[Congressional Record Volume 148, Number 52 (Wednesday, May 1, 2002)]
[House]
[Pages H2002-H2010]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROBLEMS WITH THE FARM SECURITY ACT
The SPEAKER pro tempore (Mr. Boozman). Under the Speaker's announced
policy of January 3, 2001, the gentleman from Michigan (Mr. Smith) is
recognized for 60 minutes as the designee of the majority leader.
Mr. SMITH of Michigan. Mr. Speaker, I am going to spend some minutes
talking about something that I think is very important to this country,
certainly important to farmers. That is the new farm bill.
In 1996, we passed farm legislation that was called Freedom to Farm.
It was actually a program that phased out government farm program
payments, and the challenge that we are facing in this country, almost
everybody wants some of those open spaces, almost everybody in America
would like the opportunity to have fresh products. In America, we
appreciate the fact that we have the most healthy, the most low-cost
food in terms of a percentage of our take-home dollar of any country in
the world.
The Freedom to Farm Act passed in 1996 gave farmers a farm payment in
1996. The total payout amounted to about $6 billion. It phased down the
payment for each of the next 7 years, in a sense, telling farmers in
the United States that they are going to have to start producing for
the market, not for government programs. They are going to have to make
their best guess on how much of what crop to plant based on the
information they have for the marketplaces. That is the way that the
system in America has always worked.
That is why we have surged ahead economically. We had a system when
our Founders wrote the Constitution, that the people that work hard and
try and are most efficient and learn, and put that learning to use end
up better off than those that do not, and that has been part of the
motivation in our economy. And it has also been part of the reason our
farm industry has become probably more efficient than any other
country, and we are competitive in almost every commodity. If there was
an open playing field, we probably could compete effectively with most
countries.
We are now making a dramatic change to make farmers dependent on
government farm payments, and we do this in a couple of ways. We
encourage more production which brings down the price of the commodity
that they sell, and we say to the very huge mega-farms and large
landowners with 20,000 acres of farmland or 80,000 or 120,000 acres of
farmlands, the giants, the corporation-type farms, that we will give
them a government price support check for every bushel of grain that
they produce and every pound of cotton that they produce.
What reaction does that have in the marketplace? It is going to mean
that there is going to be more production, and the challenges are that
more production is going to result in lower prices. We now find
ourselves in the midst in a battle for democracy. Even as the President
works against the undemocratic axis of evil, he may want to take a few
moments to counter some undemocratic currents in our own Congress.
At the conclusion of the conference on the farm bill reauthorization
that was just completed, H.R. 2646, the conference report was filed
earlier this morning and it is on the floor tomorrow, I think it is
clear that the conferees have defied the will of both Houses of
Congress by perpetuating these unlimited farmer subsidies which will
allow farms to draw millions of dollars in price support payments. By
giving these very large farms this kind of unlimited guarantee of a
government price support, they can farm the program rather than farm
the products of their soil in relation to the marketplace.
The purpose of subsidies since farm programs began back in 1933 has
been to protect family farmers. It was a mistake to get into the
business of subsidizing every single acre and subsidizing every single
bushel and every single pound of production, regardless of the
producer's size and income.
{time} 1600 By providing unlimited payments, we encourage farm
operations to get bigger and bigger. About 82 percent, Mr. Speaker, 82
percent of all farm production subsidies now go to the largest 17
percent of farms.
I would like to take a moment, Mr. Speaker, to invite any of my
colleagues, both who support unlimited payments and those that do not
support unlimited payments, to come to the floor to talk about this
issue, because tomorrow we are going to have a recommit vote of the
agriculture bill. We are going to talk about the agriculture bill, and
then there is going to be a motion to recommit with instructions that
some of the provisions of limitation apply to that particular farm
bill. So it is important that we talk about this today, because under
the rules of the House, there will not be any debate or discussion
tomorrow on that motion to recommit.
Mr. Speaker, this policy of giving most of the farm government
payment subsidies to the largest farms also puts upward pressure on
land prices and rents, and, as we mentioned, it contributes to
overproduction because the largest farm operations can get a guaranteed
government price on unlimited acres. The result is lower commodity
prices, driving more family farmers off the farm.
I see the gentleman from Oregon (Mr. Blumenauer) has arrived in the
Chamber. I want to yield to the gentleman. I was disappointed that the
gentleman did not have a chance to present his motion to instruct
because they very quickly brought to the floor their filing of the
agriculture bill, which preempted your opportunity to give more
suggestions to the conferees.
