[Congressional Record Volume 144, Number 41 (Thursday, April 2, 1998)]
[Senate]
[Pages S3132-S3135]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DORGAN (for himself, Mr. Daschle, Mr. Wellstone, Mr. 
        Johnson, Mr. Conrad, Mr. Harkin, and Mr. Baucus):
  S. 1918. A bill to require the Secretary of Agriculture to make 
available to producers of the 1998 and subsequent crops of wheat and 
feed grains nonrecourse loans that provide a fair return to the 
producers in relation to the cost of production; to the Committee on 
Agriculture, Nutrition, and Forestry.


             the cost of production safety net act of 1998

  Mr. DORGAN. Mr. President, we now have had two crop years under the 
1996 farm law and soon farmers across this country will be planting 
their spring crops for the third year of this seven-year farm law. It 
is time to take a serious look at how this new farm law, often called 
the Freedom to Farm law, is working. Is it achieving the goals and 
promises that were made? What is happening to our nation's system of 
family farm agriculture under this law? Is it creating new hope and new 
opportunities for a new generation of family farms on the land? Or is 
it pushing more and more family farm operators off the land and further 
depopulating rural America?

  Launched during a period of high grain prices with a flurry of 
optimism and hope, the Freedom to Farm law is taking family farmers 
down a very rocky path and even more uncertain future. The initially 
generous farm payments that fueled its passage are now giving way to 
the harsher realities of not having a working safety net.
  When poor crops, low prices, escalating production costs, and 
abnormal weather all arrive at the same time, the current farm law, 
with its capped commodity loan rates and declining transition payments, 
is poorly suited to respond to the disastrous conditions facing many of 
our farm families. During the debate of the 1996 farm bill, I said that 
the time would come when

[[Page S3133]]

farm commodity prices would fall well below the costs of production and 
we would need a working safety net for our nation's family farmers. In 
fact, the failure to have a working safety net was the primary reason 
that many of us could not support the 1996 farm bill.
  The proponents of the Freedom to Farm law promised that a second look 
would be taken if rural America ran into trouble under their farm bill. 
As we begin the third crop year under this farm law, there is no 
question that large portions of rural America are in serious trouble. 
The economic crisis in the countryside is being demonstrated every week 
by the hundreds of farm auction notices that appear in rural America's 
newspapers, particularly our agricultural weeklies. The sheer volume of 
these farm auctions demands that the farm bill debate be reopened, so 
that we can make the needed mid-course corrections to this farm law.
  Behind the escalating exodus of farmers this spring is the underlying 
issue of farm commodity prices. The value of North Dakota's spring 
wheat and barley crops this past year have each dropped by 41 percent 
from the previous year. This is a combined total of $659 million less 
than the year before. That's a tremendous drain of money out of farmers 
pockets and North Dakota's farm economy. It is why our farms are not 
cash flowing and our bankers are having more and more difficulty in 
financing their borrowers for another year.
  After talking with North Dakota farmers and the agricultural 
community, I'm convinced the problem is not just the blizzards and 
floods that we have experienced in the past few years, nor is it just 
confined to North Dakota.
  There are a number of underlying problems that must be addressed 
within our nation's farm policies. We need increased agricultural 
research to combat specific crop disease problems such as fusarium head 
blight, which is also known as scab. This disease has had a devastating 
effect on producers in many parts of North Dakota. We need to recognize 
that the current Federal Crop Insurance program is not adequately 
addressing disaster conditions, particularly in regions which have 
suffered a succession of weather-related disasters. We need to address 
a multitude of trade issues that are adversely affecting our foreign 
agricultural markets, and unfairly interfering in our domestic markets.


