[Congressional Record Volume 141, Number 13 (Monday, January 23, 1995)]
[Senate]
[Pages S1293-S1296]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FEDERAL FARM PROGRAMS
Mr. CONRAD. Mr. President, I rise today to issue a warning to those
in Congress who are suggesting we eliminate or deeply slash the Federal
farm programs.
These programs have given American consumers the lowest price and
highest quality food in the world. These programs have helped make
America's farmers preeminent among the world's food producers. They
have helped agriculture produce a $17 billion surplus in trade, one of
the largest of any American industry. These programs are the foundation
of a $950 billion industry employing over 23 million Americans that
delivers food and fiber to American families.
To those who would kill our farm programs, I say this amounts to
unilateral disarmament in the battle for world agricultural markets. It
is an unwise dismantling of our successful national food policy. Our
agriculture programs are the foundation on which much of our ability to
meet international competition is based. They are also the foundation
for our national food policy, which has helped us become the most
richly abundant nation in the world. No one would have suggested we do
away with our missile defenses during the cold war. Yet some now
suggest we do away with the farm programs that work for millions of
Americans in the food industry and for all American consumers.
Let me just explain very clearly why U.S. farm policy is right for
America. First, our agriculture policy is vital for preserving our
international competitiveness. Second, agriculture is a fundamentally
unique type of business. Third, Federal farm programs are crucial for
American consumers.
Despite these compelling arguments, some people assume farm programs
are an appropriate place to slash and even eliminate America's
commitment to our most basic industry. Why do they assume this? Mr.
President, I believe it is complacency. We have been so well
[[Page S1294]] fed and blessed with food security for so long that we
have forgotten why we created the system.
I am here to remind America that the farm programs are part of an
extraordinarily successful strategy to bring ample, affordable food to
consumers and help us compete in a tough international fight for
markets. Yet there remains a gap between our Federal agricultural
policy and an appreciation for the food on our tables.
Complacency has allowed critics to create myths about agriculture.
Myth 1 is that farm programs are not necessary in the world economy.
Myth 2 is that agriculture is like every other type of business. Myth 3
is that consumers will benefit from the elimination of farm programs.
I am here today to dispel those myths. I say to those who are
pointing their finger at agriculture, they should think twice. They are
suggesting a reversal of the policy that has made our Nation the world
leader in agriculture. They are seeking to dismantle the policy that
has provided American consumers with the highest quality, lowest priced
food in the world. They are jeopardizing an American industry that is
the envy of every other country in the world. They must explain why we
should fix a system that is not broken.
Mr. President, myth 1 about agriculture is that we do not need farm
programs to compete in the world market. What many critics do not
understand is that today there is an intense worldwide battle for
agriculture market dominance. Our primary competitor is Europe. They
have a plan. They have a strategy to win the world agricultural trade
battle. They provide high levels of support to their producers to
encourage surplus production. They dump those surpluses on the world
market, undercutting our producers and grabbing international market
share. They are on the march. They are on the move. Make no mistake.
Meanwhile, we sleep. We are blissfully unaware that our markets are
being stolen from us day by day. One day we may awaken to learn that
Europe has done to us in agriculture what Japan has done to us in
automobiles and electronics. The Europeans understand that there is a
war being waged for markets, and they believe ultimately there will be
a cease-fire. They believe there will be a cease-fire in place, and
they want to occupy the high ground. The high ground is dominating
world market share. And, oh, how well their strategy is working. In a
few short years, Europe has transformed itself from the largest net
importer of wheat to the No. 2 exporter.
This chart shows precisely what has happened from 1960 to 1992. The
red line shows European exports of wheat. The blue line shows imports.
As one can see, Europe that was once the largest importer has now moved
to the No. 2 exporter in the world. They have a plan. They have a
strategy.
Let me just tell you what we are up against. The Europeans support
their producers at rates 2 to 20 times the level of support we give our
farmers. For example, the Europeans spend $119 per metric ton to
support their wheat producers; 2\1/2\ times the U.S. level. This chart
shows the difference. This is just government levels of support.