But, on the other hand, when 265 Members of this Chamber, almost two-
thirds of this Chamber, voted the other week to instruct conferees to
have some kind of real payment limitations, they disregarded it. It
approaches arrogance when they say we do not care how most of the
Members of this Chamber vote or, how many, it was 64 to 31 in the
Senate, that said let us have real payment limitations. Maybe the
gentleman's amendment would not have accomplished what we hoped it
would.
Mr. Speaker, I yield to the gentleman from Oregon.
Mr. BLUMENAUER. Mr. Speaker, I appreciate the gentleman's courtesy
and I appreciate his leadership in focusing America's attention on the
tremendous lost opportunity that is represented by the agriculture bill
that has been put before us for a vote tomorrow.
The gentleman is right, there are issues large and small that
illustrate the problems with the mindset that we have been greeted with
the Committee
[[Page H2003]]
on Agriculture in the House in terms of its treatment of the desires of
these Members.
I had one little tiny provision that I thought would not be
particularly controversial that dealt with animal fighting,
cockfighting, really a sort of barbaric practice, where people watch
chickens that have been trained to maim each other, to fight to the
death, where you just have a little pile of feathers and blood at the
end.
It is cruel and inhumane to the animals, but it is also part of, in
many States, illegal gambling operations. It leads to illegal
activities and violence. That is why we had all sorts of law
enforcement authorities that wanted it to move forward. It is illegal
in 47 States. Identical provisions passed in the House and Senate to
make it illegal to at least transport these creatures across State
lines, and maybe help law enforcement.
Mr. SMITH of Michigan. Mr. Speaker, reclaiming my time, would the
gentleman help me remember and understand. I thought we had provision
in the farm bill at one time?
Mr. BLUMENAUER. We did. It passed on the floor to put felony
provisions for people who would transport these fighting birds, and
also to export fighting dogs.
What happened in the agriculture conference committee is that the
penalty provisions that would have closed the loophole were gutted. It
went back to a misdemeanor, so it would not be enforced, even though
identical provisions passed both the House and Senate. Even these
watered-down provisions are not going to go into effect for another
year.
Now I use this just as one example, a little tiny example, that shows
where the will of the House and the Senate, identical provisions, and
something, frankly, that the American public would have even greater
penalty provisions in, it would go farther, they read it in. They cut
it back. They gutted it.
It is nothing in terms of the damage that would be done as far as the
American taxpayer is concerned. The gentleman is absolutely correct,
and I appreciate it and was pleased to join with the gentleman on the
floor in his efforts to put a cap on those payments here in the House.
The gentleman is right, 265 Members voted to instruct, to have the
Senate's $275,000 payment limit.
Lo and behold, we get a bill back, it is the new $360,000 limit, and
all sorts of problems and additional aspects to this that actually make
that illusory.
We see example after example where this agriculture bill is a missed
opportunity. We missed an opportunity, and, if time permits, I would
like to talk in a few minutes about some of the environmental
provisions. It is a missed opportunity for the American taxpayer to
rein in costs. It is a missed opportunity in States like mine where
there are huge problems with specialty crops, where there are people
that would exercise better conservation practices if they had a little
help.
Mr. SMITH of Michigan. Mr. Speaker, I would like to talk about that.
The fact is if we had real limits that would include what is called the
generic certificate, which is the end run, the huge megacorporation
type farms used to have the million dollar payments, then there is no
question that we would have a lot more money. The estimate is between 2
and 4 billion additional dollars to do some of those things.
I yield to the gentleman from Arizona, Mr. Flake, for he has had some
concern about the tremendous expansion of government programs.
Mr. FLAKE. Mr. Speaker, I thank the gentleman for yielding. I
appreciate the gentleman from Michigan's leadership on this issue and
the others that have spoken.
This, it has been said, is the largest expansion of the Federal
Government domestic program since the 1960s, aside from military
issues. It is a huge expansion of the Federal Government and little is
being said about it.
We are expanding the commodity programs to include for the first time
apples, peanuts, onions, with little discussion about it at all. It
simply increases dependency out there among our farmers and it goes
simply the wrong direction, away from the free market.
I find it ironic that this bill, at a time that we are supposedly
embracing free markets around the world, this replaces the Freedom to
Farm Act, it repudiates it, it sets it aside and replaces it with the
Farm Security Act. We are trading freedom for so-called security that
is often illusive.
