[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW PROPOSALS TO AMEND THE PROGRAM CROP PROVISIONS OF
THE FARM SECURITY AND RURAL INVESTMENT ACT OF 2002
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
GENERAL FARM COMMODITIES
AND RISK MANAGEMENT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
APRIL 26, 2007
__________
Serial No. 110-14
Printed for the use of the Committee on Agriculture
agriculture.house.gov
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COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania, BOB GOODLATTE, Virginia,
Vice Chairman Ranking Minority Member
MIKE McINTYRE, North Carolina TERRY EVERETT, Alabama
BOB ETHERIDGE, North Carolina FRANK D. LUCAS, Oklahoma
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California ROBIN HAYES, North Carolina
DENNIS A. CARDOZA, California TIMOTHY V. JOHNSON, Illinois
DAVID SCOTT, Georgia SAM GRAVES, Missouri
JIM MARSHALL, Georgia JO BONNER, Alabama
STEPHANIE HERSETH SANDLIN, South MIKE ROGERS, Alabama
Dakota STEVE KING, Iowa
HENRY CUELLAR, Texas MARILYN N. MUSGRAVE, Colorado
JIM COSTA, California RANDY NEUGEBAUER, Texas
JOHN T. SALAZAR, Colorado CHARLES W. BOUSTANY, Jr.,
BRAD ELLSWORTH, Indiana Louisiana
NANCY E. BOYDA, Kansas JOHN R. ``RANDY'' KUHL, Jr., New
ZACHARY T. SPACE, Ohio York
TIMOTHY J. WALZ, Minnesota VIRGINIA FOXX, North Carolina
KIRSTEN E. GILLIBRAND, New York K. MICHAEL CONAWAY, Texas
STEVE KAGEN, Wisconsin JEFF FORTENBERRY, Nebraska
EARL POMEROY, North Dakota JEAN SCHMIDT, Ohio
LINCOLN DAVIS, Tennessee ADRIAN SMITH, Nebraska
JOHN BARROW, Georgia KEVIN McCARTHY, California
NICK LAMPSON, Texas TIM WALBERG, Michigan
JOE DONNELLY, Indiana
TIM MAHONEY, Florida
______
Professional Staff
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
April Slayton, Communications Director
William E. O'Conner, Jr., Minority Staff Director
______
Subcommittee on General Farm Commodities and Risk Management
BOB ETHERIDGE, North Carolina, Chairman
DAVID SCOTT, Georgia JERRY MORAN, Kansas,
JIM MARSHALL, Georgia Ranking Minority Member
JOHN T. SALAZAR, Colorado TIMOTHY V. JOHNSON, Illinois
NANCY E. BOYDA, Kansas SAM GRAVES, Missouri
STEPHANIE HERSETH SANDLIN, South CHARLES W. BOUSTANY, Jr.,
Dakota Louisiana
BRAD ELLSWORTH, Indiana K. MICHAEL CONAWAY, Texas
ZACHARY T. SPACE, Ohio FRANK D. LUCAS, Oklahoma
TIMOTHY J. WALZ, Minnesota RANDY NEUGEBAUER, Texas
EARL POMEROY, North Dakota KEVIN McCARTHY, California
Clark Ogilvie, Subcommittee Staff Director
(ii)
C O N T E N T S
----------
Page
Etheridge, Hon. Bob, a Representative in Congress from North
Carolina, prepared statement................................... 29
Goodlatte, Hon. Bob, a Representative in Congress from Virginia,
prepared statement............................................. 36
Moran, Hon. Jerry, a Representative in Congress from Kansas,
opening statement.............................................. 2
Prepared statement........................................... 32
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, prepared statement.................................. 34
Salazar, Hon. John T., a Representative in Congress from
Colorado, prepared statement................................... 33
Scott, Hon. David, a Representative in Congress from Georgia,
opening statement.............................................. 1
Prepared statement........................................... 30
Witnesses
Buis, Tom, President, National Farmers Union..................... 25
Prepared statement........................................... 146
Erickson, Audrae, President, Corn Refiners Association........... 8
Prepared statement........................................... 85
Kapraun, Joseph, Financial Planning/Marketing Manager, Grain
Division, GROWMARK, Inc.; on behalf of National Grain and Feed
Association.................................................... 5
Prepared statement........................................... 67
Nicosia, Joseph T., Second Vice President, American Cotton
Shippers Association (ACSA); CEO, Allenberg Cotton Co.......... 3
Prepared statement........................................... 38
Schwein, Rick L., Senior Vice President, Grain Millers, Inc.; on
behalf of North American Millers' Association.................. 6
Prepared statement........................................... 76
Stallman, Bob, President, American Farm Bureau Federation........ 23
Prepared statement........................................... 90
Supplemental Material for the Hearing Record
National Family Farm Coalition, prepared statement............... 158
Ryberg, Paul, President, International Sugar Trade Coalition,
Inc., submitted letter......................................... 170
Wise, Timothy A. and Elanor Starmer, Global Development and
Environment Institute at Tuft's University, submitted paper.... 167
Supplemental Questions for the Hearing Record
Etheridge, Hon. Bob, a Representative in Congress from North
Carolina....................................................... 172
Goodlatte, Hon. Bob, a Representative in Congress from Virginia.. 174
Graves, Hon. Sam, a Representative in Congress from Missouri..... 176
HEARING TO REVIEW PROPOSALS TO AMEND THE PROGRAM CROP PROVISIONS OF THE
FARM SECURITY AND RURAL INVESTMENT ACT OF 2002
----------
THURSDAY, APRIL 26, 2007
House of Representatives,
Subcommittee on General Farm Commodities and Risk
Management,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10 a.m., in Room
1300 of the Longworth House Office Building, Hon. David Scott
presiding.
Members present: Representatives Scott, Marshall, Salazar,
Boyda, Herseth Sandlin, Ellsworth, Space, Pomeroy, Moran,
Boustany, Conaway, Neugebauer, McCarthy, and Goodlatte [ex
officio].
OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
Mr. Scott. Good morning. This hearing of the Subcommittee
on General Farm Commodities and Risk Management, to review
proposals to amend the program crop provisions of the Farm
Security and Rural Investment Act of 2002, will now come to
order.
We will proceed first with opening statements and I would
like to just welcome everyone this morning to the hearing of
our Subcommittee on General Farm Commodities and Risk
Management. Our effort this morning is to review proposals to
amend the program crop provisions of the Farm Security and
Rural Investment Act of 2002. Unfortunately, our distinguished
Chairman, Mr. Etheridge of North Carolina, is not able to be
with us this morning, so I am pinch hitting for him. However,
he does extend his regards to our distinguished panelists. We
are glad to have you and we thank all of the Subcommittee
Members for attending this very, very important hearing. In the
interest of time, I will keep my opening statement very brief,
so that we may have plenty of time to address questions toward
both of our panels this morning.
One issue that is of paramount importance to my
constituents, and is therefore important to me, is the issue of
payment limits and payment concentration. For example, in 2005,
about 55,000 farms, with sales over $500,000, received $5.7
billion, which is 60.2 percent of the payment farms received,
36 percent of the payments. You all have no doubt, seen the
series of articles in The Washington Post and my hometown
newspaper, the Atlanta Journal-Constitution, decried wheat,
which is perceived as a few large farms receiving the bulk of
support payments. It certainly may be argued that limits on
farm size or amount of payments received are unnecessary,
because these payments are intended to buoy the entire sector,
not individual households. It may also be said that these
articles and the public perception are simply incorrect, and
that they point out what are a few anomalies in an otherwise
increasingly healthy system. Unfortunately, however, we, as
Members of this Committee, work in a business where perception
is reality and we must answer the questions of our constituents
on this issue.
It is my hope that our panelists today will touch on this
subject and provide me with information that I can take back to
my constituents to help improve the perception of farm sector
support programs. Specifically, I am interested in hearing what
you all have to say about the USDA's proposal for means testing
or efforts to reduce the limits on payments and how that would
play in each of our respective commodity groups.
With this being said, I turn to the distinguished Ranking
Member of the Subcommittee, Mr. Moran of Kansas, for his
opening remarks.
[The prepared statement of Mr. Scott appears at the
conclusion of the hearing:]
OPENING STATEMENT OF HON. JERRY MORAN, A REPRESENTATIVE IN
CONGRESS FROM KANSAS
Mr. Moran. Mr. Scott, welcome to the Chairman's chair. I,
like you, continue to be a Chairman in waiting, but in the
absence of Mr. Etheridge, I appreciate your leadership.
Mr. Scott. Thank you.
Mr. Moran. I am delighted to be here and welcome our
panelists this morning. I am very much appreciative of the fact
that we have heard from many farmers, many commodity groups and
farm organizations over a long period of time in anticipation
of the 2002 Farm Bill, and I think it is important that we not
lose sight of the fact that the processing industry has a
significant interest in the outcome of the farm bill debate. I
hope they will remind us of the importance of developing farm
policy that is market-oriented, that helps them establish
markets for what we produce in the United States, but what they
process as well. And I am also pleased--I don't want to short-
sight the fact that we have the President of American Farm
Bureau and the President of National Farmers Union with us.
Although they are not rarities within the Committee, I am
interested in hearing what they have to say today, particularly
in the light of the reality that we apparently are reasonably
close to having some budget numbers that, in my estimation,
actually determine much more about the farm bill than many
other things that we continue to discuss. So I look forward to
the testimony of both of those witnesses and I, again,
appreciate the time that all of you are taking to try to help
us determine what we should do in the best interest of the
agricultural economy of the United States. Mr. Chairman, thank
you very much.
