to eastern Nebraska or Iowa or--so 
definitely, Senator, if you could help us with some 
transportation dollars--we even thought about using the 
National Guard to transport hay for us, if that would be 
possible. Anything that you can help in transportation would be 
much appreciated.
    Senator Nelson. Well, I appreciate the effort that you are 
making, and if there is a way that we can find to assist you, I 
can assure you, we are going to look for it and do it.
    Well, I want to thank all of you for your participation 
here today, and the information is valuable. It will help us 
make the case in Washington. I certainly appreciate your 
commitment, and we wish you the best of luck and good fortune 
in the days ahead. I thank you very much.
    We have time for a couple of questions or comments from the 
audience. If there is somebody that would like to go to the 
microphone. I know that we have one gentleman who wants to, if 
you would, and if a couple of others would, that would work as 
well.
    If you could put your name and the question on a card, it 
is going to be helpful to the court reporter to be able to have 
that as part of the record. Then begin, if you would then, by 
identifying yourself and then give us the question.
    I am not going to offer to answer all the questions that 
are asked, but I will volunteer the panelists who remain.
    Yes, sir?
    Mr. Macintosh. OK. My name is Bert Macintosh, and I am one 
of the victims of this circumstances. I will try to keep it 
level here.
    I had to liquidate my cows. Everything I worked for for 25 
years is gone. We had quite an extensive panel here that 
addressed multiple facets of this situation. I do not know if 
the situation is equal to or worse than the 1930's. Obviously, 
I have not been around that long. I will tell you, with the 
circumstances we have in this country, with this drought, with 
the infestations of the grasshoppers, with the corporate greed 
that is ravaging our economy, we have a major national problem.
    Now, we repeatedly elected you as Governor of this State, 
and then we sent you to Washington to represent us there. Now, 
we pray for you guys, and we pray for guidance for you guys, 
and I pray that you guys get together and start looking at this 
as a real serious problem, because if we cannot stop the 
squabbling and the party bickering and the stalling and all the 
things that go on in Washington, which is part of the things 
that go on there--and I am sorry that it goes on. If both 
parties cannot get beyond this childish behavior and get 
serious about addressing the problems that this country has 
facing us, we are going to be looking at things like Egypt had 
when Joseph was there.
    Senator Nelson. If you could help me. What things are you 
referring to as childish? It might be helpful to me.
    Mr. Macintosh. Excuse me?
    Senator Nelson. Well, when you say if you cannot get 
together and stop the childish ways, I hope that I am not 
behaving in a childish manner by being here and by listening to 
what you have to say, and saying I support Senate bill 2800. I 
am not sure I know what you mean about the childish ways.
    Mr. Macintosh. OK. Maybe that was a poor choice of words.
    Senator Nelson. Well, no. No. That is all right. There are 
childish things that happen. I do not----
    Mr. Macintosh. I see the Republican Party balking at things 
that the Democratic Party is trying to do.
    Senator Nelson. Well, this is a bipartisan bill at this 
point in time.
    Mr. Macintosh. I agree. There is the corporate situation 
with the greed and the mismanagement of the corporations, which 
millions of people in America have had their life savings go 
down the drain and my stock portfolio has been devastated, 
also.
    Personally, out of the depth of my heart, these guys need 
to go to jail.
    Senator Nelson. Well, I agree with you that that is them 
that need to go, and I hope they do, and I hope that the 
prosecution is carried forth in those cases where they have 
violated the law.
    Mr. Macintosh. Anyway, that is what I was referring to, the 
constant backing, going back and forth instead of working 
together in cooperation. Just like the S. 2800, they mentioned 
several times about the provisions, as you had put in there, 
and then they all got kicked out in committee because it was a 
guaranteed veto.
    You know that kind of behavior is not looking out for the 
well-being of this country or the people that have invested 
their life in raising this country up.
    Senator Nelson. I ought to bring those people who kicked it 
out up here for you to give them fits.
    Mr. Macintosh. I would.
    Senator Nelson. All right. I believe you would, and you 
would be right to do that. Thank you very much, Bert.
    We may have--excuse me. Over here.
    Ms. Dubas. Senator Nelson, thank you for this opportunity. 
My name is Annette Dubas, and I farm and ranch with my husband 
and son in western Nance County, about 35 miles northeast of 
here. This is the third year of drought for our region and for 
our area around. As we speak, my husband and son are home 
disking under our 800 acres of dryland crop because it is not 
even suitable for feed. To say that economic conditions are 
devastating in our region is probably definitely an 
understatement.
    The other day President Bush stated that he is determined 
to fund the great priorities of our Nation and our government, 
and he says that he will veto any optional spending.
    My question is: What is more important to our Government 
and to our national security then providing food and fiber for 
our citizens? Should this be considered optional spending?
    This country is blessed with an abundant and safe and 
inexpensive food supply, and we have this because of the many 
farmers and ranchers who work endless hours to feed our country 
as well as many other countries around the world.
