[Congressional Record Volume 146, Number 36 (Tuesday, March 28, 2000)]
[Senate]
[Pages S1807-S1809]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE FREEDOM TO FARM ACT
Mr. WELLSTONE. Mr. President, as much as I hate to recognize this,
this is the fourth anniversary of the passage by the House and the
Senate of the ``freedom to fail'' bill.
On this date in 1996, both houses of Congress approved a new farm
bill, described then as ``the most sweeping change in agriculture since
the Depression. It would get rid of government subsidies to farmers
over the next seven years.''
The bill has made sweeping changes in agriculture--it has produced
one of the worst economic crises that rural American has ever
experienced. Thanks to the Freedom to Farm, or as I call it the Freedom
to Fail Act, tens of thousands of farm families are in jeopardy of
losing their livelihoods and life savings.
The Freedom to Farm bill is not saving tax payers money, in fact we
have spent $19 billion more in the first 4 years of the 1996 farm bill
than was supposed to be spent through the 7 year life of the law.
However, what has resulted is the precipitous loss of family farmers
because this legislation has not provided
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small and moderate sized farmers with a safety net. Instead payment
loopholes have been inserted in legislation that has allowed the
largest argibusiness corporations to receive the lions share of
government support. This is unacceptable.
In my State of Minnesota, family farm income has decreased 43 percent
since 1996 and more than 25 percent of the remaining farms may not
cover expenses for 2000. Every month more and more family farmers are
being forced to give up their life's work, their homes, and their
communities.
The primary problem is price. The average price paid to producers for
their crops has plummeted. Farmers suffer from a negative cash flow. In
Minnesota it costs $2.50 to grow a bushel of corn. Today the price of a
bushel of corn in Minnesota sells at around $1.75 at the local
elevator.
The forecast for prices is gloom. USDA projections for commodity
prices are expected to remain low.
USDA estimates that farm income will decline 17 percent this year if
Congress does not act.
Wheat prices have dropped $3 in the past 2 years. In May, 1996,
wheat was selling $5.75 per bushel. Today, wheat is at $2.78 per
bushel. This is well below the cost of production. Farmers need at
least $4 a bushel to break even.
Soybean prices will probably average under $5 a bushel. Livestock and
dairy prices are also being impacted. Hog farmers still face market
prices below their costs of production for the third straight year.
Family farmers have struggled to survive as the devastating results
of the 1996 Farm bill, exacerbated by the lack of a reliable farm
safety net.
In addition, merger after merger in the agriculture sector leaves
producers wondering if they will be able to survive amidst the new
giants of agribusiness.
As a direct result, rural bankers, implement dealers, and other small
businesses that rely on farm families as their customers have been
squeezed as cash flows have dropped. Rural families with shrunken
incomes have less money to pay for quality health care coverage and
adequate child care for their children. There is an affordable housing
crunch as urgent as in our urban areas. And finally, in our rural
communities there is a lack of good jobs at decent wages.
The crisis is real. You can see it in the numbers. You can see it in
the eyes of the scores of farmers who are forced to sell off the
substance of their history and their livelihood.
Many compare the current farm crisis to the 1980's. We all know there
was a massive shake out of family farmers at that time. It changed the
face of rural America. Many communities were devastated and have not
recovered. I assume many use the comparison to remind us that the
distressed farm economy in the '80's somehow survived, and so farmers
will survive this one too. But the crisis we now face is much graver
than in the 80's, and I fear that family farmers and rural America will
not survive.
The tough farm economy may resemble the agricultural crisis of the
1980's, but there is a notable difference, and that difference is
namely the passage of the Freedom to Farm Act. The Act ignored the fact
that family farming is a business both uniquely important and uniquely
affected by nonmarket forces.
The Freedom to Farm has become Freedom to Fail.
The 1996 Freedom to Farm bill was suppose to wean rural America from
subsidies by introducing a market-driven agriculture. The bill gave
farmers flexibility to plant what they wanted, and it was to make
farmers able to adapt to a slump in a particular commodity by switching
to a more profitable crop. But the switch in crops doesn't make a
difference if they are all drastically low.
We are now witnessing many farmers planting soybeans. Why is that so
many farmers are planting soybeans? It isn't because the market demands
soybeans. It is because the Freedom to Fail bill capped the loan rate
on soybeans higher than other commodities, and so farmers are planting
soybeans to get a better rate than from corn or wheat. This is not
market driven agriculture.
The Freedom to Farm bill is not saving tax payers money, as I've said
we have spent $19 billion in the first 4 years of the bill than was
supposed to be spent through the 6-year life of the law. However, what
has resulted is the precipitous loss of family farmers because this
legislation has not provided small and moderate sized farmers with an
adequate safety net.
Instead payment loopholes have been inserted in legislation that has
allowed the largest agribusiness corporations to receive the majority
of government support. This unacceptable.
In order to ensure that family farmers remain a part of this
country's landscape, need a new farm bill now. We simply cannot wait
until reauthorization in 2002 for Congress to act.
Congress must act now to address the impact of plummeting farm
incomes and the ripple effect it is having throughout rural communities
and their economic base. Farmers are not going to survive if the only
help they get from Washington are inadequate, unreliable, long delayed
emergency aid bills that are distributed unfairly.
We need policies that equip family farmers to withstand the low
prices and weather disasters that are fueling the current farm crisis,
so their livelihood is not dependent on the whims of Congress.
