[Congressional Record Volume 146, Number 33 (Wednesday, March 22, 2000)]
[Senate]
[Pages S1556-S1562]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 AGRICULTURE RISK MANAGEMENT ASSISTANCE

  Mr. LUGAR. Mr. President,  today we will debate a matter of special 
significance and timeliness to agriculture producers throughout the 
United States, and that is the subject of risk management legislation.

  During many full committee hearings, a public roundtable and hundreds

[[Page S1557]]

of hours of research and public discussion spanning the past year, 
members of the Senate Agriculture Committee have engaged in active 
deliberation, considering a host of options in providing risk 
management assistance to our Nation's farmers.
  The task has been formidable. Variances in agriculture production, 
regional considerations of weather patterns, and different perspectives 
on farm management have contributed to a most complex and yet 
beneficial discussion.
  The foundation of our efforts was section 204 of the Concurrent 
Resolution on the Budget for fiscal year 2000. Six billion dollars was 
provided over a 4-year period commencing October 1, 2000 for 
agricultural risk management. The basic rationale was that farm 
producers could take action to minimize risk, including severe market 
price fluctuations, and therefore render emergency recovery legislation 
less necessary.
  My colleagues Senator Grassley and Senator Conrad played a major role 
in the Budget Committee's action on risk management and have advocated 
crop insurance legislation offered by Senator Roberts and Senator 
Kerrey that would increase Federal subsidies for crop insurance premium 
payments to make Federal crop and revenue insurance policies more 
affordable for farmers, particularly at the higher levels of coverage.
  In recent months, I suggested that risk management strategy involves 
more than crop insurance. Cash-forward contracts, hedging contracts, 
reduction of farm debt, diversification of crops, conservation, and 
substantial capital land improvements are important risk management 
tools also available to farmers, and hopefully will be utilized by 
farmers.
  As a result of our extended debate on risk management matters in the 
Senate Agriculture Committee, more producers are aware or at least 
reminded of the risk management tools available to them. I am grateful 
for the support so many have shown to my initiative.
  Nevertheless, on March 2 of this year the Senate Agriculture 
Committee acted and approved legislation, principally the legislation 
offered by Senators Roberts and Kerrey, that over the next 4 years 
recommends $6 billion for improving and strengthening the Federal Crop 
Insurance Program, beginning with the 2001 crop. Included in the bill 
is a pilot program providing $500 million in direct risk management 
assistance to farmers who choose to forego crop insurance subsidies in 
a particular year.
  A producer would receive a risk management payment for utilizing 2 
out of 12 risk management options. The legislation also raises premium 
subsidies to make Federal crop and revenue insurance policies more 
affordable for farmers, particularly at the higher levels of coverage. 
The bill eases actual production history so that farmer insurance 
coverage is less likely to be artificially suppressed by successive 
years of bad weather; encourages the development of insurance coverage 
for specialty crops and revenue insurance on a whole farm rather than a 
commodity-by-commodity basis; it eliminates requirements of the area-
wide loss before disaster payments can be made to producers of 
currently noninsurable crops; and it reduces the potential for 
insurance fraud and abuse with strong program compliance provisions.
  In my judgment, it is very important that the Senate act favorably 
and promptly on this legislation. It will provide an important safety 
net component for agricultural producers.
  Let me mention a practical example of how crop insurance works in my 
own situation. There may be others in this body who have been 
purchasers of crop insurance on their farm. The Senator from Iowa, Mr. 
Grassley, comes to mind. I have utilized crop insurance on my farm. Let 
me suggest to the Chair the crop insurance that is now available to 
farmers may insure the yield; that is, take a look at your farm and try 
to make certain that the yield you believe you would normally get is 
going to be there through insurance, or at least as great a percentage 
