[Congressional Record Volume 144, Number 147 (Thursday, October 15, 1998)]
[Senate]
[Pages S12609-S12611]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AGRICULTURAL CRISIS

  Mr. CRAIG. Mr. President, we have just heard the Republican majority 
leader outline in brief the negotiations between the White House and 
the Congress as it relates to a final package of fiscal affairs for 
this Government for the coming year.
  Over the course of the last several days, I have had the opportunity 
to attend a variety of those negotiations, and on occasion, based on my 
certain areas of knowledge, to be consulted as to what directions we 
might head.
  I thought for a few moments this morning I would discuss briefly the 
agricultural package, because it is one of those major areas of concern 
and dispute for a period of time up until late last evening--that, of 
course, and the educational package that most of our colleagues are now 
becoming aware of.

[[Page S12610]]

  While the final language on the agricultural package is being put 
together, there are some fundamental principles we adhered to that I 
think are important for our colleagues to understand when they begin to 
examine this package for their final consideration of it tomorrow.
  First and foremost, it is important to recognize that this Republican 
Congress back in May and June began to recognize the very critical 
situation that American agriculture was in and the character of the 
decline in commodity prices that was evident out there, along with loss 
of foreign markets, that was producing what I consistently called on 
the floor of this Senate and across my State of Idaho an ``agricultural 
crisis.''
  It was in late June that I, along with six other Senators and the 
majority leader, sat down with about 15 commodity group representatives 
in this community, representing national agricultural commodity groups, 
to examine the crisis from their perspective and to look at a variety 
of things that we might do here within current policy and current 
budget constraints to deal with the crisis, recognizing that if we 
weren't responsive, we would see many of our farmers on the edge of 
bankruptcy, and potentially by next crop season they would be out of 
production. That is not good for America. It is not good for our 
economic base or for the food-consuming public.
  Fewer farmers mean larger farmers, usually, or fewer farmers with 
larger acreages. And in many instances what we find is large 
corporations buying up smaller production units that find themselves in 
bankruptcy.
  Consistently we have looked at farm policy recognizing the need to 
keep farm families intact and a production unit in American agriculture 
that was sympathetic to the American farm family. So it was with that 
spirit in mind that we met with these commodity groups and came up with 
a list of items that we would attempt to be responsive to.
  First and foremost in the general discussion with that commodity 
group was to keep the current farm policy in place, keep the 1996 farm 
bill, better known as Freedom to Farm, in place. It is working. It 
gives farmers greater flexibility to decide what to farm, what to grow, 
and how to deal with market trends. It does so with less Government 
interference, less opportunity to farm to a Government program instead 
of farm to what the market is demanding, what the consuming market is 
demanding. That became a premise of operation for us here in the 
Senate--that we would not violate or attempt to go in and offer 
dramatic changes to farm policy.
  Immediately before the August recess, we responded by reaching out 
and putting more of what we call the AMFTA payments into this year's 
current payment to bump up some money that would go directly back to 
that farmer and to that production unit.
  Most of us, of course, in August visited our farmers, and we came 
back clearly with the understanding that we were in a crisis, that the 
commodity prices were at a 20-year low, many times below the cost of 
production, and that the loss of Asian markets, the loss of markets in 
Central and South America, was also driving this decline in commodity 
prices.
  There was also a large influx of product coming in from Canada, which 
was part of a program of opening the borders for the North American 
Free Trade Agreement. And we had to be sensitive to that.
  But, most importantly, what our farmers were telling us, along with 
the decline in commodity prices, was that when we had put the 1996 farm 
policy in place, we had also said at that time there would be other 
things we would have to do. We would have to review trade policy. We 
would have to look at the cold war policy coming out of World War II 
that put sanctions on a variety of countries and basically took 13 to 
20 percent of the world market out of reach of production agriculture 
by one or another sanctions that were built up as a product of foreign 
policy statements and/or policy laws in this country that we had to 
review.
  Most immediate, when we came back in August, was the need to deal 
with the inability to trade with Pakistan and India based on the 
confrontation they were having and the nuclear tests they were engaged 
in, which was a direct violation of the nuclear test ban and, of 
course, the provisions we had put in there that would disallow us 
trading with or dealing with countries that were in violation. We were 
able to strike those two sanctions down immediately, which then in a 
near immediate sense put in play major sales of soft white wheat out of 
the Pacific Northwest. Those sales have gone forward, and they have 
been very helpful to production agriculture nationwide.
  We also said--and Chairman Lugar, chairman of the Senate Agriculture 
Committee, said--we have to look at the overall need to review 
sanctions, the attempted sanctions legislation. There were some 
modifications in it, but it was not complete. He knows it; we know it.
  One of our jobs coming back next year will be to take a serious look 
at the post-World War II era sanctions that have taken a large chunk of 
the world market away from our farmers, because in Freedom to Farm we 
said: You are going to be free to farm, and we are going to use the 
political clout, the governmental clout, of your country to open up 
these world markets to assist you. And we would look at another 
provision.
  That is the very provision that the negotiations moved toward in the 
past several days. That was a tax component--a tax provision that said 
to production units: You are cyclical by nature. By that I mean, 1-year 
commodity prices are at an all-time high and the next year they are at 
an all-time low. Those who have ever farmed--and I farmed during my 
other life as a private citizen--know that very well, that some years 
you make money and in other years you lose a lot of money. It is simply 
because of oversupply and then undersupply of certain commodities 
within the market.
  As a result, we had historically said, up to 1986, that tax laws 
should reflect that you ought to be able to reach back and pull forward 
some of those losses into a crop year where there are high profits; you 
ought to be able to income average those kinds of things out. In 1986 
we took that out--or I should say a Democrat Congress took that out--of 
the tax policy of that year, in my opinion badly handicapping and 
creating long-term injury to production agriculture. Last year we did 
some tentative work in that area putting income averaging back.
  But the package that our colleagues will have a chance to review 
tonight and tomorrow as a final work product of this Congress will have 
made permanent the permanent income average, which is a key component 
to agriculture. Someone on the other side suggested to us that doesn't 
solve the immediate problem. No, it doesn't. But we put $5.97 billion 
in to solve the immediate problem directly flowing through to 
production agriculture. But what we have to look at is the long-term 
character that we had promised production agriculture when we changed 
the farm bill. And we do that--permanent income averaging, a 5-year 
carryback provision allowing farmers to account for, as I expressed a 
moment ago, the cyclical character or future of production agriculture.
  Then we went in and did some technical corrections to IRS tax laws, 
because, for example, when a farmer is guaranteed a Government payment 
but the payment doesn't come until a certain time, the Government wants 
to tax you on the payment at the moment that you are eligible for it. 
We say no; that payment should occur at that time.
  The bill that is being reviewed now also recognizes the kind of 
drought that your State of Florida had, Mr. President, and Texas and 
other parts of the southeastern part of the United States, Georgia. And 
there are $3 billion in there to deal with economic disasters. That 
will be critically important.
  Between the payments that were scheduled in the Freedom to Farm 1996 
farm policy, along with recognizing the crisis created by loss of 
foreign markets and the typical natural cycling of our environment and 
our weather, we are going to recognize all of that.
  I will conclude by saying this. We preserve current farm policy 
because American agriculture told us they needed that to happen for the 
flexibility of future years. We have also kept some promises that we 
made in 1996, to begin to look at sanctions and to free