                       Bottom line is farm prices

  We can talk for hours about the variety of problems that are facing 
farmers, but the bottom line is and always has been the commodity 
prices that our farmers receive when they seek to sell their harvests 
in the marketplace. The simple fact is that ever since the passage of 
the 1996 farm law wheat prices have been on a downward slide, and there 
is nothing in place to stop these prices from falling further.
  Today, I am introducing legislation which would strengthen the farm 
commodity loan safety net, by establishing a new targeted commodity 
loan program geared to the actual costs of production. This is an 
addition to the current commodity loan program. My bill would not take 
anything away from producers, nor would it change any of the existing 
programs in current law. The legislation I am introducing would 
establish a new tier of marketing loans to provide a working safety net 
targeted to our nation's family farms for wheat and feed grains.
  We need to provide farmers, particularly our wheat producers, an 
effective marketing tool so that they can hold off selling their 
harvests until prices improve sufficiently to meet their production 
costs. They need a functional loan program that allows orderly 
marketing so that the supply they offer to the market demands a better 
price.
  When Congress told family farmers it was going to phase out price 
supports and farmers would have to get their price from the 
marketplace, Congress should have established a commodity loan program 
to allow such orderly marketing. Without a decent commodity loan, too 
many farmers are forced to sell grain when the market offers dirt cheap 
prices.
  To provide a working safety net, we need to increase the loan rate to 
bring it more in line with the costs of production and give wheat 
producers greater equity with other commodities. We also need a loan 
that lasts at least 12 months and can be extended for another 6 months, 
if needed.
  The U.S. Department of Agriculture has determined that the most 
recent five year average of the economic costs of production for wheat 
is $5.00 per bushel. Under my plan, the loan rate would be pegged at a 
minimum of 75% of those costs. That would mean a minimum wheat loan of 
$3.75 per bushel, compared to the $2.58 maximum under the current farm 
law.
  I am greatly concerned that the current wheat loan lags significantly 
behind other commodities in relationship to production costs. For 
example, the current maximum loan rate under the 1996 farm law for corn 
is 72% of its economic costs of production. The maximum loan rate under 
current law for soybeans is set at 89% of its costs of production. Yet, 
the maximum loan available for wheat under the current farm law is just 
52% of the costs of production.
  Equity among major farm commodities requires that Congress take a 
close look at why there is such a great discrepancy among loan rates 
for our major commodities in relationship to the costs of production of 
these commodities. Based on the fact that current wheat loans are at 
the lowest level in relationship to production costs, it is not 
surprising that wheat country is in greater economic trouble than the 
other sections of our nation's agriculture.
  This legislation is a companion bill to S. 26, the Agricultural 
Safety Net Act, introduced by Senator Daschle and cosponsored by myself 
and others. Both bills seek to improve the underlying commodity loan 
program and provide higher, more meaningful commodity loan rates for 
our producers. S. 26 would remove the commodity loan caps in the 
current farm law. As a result, commodity loan rates could actually be 
set at 85 percent of the simple five-year Olympic average of prices 
received by farmers. S. 26 provides an important cushioning effect for 
farm prices and would help stabilize farm prices and thereby help 
farmers meet the challenges of price volatility in the marketplace.
  The bill I am introducing today would add a critically important 
bottom line to ensure that farmers receive cost of production returns 
on a basic level of production. It establishes that commodity loan 
rates for wheat and corn must be at a minimum level of 75 percent of 
the economic costs of production. Other feed grain loan rates would be 
based on the historic relationship of using their feed equivalency 
value to corn.


               Targeting farm programs to family farmers

  There is one more essential reform. My plan targets the benefits to 
family farmers. My new loan program would be available on the first 
20,000 bushels of wheat, and 30,000 bushels of corn, and similar 
amounts for other feed grains for each farm. By setting a limit on the 
amount of loans available to any farm, it not only ensures that the 
primary benefits go to our family farmers, but it also means that 
overproduction will be subject to the disciplines of market forces.
  We cannot afford to cover every bushel produced in this country, so 
we need to target them to the family farm. If somebody wants to farm 
the entire township or even the entire county they can do so, but we do 
not need to give them a safety net for everything they produce. If they 
wish to take the risks of such endeavor, they should be free to do so. 
But, they shouldn't have the government as their silent partner.
  One of the major problems of past farm programs has been that they 
were not targeted to an initial basic production level to family 
farmers. The farm programs were basically open-ended programs. The more 
you produced, the greater benefits you received. Thus the benefits of 
the farm program tended to accumulate at the top, rather than spreading 
out across the base of family farmers in rural America. Rather than 
carrying out our nation's historic goal of maintaining a widely-
dispersed system of family farm agriculture, unfortunately the Freedom 
to Farm law, continued the old farm program's top-loaded pattern in its 
transition payment scheme.
  My plan would target the benefits of a working safety net directly 
related to the costs of production to the initial production of family 
farmers in this