of that as possible you can insure, and for a premium price you can 
insure that yield. Or farmers can insure the revenue that might come 
from yield and price and take out a policy that might cover that 
situation. Farmers can do both--yield and revenue.
  There have been in the past catastrophic insurance policies. They 
contemplated the loss of over half of the crop. A while back, such 
insurance was required. The requirement was relieved by the farm bill 
of 1996. This is available to farmers to guarantee income to them, 
regardless of the weather or other hazards that might come from nature; 
likewise, hazards that might come from loss of exports as it affects 
the revenue that comes from that farm.
  To take a very practical example, last Friday I was in a situation 
where I was able to make a sale of 2,000 bushels of corn from my farm 
to a grain elevator in Indiana. A commonsense person would ask: But you 
haven't planted the crop yet; where did you get the corn to make a 
forward contract, a promise, to deliver 2,000 bushels of corn? I 
promised to deliver that corn in March of 2001, and I will receive 
$2.57 a bushel for that corn.
  For me, that was a significant contract. That may not be the top of 
the market, but I point out that in our debates on agricultural pricing 
last year, the Chair will recall some debaters pointed out that the 
price of corn had fallen to $1.70 a bushel. Many pointed out that 
effectively there was a floor through the loan deficiency payment of 
about $1.96 for corn farmers throughout the country. That was the 
minimum price for corn in most sections of our country. The current 
cash price for corn in some elevators around the country is somewhere 
between $2.10 to $2.15, as of March, if you are going to deliver.
  I mention this to give some benchmarks. Mr. President, $2.57 is 
obviously much higher than the floor of $1.96 which would still prevail 
in the current crop we are speaking about, much higher than the current 
cash price. That is, obviously, far higher than journalistic accounts 
of how far the price of corn fell last year.
  I was able to make that sale because I have crop insurance. Last 
year, I took out a 65-percent CRC policy, a crop revenue coverage 
policy. That particular policy means, in essence, I can take a look at 
the number of acres I want to plant, the average yield from those acres 
on my farm. The crop insurance people then take a look at the price of 
corn in the December futures as reflected for a period of 30 days; they 
take a look at what happened in the past. In essence, I am guaranteed 
at least that if I want to I can sell my crop in advance and take bold 
maneuvers with regard to marketing.
  That is one of the major purposes of crop insurance. What I have 
described is a fairly simple device used by most farmers; namely, a 
forward contract, based upon the fact you have something to sell and 
based upon the fact the price for corn goes up and down. You can look 
at futures markets. You can look at the trends and make sales. You are 
not left to wait for the elevator price at the time the corn comes in. 
An abundant harvest sometimes puts corn and other grains on the ground 
because elevators cannot handle it or railway cars cannot take it away.
  I mention this because crop insurance is obviously an extremely vital 
part not only of a safety net to make sure farmers are going to have a 
substantial amount of income but as a part of marketing strategy. As a 
part of this debate, we have talked about marketing strategies because 
they are going to be required for most farmers in America to make a 
profit and to do well enough to support their families. It will not 
work for farmers to plant, as they always have planted, whatever does 
well on their land, and to hope that the price will be high at the time 
of harvest. As a rule, price is low at the time of harvest. Unless 
there is a marketing strategy, farmers do not maximize their income, 
and many are not doing very well.
  This is a very important part of the 1996 farm bill legislation. As 
my colleague, Senator Roberts, has pointed out during his chairmanship 
of the House Agriculture Committee, this is a part of the picture that 
was never completely filled in. We have an opportunity to do that 
today.
  The bill Senator Roberts, Senator Kerrey, and their staffs have 
researched, and which I support, calls for higher possible percentages. 
I spoke of a 65-percent policy which I took out last year, but higher 
percentages are