Europe, $119 per ton, the United States, $46 per ton; over 2\1/2\ times
our level of support. It does not stop with wheat.
The same is true for beef producers. Again, they support their
producers at 2\1/2\ times the level we support our producers. Again,
not surprisingly, Europe is No. 2 in beef exports.
This chart shows European support versus U.S. support for beef. This
is in dollars per metric ton. Europe is $2,274 per metric ton. The
United States is $878 per metric ton. Europe is supporting their
producers at 2\1/2\ times the level that we are supporting our
producers.
If that is not bad enough, Mr. President, let us look at oilseed.
They give their oilseed producers 23 times the level of support we give
our oilseed producers. While world oilseed demand and acreage have
increased over 40 percent in the past 15 years, U.S. oilseed plantings
have increased a minute 0.3 percent. European plantings have
skyrocketed 330 percent.
Mr. President, this chart shows European support in oilseeds versus
U.S. support--a dramatic difference. It is $329 a metric ton in Europe,
$15 a ton in the United States. And we wonder why Europe is capturing
market after market.
Mr. President, I hasten to point out that these examples demonstrate
how much the European governments are supporting their producers. It
does not count European consumer subsidies to their producers, which
would make the levels of producer subsidy much higher.
Mr. President, this is not a level playing field. This means that
American farmers must not only compete against French and German
farmers. American farmers must compete against the French Government
and the German Government. This means that Europeans take income from
American farmers. This means that Europeans take jobs from Americans
working in processing, transportation, and the input industry.
We can see how well this European strategy is working in trade
negotiations, as well. While Europe supports their farmers at high
levels, we consistently slash agriculture spending in this country. My
colleagues should remember the early stages of the Uruguay round of
GATT. The European GATT negotiators sat back, watched us cut our own
programs and then toughened their negotiating position. We could have
won more for our farmers and our agribusiness industry if we had not
unilaterally cut our farm programs.
Instead of a level playing field, Europe held out for equal
percentage reductions from these unequal levels of support. That
assures they will remain on top.
Mr. President, again, I emphasize to those who are listening, the
Europeans have a plan and a strategy to dominate world agricultural
markets. Their plan, their strategy is to continue high levels of
support--much higher levels than ours--on the assumption that at some
point in this world trade battle, there will be a cease-fire. They
believe there will be a cease-fire in place. They want to occupy the
high ground. So in area after area, we see the European strategy
playing out. Oh, how well it is working. We let them take advantage of
us. We cannot allow that to happen again.
The Europeans support their producers at high rates for simple yet
compelling reasons. They've been hungry. They know what it is like to
go through war and not have a stable food supply. They have made
conscious decisions to avoid that ever happening again. They also know
that every field of wheat and every field of sunflowers creates jobs
and processing, transportation and input industries. I admire them for
their foresight and commitment.
Against these odds, agriculture in America is still one of the few
sectors of the economy that contributes positively to our balance of
trade. While the rest of the economy is heading for a $180 billion
trade deficit, agriculture is producing a $17 billion trade surplus.
The farm programs are the foundation on which our farmers are able to
compete against these overwhelming odds. Remember, if American farmers
do not grow it here, American workers do not transport, process and
market it here.
I repeat, we are in a worldwide battle for market dominance. The
Europeans hope the United States will give up and give in. They hope we
will roll over. They hope we will flinch.
Mr. President, I am here to deliver a message. We must not back down.
We must not unilaterally disarm. We must not retreat. We must fight if
we are to preserve jobs and economic activity in this country.
The current battle in this global market is crucial for millions of
American jobs. That is precisely what is at stake--American jobs. The
question is this: Will we stay in this fight? We cannot win the battle
with our hands tied behind our backs. If we give in, we lose. This is
not a question of subsidies. It is a question of whether we are going
to stand behind our farmers in this global market battle. It is a
question of whether we are going to stand for American jobs.