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country. It is a true safety net designed to fit the typical family 
farmer. The simple fact is that our family farmers are the ones that 
have the greatest need for a safety net based on production costs. It 
makes good sense and good public policy to target our farm program to 
our family farmers. Such a safety net is particularly important to the 
beginning farmer and other low-equity farmers because it provides an 
assurance that they can more fully recover their costs during periods 
of low prices. It provides the stability they need to build their farm 
operation and it gives rural America the opportunity to reinvigorate 
the family farm system.
  My plan continues to let farmers plant whatever they want, based on 
market signals. But it would also let them market their grain more 
effectively in response to those same market signals. It provides a new 
working safety net, and gives family farmers a tool they need as they 
do business in a market filled with far more powerful interests and 
forces, most of whom want lower, not higher, prices.
  There are those who are fearful that if Congress reopens the farm 
bill debate that somehow the nation would return to the production 
controls and government involvement in planting decisions of past farm 
programs. This is simply not the case. I don't know of anybody who 
seriously wants to go back to such government involvement in 
agricultural production decisions.
  In fact, those who believe that is the framework of agricultural 
policy choices, are not only misreading the current situation, but also 
did not listen very closely to the debate in the 1996 farm law. The 
debate was not about government production controls. The debate was 
whether or not there should be a safety net for family farmers, and how 
should that safety net be constructed. There were no bills offered in 
the farm bill debate to return to production controls. The debate was 
about whether to phase out farm programs in their entirety or to reform 
our nation's farm laws so that family farmers have a working safety 
net.
  How do we construct a safety net that provides greater marketing 
capabilities into the hands of our family farmers? That is the debate 
we must have in this session of Congress. We cannot afford to wait 
while thousands of family farmers are in the process of leaving their 
homesteads and their chosen profession, and their dreams, and thousands 
of others are at increased risk of being forced out of agriculture.
  Mr. President. During this past Christmas season, I received a copy 
of a family holiday letter from a fourth generation family farm couple 
that announced their decision to leave their chosen profession of 
farming and ranching. George and Karen Saxowsky of Hebron are scheduled 
to have their farm auction this spring. It is a powerful letter that 
captures the challenges, frustrations, and dreams of those families who 
have been struggling to make a livelihood in agriculture. They consider 
themselves lucky, because they were not forced by the bank to make the 
decision to leave farming. Yet, they have a host of loans and bills to 
pay and are not sure of how they will get all of that done. I ask 
unanimous consent that this letter be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

