[Congressional Record Volume 147, Number 151 (Monday, November 5, 2001)]
[Senate]
[Pages S11438-S11442]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. DAYTON:
S. 1629. A bill to provide farmers with better prices and higher
profits through the marketplace; to the Committee on Agriculture,
Nutrition, and Forestry.
Mr. DAYTON. Mr. President, I rise today to introduce The Farm Income
Recovery Act. Its objective is to produce better prices and higher
profits through the marketplace. It thus addresses the principal
failures of the current farm law, the so-called Freedom to Farm bill
which was passed by the Congress in 1996.
Freedom to Farm has, unfortunately, contributed to disastrously low
market prices for agricultural commodities. Congress has thus been
forced to appropriate disastrously high taxpayer subsidies in order to
save American farmers from bankruptcy.
Mr. President, Freedom to Farm was conceived with a laudable goal--to
get the Federal Government out of agriculture. Farmers were free to
plant whatever crops they chose, and commodities supports were then to
be phased out during the life of the legislation. Unfortunately, U.S.
domestic farm prices collapsed in the aftermath of Freedom to Farm.
In October 1996, just before the Freedom to Farm legislation began,
the price of a bushel of soybeans in Minnesota, my home State, was
$6.84. In October of 2001, just last month, the price of that same
bushel of soybeans was $4.05. In October of 1996, a bushel of corn
brought Minnesota farmers $2.68. In October of 2001, it was only $1.60.
The price of a bushel of wheat fell during those same 5 years from
$4.27 to $3.
In order to prop up farm income, Federal payments have soared during
these 5 years. Last year, total Federal payments for all of agriculture
totaled nearly $30 billion--by far, a record high--which almost equaled
total net farm income. In other words, without Federal subsidies, there
would be no net profit in American agriculture. Clearly, we must find
another strategy, and that is the enormous task confronting the Senate
Agriculture Committee, on which I am proud to serve.
Our distinguished chairman, Senator Harkin, and the previous
chairman, now our ranking member, Senator Lugar, have held many
worthwhile hearings throughout this year. Just about every farm
organization has testified. My colleague from Minnesota, Senator Paul
Wellstone, also a member of the Agriculture Committee, and I have held
field hearings throughout Minnesota. Additionally, both of us have held
many meetings with groups of farmers, producers, and processors
throughout our State.
The product of all of the hearings, meetings, and discussions with
Minnesota farmers is, for me, this Farm Income Recovery Act. As I said
before, its objective is to help produce higher prices in the U.S.
domestic commodity markets so that farmers can earn real profits, thus
reducing or eliminating the need for Government subsidies. That is the
best way to reduce the costs of farm programs--to reduce the need for
them. And until we restore market prices to profitable levels, our
choice will continue to be between either more subsidies or more
bankruptcies.
My Farm Income Recovery Act has four major components. The first is
higher loan rates: $3.88 for wheat, $2.40 for corn, $5.36 for a bushel
of soybeans, $2.40 for sorghum, $2.40 for barley, $60.65 a
hundredweight for cotton, and $8.61 a hundredweight for rice.
Secondly, it targets these higher loan rates, limiting them to
certain amounts of production. It does not prevent farmers from
producing more and more, but it says that we are going to limit these
nonrecourse market loans to certain levels of production, which are set
forth in the legislation. If a farmer wants to get bigger, wants to
produce more and more of these commodities, he or she is certainly
entitled to do so, but then they are on their own. The amount of
production above these levels is subject to recourse loans, which have
to be repaid with interest to the Federal Government. This means if the
producers who want to get larger and larger decide to do so, they are
not then going to be dependent upon the taxpayers of America; they are
going to be standing on their own.
Third, it establishes commodity reserves in order to help control the
supply and, thus, help farmers decide at what prices they want to sell
their commodities. It re-establishes a farmer-owned reserve program,
which was one of the best features of previous farm legislation and
which was one of the unfortunate casualties of the 1996 farm bill.
It establishes a humanitarian food reserve fund through the Federal
Government, through which the Federal Government can hold food
commodities in reserve for the kinds of humanitarian efforts we see
underway today in Afghanistan.
It sets up a renewable energy reserve--which ties in nicely with
another important feature of the farm bill which Senator Harkin has
championed over the years and in our discussions of the last few
months, alternative and renewable fuels in our country--to really boost
the Federal incentives and support for ethanol, soy diesel, another
promising biofuel which I have introduced other legislation to promote.
As we encourage the use of these alternative and renewable fuels in
our country, we are going to need to hold food commodities in reserve
so we can assure consumers that there are going to be sufficient
resources. We may reach the day in this country where we have such
demand for ethanol and for soy diesel, that we need to go into this
Government-held energy reserve in order to generate the additional
supplies necessary to meet that demand. Not only would that be good for
our oil independence, it would be a great contribution to a cleaner
environment. It would boost domestic prices for corn, soybeans, and for
other commodities that can be used for either ethanol or soy diesel
production in ways that would, again, stimulate our domestic markets
and reduce the need for taxpayer subsidies.