[The prepared statement of Mr. Moran appears at the
conclusion of the hearing:]
Mr. Scott. Thank you very much, Mr. Moran. The chair would
request that other Members submit their opening statements for
the record so that our witnesses can begin their testimony and
to be sure that there will be ample time for your comments and
thoughts as we get to the question and answer period.
First, we would like to welcome our first panelists to the
table. First, we have Mr. Joseph Nicosia--I hope I am
pronouncing that correctly. I do not intend to butcher any
names--who is the Second Vice President of the American Cotton
Shippers Association of Cordova, Tennessee. Welcome to the
panel. Next, we have Mr. Joseph Kapraun, Financial Planning/
Marketing Manager of GROWMARK, Inc., on behalf of National
Grain and Feed Association of Bloomington, Illinois. Welcome.
Mr. Rick L. Schwein, on behalf of the North American Millers'
Association of Eden Prairie, Minnesota. Welcome. And Ms. Audrae
Erickson, President of the Corn Refiners Association of
Washington, D.C. Welcome to all of you. We are delighted to
have you. Thank you for being with us. We look forward to all
of your testimony. Mr. Nicosia, please begin whenever you are
ready.
STATEMENT OF JOSEPH T. NICOSIA, SECOND VICE PRESIDENT, AMERICAN
COTTON SHIPPERS ASSOCIATION (ACSA); CEO, ALLENBERG COTTON CO.
Mr. Nicosia. Chairman Scott and Ranking Member Moran and
Members of the Subcommittee, I thank you for this opportunity
to be here this morning. I am Joe Nicosia, CEO of Allenberg
Cotton Company of Memphis, Tennessee. Allenberg is a division
of Louis Dreyfus Commodities. I appear here today in my
capacity as Second Vice President of the American Cotton
Shippers Association. I am also a Member of ACSA's Executive
Committee, its Foreign Policy Development and National Affairs
Committee, and Chairman of the Committee on Futures Contracts.
I am accompanied today by Neal Gillen, ACSA's Executive Vice
President and General Counsel.
I have been involved in the merchandising and futures
trading of cotton for some 25 years and I am fully familiar
with and have traded all of the U.S. and foreign growths of
cotton. In my appearance today, I will review why U.S. cotton
is no longer competitive in the world market and what Congress
can and should do to enable the U.S. to regain its competitive
advantage and the market share that it has lost this past year
since the repeal of the Step 2 Program.
The Step 2 Program masked the basic problems inherent in
the cotton program. Since its repeal in August of 2006, U.S.
cotton is no longer competitive in the world market, which
accounts for 75 percent of the U.S. cotton demand. Based on
current sales and shipments, we can expect last year's export
level of 18 million bales to decrease to approximately 13
million bales. Since the CCC loan has become the market of
first and not last resort, given the excessive premiums
inherent in the price support loan structure, we expect loan
forfeitures to continue.
We are in agreement with the industry to maintain the
marketing loan and use of certificates to facilitate the
movement of cotton from the loan. This mechanism is critical to
the well-being of our industry. We are also united in the
opposition to means testing.
Given the rapid decline in U.S. mill consumption from 11.4
million bales in 1997 to an estimated 5 million bales in 2007,
we have become dependent on exports. The U.S. no longer has any
choice but to be globally competitive. To do so requires a
number of changes and reforms in the cotton program.
If I could refer you to the PowerPoint, ``The Current U.S.
Cotton Situation Pending New Legislation.'' The loss of the
Step 2 Program directly diminished the competitiveness of U.S.
cotton. Export demand for U.S. cotton has fallen sharply. The
U.S. projected carry-out is the highest since the 1985 Act
began. The loan is the best market for bales and major
forfeitures are expected. This graph shows, not only the loss
of demand, but also the loss of competitiveness of U.S. cotton
in the world market after the loss of Step 2, which took place
at the end of July 2006. You can see here that our exports have
fallen off by a factor of 3 since that time.
China is the world's largest importer and it is the United
States' largest customer for cotton. Note how the U.S.
percentage share of Chinese imports has dropped, again,
reflecting a loss of competitiveness. So not only are exports
and export demand down, but so is our market share. As our
exports have faltered, our projected carry-out has risen from
less than 5 million bales projected in August to more than 9
million bales today. Here we take a look at our carry-out in a
historical perspective. The carry-out is the largest since the
marketing loan began back in 1985. In some cases, it is
estimated to reach 10 million bales this year.
So the 4 key objectives for cotton legislation are: (1) we
propose basing the loan rate on market prices. Currently, our
loan level is too high relative to the world market price; (2)
lower loan premiums. Premiums paid for higher-grade cottons are
substantially larger than what exists in the world market,
therefore this cotton gets trapped in the loan and cannot be
redeemed, leading to loss of exports and forfeitures; (3) we
propose allowing loan cotton to be shipped prior to redemption.
Currently, cotton must remain in the loan, incurring storage
and interest charges while waiting for a profitable opportunity
to be redeemed. We propose allowing the cotton to be shipped
prior to redemption, thereby saving storage charges and
capturing export opportunities that would have been lost; and
(4) maintain current payment limitations, which includes our
opposition to means testing.
Again, thank you for the opportunity to present these
views. I will be happy to respond to any questions that you
might have.
[The prepared statement of Mr. Nicosia appears at the
conclusion of the hearing:]
Mr. Scott. All right, thank you very much. Next, we will
have Mr. Joseph Kapraun, Financial Planning and Marketing
Manager, GROWMARK. You may begin.
STATEMENT OF JOSEPH KAPRAUN, FINANCIAL PLANNING/MARKETING
MANAGER, GROWMARK, INC.; ON BEHALF OF NATIONAL GRAIN AND FEED
ASSOCIATION
Mr. Kapraun. Mr. Chairman, Ranking Member and Members of
the Subcommittee, good morning and thank you for the
opportunity to appear before you today. My name is Joe Kapraun.
I am the Financial Planning Manager of the Grain Division at
GROWMARK, based in Bloomington, Illinois.
GROWMARK is regional agricultural supply and grain
marketing network of cooperatives owned by nearly 250,000
farmers in the Midwest United States and Ontario, Canada. I am
testifying today on behalf of the National Grain and Feed
Association, on whose Board I serve. The NGFA's market
philosophy is derived from its mission statement, which commits
our organization to foster an efficient free market environment
that achieves an abundant, safe and high-quality food supply
for domestic and world consumers. Further, our statement of
purpose notes that Association activities are focused on growth
and economic performance of U.S. agriculture.
To this end, the NGFA has identified 4 major priority areas
for the next farm bill: farm programs that provide opportunity
to take advantage of market potential while minimizing
potential trade disruption; to craft policies that foster
production to meet the demand without sacrificing other
markets, including livestock and poultry feed and grain export
markets; adjusting the Conservation Reserve Program to provide
opportunities for U.S. agricultural growth while continuing the
protection of environmentally sensitive lands and minimizing
government involvement in grain stocks-holding, except for
humanitarian purposes.
The NGFA has a longstanding position that Congress and farm
organizations are in the best position to recommend the
appropriate level of Federal funding to allocate the farm
program payments. The NGFA has 3 specific concerns relative to
the farm program payments. First, such payments should minimize
market distorting signals that allow the competitive
marketplace to drive efficient production decision making by
farmers. Second, we believe that Congress should avoid major
and abrupt shifts in funding levels and program implementation
that can create near-term disruptions. And third, we believe
the U.S. farm program payments should be structured and
implemented in a way that minimize exposure to World Trade
Organization challenges.
With respect to USDA's Farm Bill proposal, we commend them
for issuing a thoughtful and comprehensive set of proposals.
However, among the most serious concerns we have is a proposal
to change the way posted county prices are calculated and
utilized to determining marketing loan gains and loan
deficiency payments under the Marketing Assistance Loan
Program. While we appreciate the Administration's efforts to
explore creative alternatives for addressing this issue, we
believe that the proposal would be highly disruptive to the
efficient operation of the cash grain marketplace, and the
proposal would greatly disrupt cash grain movement and hedging
efficiencies, particularly in inverse markets or during periods
of significant flat price changes by encouraging producers to
delay marketing decisions until they are able to determine the
applicable monthly PCP average at the start of each succeeding
month.
To comment on a few other related issues, by far the single
most important development that will affect supply and demand
balance sheets, commodity prices and the pattern of growth for
various U.S. Ag sectors in the next 5 years will be the
developmental rate of the biofuels industry. U.S. resource
capacity will be challenged to provide grain supplies for both
ethanol as well as traditional grain customers. We need both
yield growth as well as expanded land committed to corn
production.
The NGFA supports the development of public policy which
facilitates opportunities for growth in grain and oilseed
production to supply traditional and new market demand.
Adjusting the CRP is one potential tool to meet a portion of
the anticipated land capacity constraints. The NGFA supports
conservation programs that foster sound farmland conservation
and environmental stewardship practices, while minimizing the
idling of productive land resources, thereby strengthening the
economies of rural communities while achieving environmental
and other policy goals.
The 2002 Farm Bill contained unprecedented authorizations
for conservation spending, particularly for the working lands
programs, which is EQIP and CSP. The NGFA strongly supports
directing the scarce Conservation Resources Programs like these
that enhance conservation of working farmlands, coupled with
the shift away from land-idling schemes.
Finally, I would like to comment on other tools producers
utilize for managing risk. Given the competitive and
transparent nature of the grain markets, the NGFA supports
giving producers the opportunity to engage in a wide array of
risk management techniques to supplement the income and price
support received through government programs. The NGFA
appreciates this opportunity to provide its views on the
commodity title of the next farm bill, as well as some general
recommendations.