[[Page S1558]]

possible. Of course, that means higher premiums.
  The bill before the Senate lessens those premiums to farmers by 
offering a much stronger subsidy. There is a certain inversion of the 
subsidies. By that I mean, if farmers reach out for more safety, 
farmers receive more support from this bill. The point is to try to 
persuade farmers to take seriously the safety net provided by crop 
insurance risk management tools. This bill goes a long way to offering 
those incentives.

  Let me take, once again, a concrete example anecdotally from my own 
situation last year. The premium for my crop insurance on my corn crop 
was $1,700, quoted by the crop insurance salesman out in Indiana. 
Ultimately, I paid about $700-plus. The subsidy to the policy was about 
$1,000. That is a very strong inducement to take crop insurance 
seriously.
  In my home State of Indiana last year, approximately 44 percent of 
farmers did take crop insurance seriously, although many at much lower 
levels--some at simply the catastrophic level, at a very low premium. 
Therefore, even after we pass this legislation, which I hope we will 
do, and confer with the House--they have passed legislation that is 
very similar to this--and enact this so it comes into force prior to 
the fiscal year that begins the first of October, each one of us will 
have an obligation to visit with our farmers, to visit with the 
extension offices of our agricultural universities and others, to 
explain the possibilities that are there for risk management for a very 
large safety net provided in the farm bill and provided by the Budget 
Committee for these next 4 years.
  This is an extraordinary opportunity. We owe it not only to the 
country to pass legislation, but we owe it to our farmers to make sure 
our advocacy reaches a new level of information and education about 
very constructive legislation.
  I yield the floor for my distinguished ranking member of the 
Agriculture Committee. In due course, I know Senator Roberts will want 
to be heard, and should be heard, and Senator Kerrey, who have been 
largely responsible for fashioning portions of this bill.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. HARKIN. Mr. President, I thank the chairman for his leadership 
and graciousness on this bill and for working hard to get it out on the 
floor in a timely manner. I am hopeful that we can dispose of it fairly 
rapidly today and move on.
  We are here considering passage of a crop insurance reform bill that 
we just reported out of the Agriculture Committee on March 2. It has 
been a long and difficult journey to get to this point, not the least 
because we had a lot of good ideas from Members of this body and of the 
committee. I think there were no fewer than six comprehensive bills 
introduced on this issue. I would like to think the bill we will have 
at the desk shortly incorporates the best provisions of each of them. I 
am sure our colleagues in the House are eager for us to finish our work 
on this because they passed their crop insurance bill last September. 
So hopefully we can get this passed and get to conference and get this 
thing wrapped up.
  The bill we are going to have before us shortly, S. 2251, takes 
advantage of the opportunity offered by last year's budget resolution 
to apply $6 billion to a reform of the Federal crop insurance system. 
This effort probably has taken on some added urgency recently due to 
the low commodity prices faced by our farmers. But I caution my 
colleagues not to place too much emphasis on the potential role of crop 
insurance in remedying those problems. When the last set of crop 
insurance reforms were passed in 1994, this program was complemented by 
a number of others which together comprised what was called the farm 
safety net. Much of the countercyclical element of that safety net was 
removed by Freedom to Farm, laying the foundation, I think, for some 
unreasonable expectations about the ability of crop insurance to offset 
the effects of an agricultural economy that went south. I do not mean 
geographically.
  Aside from problems in the general farm economy, which crop insurance 
was never intended to deal with, the last few years have exposed other 
weaknesses in the program, which this bill does attempt to address. 
First of all, although the program currently covers about two-thirds of 
acreage for eligible crops, much of that coverage either represents 
catastrophic policies or policies at the lower levels of buy-up 
coverage. This bill offers enhanced subsidies for the purpose of buying 
crop insurance. Under the current system, the percentage subsidy peaks 
at the 65/100 level, making farmers eat a 35-percent loss of crop value 
before they qualify for any relief. We want to encourage farmers to 
insure their crops at a higher level of buy-up, which we hope will have 
the effect of reducing the probability of future ad hoc disaster relief 
programs. We are also equalizing premium subsidies for revenue 
insurance coverage, which Iowa farmers have eagerly adopted. In 1999, 
Crop Revenue Coverage and other revenue products covered more than 60 
percent of insured acres in my State of Iowa, I might add, the highest 
percentage in the country. The revenue insurance concept was one of the 
best things to come out of the 1994 reform, and I want to thank those 
at USDA and the private sector who did the hard work to make it 
available.
  In addition, this bill includes provisions which fixes APH problems 
associated with multi-year natural disasters, makes the Noninsured Crop 
Disaster Assistance Program more attractive, and offers greater support 
and flexibility in conducting research and development of new crop 
insurance products, especially for specialty crops. On the 
administrative side, it strengthens oversight of the industry and 
penalties for noncompliance and fraud, clarifies reporting 
requirements, makes changes to the structure of the Board of Directors 
of the Federal Crop Insurance Corporation, and requires USDA to pay 
more attention to regions of the country where crop insurance is not 
viewed as an attractive option.
  Chairman Lugar offered a competing vision for addressing concerns 
about crop insurance and risk management for farmers. His approach was 
to encourage farmers to adopt a wide range of risk management 
practices, rather than focus just on crop insurance. In the spirit of 
compromise, this bill included a $500 million risk management pilot 
within the substitute amendment offered and passed in committee, and I 
look forward to what USDA learns from implementing this program for 3 
years, assuming it will be implemented into law.
  I am pleased that the committee adopted an amendment I offered during 
markup which restores the conservation compliance requirement for crop 
insurance, which passed by voice vote. I do not believe it is 
unreasonable to treat crop insurance and risk management payments in 
the same way as we treat FSA loans, disaster payments or any other USDA 
benefits. For all those other benefits, farmers do have to comply with 
conservation programs. That is especially so considering that crop 
insurance is already a substantial USDA program, costing nearly $2 
billion a year. With this legislation, we will add about $1.5 billion a 
year in additional spending for crop insurance and risk management 
programs. It seems only right that for some $3.5 billion a year, we 
should be doing all we can to ensure the programs are also promoting 
conservation of our precious soil and water.
  We also worked to strengthen the risk management program by adding 
resource management practices and organic farming as eligible options, 
and instructed the Risk Management Agency to view scientifically sound 
sustainable and organic farming practices as good farming practices.
  All in all, I think this crop insurance bill is a good piece of 
legislation. I especially want to compliment my colleagues, Senator 
Kerrey of Nebraska and Senator Roberts from Kansas, for their strong 
leadership in a bipartisan manner on this bill. I believe they have 
engineered and built a good bill, a bill that will help us in all parts 
of the country in those things I just spoke about--everything from 
specialty crops in one area to the big wheat and grain crops in other 
parts of the country--with the provisions in there that mandate that 
USDA is to find new ways of making crop insurance more attractive in 
those areas of the country that have low sign-up rates. Finally, I 
think the