Finally, the Farm Income Recovery Act establishes a voluntary program
that, in periods of increased supply, will allow the Secretary of
Agriculture to raise these loan rates for farmers who voluntarily set
aside a certain percentage of their acreage for conservation; thus, in
combination with our existing conservation programs, it will encourage
better conservation practices by farmers, again, through positive
marketplace incentives.
Mr. President, I ask unanimous consent that a summary of my
legislation, as well as the actual legislation, be printed in the
Record at this point.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 1629
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SEC. 101. DEFINITIONS.
Section 102 of the Federal Agriculture Improvement and
Reform Act of 1996 (7 U.S.C. 7202) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) Considered planted.--The term `considered planted'
means--
(A) any acreage that producers on a farm were prevented
from planting to a crop because of drought, flood, or other
natural disaster, or other condition beyond the control of
the producers on the farm; and
(B) such other acreage as the Secretary considers as fair
and equitable'';
(1) by striking paragraph (4) and inserting the following:
``(4) Contract acreage; loan acreage.--The terms `contract
acreage', and `loan acreage' mean (at the option of eligible
owners or producers on a farm)--
``(A) the total crop acreage bases established for all
contract commodities and loan commodities under title V of
the Agricultural Act of 1949 (7 U.S.C. 1461 et seq.) that
would have been in effect for the 1996 crop (but for
suspension under section 171 (b)(1)); or
``(B) the average number of acres planted and considered
planted to all contract commodities and loan commodities,
respectively, during the 1996 through 2001 crop years,
excluding any crop year in which such commodities were not
planted or considered planted, on the farm.'';
(2) by striking paragraph (9) and inserting the following:
``(9) Farm program payment yield.--The term `farm program
payment yield' means the average yield per planted acre for a
crop for a farm for the 1996 through 2001 crop years,
excluding any crop year during which--
[[Page S11439]]
``(A) producers on the farm were prevented from planting
the crop because of drought, flood, or other natural
disaster, or other condition beyond the control of the
producers on the farm; or
``(B) the crop was not planted or considered planted on the
farm.
SEC. 201. NONRECOURSE MARKETING ASSISTANCE LOANS AND LOAN
DEFICIENCY PAYMENTS.
Amendment to the Agricultural Market Transition Act.--Title
I of the Agricultural Market Transition Act (7 U.S.C. 7201)
is amended by inserting after Subtitle H the following new
subtitle:
``Subtitle I--Counter-Cyclical Economic Assistance for the 2002 Through
2008 Crops--Nonrecourse Marketing Assistance Loans and Loan Deficiency
Payments
``SEC. 131A. AVAILABILITY OF NONRECOURSE MARKETING ASSISTANCE
LOANS.
``(a) Nonrecourse Loans Available.--For each of the 2002
through 2008 crops of each loan commodity, the Secretary
shall make available to producers on a farm nonrecourse
marketing assistance loans for loan commodities produced on
the farm. The loans shall be made under terms and conditions
that are prescribed by the Secretary and at the loan rate
established under section 132A for the loan commodity.
``Eligible Production.--Any production on a farm of a
program participant of a loan commodity shall be eligible for
a marketing assistance loan under subsection (a) subject to
the limitations established in paragraphs (1), (1)(A), (1)(B)
and (2) conditions established in section 202.
``(1) Except as provided in section 202, the producers on a
farm shall be eligible for a marketing assistance loan for a
quantity of a loan commodity for a crop year under subsection
(a) obtained by multiplying--
``(A) the number of acres planted to each loan commodity on
the farm; by
``(B) the farm program payment yield for the loan commodity
on the farm.
``(2) Maximum number of acres.--The producers on a farm
shall not be eligible for a marketing assistance loan for
production on acres planted to loan commodities in excess of
the total program crop loan acreage for the farm.
``(b) Compliance With Conservation and Wetlands
Requirements.--As a condition of the receipt of a marketing
assistance loan under subsection (a), the producer shall
comply with the applicable conservation requirements under
subtitle B of title XII of the Food Security Act of 1985 (16
U.S.C. 3811 et seq.) and applicable wetland protection
requirements under subtitle C of title XII of the Act (16
U.S.C. 3821 et seq.) during the term of the loan.
``(c) Additional Outlays Prohibited.--The Secretary shall
carry out this subtitle in such a manner that there are no
additional outlays as a result of the reconstitution of a
farm that occurs as a result of the combination of another
farm that does not contain eligible cropland covered by a
production flexibility contract for the 1996 through 2002
crops.
``(d) Option To Participate With Respect to 2002 Crop.--
Under such terms and conditions as may be prescribed by the
Secretary, a producer may terminate the production
flexibility contract in effect for the 2002 crop, and thus
forgo any right to a contract payment for the 2002 crop,
in order to participate in the marketing loan assistance
provided under this subtitle for the 2002 crop.
``(e) Full Planting Flexibility Provided.--Notwithstanding
section 118 of Subtitle B, or any other provision of this
Act, any commodity or crop may be planted on contract acreage
or other acreage on a farm.
``(f) Use of Commodity Certificates.--Notwithstanding any
other provision of law, including section 115 of this Act,
the Secretary may not make use of commodity certificates or
the commodity loan redemption certificate program for the
purposes of this subtitle, or any other purpose.