Thank you and I look forward to answering any of the
questions you may have.
[The prepared statement of Mr. Kapraun appears at the
conclusion of the hearing:]
Mr. Scott. Thank you very much. Our next panelist is Mr.
Rick L. Schwein, on behalf of North American Millers'
Association of Eden Prairie, Minnesota. You may begin.
STATEMENT OF RICK L. SCHWEIN, SENIOR VICE PRESIDENT, GRAIN
MILLERS, INC.; ON BEHALF OF NORTH AMERICAN MILLERS' ASSOCIATION
Mr. Schwein. Mr. Chairman and Members of the Committee,
thank you very much for the change to be here this morning. My
name is Rick Schwein. I am the Senior Vice President with Grain
Millers, Incorporated. We are a privately-owned oat processor
headquartered in Minnesota. We own and operate 2 oat mills in
the U.S., one in St. Ansgar, Iowa, near Austin, Minnesota, and
the other in Eugene, Oregon, as well as having a mill up in
Canada. We are one of the world's largest suppliers of milled
oat products to the food industry and our products are used all
around the world. I am here today representing the North
American Millers' Association. NAMA is comprised of 48 wheat,
oat and corn milling companies operating 170 mills in 38
states. Together, we produce more than 160 million pounds of
product every day, which is more than 95 percent of the total
industry capacity.
Let me, before I get to my thoughts on suggested changes,
set the stage a little bit. U.S. wheat plantings the last 3
years have been the lowest we have seen since 1972. The U.S.
last year harvested fewer acres of wheat than we did way back
in 1898 when we were still using horses for the harvest.
Kansas, the Wheat State, now grows more corn than wheat. And
the situation in oats is even worse. Oat production last year
was at the lowest level since the USDA began keeping those
records back 1866, shortly after the Civil War when President
Lincoln created that Department.
What has been the impact of this precipitous decline in
production? Not many years ago, the thought that the U.S. would
import cereal grains was unthinkable. Now, however, in most
years, U.S. production of hard red spring wheat for bread and
durum wheat for pasta is insufficient to meet total demand.
Millers have no choice but to rely on imports to augment the
short wheat crop. While, for the oat mills, the industry
already imports almost 100 percent of the oats we mill for food
products every year. This dramatic production loss has also led
directly to major relocation in the last 15 years of much of
the value-added milling capacity to Canada, taking hundreds of
industry jobs with it.
Ironically, while this exodus in production capacity has
occurred, the demand here in the U.S. for oat and other whole-
grain products has been rising. These imports have caused
regrettable friction between millers and growers. As millers,
our first choice is to buy American grain whenever possible,
but I can tell you today, for sure, imports of these grains
into the U.S. will continue and absent action by Congress, will
likely increase. Our country is working diligently to reduce
its dependence on foreign oil. I ask, is it in our strategic
interest to be dependent on foreign sources for basic
nutritious commodities like wheat and oats?
Now, how did this happen? First, beginning in 1986, the
creation of the CRP program took 36 million acres out of
production, much of which today could be farmed in
environmentally sustainable ways. Much of the CRP land is
concentrated in traditional wheat and oat-growing territory.
Second, some of the inequities in the farm program have caused
Uncle Sam to say loudly to the growers, ``don't plant wheat or
oats.'' At the same time, the government is encouraging them to
grow other crops like corn and beans, which really don't need
much encouragement today, given the President's biofuels
mandate.
An example of inappropriate encouragement in the farm
program is what we think are artificially high loan rates that
have distorted producer planting decisions, leading to a
950,000 acre increase in peas and lentils in just the past 5
years, crops for which there really isn't even much of a
domestic market to speak of. We find it very frustrating that
program payments have provided huge incentives for growers to
produce crops for which there is little domestic demand, while
discouraging them from growing crops the U.S. consumes, like
wheat and oats.
Third, total investments in wheat and oat research
significantly lags behind investments in corn and beans,
limiting producer alternatives. And next, the ethanol push has
already dramatically altered farmers' production decisions, but
we think we are only seeing the tip of the iceberg. Other
problems, we think, are looming on the horizon. We have all
known for decades that growing corn after corn after corn is
not desirable, either for environmental or disease issues or
for insect management reasons, but this is what we are
encouraging today. We believe that is the height of irony that
the U.S. Government in the 2005 dietary guidelines and the food
guide pyramid, encourages consumers to eat more grains, but at
the same time is very directly discouraging growers from
producing those very same grains.
In conclusion, NAMA believes Congress has a significant
opportunity here to improve conditions for the wheat and oat
milling industry, from grower through miller and consumer. That
can be achieved through reforming the CRP to responsibly allow
sustainable acres back into production, re-balancing the farm
program to reduce government-caused inequities distorting
production decisions and investing in research to give growers
better crop options.
Thank you for the opportunity to speak this morning and I
will look forward to your questions.
[The prepared statement of Mr. Schwein appears at the
conclusion of the hearing:]
Mr. Scott. Thank you, Mr. Schwein. Now we will hear from
Ms. Audrae Erickson, President of the Corn Refiners
Association. You may begin, Ms. Erickson.
STATEMENT OF AUDRAE ERICKSON, PRESIDENT, CORN REFINERS
ASSOCIATION
Ms. Erickson. Mr. Chairman and Members of the Committee,
thank you for the opportunity to present the views of the Corn
Refiners Association on the next farm bill. The Corn Refiners
Association represents the corn wet milling industry. Our
Members produce highly specialized starch products for both
food and industrial use, corn sweeteners, corn oil and other
food ingredients, animal feed products like corn gluten feed
and corn gluten meal, ethanol and bio-plastics. We support a
strong farm economy and applaud the efforts of the National
Corn Growers Association in proposing a revenue assurance
program. We hope this Committee will actively review that
proposal with a view to supporting its important concepts.
One of our top priorities for the next farm bill is to
ensure sufficient acreage planted to corn, given the growing
demand for this versatile starch source. We support efforts in
the next farm bill that will bring additional acres into the
production of corn, including adjusting the CRP. It is also
important to ensure that the efforts of this Committee to
provide a safety net for producers are not inadvertently
undermined by another title in the farm bill.
Despite the best intentions of Congress to assist growers,
there is one program that has resulted in unintended
consequences for the corn industry and that is the sugar
program. The sugar program is designed to support the price of
sugar in part by limiting imports into the United States and
allocating how much sugar is supplied to the domestic market
through marketing allotments. As you know, we will no longer be
able to limit imports of sugar from Mexico effective January 1,
2008, when we go to free trade with Mexico. If imports of
Mexican sugar are restricted in any way, exports of corn
sweeteners will be held hostage, and the next commodities in
the firing line will be Mexico's import-sensitive commodities,
which happen to be our export engines, beef, pork, poultry,
corn, soybean meal, dairy, rice, dry edible beans, and apples.
All of these commodities consider Mexico to be their top or
second most important export destination.
One of the leading uses for corn is the production of corn
sweeteners. The manufacture of high fructose corn syrup, or
HFCS, has accounted for approximately 5 percent of U.S. corn
production in recent years. Historically, our top export market
has been Mexico. Regrettably, we have been embroiled in a 10
year dispute with Mexico, in large part because the United
States limited Mexico's sugar access during this period. In
short, corn sweeteners became the victim in a tit-for-tat trade
challenge. The corn industry has already experienced 10 years
of either restricted exports or complete closure of our top
export market, Mexico, at a cost of more than $4 billion in
lost sweetener sales and more than 800 million bushels of corn.
As a result the CRA has no higher priority than the long-term,
permanent resolution of the decade-long HFCS dispute with
Mexico.
The next farm bill is crucial for our industry. If Mexico
stops imports of our high-quality sweeteners, because we are
limiting their sugar imports through the farm bill, it will
come at significant cost and loss of jobs to our industry.
Given the importance of this issue, the CRA would like to have
a seat at the table when decisions are being rendered about the
structure of the sugar program in the next farm bill.
We understand that some stakeholders may be considering a
market balancing mechanism to ensure that the supply and demand
for sugar in the United States is not out of equilibrium. One
such mechanism may divert all excess supply of sugar,
principally imported sugar, into ethanol. This approach is
inconsistent with NAFTA and it is economically impractical,
because Mexico's sugar is priced higher than our own. No
provision in the farm bill should stand in the way of or limit
full implementation of 2-way trade in sweeteners with Mexico.
If it does, the CRA will not be in a position to support it.
We thank you for the opportunity to testify before this
Committee and urge that the next farm bill brings additional
acreage into the production of corn and ensures free trade in
sugar with Mexico. Thank you.
[The prepared statement of Ms. Erickson appears at the
conclusion of the hearing:]
Mr. Scott. Thank you. Thank you very much. We have been
joined by our Ranking Member, Mr. Goodlatte. Mr. Goodlatte,
would you like to have an opening statement?
Mr. Goodlatte. Well, thank you, Mr. Chairman. I will just
submit my opening statement for the record and thank all of
these witnesses for their testimony today. There is absolutely
no doubt that processors and handlers play an absolutely
critical role in the functioning of our agricultural economy
and they should have a significant input, and we should listen
carefully to what they say is needed, to keep what is a great
system for bringing America's farmers, and ranchers, products
to market and how we could help them accomplish that in the
farm bill. So thank you very much for recognizing me. I will
just put my statement in the record.