We need to know who is receiving these subsidies. That is why I
appreciate the gentleman from Michigan's leadership on this issue, to
know that most of the subsidies are actually going to well-off farmers,
or some who are not farmers at all.
We know, for example, that Scottie Pippen, that well-known farmer
from Arkansas, when he is not posting up for the Portland Trailblazers,
apparently he is digging post holes around his farm in Arkansas. He
received thousands of dollars in subsidies for either growing or
agreeing not to grow certain crops. Sam Donaldson, Ted Turner, that
pauper David Rockefeller is also getting subsidies. We know this
because people are posting on their web sites, getting through Freedom
of Information those who are receiving subsidies. Now, we had to fight
back an attempt this year to actually keep that information public. It
is so embarrassing that a lot of people want it private again so nobody
can point out how absurd it is that individuals like this are getting
subsidies from government.
We have to recognize that the average American family over the next
10 years will spend about $1,800 in higher taxes simply to pay for the
subsidy programs in this bill. Worse than that, that same family will
pay another $2,500 just in the case of increased food prices because of
the price supports in this system. That is a total of over $4,000 that
the average American family will spend because of this bill. That
simply is wrong and we should not go forward with it.
I appreciate the opportunity to be here and speak on it.
Mr. SMITH of Michigan. Mr. Speaker, I hope the gentleman from Arizona
(Mr. Flake) can stay a little longer so we can talk about some of these
things.
I just have a chart here following up on the gentleman's mention.
Farm subsidies to 12 Fortune 500 companies rose by 82 percent, and here
are farm payments from these big companies that probably bought some
extra land, and then they sign up this land to get government farm
payments. Farm policy should be designed to give these to family
farmers, not John Hancock Mutual Life Insurance, Westvaco Corporation,
Caterpillar, Chevron, Georgia Pacific, the Mead Corporation,
International Paper, Archer Daniels Midland, Boise Cascade, Kimberly
Clark, Eli Lilly, Navistar. These are the kind of companies that are
making millions of dollars in their venture as a corporation, but still
in effect robbing some of the money that otherwise could go to some
more substantial programs, whether it be environmental and
conservation, whether it be more money for agriculture research,
whether it be more money for the small farmers that really need help.
The gentleman from Wisconsin (Mr. Kind) has been a leader in trying
to have a farm bill that better protects the environment, the
conservation effort. I would ask the gentleman from Wisconsin (Mr.
Kind) to give us the latest word on whether he is going to have a
motion to recommit tomorrow.
Mr. KIND. First of all, I thank my friend from Michigan for yielding
to me and securing time the night before one of the most important
pieces of legislation affecting rural America and our farmers, the
agriculture sector, will be coming before us.
I want to commend my other colleagues here, too, the gentleman from
Arizona (Mr. Flake) and the gentleman from Oregon (Mr. Blumenauer) for
the leadership they have shown on the issue and the particular insight
they have brought to this debate.
In the past, farm bills have been a tricky proposition to put
together. First of all, half of the Members of Congress, when you think
about it, do not have a farm in their entire congressional district. So
it is hard to engage individual Members of Congress on what constitutes
the farm bill and the impact it is going to have on budgetary, fiscal
policy and also rural programs, and, ultimately, support for our family
farmers across the country.
We have had a conference now that has been meeting for a period of
time, and they are reporting out a bill. I, as a member of the
Committee on Agriculture, and the gentleman from
[[Page H2004]]
Michigan (Mr. Smith) is a member of the Committee on Agriculture as
well, understand how terribly difficult the process is in a place like
Congress to formulate a coalition to develop a farm bill given the
competing interests, the different perspectives from different regions
of the country, each with their own experiences, each with their own
interests and insight on what should constitute a farm bill.
But as someone who has been involved in the process now since all of
last year, the markup in the committee and watching the conference
committee do their work, I am a little disenchanted in the way the
process has ultimately worked. Yes, we are in a political season, an
election year. That has affected the outcome of the decisions being
made on that.
But when you look at the details that are just now emerging, the
actual letter of the law being proposed, and even a lot of that is
still unclear, and I think USDA should be very concerned that a lot of
the provisions have not been clearly defined to enable them to
implement what is in this conference bill, let alone whether it makes
good policy, but you are talking about a bill that is going to have a
huge impact on fiscal policy for this Nation for at least the next 10
years. We are talking about an additional $73 billion of new money on
top of the roughly $100 billion that has been spent on farm bill
programs under the old bill. Yet with these $73 billion of new money,
roughly 75 percent of that is going to get sucked up in just a few
commodity crop programs that will only benefit less than, less than, 30
percent of our American farmers in this country.