``SEC. 132A. LOAN RATES FOR MARKETING ASSISTANCE LOANS.
``(g) Generally.--Loan rates for crops eligible for
marketing assistance loans under section 131A for any loan
commodity, as defined in section 102, to mean wheat, corn,
grain sorghum, barley, oats, upland cotton, rice, extra loan
staple cotton, and oilseeds, including soybeans, sunflower
seed, rapeseed, canola, safflower, flaxseed, mustard seed,
and other oilseeds, if designated by the Secretary, shall be
established in accordance with this section.
``(h) Annual Determination.--The Secretary shall, for each
of the 2002 through 2008 crops, make an annual determination,
in accordance with subsections (c) and (d), to establish the
national and individual loan rate for each loan commodity.
``(i) National Average Loan Rate.--The national average
commodity marketing loan rate for each loan commodity shall
be established at a rate--
(1) after making weighted county loan rate adjustments,
that is not less than 80 percent of the three year moving
average of the full economic cost of production per unit per
planted acre, and annually adjusted for both the percentage
change in variable production input expenses, and
productivity changes as determined by the Economic Research
Service using the best and most recently available data
``(2) for each of the 2002 crops, the national average loan
rate is not less than--
``(A) for Wheat: $3.88 per bushel;
``(B) for Corn: $2.40 per bushel;
``(C) for Soybeans: $5.36 per bushel;
``(D) for Upland Cotton: $60.65 per hundredweight;
``(E) for Rice: $8.61 per hundredweight; and
``(3) for the 2002-2011 crops of feed gains and other loan
commodities closely related to those identified in paragraph
(2), the Secretary shall determine the rate at a level that
is fair and reasonable in relation to the rate provided for
the closely related commodity.
``(j) For producers of program commodities who exceed the
limitations established in Section 202 of this Act, the
Secretary shall provide, recourse commodity marketing loans
subject to the agreement of eligible producers as a condition
for receiving such commodity marketing loans that the
producer agrees to repay the Commodity Credit Corporation, on
or before the maturity of such loans, the full amount of the
loan principal plus any accrued interest on those loans.''
``Individual Marketing Loan Rates.--The national average
commodity marketing loan rates established under subsection
(c) shall be adjusted to establish individual marketing loan
rates for eligible producers in accordance with the
provisions of this subsection.
(1) ``Payments in lieu of loans.--For payments under this
subtitle taken in lieu of loans, including loan deficiency
payments made under section 135A of this subtitle, the
Secretary shall develop a similar methodology as described in
paragraphs (1) through (3). The methodology shall assume for
the purposes of establishing the loan deficiency payment that
the marketing loan was actually taken by the producer.''.
``SEC. 133A. TERM OF LOANS.
``(a) Term of Loans.--In the case of each loan commodity
(other than upland cotton and extra long staple cotton), a
marketing assistance loan under section 131A shall have a
term of 9 months beginning on the first day of the first
month after the month in which the loan is made.
``(b) Special Rule for Cotton.--A marketing assistance loan
for upland cotton or extra long staple cotton shall have a
term of 10 months beginning on the first day of the month in
which the loan is made.
``(c) Extensions Allowed.--The Secretary may extend the
term of a marketing assistance loan for any loan commodity
for the purpose of establishing or maintaining any of the
commodity reserves established under the Agricultural Act of
1949.
``SEC. 134A. REPAYMENT OF LOANS.
``(d) Repayment Rates for Wheat, Feed Grains, and
Oilseeds.--The Secretary shall permit a producer to repay a
non-recourse marketing assistance loan under section 131A for
wheat, corn, grain sorghum, barley, oats, and oilseeds at a
rate that is the lesser of--
``(1) the loan rate established for the commodity under
section 132A, plus interest (as determined by the Secretary);
or
``(2) a rate that the Secretary determines, consistent with
the policies and purposes of section 110A of the Agricultural
Act of 1949, will--
``(A) minimize potential loan forfeitures;
``(B) minimize the accumulation of stocks of the commodity
by the Federal Government;
``(C) minimize the cost incurred by the Federal Government
in storing the commodity; and
``(D) allow the commodity produced in the United States to
be marketed freely and competitively, both domestically and
internationally.
``(e) Repayment Rates for Upland Cotton and Rice.--The
Secretary shall permit producers to repay a non-recourse
marketing assistance loan under section 131A for upland
cotton and rice at a rate that is the lesser of--
``(1) the loan rate established for the commodity under
section 132A, plus interest (as determined by the Secretary);
or
``(2) the prevailing world market price for the commodity
(adjusted to United States quality and location), as
determined by the Secretary.
``(f) Repayment Rates for Extra Long Staple Cotton.--
Repayment of a marketing assistance loan for extra long
staple cotton shall be at the loan rate established for the
commodity under section 132A, plus interest (as determined by
the Secretary).
``(g) Prevailing World Market Price.--For purposes of this
section, the Secretary shall prescribe by regulation--
``(1) a formula to determine the prevailing world market
price for each commodity, adjusted to United States quality
and location;
``(2) a mechanism by which the Secretary shall announce
periodically the prevailing world market price for each loan
commodity;
``(3) further adjustments to the prevailing world market
price for upland cotton, as described in subsection (e) of
section 134 of this Act.