[[Page S1559]]

vision of both Senator Roberts and Senator Kerrey in getting the 
subsidies for the buy-up--that really is the heart and soul of this 
bill to ensure that farmers will have a better deal when they buy up 
their risk coverage for their crops and their crop insurance programs.
  It is a good bill. It deserves the support of the Senate. Hopefully, 
we can get it up, and hopefully get it through in due course yet today.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Gregg). The Senator from Kansas.
  Mr. ROBERTS. Mr. President, as has been indicated by my colleagues, 
the distinguished chairman and ranking member of the Senate Agriculture 
Committee, we have before us--we do not have before us, but we would 
like to have before us S. 2251, entitled the ``Risk Management for the 
21st Century Act.'' It has been certainly aptly described by the 
distinguished chairman and Senator Harkin.
  This legislation is a slightly modified version of a bill by the same 
name; that is, S. 1580 which was introduced by Senator Kerrey and 
myself last fall. It was supported by a large number of our colleagues.
  Our farmers and ranchers have to deal with multiple threats of 
weather and pests and disease that few, if any, businesses must 
experience on a daily basis. As we all know, it can often be a very 
brutal up-and-down cycle, a real price roller coaster that our farmers 
and ranchers must face. To get through these cycles, our producers must 
have crop insurance and risk management tools at work.
  This bill represents a real personal effort on my part and that of my 
staff, as well as Senator Kerrey and other colleagues.
  But it was about 20 years ago that my predecessor in the House of 
Representatives, the Honorable Keith Sebelius, cast the deciding vote 
to create the Federal Crop Insurance Program. Since that time, it has 
been almost 20 years now we have gone through numerous reforms to get 
this right. This has been a personal commitment of mine for some time.
  If you sit on the wagon and listen to farmers, regardless of which 
region they come from, or what commodity they are involved in, time and 
time again they have come to us and said it is time for major reforms 
in the program.

  Two years ago, Senator Kerrey and I agreed to work together on this 
issue. I said: Bob, do you think we can do this?
  He said: Well, we don't have any other alternative but to try.
  Tackling the national and comprehensive Crop Insurance Program has 
been--I don't know--sort of like pushing a rope. But we certainly 
agreed on the issue. We have been working on this legislation with able 
staff and with the help of the chairman and the distinguished ranking 
member. We have been working on this for nearly 18 months nonstop.
  We began the effort in earnest when we gave every farm, commodity, 
lending, and insurance group the opportunity to provide their 
suggestions for improvements in the Crop Insurance Program. We asked 
everybody--we cast a wide net: How do you want to improve this?
  The response to this call for comments was overwhelming. The comments 
we received certainly gave us a clear and common direction in which we 
needed to go in regard to this legislation.
  Who am I talking about? If I could find the list here because we have 
a letter dated just a couple of days ago:

       As organizations representing farm, lending, and insurance 
     industries, we are writing to strongly urge that the Senate 
     pass the recently reported Senate Agriculture Committee crop 
     insurance risk management bill.