[[Page S12611]]

up opportunity in world markets. And also, most important, the third 
passage dealt with tax--tax law flexibility, so that that production 
unit, that farmer or rancher, can deal with the cyclical character of 
his or her markets on good years versus bad years. So they pay their 
fair share in taxes but they do not pay taxes one year on substantial 
profits and then the next year have tremendous losses that put them in 
a bind.
  They used to understand that. That is the way the law used to be. 
With that flexibility, you kind of store it up in the good years to 
offset your needs in the bad years. That is the way agriculture ought 
to operate, and that is the way our tax laws ought to allow them to 
operate.
  I thought I would give that synopsis of what we are doing and what I 
think is important for our taxpayers to understand. Keeping this 
tremendous production unit in our country--known as agriculture--
healthy and producing is of critical importance to our country. The 
American consumers today pay less for food than any other item they 
buy. As a result of that, our consuming public has more spendable 
income to buy cars, to buy homes, to provide for their children's 
education. They are not paying 30 percent or 40 percent or 50 percent 
or 60 percent of their income for food. They are paying 13 to 14 
percent, for the highest quality, safest, richest foods in the world. 
That is a result of this marvelous production unit we call American 
agriculture.
  I am proud that this Republican Congress, working with our colleagues 
on the other side, represented that understanding in the current policy 
that is embodied in this omnibus bill with which we will be dealing. It 
is an important area. I am glad our leaders were sensitive to it and 
that we can turn to agriculture and say: We didn't save you, we didn't 
guarantee you, but we recognize the need to shore up, in those areas of 
disaster, and to assure that those units of production--and those are 
family farms; these are people, men and women and their children who 
oftentimes work from daylight to dark--are going to be held as whole as 
we can possibly keep them at a time when farm commodities, because of 
certain situations here and around the world, have plummeted to nearly 
25- and 30-year lows.
  Mr. President, let me run through a few unanimous consent requests 
cleared by both sides of the aisle.

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