    This severe drought will not only have an adverse effect on 
our current food supply, but it will affect future food 
production also, because if we do not get financial help to 
keep family farmers and ranchers on the land, we are going to 
lose these people. When we lose them, they will not be back. 
With every farmer that we lose, we are one step closer to 
becoming a nation dependent on others to feed us.
    This problem does not stop at the farm gates. We will see 
the compounding effect on rural businesses in communities. 
Banks, implement dealers, elevators, feed stores, farm supply, 
and hardware stores, just to name a few, will suffer. Rural 
America needs family farmers and ranchers to drive their 
economy.
    How much is a safe secure food system worth to this 
country?
    Our President as well as many other across this country, 
think that the new Farm bill was the mother lode for 
agriculture, and I disagree. He believes that there are ample 
resources available through the new farm program to fund this 
disaster, and I disagree with that also.
    This drought is causing an economic emergency in our 
country. We are quick to send assistance when other disasters 
strike, and this should be no different.
    We are asking you--and I know you have supported us, and I 
really appreciate that, but we are asking you to make family 
farmers and the services that they provide to this country a 
priority in this economy. This should be considered an 
investment in our future food supply, not a handout.
    We have provided sustenance for this country for several 
hundred years. If we want this to continue, we need your help. 
I know you are there for us, and we appreciate it. We really 
need Senate bill 2800 or something very similar to that to 
ensure our future.
    Thank you for the work that you have done for the family 
farmer.
    Senator Nelson. Well, thank you very much. You hit a very 
important point, and this is what is option spending. I do not 
think we have an option here. It is a question of how it is 
addressed, but there is no question in my mind it must be 
addressed.
    This is not optional. Occasionally, there is an optional 
spending measure that is brought before us that is a good idea 
that would help somebody, but it is not the same thing as an 
emergency. It is not the same thing as compensating and trying 
to build for the future out of a disaster situation. Not saving 
an industry, such as agriculture--we have no option. I agree 
with you.
    I hope that that is the message we can take back to 
Washington to our colleagues, and also it is a message that can 
be brought to the President. Yes?
    Mr. Nelson. Yes. My name is Augi Nelson, and I am from 
Minden, Nebraska.
    Senator Nelson. You need to point out right away that you 
are not related.
    Mr. Nelson. I am not related.
    First of all, I am here representing my customers. I have a 
small insurance agency in Minden, Nebraska. Ninety percent of 
my business is crop insurance, and 85 percent of that business 
is multiperil crop insurance. We have a lot of center pivots in 
our area, and there is a concern with my customers in regards 
to the center pivot issue and dryland corners.
    We have a drought in our area, as everybody does. I totaled 
up the acres in my agency, which is a small agency. It is about 
2,777 acres, and there is $528,000 with $2.32 corn that would 
be lost with dryland acres.
    The RMA has a rule in the MPCI policy that if you do not 
plant the rows in a different direction, you cannot be insured 
as dryland acres. Therefore, these acres this year will not be 
payable because they are planted in those same row directions.
    The farmers today have the technology to be able to plant 
and change the plant population in those dryland corners 
without changing the row direction. Many times in the past in 
the last 15, 20 years they have left those laid directions. 
They have ran off water from the irrigation with decreases of 
chance of a loss of nonirrigated acres, but this year that is 
not going to happen.
    We have appraised probably 1,000 acres in the last 2 or 3 
weeks at zero bushels on these corners. Many of them are 
chopping them for silage for cattle and so forth.
    My concern--and I am representing my customers--is that if 
we have a disaster assistance program, and we bail these people 
out that do not buy crop insurance--and these guys have been 
paying premiums for 10 or 15 years on these dryland corners. 
They are not going to get paid out of them because the 
irrigated acres are going to offset those nonirrigated acres. 
It is a big concern, and that is why I am here today.
    Senator Nelson. Your point is well made. I hate to put 
Becky on the spot, but is there anything you might help 
enlighten us with on a couple of those points?
    Ms. Davis. This is an issue that has been discussed for 
several years. You have probably already heard it as well.
    You are right. The RMA policy does provide that if you have 
irrigated acres on a center-pivot system, if you continue that 
planting pattern on into your nonirrigated acres then it is 
covered, but it cannot qualify as a separate optional unit.
    Now, to qualify for separate optional units for irrigated 
and nonirrigated acres, you have to maintain your records 
separately for your irrigated and nonirrigated. One problem 
that we are seeing with this, year in, year out, is in a year 
like this--you are right--acres are and production records are 
maintained separately, but on an ongoing, yearly, in a good 
year, if you are planted in rows that go straight through, you 
tend to harvest it straight through, and you do not maintain 
your records separately.