``SEC. 135A. LOAN DEFICIENCY PAYMENTS.
``(a) Availability of Loan Deficiency Payments.--Except as
provided in subsection (d), the Secretary may make loan
deficiency payments available to producers who, although
eligible to obtain a non-recourse marketing assistance loan
under section 131A with respect to a loan commodity, agree to
forgo obtaining the loan for the commodity in return for
payments under this section.
``(b) Computation.--A loan deficiency payment under this
section shall be computed by multiplying--
[[Page S11440]]
``(1) the loan payment rate determined under subsection (c)
for the loan commodity; by
``(2) the quantity of the loan commodity that the producers
on a farm are eligible to place under the non-recourse
commodity marketing loan but for which the producers forgo
obtaining the loan in return for payments under this section.
``(c) Loan Payment Rate.--For purposes of this section, the
loan payment rate shall be the amount by which--
``(1) the loan rate established under section 132A for the
loan commodity; exceeds
``(2) the rate at which a loan for the commodity may be
repaid under section 134A.
``(d) Exception for Extra Long Staple Cotton.--This section
shall not apply with respect to extra long staple cotton.''.
SEC. 202. PROGRAM TARGETING.
(a) Applicability of Payment Limitations.--Except as
provided in subsections (b-d), the provisions of sections
1001 through 1001C of the Food Security Act of 1985, as
amended, shall be applicable to contract payments made under
this Act for the 2002 crops.
(b) Single Attribution.--The Food Security Act of 1985 is
amended by adding after section 1001E, the following
section--
``(b) Single Entity.--Notwithstanding any other provision
of this Act, the limitations on payments provided in Sections
1001 through 1001C shall apply to a single farming or
ranching entity. Payments to a single farming entity shall
not exceed the payment limitations provided under this Act,
the Agricultural Act of 1949, or any other law.
``(c) Use of Tax Identification Number.--The Secretary
shall promulgate regulations to ensure that the payment
limitations of this title are enforced through a single
attribution rule. Payments to a single farming or ranching
entity, as described or identified by employer tax
identification number, shall not exceed the applicable
payment limitation amount. Notwithstanding any other
provision of law, such regulations issued by the Secretary
shall eliminate the multiple or three-entity allowance.
``(d) Partnerships and Related Entities.--With respect to
partnerships and related entities which are not organized as
sole-proprietorships, benefits available under the marketing
loan provisions of Subtitle I of the Agricultural Act of 1949
shall be allocated according to the share of production and
market risk assumed by each member of the entity.''.
(c) Limitation on Eligibility of Other Entities.--No
individual, organization or institution with annual gross
income in excess of $2 million shall be eligible for
commodity marketing loan program benefits if agricultural
production does not account for at least 75% of that entity's
annual gross income.
(d) Limitation on Eligibility for Non-Recourse Commodity
Marketing Assistance Loans.--Notwithstanding any other
provisions of sections 1001 through 1001C of the Food
Security Act of 1985 and subject to the provisions contained
in Section 202, subsections (a) through (d) of this act, the
Secretary shall establish a maximum number of commodity
production units for each program crop per individual
producer that are eligible for non-recourse commodity
marketing assistance loans.
(e) In fulfilling the requirements of subsection (d), the
Secretary shall ensure producer flexibility to determine
which crops and the percentage volume of those crops on which
the producer may receive program benefits, except that in no
instance shall a producer be entitled to receive benefits on
a volume of production that exceeds one hundred percent of
the production for an individual crop or the sum of
percentages of the maximum eligible volume of production from
two or more eligible crops.
(f) The quantity limitations established by the Secretary
shall not be more than ten percent greater or ten percent
less than the quantities for each crop described in
subsection (a).
(a) Wheat--125,000 bushels, Corn--225,000 bushels,
Sorghum--225,000 bushels, Barley--225,000 bushels, Oats--
250,000 bushels, Rice--75,000 hundredweight, Upland Cotton--
10,500 hundredweight, Extra Long Staple Cotton--12,500
hundredweight, Soybeans--100,000 bushels, Minor Oilseeds--
60,000 hundredweight.
SEC. 203. COMMODITY RESERVES.
Amendment to the Agricultural Act of 1949.--Title I of the
Agricultural Act of 1949 is amended by adding after section
110 the following new section:
``(g) Sec. 110A. Commodity Reserves.
Farmer Owned Production Loss Reserve.--
``(1) Purpose.--It is the purpose of this subsection to
create a farmer owned reserve to provide--
``(A) stocks to be released to the marketplace when prices
rise to appropriate levels; and
``(B) a reserve that may be utilized to provide additional
production assurance and economic support to supplement the
Federal Crop Insurance Program, and for other purposes.