[The prepared statement of Mr. Goodlatte appears at the
conclusion of the hearing:]
Mr. Scott. Okay, very fine. Thank you very much. I thank
the panelists for each of your presentations. They were very,
very thoughtful and well presented. Thank you. The chair would
like to remind Members that they will be recognized for
questioning in order of seniority for Members who were here at
the start of the hearing. After that, Members will be
recognized in order of arrival and I would certainly appreciate
each of the Members understanding that and we will have ample
time for that.
I would like to start off, if I may, with 2 thoughts. As I
mentioned in my opening statement, there has been great
concern, certainly in my area in Georgia, concerning the
exports of cotton and as well as the payment limits and the
payment concentrations. As I mentioned, for example, in 2005,
about 55,000 farmers' with farm sales over $500,000 received
$5.7 billion, which is 6.2 percent of the payment farms
receiving 36 percent of the payments. In other words, there is
a perception that just a few very large farms are receiving the
bulk of the support payments.
And Mr. Nicosia, I hope that I pronounced that right. I
apologize if I am butchering your name, but accept those
apologies, please. Would you comment on that? And I guess the
fundamental question is, is that a perception? What is the
understanding for that? Would you like to shed some light on
that to give a better understanding of that? And the other part
is that the depressing or dropping so much by export into some
of these foreign markets where we depress the price and are
driving some of those farmers, particularly in North Africa,
and I am sure you may have read the articles in both The
Washington Post and the Atlanta Journal-Constitution that
referred to those 2 major problems. Would you take a moment and
expand on that?
Mr. Nicosia. Sure. Let me handle the one about exports
first. Obviously, the world has changed a little bit with the
conversion of agricultural products into energy, as we have
seen with the prices of grains, and that has an impact around
the world on acreage distribution, nowhere more so than the
United States, which is going to lose roughly 3 million acres
to corn, beans and wheat.
However, in reaction to what you read in The Washington
Post about what you referred to as us dumping or selling cotton
at lower prices and hurting growers around the world, what I
would like to show you is that, in response to higher grain
prices, the world is going to grow slightly less than 3 million
acres of cotton around the world. All of that and more than
that is only in the United States. The 4 largest producers in
the world, Pakistan, India, China, West Africa, are actually
increasing cotton acres, even though prices are low and grain
prices are high there; totally non-responsive to the market. So
the United States is the only area that is actually responding
to market forces; and yet they say we are the ones that have
distorted the price level. Nothing could be further from the
truth.
In regards to the payment limitations, our organization is
very much against them and the means testing. It makes little
sense to us to see why someone in a 2,000 acre farm should not
get benefits while someone in a 800 acre farm should,
especially in cotton, in a situation where the cost of
production is substantially higher, 2 to 3 times that of grain.
To penalize an individual because of their own success in
growing their business; where 5 years ago maybe they qualified,
today they don't; again, it seems to make no sense to me. And
to deny someone benefits upon their own personal situation or
whether they have personal finances, investments or other
earned wages, again, it doesn't seem to make much sense, in
relation to their farming operations. And to the U.S., why
should that matter? Because the benefits of all the producers
in the United States go to many of the people and the consumers
that live here. They enjoy the benefits of large-scale farming
operations, the promotion of lower prices, of reliable supply
and the security that is provided to this country, and yet to
deny the benefits to those people is to promote inefficiencies.
So, to turn around and say the country is better off by having
a higher cost of producing these goods and having lower
quantities, I think, is probably not the goal that we are
after. So we say, to all segments of our industry support
eliminating means testing and continuing with the current
payment limitations.
Mr. Scott. Thank you. Thank you very much. My final
question was probably directed to Mr. Kapraun or Ms. Erickson.
It is on the ethanol issue, especially on the downward pressure
that apparently our policy seems to be heading with the
overemphasis, I think, on corn. Could you share with us what
you feel, from the corn perspective, what the limits are? How
much can we bear? In your estimation, what percentage of our
thrust to make ethanol should we rely on corn, and especially
as it relates to the higher prices that would occur for the
feed stock element of that, and poultry and beef and those
products? And the other thing is that we recently came back
from a trip to Brazil and to South America and I was very
fascinated with your comments, Ms. Erickson, on the sugar, and
now 84 percent of their automobiles are manufactured with what
is called flex fuel and the usage of ethanol made from sugar.
What has been the impact in Brazil? Have they had an equal
problem with the downward pressure on sugar, which I didn't
pick up at that time. Could you both just comment on where we
are in terms of our movement into ethanol and the impact that
that would have on our grain?
Mr. Kapraun. I would just talk briefly on your ethanol
question and corn. I think, as long as we let the farmers have
a choice of what they raise, the market should dictate through
price what they produce and I think they have answered that in
the March report on planting intentions. We saw a huge shift of
acres into corn and I think a lot of that is driven by price
and some of that might be driven by the growth we see in
ethanol.
Mr. Scott. Ms. Erickson?
Ms. Erickson. Mr. Chairman, with respect to ethanol, we
agree with the statement that market forces ought to drive the
decisions and we understand clearly that today it is corn and
sometime down the road, as research and development allows,
there will be other opportunities for feed stocks, including
cellulosic. With respect to sugar, Brazil has a different
pricing structure, clearly, for sugar than the United States
does. Brazil's price of sugar is much, much lower and cost
production is much, much lower, so they haven't had the impact
on their feed stock sugar that we have had on corn in terms of
price. And there is a lot at stake in the international market
today in sugar growing around the world and how much is being
put on the international market, so much so that when we
encountered the hurricanes last year, at the same time, the
price of sugar was rising dramatically in the United States. It
was also coming up on the international market because the
European Union was getting out of the export business of sugar
because Brazil was diverting more of its sugar production into
ethanol. And what that did and what will happen over time, of
course, is the price is slowly going up, when it has been very,
very low internationally before for sugar. And that could have
tremendous implications for our industry, which we believe
should not be shielded from the international marketplace, that
there are opportunities for efficient sugar growers in the
United States, many of whom are looking at the Mexican market
to start exporting, which we think is a good development.
Market forces ought to be the dictating factor, whether it is
for ethanol, whether it is for corn, whether it is for sugar
and other commodities as well.
Mr. Scott. Thank you very much. I will recognize the
gentleman from Kansas, Mr. Moran.
Mr. Moran. Mr. Chairman, thank you. Let me just ask a
general question and I apologize for stepping out and not
hearing your testimony, although I have read, in parts last
evening, much of what you had to say this morning. Could you
highlight for me any specifics that you have as far as concerns
with the current farm bill, the 2002 farm bill that we are
operating under, in ways in which the markets are distorted
that disadvantage your businesses, your processing industry or
American agriculture? Are there specific things that we ought
to be looking for as we try to improve upon the 2002 Farm Bill?
Mr. Schwein?
Mr. Schwein. Mr. Moran, yes, I will share with you the
perspective from the oat milling industry. North Dakota and
northern North Dakota have historically been major, major oat
producing regions. There are climatic conditions that make oats
a superior crop in that territory. During the 2002 Farm Bill,
there was a significant loan rate established for dry peas and
lentils through that territory and the same producers that
could grow oats or barley or spring wheat have jumped all over
growing dry peas through that territory. The loan rates and the
historic yields in a particular county, a county called Burke
County, North Dakota, just north of Minot. The producer can
look at his average yields and what he is guaranteed through
the loan program and receive nearly 10 times higher net return
per acre than he can when he looks at the loan rate for oats.
We have seen significant rises in oat prices. Production in
Canada, where their producer decisions are unfettered by a farm
program, we are seeing 36 percent increase this year in oat
production in Manitoba and Saskatchewan, the biggest provinces,
in responding to those higher prices.
But the influence of a producer's banker, his partner in
his business in this area in North Dakota, while the producer
may want to grow oats because the current price looks
attractive, there is always concern that those prices won't
hold and so the banker discourages him from growing oats even
if he chooses to. So we think there are inequities that result
in swaying producer planting decisions as opposed to planting
for the market. We are delighted to compete with the ethanol
industry or corn or beans, with other processors. Let the
market set the rates. But we can't compete with government
distortions of those decisions.
Mr. Moran. Thank you. Anyone else?
Mr. Nicosia. In response to your question about the 2002
Farm Bill, without a doubt, we need to make some changes in
that for cotton. The main thing is we have to address the loan
rates. Both the overall loan rate and the loan premiums have to
be addressed to lower it down towards market values, towards
world values, otherwise cotton is going to stay trapped in the
loan and forfeited. We will be uncompetitive, so we do need to
address that.
Ms. Erickson. I have one comment and that has to do with a
program that, although it is not the jurisdiction of this
Subcommittee, it is clearly a program that you will get to vote
on and it has a tremendous impact on the corn industry and that
is the sugar program. As you know, it is not at all subjected
to market forces through limiting of imports, which has had an
impact on production agriculture and processing agribusiness,
as we try to open new trade agreements and export to other
countries around the world. And it has also had an impact on
our inability to solve this long-standing sweetener dispute
with Mexico, because we are limiting sugar imports and Mexico
is limiting corn sweetener exports to its market. And nothing
is going to be more of a perfect storm than when we go to free
trade with Mexico under the NAFTA in 3 months after the farm
bill is written, when we may be putting in place the same
program on sugar, which stands in direct opposition to
international forces.
Mr. Kapraun. Just a couple comments. We believe that the
U.S. farm program payments should be structured in a way and
implemented in way that would minimize any exposure to WTO. At
the same time, the NGFA also supports limiting any dramatic
swings in farm program funding levels and delivery that would
create short-term disruptions.