Yet it is being hailed as this great safety net for our family
farmers across the country. But any bill that comes forward that only
affects roughly 30 percent and excludes, for all practical purposes, 70
percent of the American producers in this country hardly constitutes a
safety net, in my book.
But there are also very troubling implications, too, with the payment
limitation caps that are alleged under this bill. Those of us on the
floor here today brought forward a motion to instruct just a week ago,
setting a payment limitation cap of $275,000 in a given year for an
individual entity receiving these type of payments. Unfortunately, even
though it passed with over 260 votes in the House and it received
majority support in the Senate, the conferees basically ignored the
wishes of the majority of Members of Congress in regards to the payment
caps that we passed on a motion to instruct.
Not only did they ignore it by increasing that to $360,000, but they
carved out exceptions that would basically blow the lid off of any
practical cap or limitation. These are mandatory spending programs that
we are talking about here that are going to explode in the out years
and have a devastating impact on fiscal policy in this Nation, not to
mention distorting the marketplace, because we are paying producers not
based on market conditions, but based on acreage and what they produce,
which creates an incentive for them to produce more and more and more,
which leads to oversupply and then a plummeting of these very same
commodity prices and us getting in this vicious cycle of these
mandatory payment programs going out, or, even worse, of having to deal
with multibillion dollar farm relief bills because of an incentive
program being created encouraging overproduction.
{time} 1615
So the motion to instruct that we passed with 260 votes would place a
real payment cap of $275,000, which is still pretty generous in regards
to these subsidy payments, but also using some of the money that would
be freed up to go into these voluntary and incentive-based conservation
programs, a little bit more into the agriculture research programs.
So we are talking about some value added in creating wealth in the
farm bill, rather than just direct subsidy payments.
Mr. SMITH of Michigan. Mr. Speaker, let me just briefly review, or
sort of give the skinny on what I see happening in the farm bill.
Senator Byron Dorgan, a Democrat of North Dakota and Charles
Grassley, a Republican of Iowa, were the leaders over in the Senate
that said, look, for the long run, long-term good of farmers and farm
programs, let us put a cap on these multimillion dollar payments that
are going out to some of these huge mega-farm and landowners. They said
that there is enough votes in the Senate to recommit with instructions
that we go back to the original Senate language on payment limitations.
However, the rules are that if the House passes a farm bill prior to
the Senate having the opportunity to recommit, then the Senate no
longer has that opportunity to make a motion to recommit if the House
passes the bill.
I suspect that that is some of the reason that our leaders in the
Conference Committee on Agriculture, our chairman, our ranking member,
decided to bring this up even before CBO has completed their cost
estimates to file the bill, to bring the bill to a vote tomorrow.
In the process of recommitting this bill back with specific
instructions, that first option goes to the Democrats. Normally, the
ranking member of that particular committee has a lot of decision-
making ability as to how that works.
The gentleman from Wisconsin (Mr. Kind) has his motion to reconstruct
that puts payment limitations on. Can the gentleman give us the latest?
Will we find out later tonight whether or not the gentleman's motion is
going to be offered?
Mr. KIND. Mr. Speaker, if the gentleman will yield, I do have some
additional information. In fact, I was just recently informed by our
leadership on this side that we will be offering the motion to recommit
based on the payment limitation caps. So we will have another chance
tomorrow to effectuate the end product of this debate, so to speak. So
I think this is going to be a very important motion.
Mr. SMITH of Michigan. Mr. Speaker, did the gentleman say that he
will not?
Mr. KIND. Mr. Speaker, we will be offering the motion to recommit,
based on, by and large, the motion to instruct, again that passed by
260 votes just a little over a week ago.
Because what we have now is a product that is greased to go. It was
just filed a couple of hours ago. We are trying to pour through the
details. We all know the devil is in the details in a lot of
legislation. It is really in the wording, and what exceptions are
thrown into these bills that can have a tremendous effect on policy. So
we are trying to pour through that as quickly as possible.