This crisis is a crisis of price. Farmers want and deserve a fair
price. Farmers do not want a handout. Yet, the 1996 Freedom to Farm
bill stripped farmers of their marketing tools, and they have been left
empty handed.
People cannot--they will not--be able to survive right now unless
there is some income stabilization, unless there is some safety net,
unless there is some way they can have some leverage to get a decent
price in the marketplace. That is the missing piece of Freedom to Farm
or Freedom to Fail. Flexibility is good. But that has not worked, and I
see it every day in every community that I am in.
I'm not talking about AMTA payments, which is severance pay for our
Nation's farmer heritage. Our Nation's family farmers want--they
desperately need some leverage in the marketplace to get a fair price.
We need to lift the loan rate. The Freedom to Fail Act capped
marketing loans at artificial levels so low that they fail to offer
meaningful income support. The loan rates have left farmers vulnerable
to the severe economic and weather related events of the past 3 years,
resulting in devastating income losses.
Family farmers deserve a targeted, countercyclical loan rate that
provides a meaningful level of income support when the market price
falls below the loan rate, and a loan rate with a CUP rather than a CAP
so it doesn't merely track prices when they fall. Lifting the loan rate
would provide relief to farmers who need it and increase stability over
the long term.
We also need to institute farmer owned reserve systems to give
farmers the leverage they need in the marketplace. And conservation
incentives to reward farmers who carry out conservation measures on
their land.
And finally, unless we address the current trend of consolidation and
vertical integration in corporate agriculture, nothing else we do to
maintain the family size farms will succeed.
The farm share of profit in the food system has been declining for
over 20 years. From 1994 to 1998, consumer prices have increased 3
percent while the prices paid to farmers for their products has plunged
36 percent. Likewise, the impact of price disparity is reinforced by
reports of record profits among agribusinesses at the same time
producers are suffering an economic depression.
In the past decade and a half, an explosion of mergers, acquisitions,
and anti-competitive practices has raised concentration in American
agriculture to record levels.
The top four pork packers have increased their market share from 36
percent to 57 percent. In fact, the world's largest pork producer and
processor is getting bigger. Smithfield Foods is buying the Farmland
Industries plant in Dubuque, Iowa. This deal should be complete by mid-
May.
The top four beef packers have expanded their market share from 32
percent to 80 percent.
The top four flour millers have increased their market share from 40
percent to 62 percent.
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The market share of the top four soybean crushers has jumped from 54
percent to 80 percent.
The top four turkey processors now control 42 percent of production.
Forty-nine percent of all chicken broilers are now slaughtered by the
four largest firms. The top four firms control 67 percent of ethanol
production.
The top four sheep, poultry, wet corn, and dry corn processors now
control 73 percent, 55 percent, 74 percent, and 57 percent of the
market, respectively.
The four largest grain buyers control nearly 40 percent of elevator
facilities.
By conventional measures, none of these markets are really
competitive. According to the economic literature, markets are no
longer competitive if the top four firms control over 40 percent. In
all the markets I just listed, the market share of the top four firms
is 40 percent or more. So there really is no effective competition in
these processing markets.
But now, with this explosion of mergers, acquisitions, joint
ventures, marketing agreements, and anticompetitive behavior by the
largest firms, these and other commodity markets are becoming more and
more concentrated by the day.
Last week, the Senate passed a resolution 99-1, expressing our
feelings on the 1996 Farm bill. It read,
Congress is committed to giving this crisis in agriculture
. . . its full attention by reforming rural policies to
alleviate the farm price crisis, [and] ensuring competitive
markets . . .
We are committed to having the debate about what kind of changes we
could make that would provide some real help for family farmers, that
would enable family farmers to get a decent price, that would provide
some income for families, what kind of steps we could take that will
put some free enterprise back into the food industry and deal with all
the concentration of power.
Other Senators may have different ideas. I just want us to address
this crisis. I don't want us to turn our gaze away from our family
farmers. And I say to my colleagues, on this anniversary of the Freedom
of Fail Bill, we need a new farm bill--and I will come to the floor,
every opportunity I have to speak about the economic convulsion this
legislation has caused in our rural communities.
I say to all of my colleagues who talked about how we were going to
get the Government off the farm, we were going to lower the loan rate,
and do this through deregulation and exports, that we have an honest to
goodness depression in agriculture. We have the best people in the
world working 20 hours a day who are being spit out of the economy. We
have record low income, record low prices, broken dreams and lives, and
broken families.
We had close to 3,000 farmers who came here last week. It was
riveting. It was pouring rain, but they were down on The Mall. We had
500 farmers from Minnesota. Most all of them came by bus. They don't
have money to come by jet. Many of them are older. They came with their
children and grandchildren. They did not come here for the fun of it.
They came here because the reality is, this will be their last bus
trip. They are not going to be able to come to Washington to talk about
agriculture. They are not going to be farming any longer. These family
farmers are not going to be farming any longer unless we deal with the
price crisis.
Right now, the price of what they get is way below the cost of
production. Only if you have huge amounts of capital can you go on.
People eating at the dinner table are doing fine. The IVVs, and the
Con-Agras and big grain companies are doing fine. But our dairy and
crop farmers and livestock producers are going under.
This is, unfortunately, again the anniversary, and we have to write a
new farm bill.
That is my cry as a Senator from Minnesota from the heartland of
America.
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