``(2) Establishment.--The Secretary shall establish and
administer a farmer-owned and farmer-stored reserve program
under which producers of agricultural commodities will be
able to--
``(A) store agricultural commodities when those commodities
are in abundant supply;
``(B) extend the time period for the orderly marketing of
the commodities;
``(C) provide for adequate carry over stocks to ensure a
reliable supply of commodities;
``(D) replace lost production or declines in crop yields
for agricultural producers that participate in the Federal
Crop Insurance Program; and
``(E) such other purposes which will assist farmers bear
the economic uncertainty of agricultural production, or
provide for the orderly marketing of agricultural
commodities.
``(3) Name.--The agricultural commodity reserve established
under this subsection shall be known as the ``Farmer Owned
Production Loss Reserve''.
``(4) Reserve open.--The reserve shall initially be open to
all agricultural producers to enter up to 20 percent of
average annual individual production of crops determined
eligible by the Secretary. Additional amounts may be accepted
up to the maximum allowable national level established under
paragraph (9). No individual may enter more than 20 percent
of average annual production of the commodity.
``(5) Equitable participation.--The Secretary shall ensure
that equitable participation opportunities are provided to
all eligible producers within the limited scope of the
reserve program authorized by this subsection.
``(6) Price support loans and direct entry.--In carrying
out this section, the Secretary shall provide both--
``(A) for direct entry into the reserve; and
``(B) extended price support loans, and loan discounts, for
agricultural commodities. An extended loan shall be made to a
producer after the expiration of the original 9-month price
support loan, and the loan shall be extended at no less
favorable terms than the current rate of support for the
commodity.
``(7) Production losses.--
``(A) Generally.--The Secretary shall administer a program
to utilize the commodity reserve authorized by this
subsection to allow agricultural producers that participate
in the Federal Crop Insurance Program to--
``(i) under certain conditions, redeem and market reserve
commodities at a discount to the entry level price; and
``(ii) use stocks in the reserve to offset a portion of
actual insurable production losses not indemnified through
multi-peril or other buy-up crop insurance policies.
``(B) Loan repayments.--Under the program authorized by
this paragraph, the Secretary shall discount the repayment
amount of the loan or extended loan if the actual production
of the commodity on the farm for any crop year, as provided
in paragraph (C), is less than the actual production history
established for the farm. The amount of this discount shall
be determined by the Secretary after considering anticipated
payments from the Federal Crop Insurance program, costs of
production, and other factors in order to provide support
to the producer for the full value of lost crop or reduced
yield.
``(C) Replacement for production.--The Secretary shall
utilize the reserve to fully replace lost production for a
producer when actual production yields for the commodity for
the crop year on the farm is less than 95 percent of the
actual production history established for the farm.
``(D) Limitation.--At no time may the reserve be utilized
to assist any producer in excess of 20 percent of individual
annual production.
``(8) Storage payments.--The Secretary shall also provide
storage payments to producers of agricultural commodities to
maintain the reserve established under this subsection.
Storage payments shall--
``(A) be in such amounts and under such conditions as the
Secretary determines appropriate to encourage producers to
participate in the program;
``(B) reflect local, commercial storage rates subject to
appropriate conditions concerning quality management and
other factors; and
``(C) not be less than comparable commercial rates, except
as provided by paragraph (B).
``(9) Quantity of commodities in program.--The Secretary
shall establish maximum quantities of commodities that may
receive loans and storage payments under this subsection in
such reasonable amounts as will enable the purposes of the
program to be achieved. In no event may the reserve exceed 20
percent of the average annual production of the agricultural
commodity.
``(10) Discretionary exit.--A producer may repay a loan
extended under this section at any time.
``(h) Humanitarian Food Assistance Reserve.
``(1) Purposes.--It is the purpose of this subsection to
create a food reserve that will--
``(A) ensure the capacity of the United States to fulfill
its current and future commitments for humanitarian nutrition
assistance programs;
``(B) support the International School Lunch Program which
will seek to prevent hunger and malnourishment and improve
educational opportunities among the estimated 300 million
needy school children around the world; and
``(C) for other purposes to meet domestic and international
humanitarian food relief needs, and to establish and maintain
a food reserve to enable the United States to meet its
emergency food assistance needs.
``(2) Establishment.--The Secretary is authorized to
establish and administer a government-owned and farmer-stored
reserve
[[Page S11441]]
program under which producers of agricultural commodities
will be able to--
``(A) sell agricultural commodities authorized by the
Secretary into the reserve; and
``(B) store such agricultural commodities.
``(3) Name.--The agricultural commodity reserve established
under this subsection shall be known as the ``Humanitarian
Food Assistance Reserve''.
``(4) Purchases.--The Secretary shall purchase agricultural
commodities at commercial rates in order to establish,
maintain, or enhance the reserve when--
``(A) such commodities are in abundant supply; and
``(B) there is need for adequate carryover stocks to ensure
a reliable supply of the commodities to meet the purposes of
the reserve; or
``(C) it is otherwise necessary to fulfill the needs and
purposes of the domestic and international nutrition
assistance programs administered or assisted by the
Secretary.
``(5) Limitation.--Purchases under this subsection shall be
limited to amounts of agricultural commodities needed to fill
one-year estimated needs and commitments of the nutrition
programs supported by the reserve. Otherwise, the Secretary
may establish maximum quantities of commodities in such
reasonable amounts as will enable the purposes of the program
to be achieved.