  We have the American Association of Crop Insurers, the American 
Bankers Association. Don't forget, this is a lender's issue as well. 
This is an issue that affects the lending institutions. Many of them 
simply will not continue to go down the road on behalf of our producers 
without what they believe is reasonable crop insurance.
  We have the American Farm Bureau Federation, the American Feed 
Industry Association, the American Nursery and Landscape Association--
let me repeat that--the American Nursery and Landscape Association. Why 
am I saying that? Because that particular group represents, in many of 
the Northeastern States, the No. 1 major agriculture interest. I 
understand there is some concern on the part of those from the 
Northeastern part of our country that perhaps their needs have not been 
addressed to the extent that they believe would be commensurate with 
proper reform.
  We have the American Soybean Association, the Crop Insurance Research 
Bureau, the Farm Credit Council, the Independent Community Bankers 
Association, the Independent Insurance Agents of America.
  I do not mean to get too tedious, but this is a long list of 
everybody involved in agriculture who has come to the conclusion that 
this bill is a good bill and we should pass it.
  We have the National Association of Wheat Growers, the National 
Barley Growers Association, the National Corn Growers Association, the 
National Farmers Union, the National Grain Sorghum Producers, the 
National Pork Producers Council, the National Sunflower Association, 
the National Association of Professional Insurance Agents, the Rural 
Community Insurance Services, the Society of the American Florists. If 
Members will vote for this, they will get a floral bouquet, as well as 
bouquets of credits from all these organizations.
  We have the U.S. Canola Association. I could go on with other lists, 
but I think I have made my point.
  These groups told us to do the following. This also represents all 
the producers from all regions of the country, every commodity group, 
that told us, No. 1, to make higher levels of coverage more affordable. 
We want to encourage our farmers and ranchers to buy up more crop 
insurance, certainly not less.
  Second, to provide an equal subsidy for both yield and revenue 
insurance products. It is the revenue insurance product that may well 
be the foundation for the next farm bill. I am not saying that will be 
the case, but certainly that is an option. So to improve those 
products, it seems to me, is very important.
  The chairman has gone over this in his remarks.
  Third, to develop steps to address the problems associated with a 
lack of production history for a farmer that is just beginning and 
concerns that an adequate policy does not exist to address multiple 
years of disasters. How many times have we had a farmer come and 
testify before the committee and say: Look. I can't get any crop 
insurance. I have been hit. The Good Lord was not willing, and the 
creeks did rise or they didn't rise, and we got into all sorts of 
multiple disasters and I could not get the crop insurance.
  Fourth, the creation of new and expanded crop insurance policies for 
specialty crops and improvement in what is called the Noninsured 
Assistance Program, which covers many specialty crops.
  I am going to come back to that because when we put together this 
bill, Senator Kerrey and I knew we had to reach out to every region of 
the country. We knew there was a lot of consternation and frustration 
on the part of Members who represented farmers from the Northeast and 
producers also from the South that the current Crop Insurance Program 
was not favorable to their interests, that it was discriminatory.
  So we sat down with staff. I remember in one of the first meetings we 
had, why, Senator Kerrey told me: Pat, we have to reach out to these 
groups. We have to cover the specialty crop producers, more especially, 
since the Northeast and the Eastern part of the country went through 
such tough times in regards to last year and the drought.
  We have tried to do that. It seems to me to be a paradox of enormous 
irony that the very region of the country we are reaching out to, now 
we have distinguished Senators who are privileged to represent the 
farmers and the ranchers and the producers, the specialty crop folks 
from that part of the country, saying: Well, wait a minute. We're 
worried that this bill does not address our concerns. Address them? We 
reached out to them. This is the most favorable crop insurance reform, 
I won't say that could be imagined, but these are the very folks to 
whom we reached out.

[[Page S1560]]

  Next the farmers told us: We want some increased emphasis in 
specialty crop policy research and development; use the good offices 
and the expertise and skill of the Department of Agriculture for pilot 
projects with regard to research and development for specialty crops, 
not only the program crops, the wheat, barley, corn, and feed grains, 
all of that, cotton and rice, but the specialty crop folks; they 
deserve that. And that is in the bill.
  They asked for major changes in the Federal Crop Insurance 
Corporation's board of directors, more farmer input, if you will. That 
has certainly taken place.
  They asked to streamline and remove the roadblocks in the product 
approval process. Somebody could come up with a new pilot project and 
it would lay around 6 months, 8 months, a year, and we couldn't get any 
approval. We have deadlines now to be approved.
  We take some significant steps to address the fraud and abuse of the 
program. The chairman has pointed out that we don't want a situation 
where if you are going to reform crop insurance, you simply encourage 
people from challenged lands, if that is the proper term for it, to 
farm the program, if you will. We have very strong language in regard 
to fraud and abuse. I cannot imagine any producer who, once they take a 
look at the penalties, would ever go down that road.
  It is my hope the bill does all the things I have said and more. I 
have the rest of my statement here. I will not ask that it be put in 
the Record at this point because I would rather simply go into the 
details when we have the bill before us and have a time agreement. I 
hope we can get the time agreement.
  Again, I think it is a paradox of enormous irony that when you reach 
out to certain sections of the country, you find yourself in a real 
quandary. You scratch your head and have a lot of frustration. You have 
some degree of concern that Senators from the very part of the country 
you have included in the major crop insurance reform--and by 
``included,'' I mean asking those Senators and their staff to come to 
us and to provide some answers; they have done so, and we have put it 
in the bill. Now it seems that this is where the concern is coming 
from, and we are holding up the bill.
  I can go into all of the provisions we have for specialty crops; 
i.e., the matter of concern with regard to folks in the Northeast. I 
will not do that. I am going to save that until we have some of the 
Senators on the floor to point out to them just what we have done. But 
there are four big ticket items, and additional items of interest, 
about 15 of them. I think it is very salutary to the concerns of 
producers in that area.
  Both Senator Harkin and the chairman of the committee, Senator Lugar, 
indicated that this bill should be on the unanimous consent calendar. 
We had the debate in the committee. The chairman had a different 
approach in regard to a risk management approach. It was a very 
legitimate option. We have committed some funds to see if we can go 
forward with that kind of option step by step. But the majority of the 
bill pretty much mirrors what they have done in the House.
  Now, how did the House do this? Did they have a big debate? Did 
regions of the country have some problems with this? No, the House of 
Representatives, in their infinite wisdom, passed this by unanimous 
consent.