But given the fact that the Members of the House and now the Senate
are on record of supporting a 275 payment cap that has already passed,
I think we have an opportunity with this motion to recommit to send it
back to the conferees with these instructions again that this is really
the will of the majority of Members of Congress, and that they need to
treat it seriously this time, rather than brushing it off as merely an
advisory type of motion. So we are going to have to get the word out
between tonight and tomorrow.
parliamentary inquiry
Mr. SMITH of Michigan. Mr. Speaker, I wonder if it is appropriate,
during a Special Order, to have a parliamentary inquiry. Is there even
reproductions of the farm bill that are available for the Members to
read?
The SPEAKER pro tempore (Mr. Boozman). There is not a printed copy at
the desk currently; the conference report is being printed by GPO.
Mr. SMITH of Michigan. I thank the Speaker.
So here again is a real problem of asking us to vote on something
that we are not even going to be able to read. If they give it to us at
the last minute tomorrow morning, it is my guess that we are looking at
a bill that is 3 or 4 inches thick, almost impossible, even with a
group of staff, to try to wade through to find really what was stuck
into this bill at the last minute for whatever reason.
Mr. KIND. Mr. Speaker, if the gentleman would yield for one final
point. I want to be perfectly clear on this point. I represent over
10,600 family farmers in my congressional district alone. What we are
proposing here should not be perceived for a second to be antifarmer.
It is rather how can we help effectuate good farm policy for basically
the next 10 years.
There is one crucial aspect in regards to these subsidy payments that
I think
[[Page H2005]]
a lot of our colleagues have ignored or just overlooked, and that is
the trade implications. I mean historically, a round of trade
discussions have usually dealt their fatal blows over disputes over
farm policy. Now we are starting to hear the rest of the world in a
single chorus cry out against the tremendous amount of subsidies that
we are piling on in this next farm bill and encouraging retaliation on
their part, but even more than that, encouraging bad faith negotiation
in the next round of trade discussions which are important to our
family farmers, but also important for economic growth in this country.
So if we do not get this aspect of the farm bill right in regards to
our WTO obligations and setting up the next round of trade discussions
for success rather than failure, this is something that is going to
come back and haunt us for a very long time, not just on agricultural
exports, but on a whole range of products that we need market access
to, and it is going to be very hard to accomplish if this is the
message that we are sending to the rest of the world, that we are going
to pile on the subsidies here, virtually unlimited, and yet we expect
them to open up their markets to our products.
I thank the gentleman again for this time.
Mr. SMITH of Michigan. I thank the gentleman. Of course, with the
rush on this bill, there is a lot of work to do in informing our
Members of what the gentleman's amendment is, and I think most of us in
this room are cosponsoring it.
Mr. Speaker, I yield to the gentleman from Arizona (Mr. Flake).
Mr. FLAKE. Mr. Speaker, I thank the gentleman for yielding. Just to
the point of the conferees ignoring the will of the House, there was
another issue that was brought up. There was a vote on a motion to
instruct which would instruct the House conferees to accept the Senate
version with regard to private financing of agriculture exports to
Cuba. One can argue about the policy there, but the House
overwhelmingly, 2 years ago, said that food and medicine sales to Cuba
were fine. All this would say is that private banks here in the U.S.,
if they want to take the risk, then they can lend. Right now it has to
be done on a cash basis. We had a vote, 272 Members supported it, yet
the conferees ignored that, and they ignored the Senate as well, and
that provision is out.
So I appreciate what the Members here have done, and I just wanted to
point out that that was another issue where the conferees simply
ignored what the House felt as a whole.
Mr. SMITH of Michigan. Mr. Speaker, maybe sometimes too much control
and ability to have it their own way instead of having it the people's
way. So hopefully in the future it will change. Earlier I used the word
``arrogant'' in describing the disregard of conferees to seriously
consider and look at and, at least in part, put in the will of the
delegation. I saw in one of our leading newspapers a quote about two
brothers producing sugar benefit in excess of $400 million, I think
that was a year, from the production program that we have for sugar.
Here again, we want our sugar beet farmers to survive and our sugarcane
farmers to survive, but when it goes to $400 million to a set of
brothers probably does not help our average farmer very much.
The gentleman from Florida (Mr. Miller) has been a leader in trying
to get some equity in trying to keep some industry that is related to
sugar in the United States, and I yield to the gentleman.
