[Congressional Record Volume 147, Number 17 (Wednesday, February 7, 2001)]
[Extensions of Remarks]
[Page E139]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          FARMERS NEED A SAFETY NET IN ADDITION TO FLEXIBILITY

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                           HON. DOUG BEREUTER

                              of nebraska

                    in the house of representatives

                      Wednesday, February 7, 2001

  Mr. BEREUTER. Mr. Speaker, this Member commends to his colleagues the 
following editorial from the February 2, 2001, Omaha World-Herald. The 
editorial highlights the challenges in developing a workable 
agriculture policy which maintains flexibility while providing farmers 
with assistance when needed.

                      ``Freedom'' Not in Farm Law

       The time is at hand for the U.S. government and the 
     Americans involved in production agriculture to decide how 
     they're going to coexist for the next few years. For farmers, 
     in addition, there is the matter of how to survive in a world 
     in which their product is often available in income-
     depressing surplus.
       Freedom to farm, the tag line given to the 1996 federal 
     farm policy, came along at an inopportune time. The original 
     plan--an end to federal crop subsidies as of next year--
     turned out to be impractical. Something else is needed.
       The underlying philosophy was worth a try. Agriculture was 
     stagnating under the old system, in which farmers received 
     subsidies for planting a specified number of acres to a 
     specified crop. The 1996 idea was to de-link subsidies from 
     planting decisions for a half-dozen years while continuing 
     the flow of cash in the form of transition payments.
       This was ``freedom to farm.'' At the end of the transition 
     period, the subsidies would theoretically dry up. Farmers, 
     having tailored their production to maximize their income 
     from the marketplace, would theoretically be ready for 
     financial independence.
       Now, with the transition period nearing an end, 
     agriculture's ability to take that next step is more than a 
     little doubtful. It turned out that even a relatively 
     deregulated grain-producing industry couldn't respond in time 
     to take advantage of fast-changing market conditions. As the 
     Asian currency crisis worsened in the late 1990s, American 
     farmers were stuck with huge piles of grain they had produced 
     on the theory that the Pacific Rim boom would be sustained 
     into the new century. From planning to planting to harvest 
     takes many months. When conditions change, it's too late if 
     the crop is in the ground.
       The transition payments, instead of descending as planned, 
     have skyrocketed. Since 1996, when the total was $7 billion, 
     the amount quadrupled. This year's $28 billion constituted 
     half of all the revenues that farmers received from their 
     operations.
       This isn't healthy. But the best idea to come out of a 
     federal panel, created to monitor the outcome of the 1996 
     approach, is a new variety of subsidy to provide income 
     maintenance for farmers when hit by sagging market demand for 
     their products.
       Subsidies have a downside. They keep inefficient operations 
     from being squeezed out by efficient competitors. This 
     creates a self-fulfilling cycle. Inefficiency intensifies the 
     demand for subsidies, leading to more inefficiency.
       Subsidies, in addition, sometimes undermine the political 
     support for agriculture in parts of the country where the 
     Midwestern corn-wheat-cattle-hogs economy is not well 
     understood. Eastern commentators include farms among the 
     recipients of corporate welfare. They seem to forget that 
     subsidies have been part of a cheap-food policy under which 
     Americans pay a lower percentage of their income for food 
     than is possible in nearly any other part of the world.
       So the aid the government has given to agriculture is not 
     necessarily bad. Indeed, former Secretary of Agriculture Dan 
     Glickman said the alternative would have been chaos in rural 
     America last year. And the current secretary, Ann Veneman, 
     says a ``safety net'' of some sort has to be kept in place, 
     although she has not been more specific.
       Few farmers and ranchers, given a choice, would accept the 
     subsidized way of life as opposed to an economic system in 
     which they had an even chance to get a fair return on their 
     labor and investment. On the other hand, survival would be 
     difficult, with conditions as they currently are, without 
     what Veneman calls a safety net.
       Accordingly, designing a system that makes sense 
     financially, politically and socially is a task for the 
     sharpest economic minds. As they proceed, some thought should 
     be given to what returns--such as habitat restoration, 
     wetlands preservation and the safeguarding of productive land 
     in the form of conservation reserves--might be secured, in 
     the process, for the tax-payers.

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