Today, we are at a crossroads. We are beginning debate on the 1995
farm bill, a bill that will set American agriculture and food policy
into the 21st century. At the same time, debate on another round of
GATT will begin in
[[Page S1295]] the next few years. The choice is ours. We engage, or we
retreat.
Mr. President, myth two about agriculture is that it is like every
other type of business. That is simply not the case. Unlike any other
sector, farmers produce a basic human need: food. To sustain that
abundant food supply, we maintain a reserve of basic commodities to
fulfill our food and feed needs in times of shortfall. The reserve is a
national food security system, an insurance policy for consumers
against shortfalls in crop production. Inherently, reserves depress
prices and reduce farmers' incomes.
For many decades, the people of this Nation have believed that
maintaining a stable reserve of critical commodities is in our national
interests. For decades, we have believed that we should maintain
producers' incomes at levels sufficient to sustain a stable supply.
That is why we have farm programs.
Not only do farmers produce a basic human need and maintain large
inventories, but farmers must also deal with a highly volatile factor--
the weather.
In other parts of the world, droughts have killed hundreds of
thousands of people. Thankfully, our Nation has always been spared
famine. We have had a rational food policy. Americans need not think
long to recall the last time weather had a disastrous impact on U.S.
agricultural production--the last time we made a claim on our national
food insurance policy. The 1993 flood reduced corn production by one-
third. Luckily for the American consumer, we had stocks of grain on
hand, a land reserve to increase plantings, and favorable weather in
1994 to replenish our supply.
How much would consumers have spent on higher food costs without a
farm program? The answer is billions of dollars. On top of the billions
of dollars consumers saved in 1993, food stocks in hand during the
1988-1989 drought saved consumers some $40 billion in higher food
costs. That is how a national food policy should work, and that is how
our national policy does work.
Moreover, the research that agriculture supports has given consumers
a second insurance policy. Insects and disease have always presented
formidable and destructive problems to agriculture. For example, 1993
wheat production in some counties in North Dakota was cut 50 percent by
disease. Farmers burned literally millions of acres of wheat destroyed
by that disease. Researchers are now hard at work to prevent the spread
and find a cure.
We can remember what happened in other times, in other countries that
did not have such a vigorous effort, such an insurance policy.
The potato famine of the mid-19th century in Ireland provides a
dramatic example of the importance of disease research. One single
fungus destroyed Ireland's potato crop, forcing many into starvation.
Fortunately for U.S. consumers today, food production research in the
U.S. targets disease early, limits the spread, and prevents that type
of human devastation.
Mr. President, myth three about farm programs is that their
elimination will benefit consumers. The purveyors of myth three ignore
clear evidence to the contrary.
First, American citizens enjoy a safe, high-quality, abundant, and
stable food supply. Second, we spend less of our disposable income on
food than any other consumers in the world.
I have brought this chart to show what we pay in this country versus
what other consumers in other countries pay. I think it is very
revealing. This shows the percentage of income that goes for food. In
Italy, 26 percent of their country's income goes for food--26 percent.
In Australia, 23 percent; in Japan, 19 percent; Germany, 19 percent;
France, 16 percent; the United Kingdom, 12 percent; Canada, 11 percent;
and in the United States, 8 percent of our income goes for food, the
lowest cost food in the world. And there are those who suggest we
eliminate the underlying programs that make this possible. Mr.
President, that makes no sense.
We have been in a time when we spend less of our income for food than
do the consumers of any nation, but at the same time we have achieved
that result, we see food prices continuing to fall. According to the
USDA, consumer spending has dropped from 10 percent of income in 1970
to 8 percent today. So not only have we achieved the lowest cost food
in the world, but we have also kept food costs going down. In 1970, 10
percent of the average American's income went for food. In 1991, it was
down to 8 percent.
And of that declining percentage, only 22 cents of each dollar goes
to the American farmer. Further, the cost of marketing food has been
the principal factor affecting consumer costs.