Mr. Moran. I am surprised, sir, that you don't mention CRP.
I will have to tell Mr. Tunnel that I have never had a
conversation with anybody from the feed and grain industry in
which CRP is not the topic of conversation. Thank you, Mr.
Chairman.
Mr. Scott. Thank you.
Mr. Moran. I yield back the balance of my 5 seconds of my
time. Oh, I am over 5 seconds.
Mr. Scott. Thank you, Mr. Moran. I now recognize the
gentlewoman from Kansas, Mrs. Boyda.
Mrs. Boyda. Thank you very much. I just had a question on
when we are making our, and looking at, decisions on payments
to farmers and we are currently talking about direct payments
may be in more places than some of the counter-cyclical
payments. How do you all feel about those kinds of payments,
with regard to conservation and more direct payments as opposed
to the counter-cyclicals? And I will open that up to anyone.
Mr. Nicosia. Well, I think the more direct payments are
fine. It gives more assurances to what is happening out there
in the community, to the grower to base his decisions on.
Obviously, it lends itself to more free market decisions on the
planning side. However, I don't think it is the only answer,
because it will still leave the producer with exposure to
certain things that he cannot control, whether it be weather,
whether it be import tariffs, or price changes that are there.
So I think the movement that way, especially in response to how
it is treated under WTO, it seems to be a more advantageous way
to move benefits, but I don't think we can use it in place of,
whether it be counter-cyclical and/or revenue or price
assurances as well.
Mrs. Boyda. Anyone have any additional thoughts on that?
All right. I yield the balance of my time. Thank you.
Mr. Scott. Thank you very much, Mrs. Boyda. I would now
recognize the gentleman from Louisiana, Mr. Boustany.
Mr. Boustany. Thank you, Mr. Chairman. First of all, thank
you all for your testimony. It was very informative and I
certainly appreciate it. Ms. Erickson, if I could start with
you. I come from a district in South Louisiana and obviously,
we have a lot of sugar cane down there and I am certainly well
aware of the market structure differences between corn and
sugar. And maybe my question is either naive or mischievous,
but I am just curious as to whether or not there have been any
discussions between the corn refiners and the sugar industry to
come forward with perhaps a common proposal as we move toward
the farm bill?
Ms. Erickson. Thank you, Congressman. There were attempts
by the Sweetener Users Association to bring everybody together.
Unfortunately, there were reasons why the sugar industry wanted
to restrict that discussion to sugar only. We did have a
participant at that meeting and we very much support a dialogue
between the users of sugar, all of the stakeholders in the
sweetener industry, which would include the Corn Refiners
Association and the sugar growers and processors.
Mr. Boustany. Okay. Well, certainly, if I could be of
assistance as we go forward on that, I would be happy to try to
play that role. Mr. Kapraun, in your testimony, you describe
the disruption to marketing that would occur if the USDA
transitioned to a monthly posted county price for the purposes
of getting loan deficiency payments. Can you further explain
the impact of the USDA's proposal and what that impact would be
on cost, transportation efficiencies, delivery time tables, and
give me an indication of what the ripple effect might be if we
went forward there?
Mr. Kapraun. Absolutely. As we move to a monthly LDP rate,
if the producers would watch the market during the month and
try to predict what those LDPs are going to be before the end
of the month, rather than seeing a marketing system where the
producer could make that decision on a daily basis, we believe
that if there are LDPs involved, you would probably see the
need to not make those decisions until about once a month,
either right towards the end of the month when the LDP rates
were about to come out, or the beginning of the next month.
What that would do, especially during the harvest season when
we see a lot of LDPs, we would be having farmers hold on to
their stocks. Elevators would not know if the grain is going to
be sold or not. We would have trains that we didn't know if we
could fill or not, as those deliveries are short at that time
of the year. And we feel like that would be the disruptive
portion of it, having the farmers delay those decisions until
those couple of days of the year that they can get the most
benefit out of the LDP.
Mr. Boustany. Thank you. So what is your recommendation?
What alternatives do you recommend?
Mr. Kapraun. Even though I don't know that we could say
that the current system is perfect. I think given the choice of
where we are at today and even the proposal of even a weekly or
monthly, we prefer what you have currently got versus one of
those other 2 options.
Mr. Boustany. Thank you. Mr. Nicosia, you talked about the
Step 2 Program and the impact; we are beyond that now. Can you
talk a little bit more, elaborate a little more about the
factors that are keeping U.S. cotton from being competitive
now. You did mention, I think, what is going on with Pakistan,
India and China not being subject to market forces and I would
like you to elaborate a little more on that.
Mr. Nicosia. Well, I think the most glaring example of that
is really what is taking place in their planning decisions.
China is the largest producer, the largest consumer, the
largest importer of cotton in the world. I don't think any
other commodity has this type of situation in any one country.
And their market is protected. They control it by import quotas
that are allocated. The ones that were negotiated under WTO are
so small that they essentially mean nothing. So they can
control their interior prices by how much quota they allow and
when they allow it. So it may be that a farmer, for example,
inside China is going to expand cotton acres when, as we know,
cotton prices are extremely low and the rest of every other
agricultural price is high, but the price of cotton in China is
extremely high.
Imports would probably be double what they are if they
didn't have those controls inside of China. From the U.S.
standpoint, the problem that we have is that, again, the
premiums that we have on high-grade cotton in the majority of
cotton today, as technology is advanced, is much above the base
quality grade that we have. Because of that, they receive a
premium and when you receive a 6 cents premium in the loan and
the marketplace only pays you a 3 cents premium for those
qualities that are grown from around the world, it is not going
to come out of the loan because it just doesn't work to
profitably redeem those cottons and sell them.
And so what happens? The other countries, whether it be the
West Africans, Indians, Australians, Uzbekistans, all turn
around and take our marketplace from us. It is not the U.S.
cotton that is driving world prices down. The U.S. is the only
one that is curtailing production. It is the continued over-
production in Brazil, people who have gone ahead and moved
forward with the complaint in the WTO, whose cotton production
has expanded rapidly. It is the continued production and non-
switching in West Africa, massive growth and production in
China and India that has put the pressure on world prices.
Mr. Nicosia. Thank you very much. My time has expired.
Thank you, Mr. Chairman.
Mr. Scott. Thank you very much. I now recognize the
gentleman from Ohio, Mr. Space, and I apologize for missing you
the first go-around.
Mr. Space. No problem. Thank you, Mr. Chairman. Ms.
Erickson, I wanted to ask or enquire concerning acreage
currently devoted for the production of corn. I understand that
one of your top priorities is to ensure sufficient acreage,
given the growing demand. My question is, in a general sense,
how does this farm bill establish that and for a more specific
sense, are you proposing either a release of current acreage
devoted under the conservation programs or are you advocating
for a reduction in the total acreage allotted under the current
conservation programs? I would be interested in your thoughts
on that.
Ms. Erickson. Thank you, Congressman Space, and I will
share my time a bit with NGFA, who also has views with respect
to CRP, but we are generally supportive of bringing additional
acreage out of CRP where it makes sense. I know there are a lot
of factors that go into that decision making, but clearly,
there is a lot of pressure right now on the corn industry and
the corn complex broadly speaking. And with respect to policy
levers, clearly Congress has to facilitate more corn coming
into production, that would really be the one. It would be a
close working relationship with the USDA and how acres come
out, could those acres feasibly be put into corn production,
and that is clearly the concern of many, including our
industry.
Mr. Space. And just for clarification, when you say acres
coming out, are you talking about reducing the acreage level
for CRP or are you talking about taking existing CRP acreage
and bringing it back out of conservation into production?
Ms. Erickson. Mostly taking existing acreage that which can
come out, retire out of the program.
Mr. Space. So in essence, a premature or early retirement.
And have you or your organization given thought to how that can
be equitably accomplished given the structure of the CRP
program right now?
Ms. Erickson. We don't have specifics in that regard, but I
would like to yield some time, if I could, to NGFA and their
views on CRP.
Mr. Kapraun. The time on the CRP, we realize that the land
is environmentally sensitive, that the CRP is a good
opportunity to protect that land. However, we also would like
to see that those acres do not get increased where they
currently are. We have the view that maybe we can see some
shifting of acres or there may be some lands that are more
environmentally sensitive than acres currently that are in the
program, that those acres could be switched, get them out of
the program. We also support the Working Lands Program.
Mr. Space. And pardon me for dwelling on this subject, but
I am curious as to whether you are suggesting a buy-in or a
buy-out for a particular farmer who currently has his ground in
a CRP program? Is there going to be a compensatory obligation
in order to take land back out or is this something you
envision as just being applied on a universal scale with due
consideration of the land uses and values?
Mr. Kapraun. I don't know that I have personally given any
thought to the compensation of getting those acres that are in
CRP that are contracted out. We do appreciate the opportunity
for a farmer to have the flexibility to take acres out if he
feels like the market dictates that he raise crops on those
acres rather than having them in the CRP. Also having the
ability to maintain yield bases; updating those, as well.
Mr. Space. Thank you. I yield back the balance of my time.
Thank you, Mr. Chairman.
Mr. Scott. Thank you. Mr. Neugebauer of Texas.
Mr. Neugebauer. Thank you, Mr. Chairman. Mr. Nicosia, you
gave a chart that showed the exports for U.S. cotton and I
think you showed a date there of the date that Step 2 was, the
last day of that program, the remarkable drop in the amount of
U.S. cotton being shipped. Has your industry given some
thoughts, number 1, what was the Step 2 doing and what are some
things that we can do to replace Step 2 that would maybe help
additionally stimulate U.S. cotton exports?
