[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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