Let us just look for a moment at the price of bread. This chart shows
what has happened with U.S. wheat prices versus what happened to bread
prices. Wheat prices have been relatively stable. Bread prices have
continued to rise. In other words, there is virtually no relation
between the consumer cost and the price the farmer receives. Clearly,
the increase is not going into the farmer's pocket. To further
illustrate, from 1983 to 1993, 85 percent of the rise in consumer food
costs went to the marketing bill, not to farmers.
Returning to our examples of the 1993 flood and the 1988-89 droughts,
while production dropped sharply, consumer prices remained stable.
Again, this is how the farm programs are supposed to work and it is how
they do work--protecting consumers against the dramatic fluctuations in
supply that can occur because of weather-related and disease-related
disasters.
What would happen if farm programs were eliminated? Very likely,
reserves of grains would be reduced, prices would fluctuate, and
consumers' cost of food would increase. Does that sound like something
that is good for the American consumer? Absolutely not.
Mr. President, we are now engaged in a debate about how to reduce the
budget deficit. I support a balanced budget. I have not only voted for
deficit reduction measures, I have offered my own plans, as a member of
the Senate Budget Committee, every year I have been in the U.S. Senate.
But let us look at what you get if you eliminate agriculture
spending. You do not get much. Agriculture represents less than 1
percent of the entire Federal budget.
This chart shows Federal outlays from 1996 to 2002, the period about
which we are talking about balancing the Federal budget. Here is
interest on the debt, nearly $2 trillion over that period; defense,
over $2 trillion; Social Security is nearly $3 trillion; domestic
discretionary spending, just over $2 trillion; Medicare, almost $2
trillion. Where is agriculture? Where is agriculture, Mr. President? It
is this little, tiny slice right here. You almost cannot see it.
That is because, of the $13 trillion that we are projected to spend
over the next 7 years, $87 billion is for agriculture--$87 billion out
of $13 trillion, far less than 1 percent of Federal spending.
Mr. President, I repeatedly encounter press reports of someone
suggesting we cut agriculture and that cutting agriculture will somehow
solve our deficit problems. It simply will not.
Not only is it a small pot of money, it is a dwindling pot.
Agriculture spending has suffered dramatic cuts in recent years. In
constant dollars, farm spending dropped a full two-thirds since 1986.
Still, some continue to point their finger at agriculture as the cause
of our deficits. Nothing could be further from the truth.
Mr. President, this chart shows in constant dollars agriculture
program spending: In 1986, expressed in 1994 dollars, $35 billion; in
1994, down to less than $12 billion, a dramatic reduction. In fact, if
other parts of the budget had suffered the same reductions that
agriculture has experienced, there would be no deficit problem. We
would be in surplus.
Mr. President, many critics of farm programs suggest that because
some forms of agriculture production in the United States survive
without Government programs, all commodities should be able to operate
in that manner. Most often mentioned are livestock and fruits and
vegetables.
Let us just take livestock off the table right away. Anyone who
suggests the livestock industry operates without the benefit of feed
prices stabilized by our farm program is sorely misinformed.
Fruits and vegetables are another case. Fruits and vegetables are
perishable. While a reserve would be highly impractical, the prices of
many such commodities are stabilized through
[[Page S1296]] marketing orders administered by USDA. So, in fact, we
do have price stabilization programs for the vast majority of
agricultural commodities. That is why consumers enjoy stable supplies,
high quality, and modest food prices.
Mr. President, I believe I have demonstrated how important farm
programs are to consumers. Now let us take a hard look at how the
elimination of farm programs would affect producers.
Who are these producers? They are good citizens. They are hardworking
people. They get up early. They work late. They support their
communities. They pay taxes. And, Mr. President, far from the media-
generated image of wealthy folks, the average net farm income in North
Dakota is $20,000 a year. I know that is hard to believe when one sees
portrayed over the media these images of wealthy farmers who are
farming the mailbox.