``(6) Release of stocks.--Stocks shall be released at cost
of acquisition, and in amounts determined appropriate by the
Secretary, when market prices of the agricultural commodity
exceed 100 percent of the full economic cost of production of
those commodities. Cost of production for the commodity shall
be determined by the Economic Research Service using the best
available information, and based on a three year moving
average.
``(7) Storage payments.--The Secretary shall provide
storage payments to producers that wish to store agricultural
commodities to maintain the reserve established under this
subsection. Storage payments shall--
``(A) be in such amounts and under such conditions as the
Secretary determines appropriate to encourage producers to
participate in the program;
``(B) reflect local, commercial storage rates subject to
appropriate conditions concerning quality management and
other factors; and
``(C) not be less than comparable local commercial rates,
except as may be provided by paragraph (B).
``(8) Quantity of commodities in Program.--The Secretary
may establish maximum quantities of commodities that may
receive loans and storage payments under this subsection in
such reasonable amounts as will enable the purposes of the
program to be achieved.
``(9) Management of commodities.--Whenever fungible
commodities are stored under this subsection, the Secretary
may buy and sell at an equivalent price, allowing for
customary location and grade differentials, substantially
equivalent quantities of commodities in different locations
or warehouses to the extent needed to handle, rotate,
distribute, and locate the commodities that the Commodity
Credit Corporation own or controls. The Secretary shall make
purchases to offset such sales within a reasonable time, and
shall make public full disclosure of such transitions.
``(i) Renewable Energy Reserve.
``(1) Purposes.--It is the purpose of this subsection to
create a reserve of agricultural commodities to--
``(A) provide feedstocks to support and further the
production of the renewable energy; and
``(B) support the renewable energy industry in times when
production is at risk of decline due to reduced feedstock
supplies or significant commodity price increases.
``(2) Establishment.--The Secretary is authorized to
establish and administer a government-owned and farmer-stored
renewable energy reserve program under which producers of
agricultural commodities will be able to--
``(A) sell agricultural commodities authorized by the
Secretary into the reserve; and
``(B) store such agricultural commodities.
``(3) Name.--The agricultural commodity reserve established
under this subsection shall be known as the ``Renewable
Energy Reserve''.
``(4) Purchases.--The Secretary shall purchase agricultural
commodities at commercial rates in order to establish,
maintain, or enhance the reserve when--
``(A) such commodities are in abundant supply; and
``(B) there is need for adequate carryover stocks to ensure
a reliable supply of the commodities to meet the purposes of
the reserve; or
``(C) it is otherwise necessary to fulfill the needs and
purposes of the renewable energy program administered or
assisted by the Secretary.
``(5) Limitation.--Purchases under this subsection shall be
limited to--
``(A) the type and quantities of agricultural commodities
necessary to provide approximately one-year's estimated
utilization for renewable energy purposes;
``(B) an additional amount of commodities to provide
incentives for research and development of new renewable
fuels and bio-energy initiatives; and
``(C) such maximum quantities of agricultural commodities
determined by the Secretary as will enable the purposes of
the renewable energy program to be achieved.
``(6) Release of stocks.--Stocks shall be released at cost
of acquisition, and in amounts determined appropriate by the
Secretary, when market prices of the agricultural commodity
exceed 100 percent of the full economic cost of production of
those commodities. Cost of production for the commodity shall
be determined by the Economic Research Service using the best
available information, and based on a three year moving
average.
``(7) Storage payments.--The Secretary shall provide
storage payments to producers of agricultural commodities to
maintain the reserve established under this subsection.
Storage payments shall--
``(A) be in such amounts and under such conditions as the
Secretary determines appropriate to encourage producers to
participate in the program;
``(B) reflect local, commercial storage rates subject to
appropriate conditions concerning quality management and
other factors; and
``(C) not be less than comparable local commercial rates,
except as may be provided by paragraph (B).
``(j) Commodity Credit Corporation.--The Secretary shall
use the Commodity Credit Corporation, to fulfill the purposes
of this subsection. To the maximum extent practicable
consistent with the purposes, and effective and efficient
administration of this subsection, the Secretary shall
utilize the usual and customary channels, facilities and
arrangement of trade and commerce.''.
SEC. 204. DISCRETIONARY INVENTORY MANAGEMENT AND PROGRAM
COST-CONTAINMENT.
(a) Short Title.--This section may be cited as the
``Discretionary Inventory Management, Program Cost-
Containment, and Fiscal Responsibility Act of 2001''.
(b) Amendments to the Federal Agriculture Improvement and
Reform Act.--Subtitle F of title I of the Federal Agriculture
Improvement and Reform Act (7 U.S.C. 7201) is amended by--
(1) striking out the subtitle heading and inserting the
following new heading--
``Subtitle F--Permanent Authorities
``Chapter 1--Price Support; and
(2) by adding at the end the following new chapter--
``Chapter 2--Discretionary Inventory Management and Program Cost-
Containment
``SEC. 173. DISCRETIONARY INVENTORY MANAGEMENT AUTHORITY.
