[Congressional Record Volume 145, Number 75 (Monday, May 24, 1999)]
[Senate]
[Pages S5788-S5789]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       CRISIS IN THE FARM ECONOMY

  Mr. CONRAD. Mr. President, I rise today to talk about the continuing 
crisis in the farm economy. I have just been home the weekend before 
last. Everywhere I went in my State, people were saying to me: Senator, 
something has to be done. We are facing a crisis in rural America. The 
prices we are getting for things continues to be at very low levels--in 
fact, we have the lowest prices in 53 years--and at the same time 
everything we buy is going up. That is putting us in a cost/price 
squeeze that is truly strangling American farmers.
  The result is going to be devastating unless there is a response. 
Last year, the Federal Government did respond with a $6 billion program 
of disaster assistance that made a significant difference in rural 
America. About half of that money went for a support, a supplement that 
gave farmers some assistance when prices were collapsing. There was 
also a second major element for a disaster program, natural disasters 
around the country that had dramatically reduced farm income. That 
program made a significant difference.
  Those same conditions continue this year. Prices again are at very 
low levels, and we have seen natural disasters once again strike rural 
America. In fact, we now know to deliver on the promise we made last 
year on a disaster program is going to require more money than we 
appropriated. We appropriated about $3 billion for that purpose. We now 
know delivery on the program we passed is going to cost another $1.5 
billion, because the signup of agricultural producers that is now 
completed indicates to us there are far more who are eligible than we 
thought when we wrote the program. That is, of course, because we were 
faced with a moving target. We were faced with additional natural 
disasters that deepened and worsened and made more farmers eligible.
  I believe we need that $1.5 billion to keep the promise made last 
year and another $2.8 billion that will be necessary to give the same 
kind of income support we provided last year, about a 50-percent AMTA 
supplemental.
  Why are these necessary? What is happening out there so those of us 
who represent farm country come to our colleagues and talk about a 
crisis in rural America? Perhaps the best way of showing what has 
happened is this chart that shows what has happened, over a 53-year 
period, to farm prices. As we can see, with spring wheat and barley 
prices from 1946 to 1999, we are now at the lowest level for barley and 
wheat prices in 53 years. That is the hard reality our farmers are 
coping with, the lowest prices in 53 years. We know that earlier this 
year hog prices fell to 8 cents a pound. It costs 40 cents a pound to 
produce a hog.
  To put these prices into some perspective, these are per bushel. We 
are down to a price per bushel of $2.60 to $2.70 for wheat. I know a 
bushel does not mean a lot to many people in our very urban society 
today, but a bushel of wheat weighs 56 pounds. So farmers are getting 5 
cents a pound--actually something less than 5 cents a pound--for the 
product they produce. There is no way you can make it when you are 
getting 5 cents a pound for a product that costs at least 10 cents a 
pound to produce. But that is what is happening to farmers.
  Let me go to the next chart that shows what is happening to wheat 
prices received by farmers in relationship to cost. This green line 
shows the cost of production in 1997. You can see it is just about $5 a 
bushel. That is the cost. That is the best estimate of what it costs 
across the country to produce a bushel of wheat, just above $5. You can 
see the last time farmers were getting above $5 was back in 1996. Since 
that time, in 1997, it was far below the cost of production, and it has 
done nothing but get worse through 1998 and on into 1999. We are far 
below the cost of production. As I indicated, we are running, down here 
at $2.60 a bushel. The cost of production is over $5. It is no wonder 
farmers are saying we desperately need a Federal response.

  Why is it a Federal responsibility? For the entire history of the 
United States, we have recognized the special role of agriculture. We 
have recognized it is subject to dramatic swings in both production and 
prices, because, first of all, it is a product that depends on the 
weather, and the weather is very unpredictable, as we have seen across 
the country for year after year after year. On top of that, we are 
subjected to dramatic price swings. In the last several years, we have 
been influenced by the collapse in Asia; we lost one of our biggest 
customers. We have also seen a financial collapse in Russia. Of course, 
Russia was a key customer of the United States. Those two things have 
had a dramatic and adverse impact on price. You can see it here--prices 
down, down, down--and the cost of production staying up. That has put 
our farmers at an extreme disadvantage.
  While farmers are paying more but receiving less, it is not 
surprising, then, they find themselves in a cost/price squeeze. This 
green line shows the prices farmers paid for various inputs. As you can 
see, the prices farmers had been paying had been going up rather 
steadily. They have actually leveled off in the last 3 years. But look 
at what the prices that farmers have been receiving look like. That is 
this red line. We can see it peaked right at the time we passed the 
1996 farm bill.
  The 1996 farm bill changed everything. It said, instead of adjusting 
what Government provides by way of assistance when prices fall, we will 
no longer do that. The new farm bill said we are going to have fixed 
payments that are sharply reduced year after year no matter what 
happens to prices.
  Here is the pattern we see: the prices farmers pay for goods they use 
to produce products going up; the prices

[[Page S5789]]

they receive going down dramatically. The result is this enormous gap 
between what they are able to buy for, what they have to pay to receive 
goods, and what they are able to get when they sell their goods. This 
dramatic gap, this chasm now, between the prices farmers pay for what 
they have to buy and what they get for what they sell has opened up 
into such a large difference that literally tens of thousands of farm 
families are threatened.
  It would be one thing if the United States was alone in this world, 
if we did not have competitors to worry about, but we do have 
competitors. The Europeans are our chief competitors, and it is very 
interesting to see what they are doing.
  At the very time when we have dramatically cut support for farmers, 
cut support at the very time they are in the greatest need, because the 
gap between what they pay for and what they get has opened up in such a 
very serious way, we have cut dramatically the level of support we 
provide our farmers. In the last farm bill, we cut in half the support 
we provide our farmers. If we look at what our competitors, the 
Europeans, are doing, we see quite a different pattern.
  Our European competitors are spending far more than we are to support 
their farmers. If we go back to 1996, we can see the red bar is what 
Europe is spending in direct support; the yellow bar is what we are 
spending. We can see the pattern all through 1997, 1998, 1999, the year 
2000--and these are projections for 2001 and 2002--that our competitors 
are providing much more support to their producers than we are 
providing ours.
  I conclude by saying we have a crisis in rural America. It requires a 
Federal response. I hope very much before this year has concluded that 
we have said farming is important in this country, that we understand 
it is in crisis, and that we are prepared to respond.
  I thank the Chair, and I yield the floor.
  The PRESIDING OFFICER (Mr. Roberts). The time between 12 noon and 
12:30 p.m. shall be under the control of the distinguished Senator from 
Utah, Mr. Bennett. The Senator is recognized.

                          ____________________