  With all due respect to my colleagues in the other body, a body in 
which I was privileged to serve, they have a lot of trouble deciding 
when to adjourn, let alone doing anything by unanimous consent. I hope 
they take that in the spirit in which I say those comments.
  They passed it by unanimous consent. That means any one Member out of 
435 could have stood up and objected. Nobody did that because they knew 
that this was on the agenda. We promised this 4 years ago, the 
editorial ``we,'' both Democrats and Republicans, when the new farm 
bill was passed. Despite all of the criticisms we have heard in regard 
to the new farm bill--and this is not the time to get in to that 
discussion or debate--both Senator Lugar and I held up the chart--
certainly Senator Lugar referred to it--which said, if you go to a more 
market oriented farm policy, these are the things you have to have with 
it to give the farmer the risk management tools to compete. It was 
supposed to be done 4 years ago after the 1994 reform.
  We did not do that, ``we'' meaning the administration and leadership 
on both the Democrat and Republican side. We all bear part of that 
responsibility. There were honest differences of opinion. Sometimes 
things take a little longer. But if the House of Representatives can 
pass this by unanimous consent without one objection, what are we doing 
here holding up this bill, especially when we are reaching out to the 
very people who are raising the objections.
  If Senators have some problems with this, please come down and talk 
to Senator Kerrey and me and the distinguished chairman and Senator 
Harkin. We think we have some very good answers for you. We think we 
have done what you want us to do. I don't know when enough is not 
enough, but it seems to me we ought to do that.
  One of the biggest reasons why we should do this, you never know what 
the weather is going to do. You never know when a section of the 
country could be hard hit. We provide that assistance under disaster 
bills. Ours is not a disaster bill. It addresses some of the concerns 
farmers have in regard to going through disasters in that it gives them 
a risk management tool. They control that, along with their lender and 
their insurance company. They can better guard against the natural 
disasters that can happen. But everybody here knows what has happened 
when we have a disaster, more especially in the even-numbered years. 
When we have a disaster, it is a disaster to try to devise a disaster 
program that is fair and is equitable. That was a concern on the part 
of the Senators from the Northeast during the last disaster bill that 
was passed in the last year to provide assistance to hard-pressed 
farmers. They believe they were discriminated against. I think they 
have a point. But the proper way to address that is not on the crop 
insurance reform we have constructed to be in their best interest. That 
is a separate issue.
  If we passed the crop insurance reform and the money is in the budget 
through the efforts of the good Senators mentioned by the distinguished 
chairman, we have $6 billion there. It is not over budget. But if we 
have add-ons with different amendments, obviously we will be over 
budget. That is not the answer to this.
  In addition, if you have the crop insurance risk management tools in 
place, in my personal view, you are not going to have the tremendous 
need or the tremendous support for annual disaster bills. We got along 
for 2 years, I think, after passage of the farm bill, where we didn't 
have to spend $1 for disasters. Obviously, we have a lot of folks who 
would predict that it doesn't happen every year. But if the farmer has 
the proper risk management tools, yes, it is going to cost some money, 
but it will save the taxpayer much more money in the long run rather 
than treating this on an annual basis in terms of disaster bills. This 
is in the best interest of the taxpayer.

  I think I have pretty well made my point. I will save the rest of my 
statement when we do get agreement. I will say again that I hope we do 
get the agreement soon.
  I wish to pay special credit to Senator Kerrey and to his assistant, 
Bev Paul, along with a young man who assisted me in this effort, Mike 
Seyfert. They have worked day after day, hour after hour, back and 
forth between every commodity group, every farm organization, every 
Senator, every region. It has been tedious work. How many Senators will 
get a blind phone call from somebody trying to sell you insurance? I 
think probably insurance is not the most favorable topic about which to 
be talking. Crop insurance does tend to be a high glazer, as we can see 
by the lack of colleagues on the floor. So they have taken this rather 
tedious subject, this detailed and complex subject and have worked out 
a major reform.
  Senator Kerrey has done a splendid job. We have both, as I said 
before, tried to truly listen to our producers to come up with 
something we think will be the answer.
  I think this is one of the major reforms in farm program policy. I 
thank Senator Kerrey and the dedicated staff, both his and mine, and 
certainly the staff of Senator Lugar. We have worked through a very 
difficult time. Well, now is the time. As I said, we