``(a) Generally.--Notwithstanding any other provision of
this Act, or the Agricultural Act of 1949, the Secretary may
establish a voluntary inventory management program for loan
commodities under the provisions of this section. Such
program shall be established on a whole farm basis and shall
include total program crop acreage for the farm.
``(b) Incentives Offered.--The Secretary may offer
incentives, as defined in subsection (f), to agricultural
producers of loan commodities that agree to forgo production
on a specified percentage of the acreage planted to eligible
commodities. The production management program may be
announced when the Secretary determines that the estimated
total supply of loan commodities for the next crop year, in
the absence of such a program, will be excessive taking into
account the need for an adequate carryover to maintain
reasonable and stable supplies and prices and to meet a
national emergency.
``(c) Acreage Defined.--Inventory management acreage must
be acreage that either--
``(1) has previously been under a production flexibility
contract, or
``(2) was previously planted an eligible loan commodities
for at least three of the last five years.
``(d) Conservation Uses.--Inventory management acreage
shall be devoted to approved conservation and wildlife uses,
as defined by the Secretary. Adequate safeguards from weeds,
and wind, soil, and water erosion must be provided.
``(e) Acreage Options.--If announced, the inventory
management program shall offer the producer a range of
acreage participation options. Under such a program, the
Secretary shall offer producers the option to set-aside 5
percent, 10 percent, 15 percent, or 20 percent of total
commodity acreage. Total program acreage shall include
applicable inventory management acres from the previous
crop year.
``(f) Incentive Defined..--
``(1) The incentive offered by the Secretary for agreement
to forgo production on a specified percentage of loan
commodity production acres shall be an increase in the
marketing loan rates for eligible commodities for the
individual producer in an amount that is equal to one half of
the percentage of the percentage inventory management or
acreage option selected under subsection (e).
``(2) The increase in the marketing loan rate for an
individual producer, shall be as follows--if the inventory
management acreage is--
``(A) 5 percent, then the marketing loan rate shall be
increased by 2.5 percent.
``(B) 10 percent, then the marketing loan rate shall be
increased by 5 percent.
``(C) 15 percent, then the marketing loan rate shall be
increased by 7.5 percent, and
``(D) 20 percent, then the marketing loan rate shall be
increased by 10 percent.
``(g) Commodity Credit Corporation.--The Secretary shall
carry out the program authorized by this section through the
Commodity Credit Corporation.
[[Page S11442]]
``(h) Regulations.--The Secretary shall issue such
regulations as may be necessary to carry out this section.
Cross Compliance and Offsetting Compliance.--The Secretary
shall require that compliance on a farm with the terms and
conditions of any other commodity, conservation, or any other
program is required as a condition of eligibility for
inventory management incentives provided under authority of
this section.''.
____
The Farm Income Recovery Act
Better Prices and Higher Profits Through the Marketplace
Since the commodity market collapse in the late 1990's,
farmers in Minnesota and the rest of the country have learned
a hard lesson: the 1996 ``Freedom to Farm'' Act lacks an
adequate safety net for farmers struggling with severe price
fluctuations. As a result, year after year, the Federal
Government has been forced to pass billions of dollars in
emergency funding, barely enough to allow many of these
farmers to survive.
We cannot continue this pattern--it is hurting our farmers,
and its is fiscally irresponsible, costing taxpayers close to
$33 billion in emergency assistance over the past five years.
The goal of the Farm Income Recovery Act is to raise market
prices for farmers, with the added benefit of reducing the
cost of the taxpayer. It provides farmers with a secure
safety net that can offset severe price fluctuations and can
help manage uncertainties in the marketplace by boosting
marketing assistance loan rates. It creates a sound reserve
program, allowing producers to store their commodities when
they are in abundant supply, so market prices do not continue
to spiral downward. And it is counter cyclical, so it kicks
in to help farmers when prices are low, but phases out when
prices increase.
Boosting Marketing Assistance Loan Rates
The Farm Income Recovery Act boosts marketing loan rates,
establishing an equitable, counter cyclical assistance
program based on costs of production.
Instead of basing loan rate calculations on an arbitrary
snapshot of community prices in a given year, the bill
directs the Secretary of Agriculture to establish marketing
loan rates at not less than 80 percent of the economic cost
of production, allowing loans rate to adjust annually to
changes in both producer input costs and productivity.
The loan rates in the Farm Income Recovery Act are far more
equitable than current rates, as well as the rates proposed
in the Farm Bill passed by the House of Representatives and
even those being suggested by the Senate Agriculture
Committee:
----------------------------------------------------------------------------------------------------------------
Farm
Current Income House Senate Ag
Crop and unit loan rate Recovery passed committee
Act \1\
----------------------------------------------------------------------------------------------------------------
Wheat (bushel)................................................. $2.58 $3.88 $2.24-2.58 2.94
Corn (bushel).................................................. 1.89 2.40 1.64-1.89 2.05
Sorghum (bushel)............................................... 1.71 2.40 1.44-1.89 1.98
Barley (bushel)................................................ 1.65 2.40 1.40-1.65 1.98
Soybeans (bushel).............................................. 5.26 5.36 4.06-4.92 5.20
Upland Cotton (Cwt)............................................ 51.92 60.65 51.92 54.50
Rice (Cwt)..................................................... 6.50 8.61 6.50 6.90
----------------------------------------------------------------------------------------------------------------
\1\ As of 10/31/01.
