[Congressional Record Volume 144, Number 86 (Friday, June 26, 1998)]
[Senate]
[Pages S7283-S7284]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD:
  S. 2255. A bill to amend the Agricultural Market Transition Act to 
prohibit the Secretary of Agriculture from including any storage 
charges in the calculation of loan deficiency payments or loans made to 
producers for loan commodities; to the Committee on Agriculture, 
Nutrition, and forestry.


             agricultural market transition act amendments

  Mr. FEINGOLD. Mr. President, today I introduce legislation that will 
give some relief to the taxpayers of this country, who now pay millions 
every year to cover the storage costs of cotton farmers. This year 
alone, this program has provided more than $23 million to store the 
cotton crop of participating farmers. This measure puts all commodities 
on a more equal footing by eliminating the storage subsidy for cotton, 
the only commodity that still enjoys that privilege.

  Mr. President, prior to the passage of the 1996 Freedom to Farm bill, 
farmers producing wheat and feed grains relied heavily on the Farmer 
Owned Reserve Program to assist them in repaying their overdue loans 
when times were tough. They would roll their non-recourse loans into 
the Farmer Owned Reserve Program which would allow them the opportunity 
to pay back their loan, without interest, and also get assistance in 
paying storage costs. Although cotton producers were not eligible to 
participate in that particular program, they were offered the same 
opportunities and others through the heavily subsidized cotton program. 
Those were the days of heavy agriculture subsidization, when the 
government dictated prices, provided price supports, and more often 
than not, had over-surpluses of wheat, corn and other feed grains--
driving down domestic prices. The 1996 Farm Bill, sought to bring farm 
policy up to date with prevailing modern agricultural thought--that the 
agriculture industry must be more market oriented--must survive with 
minimal government price interference.
  Mr. President, although the Farm Bill was successful in ridding 
agriculture policy of much of the weight of government intrusion that 
burdened it for years, there are still hidden subsidies costing 
taxpayers billions. This legislation would prevent USDA from factoring 
cotton industry storage costs into Marketing Loan Program calculations. 
This costly and unnecessary benefit is bestowed on no other commodity.
  Farmers, except those who produce cotton, are required to pay storage 
cost through the maturity date of their support loans. Producers must 
prepay or arrange to pay storage costs through the loan maturity date 
or USDA reduces the amount of the loan by deducting the amount 
necessary for prepaid storage. Cotton producers are not required to 
prepay storage costs. When they redeem a loan under marketing loan 
provisions or forfeit collateral, USDA pays the cost of accrued 
storage.
  It is interesting to note, Mr. President, that in a 1994 audit of the 
cotton program, USDA's Office of Inspector General found no reason for 
USDA to pay for the accrued storage costs of cotton producers. The 
Inspector General recommended that USDA ``revise procedures to 
eliminate the automatic payment of cotton storage charges by CCC and 
make provisions consistent with the treatment of storage charges on 
other program crops''.
  Although those in the cotton industry will argue that the automatic 
payments were eliminated in the Farm Bill, in reality, those payments 
are now simply hidden. It's true that certain provisions have been 
removed from the statute which mandates that USDA pay these charges. 
Now, USDA freely chooses to waste the taxpayers money by paying these 
costs, allowing cotton producers to subtract their storage costs from 
the market value of their cotton, providing a larger difference with 
the loan rate, and therefore receiving a higher return.
  Marketing Loan Programs are designed to encourage producers to redeem 
their loans and market their crops, but USDA payment of cotton storage 
costs discourage loan redemption. As long as the adjusted world

[[Page S7284]]

price is at or below the loan rate, producers can delay loan redemption 
in the secure expectation that domestic prices will rise or the 
adjusted world price will decline regardless of accruing storage costs.
  Mr. President, its time to stop kidding ourselves. Let's eliminate 
this subsidy before it costs hardworking Americans any more. Let's 
bring equity to the commodities program. Lets finish what the Farm Bill 
started--a more market oriented agriculture program. One that benefits 
us all.
  Mr. President, I ask unanimous consent that the entire text of the 
bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2255

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. STORAGE CHARGES FOR LOAN COMMODITIES.

       Subtitle C of the Agricultural market Transition Act (7 
     U.S.C. 7231 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 138. STORAGE CHARGES FOR LOAN COMMODITIES.

       ``In calculating the amount of a loan deficiency payment or 
     loan made to a producer for a loan commodity under this 
     subtitle, the Secretary may not include any storage charges 
     incurred by the producer in connection with the loan 
     commodity.''.
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