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ought to do it by unanimous consent. I hope we can get this thing done 
and we can work out the agreement. I know people are working overtime 
to get this done, but tempus and the weather fugit. That means we can't 
dilly-dally around with this.
  I must say, given the considerations that it is an even numbered year 
and the amount of angst and frustration on the part of our farmers and 
ranchers, this has been promised for years. So the people who hold up 
this bill should know there is a groundswell of support for the bill, 
and there will also be, I suspect, a tad bit of criticism for the 
people who are holding it up. That is just a thought.
  At this point, I yield the floor.
  The PRESIDING OFFICER. The Senator from Nebraska is recognized.
  Mr. KERREY. Mr. President, I thank Chairman Lugar. He has done great 
work in allowing the process to come forward and allowing suggestions 
on how to improve crop insurance and make it more responsible. There 
has been some abuse of the program. Senator Roberts talked about it, 
and he has been a champion on that problem. We don't want a program 
that encourages people to farm for insurance rather than actually 
produce a crop. His suggestion to produce a program that gives people a 
variety of options that includes crop insurance, I think, is an 
improvement in the risk management offering to provide the farms and 
ranchers in the United States of America.
  I also thank Senator Leahy. I understand he spoke yesterday. In the 
Northeast, although there is only 2 percent of the farm land and 6 
percent of the dollar value of crops produced on an annual basis, it is 
still important. There are farms in New Hampshire, Vermont, upstate New 
York, and New Jersey. They are concerned; they have expressed those 
concerns. We have taken their concerns into account. The House bill 
does not, I should point out to those from the Northeast. We have 
accommodated those concerns, unlike the House. You will see it if you 
look at the language of the legislation.
  I thank Senator Roberts. It has been fun working with him. I think we 
have produced a piece of legislation that will provide producers with 
what they have been asking for, at least in Nebraska--the most 
important.
  We have been blessed in the United States with a successful 
agriculture strategy over the last 100 years. But it has lulled us to 
sleep in many ways.
  We are hoping to get an agreement on the bill. I ask my colleagues to 
take this opportunity to discuss agriculture in general. There are so 
many misconceptions about agriculture. It is seen as sort of an old 
policy. Agriculture is oftentimes seen as a special interest when, in 
fact, out of an $8 trillion economy, agriculture still accounts for a 
trillion dollars of that. Nearly 1 out of 8 jobs--almost 20 million 
jobs--in the United States are there as a consequence of the food and 
fiber grown on the farms and ranches of the United States of America. 
It is quite a remarkable success story. We take it for granted too 
often.
  In this morning's New York Times there is an article by an economist 
by the name of Paul Krugman, talking about an issue that is quite hot: 
genetically modified organisms. Mr. Krugman, quite accurately, said 
that many of the opponents of GMOs are people who don't understand that 
it is the application of technology that has not only made our food 
better but made it affordable and relatively easy to acquire. It is 
almost nothing if you want to order the food that you can't get in 
relatively short order as a consequence not just of the way we produce 
food, but the way we distribute it, transport it, store it, and the way 
we process it. It is quite a remarkable success story and still 
accounts--even with declining sales internationally--for the most 
impressive part of our trade story. In fact, about the only good news 
right now in the trade story is we still have a slight surplus with 
agricultural exports. We tend as a consequence to take agriculture for 
granted and sort of see it as a marginal part of the economic debate.
  Agricultural policy should be front and central to any economic 
strategy. Producing a trillion dollars in output and producing 20 
million jobs is obviously significant to those of us who have portions 
of our economy dependent upon agriculture in our States, and it is 
obvious to us that it is a part of the new economy. The Senator from 
Indiana can talk eloquently about it because he still has an active 
farm. But you don't achieve success on a farm today without applying a 
significant amount of technology, without being a part of the new 
economy, without using computers, without being able to know exactly 
what your costs are, and without being able to know how to market and 
where the market is. There is almost nothing that is taken for granted 
today when it comes to production agriculture.
  So it ought to be a central part of our economic strategy. I know we 
attempted not just to accommodate but to take into account the concerns 
of States that don't have as much agriculture but are still important, 
such as the Northeast, where, as I said, it is only 2 percent of the 
agricultural land in production and 6 percent of the total dollar 
output; it is still important for a lot of reasons, both economic and 
social. As we try to figure out our economic strategy, it ought not to 
end up on some shopping list down there with a list of 30 or 40 things 
that people want to get done.

