[Congressional Record Volume 144, Number 117 (Tuesday, September 8, 1998)]
[Senate]
[Pages S9956-S9957]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE FARM CRISIS
Mr. HARKIN. Mr. President, farmers continue to suffer huge losses
through absolutely no fault of their own. No other business has less
control of the price they can receive for what they produce, the cost
of the inputs. Farmers cannot control the weather. They cannot control
the world economy. They cannot control what is happening in Asia. But
those factors do determine the price of corn, soybeans, wheat, and
other commodities. The Freedom to Farm bill passed in 1996 sharply
reduced the farmer's safety net to take care of those contingencies
over which the farmer has no control.
Now farm prices are crashing to levels not seen in decades. Many
farmers are going to have a difficult time acquiring funds needed to
pay their bills this year and to get the necessary money to get the
fields prepared and to get the seed and the fertilizer to get the crops
in the ground for next year.
Many farmers could lose their farms that have been in their families
for generations. I recently talked with an older farmer who said,
``That's my life's savings. I made it through the eighties. I'm a good
manager. I weathered that terrible storm in the eighties. And now this
may wipe me out after a lifetime of work.''
I am sure the Senator from Alabama knows. He has a lot of farmers in
his State. There is the old adage that farmers live poor and die rich.
They have all that money in that land. That is their retirement system.
They work hard all of their lives. They do not live high on the hog.
Then it comes time to retire. That is their equity. And now that is
being severely eroded, not to mention the young farmers who have gotten
started, carrying a debtload who will be really forced out of
agriculture, never to return.
Well, it is already having a terrible ripple effect, not only on
farms but in small towns and communities all over America. Layoffs are
starting to occur at agricultural equipment manufacturing companies and
in stores. I think we are just beginning to see the stages of what
could become a very severe downturn in rural America.
Last week, a number of Senators and I proposed a series of
modifications in ag programs to help alleviate the problem. But I take
the floor this morning to say that I believe Congress should also pass
a provision broadening existing tax law that will allow farmers to
recover taxes paid in the past to cover their net operating losses
right now.
Mr. President, under existing law, businesses, including farmers, can
be
[[Page S9957]]
reimbursed for their business losses by receiving a rebate for taxes
paid in the prior 2 years--or 3 years in cases in which there is a
natural disaster. Well, we are facing a large economic disaster that
can really sink us in rural America.
What I am proposing--and I will be shortly introducing a bill to do
so--I propose that family farmers be allowed the option to get a rebate
from the taxes that they paid over the past 10 years, covering up to
$200,000 in operating losses rather than the 2 years that is allowed
under current law.
Many farmers cannot receive a rebate for their operating losses
because they were not able to make any taxable profits in the last
couple of years. By being able to go back 10 years, we will allow these
farmers to be able to get a rebate next year and then limit it to
$200,000 so it would be available to all family farms, up to a limit of
$200,000 in net operating losses.
The benefit would only go to farmers whose families are actively
engaged in farming and whose business activity is mostly farming. The
amount of the rebate would be dependent on the amount of the loss and
the tax rate paid by farmers for the paid taxes that are being
restored.
The provision I am proposing would cover losses occurring in both
1998 or 1999.
If passed this year, farmers would be able to calculate their losses
early next year and receive a rebate from the IRS for the taxes paid in
earlier years very soon thereafter. This proposal would provide a
significant amount of relief when it is needed early next year. It
would help many farmers acquire the funds they need, as I said, to get
the fields prepared and get the feed and fertilizer and bills paid so
they can continue on next year.
I might add that there is some precedent for this. There was a case
in 1997 where Amtrak was allowed to use net operating losses of their
predecessor railroads going back over 20 years in the past. So there is
precedent for this. If we can do it for Amtrak, I think certainly we
ought to be able to do it for our family farmers. I am hopeful at some
point this fall either under a tax bill, if we are going to have one,
or under some other vehicle, that we can at least put this provision
in.
I know my colleague from Iowa has another provision that would allow
farmers to invest some of their profits for up to 5 years without being
taxed until the money is used in poorer years, which is a great
provision, one I also hope gets through.
Right now, the farmers are facing the fact that they don't have any
money. I think maybe the two coupled together will get them some funds.
If they went ahead and invested and used a provision of my colleague
from Iowa, we might have a situation to help get some of the farmers
through the next couple of years.
I just wanted to bring that to the attention of Senators. I hope to
be introducing that very shortly. Again, I don't mean to belabor it,
but we are seeing really bad times out there. I used these charts last
week. I will use them again in case other Senators may be watching that
didn't watch last week. Since July 16, wheat, corn, and soybeans are
all down--I used central Illinois only as a measuring point--21 percent
decline in the past 6 weeks in corn, 21 percent decline in soybeans in
the last 6 weeks, and a 13 percent decline in the past 6 weeks in hard
red winter wheat in Kansas City. We see no signs this will be
alleviated any time soon. It looks like we will have a record crop of
soybeans this year, a record crop, and probably the second or third
largest corn crop we have ever had. So this will be hanging over the
marketplace. We need to do everything we can.
Again, I hope that we will have some provisions very soon that will
remove the caps on the loan rates and even provide emergency provisions
for the Secretary to be able to pay storage payments to farmers, to
store some of that grain so that they don't have to dump it this fall.
They can keep it until next year. Maybe the Asian economy will come
back; maybe there won't be very good weather next year, whatever; maybe
the prices will come back next year. Let the farmer have the freedom to
market that grain at some point down the line rather than just dumping
it on the market this year.
There are other provisions that we will be talking about, but I think
those are the major ones that will help get us through a very, very
difficult year in agriculture and all over the world.
I thank my colleague for yielding me the time.
____________________