Mr. Nicosia. Well, the most important thing that Step 2 did
is it made us relatively competitive on every day. When you
removed Step 2, the only way to become competitive was to
become competitive in an absolute basis. So whether prices were
60 cents, 70 cents, 50 cents, Step 2 allowed us to be
competitive every day. Today, without the use of Step 2, which
was an adjustment that was used, we can only be competitive on
an absolute basis, so what that means is that the only way to
do it is for U.S. prices to fall to a level below the rest of
the world.
When that happens, it triggers a whole spiral effect where
then someone else cuts their price, you cut your price, they
cut their price. At some point in time, prices go down and they
do until what happens? Until the U.S. cotton gets caught in the
loan. It gets caught, it gets trapped in the loan, the rest of
the world can under-price us right underneath them, they grab
the market share and we can't spiral any lower than being
trapped in the loan. We remove ourselves from the game and the
foreign countries take all of the export market that is there.
That is essentially what happened with the loss of Step 2.
So how do we move forward, how do we address that? One way
is we have to make sure that the cotton no longer gets trapped
in the loan. That means we have to make the loan levels more
competitive, both the absolute level and again, the premium
levels, to bring them down so that they can compete in the
world market again. We do have to make some tweaking to the
adjusted world price formula. The industry is coming together,
I believe, on that. You will see a pretty united front in 2007
to address that. There are different ideas on how to handle
that for 2006. But for going forward for next year's crop, I
think the industry will come together on it.
Mr. Neugebauer. And when you talk to the producer groups
about changing the loan rate, obviously many of those folks
probably are pushing back some. What are the ways, if we did
lower the loan rate, that we could still provide the safety net
for those producers?
Mr. Nicosia. The Administration's proposal that came out
did have an increase in the direct payments that was there to
help compensate. What they did miss, however, is that when we
lower the loan rate and cotton being in the situation where
prices are down towards the loan rate versus grain, we are
increasing the counter-cyclical exposure for the cotton grower.
I think he is willing to take that if it wasn't for the risks
of the payment limitations that they would have to impose.
Cotton farms tend to be, from an efficiency standpoint, they
are more expensive to grow and they tend to be larger scale, so
the payment limitations affect them more directly.
So if we could address the counter-cyclical payments,
either through a direct relationship of lowering the loan to
compensate or through direct payments, I think they would find
very little pushback. We have found that producers understand
it is broken. They realize, when they can't sell their equities
and cotton is caught in the loan, that something is wrong. So I
think they are fairly open to ideas, but the payment
limitations are a major problem in our industry.
Mr. Neugebauer. In my remaining time, to the rest of the
panel, when we have farm policy and we sit down, writing the
farm bill, what are some of the challenges you see as to making
our farm bill more compliant with WTO provisions and how much
of a factor should this group consider as we move forward in
trying to make this farm bill as WTO compliant as we can? Mr.
Kapraun.
Mr. Kapraun. I don't know that I have a list of the exact
requirements right now for WTO, but I would be more than happy
to get back to you and the Committee with some of our opinions.
Mr. Neugebauer. Okay. Mr. Schwein.
Mr. Schwein. I would say, with a great deal of comfort,
that our group would definitely encourage compliance with WTO.
I do not believe we have made any attempt internally to come up
with a list of recommendations, but we will certainly undertake
that effort and reply, as well.
Mr. Neugebauer. Ms. Erickson.
Ms. Erickson. Mr. Congressman, thank you. We are concerned.
As you know, Canada has begun the process of a challenge to the
corn program, but there are elements of that potential
challenge, should it go forward, that have broader implications
beyond corn and really, it has to do with our overall domestic
support spending. We would hope that the Committee would look
seriously at ensuring that our trade obligations are met with
respect to the WTO and the NAFTA, that we are not subject to
challenge and that, in fact, we can take advantage of these
trade agreements which have so benefited U.S. agriculture.
Mr. Neugebauer. Thank you. Thank you very much.
Mr. Scott. The gentleman from California, Mr. McCarthy.
Mr. McCarthy. Thank you, Mr. Chairman. I wanted to touch on
Mr. Nicosia's PowerPoint, if I could. First, if China is the
largest purchaser, and I have seen, in California, less cotton
being planted and grown, who are they buying their cotton from
right now?
Mr. Nicosia. Well, the biggest change in the last 12 months
has been India, by far. India has gone ahead and taken actually
30 percent of the market share this year alone, but they
continue to buy from the United States, West Africa, Australia
and then the CIS areas.
Mr. McCarthy. If I could just touch on and have you
elaborate a little more, you gave 4 key objectives for cotton
legislation. We talked about the loan rate base. I was
wondering if you would elaborate a little on the loan cotton to
be shipped prior to redemption, the strategy there.
Mr. Nicosia. Sure. Currently, because of the way cotton is
cycled through the loan and is redeemed, there is a tendency
for cotton to remain in the loan for a longer period of time,
looking for an opportunity for redemption. So that can happen
anywhere within the 9 months. When this time period goes
through, if you have a small opportunity in the first month,
you are going to tend not to grab it until such later period
because you have 8 more months to wait for a better opportunity
to come. So as this time passes and as this cotton remains off
the market, you are missing export opportunities that other
countries are taking from us.
And since we cannot ship the cotton, we cannot make the
sale because we can't divorce redemption from shipment, we tend
to lose all early export opportunities. So what our proposal
is, is to allow us to redeem, not to redeem, but to actually
make foreign sales, ship that cotton, put up collateral with
CCC to protect their interest in the loan and yet allow us to
still redeem it at another point in time. The benefits of that
is one that is going to stop storage, which the government
currently incurs; and it allows us to capture export markets
and opportunities earlier in the year that we otherwise would
miss.
It will lower our carry-out, which will have a tendency to
raise prices in the United States, which will lower, whether it
be LDPs or counter-cyclical payments; and allow us to then go
ahead and price that cotton or redeem it on paper at a later
point in time. Now, people will argue and they will say whether
that is cost effective or not because you will have the
tendency to have larger payment schedules later in the year at
advantageous prices. But the alternative is, it is happening,
so all we are going to do is have those same opportunities to
redeem them later, except the government is going to bear the
cost of carrying that cotton until such time, therein losing
the markets.
Mr. McCarthy. So that would save the government from
warehousing, the cost of warehousing?
Mr. Nicosia. Absolutely.
Mr. McCarthy. Okay. I will yield back the balance of my
time.
Mr. Scott. Thank you very much. Again, I try and try again.
I am sorry that I missed you on that one, Mr. Ellsworth, but I
will make up for that by having 2 Democrats go this time. We
will now have Mr. Ellsworth.
Mr. Ellsworth. Thank you, Mr. Chairman. Don't give it a
second thought. I learned as much from Mr. McCarthy's excellent
questions that I might from my own, so I only have 1 question.
I think Mr. Kapraun, it is for you. Could you discuss your
organization's position, and the reasons why, if your
organization thinks the fruit and vegetable planting
prohibition on program base acres should be repealed?
Mr. Kapraun. I don't know that we have a strict position on
that. Could you re-ask what provision it is, again?
Mr. Ellsworth. On the fruit and vegetable planting
prohibition on program base acres and whether that should be
repealed.
Mr. Kapraun. I don't think that we have a specific position
on fruit.
Mr. Ellsworth. Anybody on the panel that has a position?
Ms. Erickson.
Ms. Erickson. Mr. Congressman, I will just note that
although Brazil cannot challenge us on that particular measure
today, under the cotton challenge, under the corn challenge
that is being levied by Canada, should that proceed, that could
have serious implications for our overall domestic support
spending because those direct payments, of course, would no
longer be green box and would have to be put in an amber box
category and that would be the challenge, then, that would put
at risk our overall domestic support spending, so it is a
difficult situation. We don't have a specific view, but we
wanted to highlight the important implications of that
decision.
Mr. Ellsworth. Thank you. Mr. Chairman, I don't have
anything further. I yield back.
Mr. Scott. All right. The gentleman from North Dakota, Mr.
Pomeroy.
Mr. Pomeroy. Thank you, Mr. Chairman. I would just ask,
maybe Ms. Erickson. What is the price of corn today?
Ms. Erickson. It is very high, Mr. Congressman. It is a
good situation, as you know, for the corn growers, but for our
industry----
Mr. Pomeroy. About $4 a bushel, right?
Ms. Erickson. It is right about that.
Mr. Pomeroy. Now, it seems to me like your beef and Mr.
Schwein's beef, principally, are with the legitimate market
dislocation issues of concern to your focused industries coming
from high corn prices. Mr. Schwein, I find it rather
implausible that you contend the government is somehow
responsible for the decline in oat acreage when the fact of the
matter is, is there are alternative applications for this
cropland that previously was oat and wheat that are going to
give the farmer a little better return. I also think that your
statement failed to put in perspective where oats has been
relative to a domestically produced product.
It is my 15th year in Congress and oats has never, during
the time I have been here, been a particularly important crop
in North Dakota. It is, for example, looking at the acreage
from the National Ag Statistic Service shows that in 2005 we
had 490,000 acres. That sounds like a lot, but when you
consider the fact that North Dakota has 26 million acres of
cropland, 490,000 acres is a pretty small deal; 420,000, you
know, 6 may be proving your point. You see a drop in acreage.
But planting decisions, reported in the Ag Statistics Service
for 2007, show 530,000 acres out of 26 million.