  The unfortunate part of agriculture is that there is considerably 
more risk. That is what this legislation does. I want to talk about 
that risk because I get asked about this in urban environments in 
Nebraska, such as Omaha, Lincoln, Hastings, or some other smaller 
communities. Oftentimes, they say: Why do we have a special program? 
Why do we do crop insurance at all? Why do we have a Government-private 
sector partnership to help farmers manage risk? What makes them special 
or different than us?
  There is an answer that may not be readily apparent, although it is 
quite obvious to those of us who are from States where there is an 
awful lot of production agriculture. The answer is, unlike all other 
manufacturing businesses, agriculture is at risk to the weather. I am 
in business. I have restaurants and health clubs.
  In 1975, on the 6th of May, at about 4 o'clock in the afternoon, a 
tornado came up out of the Northwest. We had been in business a little 
over 2 years. The tornado blew us away; it completely destroyed our 
business. We had to start again from scratch. It happened in May, and 
we reopened 18 weeks later. We didn't even lose the 4 months sales we 
thought we were going to lose because we opened with greater volume. 
But if I am running Dick Lugar's farm and a tornado comes through, it 
can take away not just 4 months' revenue but an entire year's revenue.
  It is different. In my restaurant, I control the environment. I don't 
suffer declines as a consequence of drought, as we are currently 
experiencing in the State of Nebraska. I don't suffer as a consequence 
of all the different changes in the weather that can put the crop of a 
farmer or ranch unit at risk. So there is considerable risk, which is 
different than in other kinds of businesses. No other manufacturing 
business produces its product out of doors, and no other manufacturing 
business is at risk of losing an entire year's revenue as a result of 
too much water, too little water, rain, hail, and all the other sorts 
of things that can happen that cause a producer to lose an entire 
year's income.
  In addition, very few businesses have the economic situation that 
agriculture does. That is to say, just a little more supply than what 
is necessary will cause prices to go down. It is just a slight more 
supply than is needed--if you produce, say, 15 or 20 percent more than 
what the market will absorb in a single year's time, the price will go 
down sharply. There is tremendous sensitivity to excess production.
  In Mr. Krugman's excellent observation this morning in an op-ed piece 
in the New York Times, he said the very people who tend to oppose GMOs 
are the people who are least likely to be able to produce food on their 
own and who have benefited from the application of technology and the 
consequence of lower prices, greater quality, and greater accessibility 
to food. They have no difficulty getting food. They live in relatively 
wealthy nations, and they are not going to suffer as a consequence of 
not bringing the GMOs on line. It will be the poor, less developed

[[Page S1562]]

nations that will suffer the consequence. It is easy for Prince Charles 
to oppose GMOs.
  We find ourselves in a short supply-and-demand situation where 
consumers are basically saying: We don't want our farmers and ranchers 
to produce less than what we want. We don't want to be short of food. 
We don't want prices to go up too high. We have a policy--it is 
especially true with large processors--where processors not only want 
prices to be stable but prefer prices to be in the lower range, if 
possible. That is always good business. You try to keep your costs 
under control. If we overproduce, the prices are always going to be on 
a downward pressure.
  This legislation, the Risk Management for the 21st Century Act, 
allows the continuation of the development of products that are offered 
to farmers to manage the risks of price declines and revenue losses 
coming from changes in the market over which they have no control.
  The Senator from North Dakota talked about currency fluctuations at 
great length when we discussed trade agreements and trying to get 
something in trade agreements that allow us to accommodate the sort of 
things that we saw after NAFTA with the peso decline. We found 
ourselves at a significant disadvantage as a consequence. These 
currency declines can have a tremendous impact on the earning ability 
of our farmers. It is a risk that the farmers of America have to 
manage.
  In this new and improved crop insurance proposal, we will have an 
increased likelihood, in my view, that market-oriented products will 
enable a producer to manage the risk of loss of income due to 
unexpected and uncontrolled declines in their income associated with 
price declines. Also, those products will be developed and available to 
the market. Not only do we increase the subsidies and make it more 
likely that people will buy, but we also provide risk-minded options. 
We make changes in the existing crop program. Key among them is we 
restructure the risk management agency to make it more likely that 
products will be brought to market more quickly. It is more likely to 
be market-oriented as well.
  My hope is that we can move this legislation--as Chairman Lugar and 
Senator Roberts have indicated, and earlier Senator Harkin spoke, and 
we could not have developed this piece of legislation without the 
distinguished ranking member as well--and pass a good, strong bill that 
is beneficial to all regions of the country so that it is more likely 
to come out of conference as a bill that is closer to what the Senate 
has. The House, as I said, does not have many of the provisions that 
the Northeastern Senators have been talking about. We did in ours. My 
hope is that we can pass this piece of legislation with a large 
influence and in a positive way for the conference.
  The PRESIDING OFFICER. The Senator from Indiana.

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