Mr. DAN MILLER of Florida. Mr. Speaker, it is a pleasure to be here
with my colleagues today, and I commend the gentleman from Michigan,
someone who is a real farmer here in Congress, and on the Committee on
Agriculture, to be able to stand up and say, this is a bad bill. Each
of us come from different districts, whether it is from Wisconsin,
where there is a lot of small family farmers, and in my area, we have a
lot of tomato farms, and citrus is a big area. But even though we do
not know too much about this bill because it is basically a secret bill
that we will find out about tomorrow, basically it just helps a limited
number of people in a limited number of States.
The problem is that this bill is a total reversal of a philosophy
that those of us that came together, the gentleman from Michigan (Mr.
Smith), when we came together with a conservative philosophy to say, we
need to reduce the size and scope and government, and actually in the
1996 Freedom to Farm bill, we started to do that. It was a glidepath to
reduce the role of government and to open up the agriculture market. I
voted for that bill, but this is a total reversal. Not a total reversal
in the amounts of money and the programs, but the targeting of other
specialized programs.
We got rid of the wool, mohair and honey programs back in 1996. They
are back. Why are we subsidizing wool, mohair and honey? The peanut
program is going to cost us billions of dollars. Now, I like peanuts,
but the problem is we do not need to spend billions of dollars on
peanuts. I do not grow peanuts in my district and I do not think my
colleagues here on the floor grow peanuts. But if you grow peanuts, you
will support this bill. So there is bipartisan support, but there is
also bipartisan opposition.
We do not really know the full cost of it. I have been trying to find
that out, and some are saying it is $171 billion, but we really do not
know. When we passed Freedom to Farm in 1996, it was projected to cost
$47 billion. It turns out to be costing $123 billion.
Now, this bill is supposed to be $171 billion to start with, so it is
a huge increase over what we passed in 1996, and what happened in 1996
is any indication, we are into a $350 billion bill and program; $350
billion. Here we are up here getting ready to go through the
appropriation process figuring out how to get enough money for Pell
grants, for prescription drugs, how to have enough money for homeland
security and taking care of the war on terrorism, and here we are going
to spend $350 billion on these farm programs over the next year.
Now, the gentleman mentioned the sugar program. The gentleman is
correct. This program is getting worse. It was a bad program to start
with and they made it even worse. It is so bad that last year, the
Federal Government had to buy $500 million worth of sugar and then had
to store it. Now we are paying to store the sugar, and we are creating
a program that is going to have an incentive to produce even more sugar
and the Federal Government is going to buy more sugar. I do not know
how we are going to store all of this sugar that is going to be bought
by the Federal Government over the next years.
Under trade regulations, Mexico is going to be allowed to sell more
sugar than the United States. So we are going to be flooded with sugar.
This bill encourages overproduction, and sugar is just one of the
programs that they claim does not really cost very much money. They
claim it was not going to cost anything until last year when they had
to buy the $500 million worth of sugar. Because what it does is it
costs jobs. The sugar program, what it does is, it sets an artificially
high price for sugar in the United States, and what it does is, it
drives jobs out of this country. The gentleman from Michigan, for
example, talked about the Lifesaver plant in, I think, Holland,
Michigan.
Mr. SMITH of Michigan. Mr. Speaker, the Lifesaver plant over in
Holland, Michigan, producing pretty much all of the Lifesavers produced
in the world, has now made the decision, because of the price of sugar,
that they are going to go to Canada.
Mr. DAN MILLER of Florida. Mr. Speaker, so they are going to Canada
for jobs. Sugar is a third of the price in Canada than it is in the
United States.
So if someone is, especially in the hard candy area and uses a lot of
sugar, why not move your production over into Canada, and that is
exactly what is happening.
Mr. SMITH of Michigan. Mr. Speaker, that might hit our family farmers
that are producing sugar even more aggressively than the tariff rate
quotas that we tried to develop to protect them.
Mr. DAN MILLER of Florida. Mr. Speaker, the gentleman is right. The
cane growers are some very, very large corporations like the brothers
the gentleman mentioned. The beet farmers are smaller farmers up in the
Midwest and the Dakotas and such, and they really are more family
farmers, but the big farms, these plantations in Florida, they also
control, for example, most of
[[Page H2006]]
the sugar in the Dominican Republic. But the Dominican Republic, and
this is how crazy the program is, they sell sugar around the world for
maybe 6 cents a pound, but they sell it to the United States for the
United States price, which is about 20 cents a pound. Absolutely crazy,
and it is still controlled by the same family that grows it in Florida.