Another thing that I think is, aside from the fact that
people are going to be looking at corn and soybean because they
can get better value. They can get more money into their
farming operation from higher value crops, and you do note the
agrimony advances that allow that opportunity in areas we
didn't have it before. There are other issues about other crops
beyond the government programs. Yes, there is a loan program
now supporting dry pea and lentil. But dry pea and lentil also
have some particular characteristics that make it desirable to
a farmer. They are nitrogen infusing crops at a time when
inputs are just wildly expensive.
Having a nitrogen infuser in your crop rotation has been
found to be very valuable to a number of farmers when you talk
about the soaring acreage of dry pea and lentil production in
North Dakota, nearly 950,000 acres. Again, that is out of 26
million acres overall. You indicate why in the world don't we
put some support behind a product we don't even eat. I hope we
don't eat it, we sell it. We just had the worst trade imbalance
in the history of the country and some support for something we
can actually export doesn't strike me as the worst idea that we
ever encountered.
Ms. Erickson, I come back to your testimony. I am just kind
of befuddled by it. You place all the blame on sugar for your
inability to expand into the Mexican market, but the reality
is, the Mexican market has, in some instances, demonstrated a
preference for Mexican sugar as compared to U.S. corn as a
sweetener product. In addition, production costs, market price
for sugar in Mexico is more expensive than it is in the United
States. So I think that there are some other market
characteristics that play relative to what you are talking
about and blaming the sugar policy, I think is, again,
misplaced.
I think the fundamental problem for each of you is that we
have very high-priced corn because it is being used for
ethanol. We have had, in the fairly near term, a transforming
event in agriculture and it has caused market dislocation,
market impact for related industries like the 2 of you
represent. To me, that should have been placed on the table at
the start of your testimony. I think that you have identified
villains relative to your present challenges that are not the
principal cause of your problems.
Thank you, Mr. Chairman. They have 10 seconds to respond. I
can just yield back and leave it for a statement, but if you
would allow the time for them to respond----
Mr. Scott. Would you like to respond real briefly, in 2
seconds? We will give you a little bit of time.
Ms. Erickson. Mr. Congressman, our challenges on corn
sweetener has really been actions taken by the Mexican
Government that limited our export opportunities. What we are
hopeful in moving forward is that in the farm bill that our
government doesn't inadvertently take actions that limit the
two-way trade in sweeteners between Mexico and the United
States as the NAFTA allows.
Mr. Pomeroy. All right. Thank you.
Mr. Schwein. Just briefly, Congressman. Our concern is
simply to provide the producer and his banker partner the
opportunities to consider oats if the market prices are
advantageous. We see strong market prices this year. Certainly,
we need to compete with corn and beans and that is something we
are well aware of and willing to undertake, but we would like
to see the banker, that producer's partner, also be able to
look to oats as a reasonable option.
Mr. Scott. All right. Thank you. And now I will recognize
the gentleman from Texas, Mr. Conaway, and thank you for your
patience in more ways than one.
Mr. Conaway. Mr. Chairman, thank you. I always find it
instructive to watch the techniques of my good colleague from
North Dakota as to how he expands his 5 minutes by preaching
right up to the last minute and then bullying the Chairman
into--anyway, bullying. But thank you, Mr. Chairman. I
appreciate that. Mr. Nicosia, you mentioned reducing loan
rates. What should the loan rate be or how does that mechanism
work? Give me a number that would work on a loan rate.
Mr. Nicosia. Well, today it is just set roughly at 52
cents.
Mr. Conaway. Right.
Mr. Nicosia. What we would like to see is it be based more
upon, the Administration proposal was for 85 percent of the 5
year Olympic average, which would relate it to market prices.
If we did that, and we are in support of that concept, although
we don't believe it should all be at one time because that
would be a massive drop and create such a large counter-
cyclical exposure, it would be very difficult on the industry.
But to base the base market rates on a 5 year Olympic average
is fine. We would probably propose to have some percentage
limit on any one year change on it so as to not be market
disruptive.
Mr. Conaway. Okay, thank you. Mr. Schwein, you mentioned
that your mills, after having trouble getting the raw materials
to use, but you are now using imports, can you help me
understand what the economic impact is on your business of
using imported grains versus domestically grown grains? Or is
there an impact?
Mr. Schwein. The economic impact is of a concern, but it is
not the greatest concern and while we do bring in oats from
across the Canadian prairies to the mill in Iowa, for example,
and there is a transportation component there, market forces,
if they were grown in Iowa, the market would probably be the
same price based on our facility. A bigger concern is the
strategic risk that all the mills are now taking by having most
of North America's oat production concentrated in a single
growing region of the continent.
There has historically been 5 large oat producing states in
the U.S., but they covered a pretty broad geographic area.
Today, as the oat production has shifted into Canada, most of
the North America's oat production is a 130 mile oval spread
across Manitoba, Saskatchewan and into Alberta. So all of our
oat demand for food products is filled from a narrow producing
reason and the event of a crop growing problem in that region
of the world, we will not be able to source sufficient supplies
within North America.
Mr. Conaway. Okay. Thank you, Mr. Chairman. I yield back.
Mr. Scott. All right. Thank you, panelists. You have done a
wonderful job. Thank you very much. Thank you, Mr. Nicosia, Mr.
Kapraun, Mr. Schwein and Ms. Erickson, for your excellent,
excellent presentations and we will allow you to leave and we
would like to welcome our next panelists.
All right. Thank you very much. We would like to welcome
our second panel. First, we have Mr. Bob Stallman, President of
the American Farm Bureau Federation, and Mr. Tom Buis,
President of the National Farmers Union. You may begin, Mr.
Stallman, but just before you begin, staff has just informed me
that we will be having votes in about 15, 20 minutes, so if you
could concise your remarks so that we can ask questions before
we leave, we have a series of 3 votes; some may come back, some
not. We can have it for the record, but you may proceed, Mr.
Stallman.
STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU
FEDERATION
Mr. Stallman. Chairman Scott and Members of the Committee,
thank you for the opportunity to present our recommendations on
the 2007 Farm Bill. The farm bill encompasses much more than
just issues that affect farmers and ranchers. It covers issues
in which all Americans have a stake; alleviating hunger and
poor nutrition, securing our Nation's energy future, conserving
our natural resources, producing food, fuel and fiber and
promoting rural development.
Our Members have told us that the basic structure of the
2002 Farm Bill should not be altered. The current farm bill is
working and working well, overall, not only for farmers and
ranchers, but also for the environment and consumers. The track
record of success from the current farm program is very good.
Agricultural exports continue to set new records, hitting $69
billion in 2006, accounting for \1/4\ of farm cash receipts.
Government outlays are considerably lower than what Congress
said it was willing to provide as a farm safety net when the
2002 Farm Bill was signed. Farmers' average debt to asset ratio
is the lowest on record, about 11 percent in 2006, and farmers
have access to a dependable safety net.
The following is a summary of the 4 key principles
underlying our proposal. First, the proposal is fiscally
responsible. Even though the goals of the farm bill continue to
grow, we have structured our proposal to stay within the March
CBO baseline and do not assume any additional budget dollars
from reserve funds. We accomplish this by proposing offsets for
all funding increases within a title.
Second, the basic structure of the 2002 Farm Bill should
not be altered. Farm Bureau's proposal for the 2007 Farm Bill
maintains the baseline balance between programs. Our proposal
does not shift funding from title to title.
Third, the proposal benefits all of the sectors. Farm
Bureau is a general farm organization with Members who produce
all commodities. It is easy for any one group to ask Congress
to allocate more funding for a program that benefits its
interests without worrying about whether that will take funds
away from others. Farm Bureau's proposal seeks balance across
the board.
And fourth, world trade rulings are considered. The Farm
Bureau proposal includes changes to comply with our existing
agreement obligations and World Trade Organization litigation
rulings, but it does not presuppose the outcome of the Doha
Round of WTO negotiations, which are far from complete.
We have nearly 60 recommendations and suggestions included
in the report we have submitted for the record. I will
highlight just a few of the major proposals.
First, we support continuation of the 3-legged stool safety
net structure of the commodity title, including the direct
payment system and the loan support. But we recommend that the
current counter-cyclical payment program should be modified to
be a counter-cyclical revenue program using state crop revenue
as the trigger, rather than the national average price.
Second, given the determination of the ruling of the WTO
Brazilian cotton case, we support eliminating the fruit and
vegetable planting restriction on direct payments. We support
continuing the restriction for the counter-cyclical payments.
Third, we maintain our longstanding opposition to any
further changes in the current farm bill payment limitations or
means testing provisions.
Fourth, we support establishing a county-based catastrophic
assistance program focused on the systemic risk in counties
with sufficient adverse weather to be declared disaster areas.
In conjunction with this, we support elimination of the
Catastrophic Crop Insurance Program and the Non-Insured
Assistance Program. The crop insurance program would then need
to be re-rated to reflect the risk absorbed by the catastrophic
program.
Fifth, we support changing the structure of the dairy price
support program to support the price of butter, nonfat powder
and cheese, instead of only the price of milk. We support this
only if total Federal spending does not increase under this
approach.
Sixth, we support haying but not grazing on CRP acreage,
with some reduction in the rental rate. Similarly, we support
the use of selected CRP acres to harvest grasses raised for
cellulosic feed stock, with a reduction in the rental rate. In
both of these cases, production practices that minimize
environmental and wildlife impacts would have to be utilized.
We support an additional $250 million annual to expand the EQIP
program and to allocate 17 percent of the mandatory EQIP
funding for fruit and vegetable producers. And for the
nutrition title, we support funding for additional purchases of
fruit and vegetables.
