[Congressional Record Volume 147, Number 68 (Thursday, May 17, 2001)]
[Extensions of Remarks]
[Pages E831-E832]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  THE COST OF HIGH ENERGY PRICES ON OUR NATION'S AGRICULTURE PRODUCERS

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                            HON. JERRY MORAN

                               of kansas

                    in the house of representatives

                        Wednesday, May 16, 2001

  Mr. MORAN of Kansas. Mr. Speaker, I rise today to call attention to 
the energy crisis that is draining the farm economy. My district, like 
many rural areas across the country, has suffered greatly as a result 
of high energy prices. Agricultural producers in particular have been 
hit hard as higher diesel and natural gas prices increase fuel, 
irrigation energy, and fertilizer costs.

[[Page E832]]

  Our reliance on foreign oil and dependency on imported fuel has 
created a crisis for our nation's farmers. Kansas producers' net income 
fell 7.7 percent in 2000, down 11 percent from the five-year average, 
largely because of the summer drought and dramatic increases in the 
price of energy. On a nationwide average, energy costs alone caused a 6 
percent decrease in farm income.
  According to the Kansas Farm Management Association, average cash 
operating expenses on Kansas farms increased 6.2 percent last year, and 
the increase was largely related to energy prices. Combined gas, fuel 
and oil expenses rose $2,551 per farm, a 33 percent increase. Prices 
for nitrogen fertilizers, a natural gas derivative, were the primary 
determinant in driving fertilizer costs up more than 10% above the 1999 
average. Irrigation energy costs for a typical irrigated corn farm in 
western Kansas were $34,026, approximately one-fourth of the gross 
revenue generated. This figure represents an increase of almost $18 per 
acre just to run the irrigation system.
  With commodity markets remaining at record lows and the tremendous 
increase in energy prices, last year it cost farmers more to produce 
grain than they were paid for it. Without emergency assistance, 
producers would have lost money.
  Unfortunately, projections for the 2001 crop year are not optimistic. 
Given the current status of energy supply and demand, the Department of 
Agriculture predicts that producers will face a 15 percent decrease in 
net cash income due to energy and fertilizer costs. Losses will be 
still greater for irrigators.
  In addition to the negative impact on crop producers, the livestock 
segment of the agriculture industry has also been affected by fuel 
costs. According to the National Cattleman's Beef Association Cattle-
Fax, high energy prices have cost the fed cattle market $4 per hundred 
weight in decreased demand. The crises spreads across commodities and 
across all regions of the country, from rice producers in California, 
to Kansas wheat farmers, to New England dairies.
  Since I arrived in Congress, I have asked both the Administration and 
my colleagues to develop a national energy policy. I look forward to 
reviewing the findings of the Domestic Energy Policy Task Force headed 
by Vice President Cheney when their report is released tomorrow. As we 
finally begin to look at legislation regarding national energy policy, 
it is important to keep in mind both the short and long term challenges 
that exist in the agricultural sector.

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