So, you know, in 1996, one of the classic, most important bills we
passed was welfare reform, and I think it has been a success. We are
going through the process of reauthorizing it this year. But what we
are creating is a welfare program for farmers, and that is unfortunate.
We want to support the small farm; we want to have the life of the
farmer to continue as we have known in previous generations, but it is
becoming big business, and what this bill does is just making it harder
for the family farmers to survive.
Mr. SMITH of Michigan. Mr. Speaker, the statistic I think, at least
for last year, is 40 percent of the net income of farmers came in
government checks. If farmers do not like it, our goal has to be to
increase production.
{time} 1630
Mr. Speaker, I yield to the gentleman from Oregon (Mr. Blumenauer)
for an ``out West'' opinion.
Mr. BLUMENAUER. Mr. Speaker, I thank the gentleman for yielding to
me.
One of the things that I wanted to spend a moment on deals with the
environmental aspects. The gentleman has been speaking earlier, and I
think very forcefully, and focusing on how bad a deal this is for the
taxpayers, the costs that are associated with this. We are going to
hear in the course of this discussion that this 10-year bill represents
a quantum increase in conservation.
Well, we are going to find that virtually all the major environmental
groups are going to come out opposed to this legislation. Yes, it is
true that there will be a dollar increase over the next 10 years, and
it will be a significant increase over the next 10 years.
But this, put in the context of how great the need is and how much
money we are going to be throwing at all aspects of the agricultural
program, this actually represents a retreat. We are going to find that
as a result of this bill, it will represent a lower percentage of the
total Federal commitment to agriculture than the farm bill of 1996.
It has been stated, I think very well, by the Defenders of Wildlife:
``All the talk of the importance of conservation work has, in the end,
amounted to a hollow shell of the conservation budget that came out of
the Senate. The conference report will shrink conservation spending as
a percent of total farm spending.''
I would like to talk for a moment, if I could, about some of the
specifics. We have the Environmental Quality Incentives Program. This
is very important. It is a way to help deal with the real environmental
problems that are faced by agricultural producers.
Under current law, the Environmental Quality Incentives Program, the
EQIP, is limited to small- and medium-sized producers and restricts
payments to $50,000 over multiple years. When the House and Senate
opened this to corporate livestock producers, they argued that, well,
these payment limits would restrict the large factory farms from
receiving large payments to clean up their waste and from draining
money out of the program.
Well, it was not just the overall caps that the negotiators turned
their backs on. They turned their backs on the small and medium
producers when they multiplied the current limit nine times over to
$450,000 for multiple years.
The current program has a backlog of almost 200,000 applications for
small and medium producers. The average payment last year was $9,000.
Now we are opening the door to large factory farms. We are waving large
checks in front of Smithfield and Tyson Foods, and we are going to have
the small producers squeezed to the back of the line. It is going to
put more and more pressure on them to have to either sell out or
consolidate. It is an important step backwards.
Mr. SMITH of Michigan. Mr. Speaker, that is sort of a cue to allow me
to talk a little bit about how we are putting pressure on the small,
traditional crop farmer in the United States.
We passed my amendment to put real limits on and get rid of the
loophole on a vote of 265 to 158, and we did that on April 18. At the
time the House motion passed, the chairman of the Committee on
Agriculture was quoted as saying, ``It will have no bearing on the
conference,'' and true to his word, with the apparent consent of the
Senate agriculture committee chairman, the conference report that came
out yesterday keeps that loophole and bows to the interests of mammoth
farms and giant grain and cotton dealers who want unlimited price
supports and the resulting increased production.
If we asked a grain trader such as Cargill, Archer Daniels, any of
them, they tend to make their money based on the amount of product
going through their system, so the more product they have, the more
money they have.
So these conferees were under tremendous pressure not only from the
huge farmers in the megafarms, but also from the grain traders and
cotton traders that have an advantage with having unlimited payments
and unlimited price support.
Now, let me tell Members briefly how the loophole works. Nonrecourse
marketing assistance loans allow a farmer the choice of repaying
commodity loans at low local market prices. As an alternative, a farmer
can forgo loans entirely and simply take the difference between the
loan rates and the low market prices as a direct cash payment. That is
called a loan deficiency payment, an LDP.
Both marketing loan and the LDP benefits are capped in current law.
They are capped in this bill. Many in the agricultural community, I
will use the word ``hoodwink,'' hoodwink many in this Chamber and many
Americans by saying, look, we have a cap on payments. But the fact is
that there is a loophole. That loophole lets the farmer get around the
limits through the use of commodity certificates.