To discourage overproduction, the Farm Income Recovery Act
directs the Secretary to establish limits on the crop amounts
for which individual producers can receive nonrecourse
marketing loans. This limit is calculated by multiplying a
producer's 1996-2001 crop years average acreage base by the
1996-2001 crop years average yield base.
TARGETING HELP TOWARD FAMILY FARMERS
The Farm Income Recovery Act is designed to target its
benefits to family farmers by limiting the amount of a crop
for which farmers can receive nonrecourse loans. Production
that exceeds limits would be eligible for recourse loans,
which must be paid back, with interest, to the Federal
Government: Wheat, 125,000 bushels; Corn, 225,000 bushels;
Sorghum, 225,000 bushels; Barley, 225,000 bushels; Oats,
250,000 bushels; Soybeans, 100,000 bushels; Rice, 75,000
hundredweight; Upland Cotton, 10,500 hundredweight; Extra
Long Staple Cotton, 12,500 hundredweight; and Minor Oilseeds,
60,000 hundredweight.
The targeting provision also prohibits program
participation by anyone whose annual gross income exceeds $2
million of which agricultural production accounts for less
than 75 percent.
Using Commodity Reserves to Achieve Policy Objectives
In the past, commodity reserves languished in Government
stockpiles unless high prices triggered their release into
the market--which would often result in depressed prices.
Under the Farm Income Recovery Act, commodity reserves
would not enter the free market, where they could have a
depressive effect on prices; instead, they would be used
exclusively to achieve other policy objectives as follows:
The Farmer-Owned Production Loss Reserve allows producers
to store a specified amount (up to 20 percent of their annual
production) of program commodities when they are in abundant
supply, and supplements the Federal Crop Insurance Program by
providing additional risk protection to producers who suffer
production losses.
The Humanitarian Food Assistance Reserve allows the Federal
Government to purchase, store, and utilize commodities to
ensure the capacity of the United States to fulfill current
and future humanitarian nutrition assistance commitments and
stimulate economic development in the neediest parts of the
world. The quantity that may be purchased by the government
for the reserve is limited to approximately one-year's
estimated commitments. Some examples of humanitarian programs
that may benefit from this reserve are the Food for Peace
Program, United Nation's World Food Programs, and the
proposed McGovern/Dole Food for Education Program.
The Renewable Energy Reserve allows the Federal Government
to purchase, store, and utilize commodities such as corn and
soybeans that are used to create renewable fuels like ethanol
and biodiesel when production is at risk of decline due to
reduced feedstock supplies or significant commodity price
increases. The quantity that may be purchased by the
government for the reserve is limited to approximately one-
year's estimated utilization for renewable energy purposes.
Cost containment Through Conservation
In times of overproduction, the Farm Income Recovery Act
authorizes the Secretary of Agriculture to establish a
voluntary program that would further increase loan rates for
producers who voluntarily set aside a percentage of their
acreage for conservation as follows:
------------------------------------------------------------------------
Percent
increase
Acreage set aside of loan
rate
------------------------------------------------------------------------
5 percent................................................... 2.5
10 percent.................................................. 5
15 percent.................................................. 7.5
20 percent.................................................. 10
------------------------------------------------------------------------
Cost Estimate
The Congressional Budget Office is currently calculating a
cost estimate for the Farm Income Recover Act. However, the
Agricultural Policy Analysis Center at the University of
Tennessee has estimated the 10-year cost of a very similar
program at about $50 billion over current expenditure levels
for the next 10-year budget cycle. By comparison, the House
Farm Bill's Commodity Title, which covers comparable issues,
has been scored at $48.8 billion.
Mr. DAYTON. In summary, this legislation, which was developed in
close consultation with the National Farmers Union and the Minnesota
Farmers Union, really bears the imprint of the farmers in Minnesota,
with whom I have consulted over the last several months--really over
the last 20 years. It accomplishes what farmer after farmer in
Minnesota has told me that he or she is searching for, and that is a
farm program that encourages market prices to levels where farmers can
make a profit in the marketplace.
I come from a business family, and I know you don't stay in business
if you cannot earn a profit for what you produce and sell.
Unfortunately, the ability and the opportunity to earn a profit is what
has been taken away from farmers in Minnesota and across this country.
I am humbled by the fact that for 60 years Members of this body, from
both sides of the aisle, have endeavored to create a Federal
agricultural policy that would best serve the interests of Minnesota
and other American farmers. Sometimes they have succeeded in doing so;
sometimes their efforts have fallen short.
I do not know if this legislation provides the right answer for all
the farmers across this country, but I do know it is a step in a better
direction from what we have today. It is a step toward higher prices in
the marketplace; it is a step toward lower taxpayer subsidies; it is a
step toward putting agriculture in this country back on its own
economic feet so it is not dependent on Government programs and not
dependent on every decision we make in Washington to dictate what the
next course of action will be.
I look forward to working with colleagues on this legislation.
______