     Holiday Greetings to our Friends and Families:
       It is early Sunday morning and while the house is still 
     quiet with everyone sleeping and the trees are so beautifully 
     frost covered, I thought I would dash off a quick line in 
     spite of my resolution not to send a letter this year--when I 
     bought the Christmas cards I really loved the message but 
     thought, that is enough reading for most people!
       In April we had the worst blizzard ever--the city of Hebron 
     was without electricity for 48 hours, but we did have it most 
     of the time. A ``city'' friend and classmate of George's 
     called during the blizzard to say he just loves a good 
     blizzard--my perspective was different so as a gift to him I 
     started a chronicle of the storm, the events that went with 
     it, and the aftermath in a blow-by-blow account that took 15 
     typed pages; it was my way of coping and I handled everything 
     fine at the time but now I can't read it without crying. 
     Jason was off the farm during the whole thing but Glendon was 
     here and such wonderful help and such a trooper.
       March had gone out like a lamb with 60 degree days. The 
     predictions were the storm would miss us; then changed to 3-5 
     inches of snow with wind and it would end Friday night. We 
     had just bought another large portable (can be moved with two 
     tractors) calf shelter, so now had two, and have lots of 
     corrals, wind breaks, protection, feed and hay on hand--so 
     felt pretty confident we were ready.
       The storm actually raged all day Friday, Saturday, and on 
     into Sunday afternoon with gusts through the evening. We got 
     some outrageous amounts of snow--after twenty-four inches it 
     didn't matter anymore.
       The cattle started running with the storm, the guys were 
     able to get them turned around and back to corrals but that 
     was just the beginning of the nightmare! We chased different 
     herds into protected areas (of course they don't want to go), 
     then we worked on getting 70 calves into the calf-shelter and 
     decided to haul those that were freezing from the corrals 
     into the barn (the pick-ups, tractors nor bobcat could get 
     through the snow) fighting 50 mph winds, George bought one 
     calf while I tried to help Glendon bring another--going up 
     hill and fighting the wind in thigh deep snow--I just 
     couldn't do it. We got those two to the barn, decided they 
     were in such bad shape if we were going to save them they 
     would have to go to the house so took them there, then 
     reassessed the situation. Glendon said, ``If we do another 
     trip I'll have to pull Mom and the calf, in the calf sled, up 
     hill, in the blizzard!'' And that was the truth of it.
       The tractor bucket broke, but they couldn't get the tractor 
     to the shop to weld it so in the raging blizzard they brought 
     the welder, on a calf sled, from the shop to the house, 
     pulled my stove ahead to plug it in, drove the tractor up on 
     the porch and welded it in the kitchen doorway--twice. The 
     stories just go on and on (guess you had to be there)! Those 
     poor guys worked all day in the blizzard, came in exhausted, 
     took a quick nap and went back out. At 7:30 Saturday night 
     they were coming in for supper when they heard loud cracks in 
     the barn--the roof beams were cracking from the weight of the 
     snow! They stayed out and shoved off the roof until 
     11:30 (figured they moved about 3 tons of snow and ice), 
     then got up at five the next morning and worked all day 
     again.
       As the storm abated Sunday evening I could hear Glendon 
     yelling and ran to see what was going on now, but couldn't 
     find him. Here, they had found a cow lying on its side 
     drowning in muck. Glendon was lying flat on his belly holding 
     the cows head out of the muck while George was trying 
     frantically to get the tractor down to him. I plowed through 
     four foot deep snow to help--the first tractor got wet and 
     quit. (All during the storm we had distributor caps in the 
     oven drying out!) He got the Bobcat--it quit; he got the next 
     tractor and we made it down there, tore a fence down, put 
     chains on the cow and pulled her out. She died; as did a calf 
     that had been buried in the snow someplace in the ten feet 
     where we had pulled the cow and we didn't even see, until the 
     snow melted enough, that it was under her; as did those two 
     calves in the basement; as did a calf that had followed its 
     mother to the water fountain, got stuck in the snow and froze 
     to death standing up--we must have walked by that calf fifty 
     times but with the blizzard didn't see it--they get snow 
     covered really fast; as did the cow in the corral with a roof 
     over her head with water and hay right beside her; as did . . 
     . well, you get the picture. It continued for fourteen days 
     after the storm, every day we lost at least one cow and/or 
     calf. We took them to the vets for autopsies and what-not but 
     it just seemed there was nothing we could do to save them. 
     One day we made it to 5:00 without any dying and thought the 
     curse was broken but by midnight we had lost a cow and a 
     calf. It was terrible, terrible time, but we lived through 
     it--but not alone. Friends were there for us. On the Friday 
     after the storm, one called to tell us to get out of the 
     house and come to town for a Fireman's Dance--we were just 
     too exhausted and depressed--but he was pushy (he did the 
     same thing for us after last year's cow incident on I-94. We 
     went, and visited with other farmer-ranchers who were in the 
     same boat--it really was so helpful and encouraging.
       We were really dreading the first snow of this winter. Long 
     about October, George started talking about quitting 
     farming--I took it as a mid-life crisis; a one time slide. 
     But, he kept talking . . . and then started making plans. We 
     would put in a crop in '98 and quit in '99. I still thought 
     `this-too-shall-pass'' but he just got more serious. In 
     November I started getting calls asking if I would like a job 
     off the farm? I have to tell you, I was so flattered that 
     they even considered me capable of doing what they needed; I 
     had been self-employed for almost 25 years. I turned them 
     down, but it did start the wheels turning. Then, there was an 
     ad in the paper for a job in Hebron with benefits. We talked 
     about it and I applied; they offered me the job and I took 
     it. This was not easy, now we couldn't put a crop in this 
     spring as the job is 40 hours a week including every other 
     Saturday and George can't farm without me.
       The bottom line is; a 47 year old, 4th generation farmer in 
     his 27th year of farming is quitting farming.
       I started working at the Credit Union on December 1st. I 
     thought my world would fall apart--the week before I started 
     work everything just `went-to-hell-in-a-basket' and I almost 
     decided I couldn't do it! We sold a semi load of cattle, 
     checked the night before and the market was strong so loaded 
     them up early in the morning. At 10:00 the auctioneer called 
     and said the bottom had fallen out of