These are some of the major recommendations. I will be glad
to answer any questions on the other recommendations I have not
specifically referenced. For clarification, any element of the
current farm bill not directly addressed in our submission, has
our support to be continued.
In closing, I want to emphasize that our recommendations
are intended to more effectively use the limited dollars in the
CBO baseline. There are still many unmet needs across all of
the titles of the farm bill, and our testimony would look
somewhat different if additional budget funds are allocated for
the farm bill. Thank you and I will look forward to answering
questions.
[The prepared statement of Mr. Stallman appears at the
conclusion of the hearing:]
Mr. Scott. Thank you very much. Now we will hear from Mr.
Tom Buis, President of the National Farmers Union.
Mr. Buis. Thank you, Mr. Chairman. It is actually
pronounced ``Bias.'' It is a Hoosier pronunciation of a French
name and I don't know how they came up with it.
Mr. Scott. Thank you. I appreciate that. As you have
noticed from the first panel, I have struggled with my
pronunciations of names.
Mr. Buis. That is okay.
Mr. Scott. So thank you for correcting me. I appreciate it.
Mr. Buis. I can legitimately say I am born biased.
Mr. Scott. Wonderful. Thank you, Mr. Buis.
STATEMENT OF TOM BUIS, PRESIDENT, NATIONAL FARMERS UNION
Mr. Buis. Mr. Chairman and Members of the Subcommittee, I
appreciate this opportunity to be here today. We have submitted
a more complete, inclusive testimony in writing, which
obviously we don't have time to go over orally, but I would be
glad to answer any questions regarding that. We too are a
general farm organization and as you might imagine, there are a
lot of issues out there considering the breadth and depth of
the farm bill.
The goal of this farm bill, however, should be profits from
the marketplace. I have never met a farmer that didn't prefer
to get their income from the marketplace, and with the recent
excitement and opportunity in renewable energy, both ethanol
and biodiesel and wind energy and those opportunities down the
road with cellulosic ethanol, farmers in those areas are very
optimistic and very upbeat. And if we accomplish the goal of
profits from the marketplace, many of the symptoms that we
often debate, in this Committee and elsewhere, go away.
However, while prices may be good in some sectors and overall,
farmers are pretty satisfied with the 2002 Farm Bill safety net
structure, any farm program that works in high prices; any
safety net would then work. But as history has taught us, good
times do not last forever and we must plan for the worse. So we
feel there should be a safety net that works when the rural
economy is struggling and it has to be a key priority.
We conducted numerous meetings around the country and by
and large, people pointed out, over and over again, 2 glaring
holes in the current safety net. One is the rising cost of
production, primarily fueled by skyrocketing energy costs that
farmers, as price takers, cannot pass on to others as most
other businesses can and do. As President Kennedy once said,
``farmers are the only ones who buy retail, sell wholesale and
pay freight both ways.'' I would add another sentence, that
they also are the only ones that pay fuel charges both ways,
and that has been difficult the last couple of years for them
to grapple with.
And since the Committee is faced with crafting a new farm
bill with significantly diminished resources, we started
looking, at Farmers Union, at options. One option that we had
reviewed and analyzed, and we commissioned a study by Dr.
Darryll Ray at the University of Tennessee, that looked at a
purely counter-cyclical safety net based on cost of production.
The concept is to take all of the current safety net, the 3
legs, the direct payments, marketing loans, target price,
combine them into 1 counter-cyclical program based on cost of
production. The preliminary results of the study show that we
could provide the same level of safety net the farmers
currently have, plus save $2 to $3 billion per year for other
priorities. This level of support, 95 percent of the cost of
production, would only provide Federal assistance if commodity
prices are low and I think that is key, because one of the
things that we get beat up with over and over again is how can
you justify a payment to a farmer, like myself in Indiana,
getting $4 for the corn, which is a profitable price, and also
a payment from the government?
The second glaring hole in the safety net is when producers
have less than a normal crop because of weather-related
disasters. Well, risk management programs are important. They
do not protect enough of the risks farmers face. Emergency ad
hoc assistance, as we all know, and you are going through it
right now, is most difficult to enact. We are now going on the
third year without an emergency disaster program. Permanent
disaster assistance in the farm bill is a critical and
inseparable part of an adequate safety net. Using part of the
direct payments to pay for a permanent disaster program seems
like a common-sense solution to a major challenge currently
confronting our Nation's farmers.
In summary, Mr. Chairman, I would hope this Subcommittee
would seriously consider taking a look at adopting a purely
counter-cyclical safety net based on cost of production,
because no one can project what prices are going to be down the
road. Gross revenue, fixed payments, don't get to the problem
that they are currently facing; and also combine it with a
permanent disaster program. Thank you, Mr. Chairman. I would be
glad to take questions.
[The prepared statement of Mr. Buis appears at the
conclusion of the hearing:]
Mr. Scott. Thank you. Thank you, Mr. Buis. Here is our
situation. We have got 12 minutes before votes and what I
thought we could do is to get as many questions in as quickly
as we can. And then, Members, we have a choice of either
submitting our questions for the record or taking some--12
minutes left until the votes end. So I would suspect that we
have got about 10 minutes before we have to rush over, with 2
minutes to get over that normally we can make it. So we have
got 10 minutes here. We can take as much advantage of it and if
we want to come back, the chair will certainly have us come
back or we could submit questions for the record. With that, in
an effort to speed things, I will recognize Mr. Moran for his
questions.
Mr. Moran. Mr. Chairman, thank you very much. I will ask
these questions and not expect a response today, but if Mr.
Stallman or Mr. Buis, if you or your colleagues would visit
with me about these topics in the future, that would be useful
to me. I just wanted to raise the issue with Mr. Stallman,
about rebalancing target prices and loan rates. That is not
mentioned in your testimony. We heard from the panel
previously, particularly from the millers, their concerns about
oats and wheat, and I hear this issue from Kansas wheat
farmers, about their importance. And I know how difficult it is
if we don't have more money. No one wants to give up anything
in order to increase the other side. So Mr. Stallman, if you
would visit with me sometime about American Farm Bureau's
thoughts in regard to rebalancing loan rates and target prices.
Mr. Buis, your position on direct payments I am interested
in pursuing. Direct payments at the moment in Kansas are the
only thing that we are receiving as far as a safety net for
farmers, and my guess is that the only way that I could reach a
conclusion that direct payments are not a valuable part of this
3-legged stool is if we had a crop insurance or disaster
program that was actually working. Despite our efforts, for as
long as I have been in Congress and perhaps as long as you all
have been working in agricultural policy, we are a long way
from that being the case. So I would like to talk further about
what I see developing here. It is kind of an anti-direct
payment proposition and yet there are reasons in which direct
payments are awfully important and so I would like to hear from
you in the future about that, and I yield back the balance of
my time.
Mr. Scott. Thank you very much, Mr. Moran. The gentle lady
from South Dakota, Ms. Stephanie Herseth Sandlin.
Ms. Herseth Sandlin. Thank you, Mr. Chairman. I will defer
to my colleagues who were here previously. I appreciate their
testimony today, 2 organizations which you represent that have
long provided good ideas to this Subcommittee and the full
Committee; but I defer to my colleagues. Thank you.
Mr. Scott. And thank you. The gentleman from Louisiana, Mr.
Boustany.
Mr. Boustany. Thank you, Mr. Chairman. I also share
Congressman Moran's question with you and also, I would like
you to compare and contrast your proposal on the counter-
cyclical payments, your individual approaches to this, with
that recommended by the corn growers. I would be interested in
knowing some of the differences and how you have come about
your change in position on this, to some degree, over the last
several months. Thank you and I will yield back.
Mr. Scott. All right, thank you. Now the gentleman from
Indiana, Mr. Brad Ellsworth.
Mr. Ellsworth. Thank you, Mr. Chairman. If you would ask me
how to pronounce Mr. Buis, as a fellow Hoosier, I could help
you there, but probably not.
Mr. Scott. I needed help. I needed help this morning, my
friend. I appreciate it.
Mr. Ellsworth. I will submit my questions, but if you all
could contact my office about the farm flex issue and your
support and/or feelings about that, and your organizations', on
farm flex. I think there are about 19 Members that are co-
sponsoring legislation as a result of that and if you could
have someone contact my office about that and your opinions.
Thank you.
Mr. Scott. Thank you. The gentleman from North Dakota, Mr.
Pomeroy.
Mr. Pomeroy. Thank you, Mr. Chairman. It seems to me that
the core of the farm bill, the heart of it, is making sure we
have price protection for farmers when prices collapse. We have
seen that if it doesn't account for skyrocketing energy costs,
that can be a very insufficient level of security. I am very
intrigued by the Farmers Union proposal and the $3 billion it
potentially frees up that we give through scoring. That could
be used as a down payment on the permanent disaster component
that many of us hope to put into this legislation. So I know
each of these guys and think very highly of them and the
organizations they represent. They have once again given us
some weighty material to consider and I think it is going to be
very helpful to us. Thank you.
Mr. Scott. Thank you very much. And certainly, before we
adjourn, let me, on behalf of the full Committee thank you for
your understanding of our time crunch this morning. Your
testimony was very, very informative and very beneficial to us.
And thank you, Mr. Stallman, and thank you, Mr. Buis, for your
testimony.
Now, under the rules of the Committee, the record of
today's hearing will remain open for 10 days to receive
additional material and the supplementary written responses
from witnesses to any questions posed by a member of the panel.
This hearing of the Subcommittee on General Farm Commodities
and Risk Management is adjourned.
[Whereupon, at 11:33 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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