    One thing that may help is--there is a policy revision. It 
should be published in the Federal Register, and it will be 
open to comment. It would be effective probably for the 2004 
crop year at the earliest, depending on how quickly regulations 
can clear. It would allow--if you continue in that planting 
pattern--but if you can change your planting on the fly to a 
nonirrigated seeding rate--that that may qualify you as 
changing your planting pattern.
    Hopefully, that helps address your concerns.
    Senator Nelson. Well, if there is something that we can do 
to be helpful in that area, I certainly would volunteer to 
provide something. Does that begin to address part of what 
the----
    Mr. Nelson. Well, I guess my question is: If we are going 
to have a disaster assistance, and we----
    Senator Nelson. We want to make sure that we do not----
    Mr. Nelson [continuing]. We bail out these people that have 
not had crop insurance----
    Senator Nelson. I understand.
    Mr. Nelson [continue]. We do not pay these guys that have 
insured every year, I do not think that is a very good idea, 
and those people should be given some consideration with those 
nonirrigated acres rather than billing out to people that have 
elected not to insure, have signed a waiver at the FSA office 
in that case have elected to self-insure. Where these guys have 
taken the risk management and purchased crop insurance those 
people should get more consideration than----
    Senator Nelson. It does raise questions of equity, and your 
point is well made, and that will have to be factored in 
ultimately in how this settles out.
    I am told there is time for one more. Do we have two people 
who want to do it? Well, we are not going to shut you off if 
there are two of you. We will take both of you.
    Yes?
    Mr. Kaliff. Senator, I am Bill Kaliff from Grand Island. 
Senator, I have this question.
    Senator Nelson. Yes.
    Mr. Kaliff. Why are the resources of the Federal Emergency 
Management Administration not being cut loose to help this out?
    Senator Nelson. It is a good question. I do not have a 
complete answer to that, and I am not going to try to put 
Stephanie on the spot to come up with an answer either. It is 
in the definition of emergency.
    Mr. Kaliff. Well, I do, too.
    Senator Nelson. I mean, in terms of a particular point in 
time, it is looked at as though it is a flood, it is a 
hurricane--it is this, it is that--as opposed to something that 
is over a longer period of time, but it is no less devastating. 
It happened over a longer period of time.
    Mr. Kaliff. I would hope that their resources could be made 
available to this problem.
    Senator Nelson. You raise a good point. We will look into 
that. Thank you.
    Yes? If you could, for the record--and we have cards now--
help me by stating your name.
    Mr. Richardson. Charles Richardson, Hastings, Nebraska.
    Senator Nelson. Yes. Thank you.
    Mr. Richardson. There is really a fearsome reality here 
that has simply not been mentioned, and it astonishes me. It 
has been known for at least 15 years that if we continue to 
pump carbon dioxide into the atmosphere, we would have worse 
droughts, big floods, hot summers, mild winters, bigger winds. 
This has been clearly known.
    Our governments have been totally negligent on this 
throughout--over the course of this 15 years, and certainly 
over the last years. Our current President has made a firm 
commitment to do absolutely nothing.
    Our carbon dioxide greenhouses continue to increase the 
consequences that we are now seeing were fully predicted. 
Farmers deserve all possible help. They have been betrayed by 
the governments.
    Senator Nelson. Well, thank you very much. I suspect that 
that might be somewhat controversial, as you understand, but I 
appreciate the fact that you have stated it for the record. I 
appreciate that. Thank you.
    Mr. Richardson. The President's administration has 
acknowledged it.
    Senator Nelson. Thank you.
    Well, I want to thank everybody for your participation here 
today, those who were on the various panels, as well as those 
who have participated by serving in the audience. To also 
suggest to you that I hope that we can take what we have been 
able to put together here at this hearing back to Washington to 
develop a consensus among our colleagues and a coalition and 
move forward on getting the quickest possible resolution of 
this issue, which means to get drought disaster aid relief back 
to the States that require it as quickly as we can possibly do 
it.
    It is clear that there is a strong concern about anything 
that would delay the process, and it is also clear that we do 
not have an option here. This is not about optional spending. 
We need to move as quickly as we would if we had a flood or a 
hurricane or some other kind of natural disaster.
    I hope that we are able to build that case, convince our 
colleagues, and move forward on this, and to partner with the 
White House to be able to help agriculture respond to the 
challenges of the day, but also to preserve agriculture for the 
future.
    Otherwise, we recognize the dire consequences to 
communities and to our State. If we lose agriculture, this will 
not be Nebraska anymore.
    I hope that that is where we are heading, and we are 
going--I know that is where we are heading, and I hope that we 
are going to be successful in doing that.
    I thank you. Again, I thank Stephanie and Senator Harkin, 
who would have enjoyed being here were it not for his 
requirements in his State, and many of my colleagues sent their 
best regards and have shown a great deal of interest in this as 
well.
    Thank you. The hearing is adjourned.
    [Whereupon, the committee was adjourned.]
      
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                            A P P E N D I X

                             July 20, 2002



      
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