Mr. President, that is not the way it is. I come from North Dakota. I
go across the State of North Dakota, through cities and towns, visiting
farmsteads. I get a chance to see what the condition is in rural
America.
The hard reality is that the average farmer in my State is earning
$20,000 a year. They have strong families. Farming is a family
business. They raise good children; children that grow up with a strong
work ethic, a good education, and good values.
But those children rarely come back to farm because they do not see a
future in it. They do not see a good opportunity. They do not see a
secure and profitable profession. They see a struggle. They see a
struggle to raise a good crop, a struggle to withstand low prices, a
struggle to persevere through hail, drought, or flood.
They watch their parents struggle and they ask why.
Mr. President, I think we find farm families staying on the land not
because it makes sense financially, because the rate of return for
agriculture is as low as any industry one can find. I believe they stay
with it because it is a way of life.
What will the cuts that some people are suggesting do to this way of
life? In North Dakota, the effect would be dramatic. According to USDA
statistics, in 1993, farm program payments represented 82 percent of
net farm income--82 percent of net farm income represented by Federal
farm program payments. Nationally, startling statistics from the U.S.
Department of Agriculture provide a clear picture of what is happening
on the farm. Let me quote:
* * * recently, entry has fallen fastest for farms operated
by those under 35.
They go on to say:
* * * the most noticeable change in the 1992 census (of
Agriculture) was among 35-to-44 year-old farmers. Farm exits
for this age group increased * * *
What does this tell us? It tells us that farming is not an
economically attractive business. It is high risk, not high income.
Again, according to USDA:
Approximately 90 percent of all farm operator households
received some income from off-farm sources.
If farming were such a profitable business, far fewer households
would have to search for alternative sources of income to meet their
needs.
Finally, the difference between the Consumer Price Index and the
prices received for farm commodities clearly portrays the pressure that
farmers face.
Mr. President, this chart shows the farmers' financial squeeze. The
Consumer Price Index rises much faster than farm prices. This chart
shows from 1982 to 1993 the relationship between the Consumer Price
Index, the prices that farmers pay for things, and farm prices, the
prices that farmers get. This chart tells us a very clear story:
From 1982 to 1993, the red line shows farm prices. It has been
relatively stable. The blue line shows what has happened to the
Consumer Price Index. It has risen each and every year on a steady
course. So the gap between what farmers pay and the prices they receive
has steadily grown.
Farmers are being squeezed by low farm prices and rising costs.
Further, agricultural program cuts will damage rural America in
profound and irreversible ways. At a time when we need sustained
economic growth in both rural and urban areas, the needs of rural
America cannot be ignored. It would be flawed economic policy.
In conclusion, let me restate why we need to maintain our agriculture
policy. First, agriculture programs are the foundation for our
international competitiveness. Without them, we unilaterally disarm in
the world trade battle. That would harm American farmers, eliminate
American jobs and threaten America's economic security.
Second, agriculture programs are insurance policies for consumers.
Without farm programs, consumers lose security over a basic human need:
Food.
Finally, agriculture is a fundamentally different form of business.
To work properly, it must maintain a reserve, but that reserve
depresses prices for farmers and benefits consumers. Because of
agriculture's differences, farm programs are essential.
We as a nation have maintained an agriculture policy for decades to
protect producers and consumers. This is not blind generosity. This is
not aimless policymaking. This is not luck. Those who seek to destroy
the farm program must demonstrate why their way is right for America.
The burden of proof is on them. I think the facts prove they are dead
wrong.
Our agriculture policy works. We have proof that it works. We must
not destroy a program that is proven to deliver an abundance of low-
cost, high-quality food. We must not destroy a program that has made
America the world leader in agriculture. We must not destroy a program
that has worked. We must not unilaterally disarm.
I thank the Chair, and I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DOLE addressed the Chair.
The PRESIDING OFFICER. The majority leader.
Mr. DOLE. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOLE. Mr. President, is leader's time reserved?
The PRESIDING OFFICER. It has been reserved.
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