[[Page S3135]]

     the market, a bunch of Canadian cattle had just hit the meat 
     packing plants and their buyers weren't buying. George was 
     gone so I had decided what to do; with paying to have them 
     hauled out, and back, then to sale again I said to let 
     them go, when George got home he agreed with me but at the 
     next sale the price was strong again--George and I said, 
     ``That's why we're getting out of farming--there is no 
     predictability!!''
       It was like the farm really needed both of us--as much for 
     moral support as the labor itself. The clincher almost came 
     on Sunday night (before my new job on Monday morning) when I 
     had planned a special ``last-supper'' of T-bones and had them 
     thawing on the counter while I was working on the computer--
     the cats jumped up on the counter and ate them!! Monday 
     morning came and--I went to work. I was so surprised, but I 
     just love my job!! I don't know if it is the people I work 
     with, the people that come in, the feeling of accomplishment, 
     the challenge of balancing the books or what (there is life 
     after farming???) but, I am really happy that I followed 
     through!! In training the hardest part was the balancing out 
     and having everything in the main office by 3:00--one night 
     it was 5:15. Until we actually balance I am always so 
     grateful if I am ``long'' on the money side so at least then 
     they know I didn't take it!! I seem to have the hang of it 
     now, so it is less stressful, easier and even balancing is 
     fun! Everyone is so nice, and I really am trying hard--but 
     keep me in your prayers!
       It sounds like we are having an auction sale in March on 
     the Saturday before Palm Sunday. We are planning on renting 
     out the land and selling the cattle but still living on the 
     farm. George will continue making hay to sell, doing custom 
     combining and has been working with the local electrician and 
     for elevator doing some carpentry stuff. I thought the deal 
     was if I took a job he would stay home until the cows were 
     gone but . . . I guess not!!
       I have friend who just lost her 38 year old son-in-law to a 
     24 hour illness. Then, trying to come back home from her 
     daughter and grandchildren she was delayed three days as the 
     planes couldn't land due to fog. She was home three days when 
     her house caught on fire. The good news is we're small town. 
     We care about and support each other. We may have our little 
     squabbles and irritations but we get over it and move on! 
     Pastors sermon today was about helping each other cut the 
     tops off some of the ills we have to climb and walking with 
     them through the valley of grief for their upbuilding, 
     encouragement, and consolation. We thought of you, our 
     friends and family! With that thought in mind, we wish you 
     little knolls rather than mountains to climb, friends to 
     share the valleys with a sincere * * *.
           Merry Christmas and a very Happy New Year!!
                   George and Karen Saxowsky, Hebron, North Dakota

  Mr. DORGAN. Mr. President, in reading this letter, I am reminded of 
the reasons why it is so important that our nation provide a national 
agricultural policy framework that not only fosters a family farm 
system of agriculture, but purposefully sets out to undergird that 
system and provide the tools that are necessary for our family farmers 
and ranchers to have the opportunity to be successful.
  It is for this reason that I am introducing the Cost of Production 
Safety Net Act. I am pleased to include Senators Daschle, Wellstone, 
Johnson, Conrad, Harkin and Baucus as cosponsors to my bill. I 
encourage others to join in this effort and look forward to having a 
meaningful debate on our nation's agricultural future in the remaining 
months of this session.
                                 ______