Here is how it works: the generic commodity certificate was initially
an innovation aimed at preventing a buildup of forfeited commodities in
government warehouses, so with a nonrecourse loan, a farmer can give
title of that commodity to the government. The government will give a
loan to that farmer, and the loan will represent the price support that
is offered through the LDP, or a marketing loan program, so there are
the same benefits in terms of the money that farmer now has.
Where we can limit the amount of cash that can be given to the farmer
with the marketing loan or the loan deficiency payment, we do not
limit; and the law allows USDA, the U.S. Department of Agriculture, to
give that farmer a generic certificate to buy other commodities that
will result in the same price support benefits as if they got a loan
deficiency payment. So it is a loophole.
That is why we have so many of these farm operations receiving
millions of dollars in payments every year at the same time that some
brag that there are payment limits and payment caps in the proposal.
The conferees said, well, we will put in language where we will study
it. Here is what the study is supposed to analyze.
Number one, what kind of effect will it have on the grain trade and
the cotton trade? Well, the effect is going to be if we do not
encourage more production, there is probably going to be less
production. That means the grain trade is going to have a few less
bushels and pounds going through their system, so it is probably going
to have a little negative effect on their trade.
But what happens to the price farmers get? With lower production, the
price farmers get goes up, and we can help many of those family farms
around the United States and that green and open space, as we talk
about the environment. We can preserve that land and keep it in
agriculture, instead of paving it over for development and housing
projects.
Our goal and our policy in this country should be to help family
farms, the traditional family farms. It should not be to give a
disadvantage to those family farms.
That is what we are doing. We are saying to this huge farmer that has
a lower cost of production, we will guarantee you a payment that more
than covers your variable costs. So that
[[Page H2007]]
farmer says, well, look, I have this protection, so I am going to farm
the farm program as much as I farm the market and the soil, so they end
up overproducing.
That overproduction is getting us into real problems because that is
part, with our current ability to distribute that food around the
world, that is part of our problem in bringing prices down to the
farmers. That is why we are working in the bankruptcy bill to make it a
little easier for farmers to try to re-form their farmland and have the
provisions of section 12 in the bankruptcy code.
Mr. Speaker, I yield to the gentleman from Florida (Mr. Dan Miller).
Mr. DAN MILLER of Florida. Mr. Speaker, as the gentleman was talking
about the fact that we are really helping the big farmers, there are
some interesting numbers that came out of the Heritage Foundation, I
see today. It says, the top 10 percent of the recipients now get 73
percent of the money. That has increased from 67 percent of the money
that goes under the agriculture program.
The bottom 80 percent, and this is where all our family farmers are,
now instead of getting 16 percent are going to get 12 percent. The
money overwhelmingly goes to this top 10 percent, which are the very
large farms, the ones that make the most money. We want to encourage
the family farm and support that family farm, but all this is going to
do is make it more difficult for the family farm to compete with the
big giants, the agriculture giants in this country.
Mr. SMITH of Michigan. Mr. Speaker, I see also that this is a problem
of the survival of the future of farm programs. With all of this
publicity that is going out, and it does not matter what paper we pick
up, they now realize that there is a loophole; and the Environmental
Working Group has passed out the information that a lot of these big
corporate-type farms are getting a lot of the money.
I think that is going to come back to hurt the average family farm in
terms of the kind of programs that we can offer here in Washington,
D.C., because it is bad publicity, so a lot of people start thinking,
well, farmers are already rich. They are getting these million-dollar
payments.
The fact is exactly as the gentleman suggests, that in our efforts to
appease these large, influential farms, these large landowners, the
large grain and cotton dealers, we have come up with a program that
allows those big farmers the incentive to have unlimited production,
overproduction, really, if you will. That means that the prices are
going to go down for everybody else, with more pressure on those
farmers.
When push comes to shove in the next 10 or 15 years, when we are
looking at the survival of Social Security and the survival of
Medicare, and we say, well, are we going to have to cut off some of the
farm programs because a lot of people in America say we are giving too
much money to these rich farmers anyway, what do Members think is going
to happen?
What is going to happen is we are going to cut down on farm programs.
At that time, probably we will cut down on the big, large million-
dollar payments to the big farmers, too. But probably it is going to
jeopardize the effectiveness of the farm programs for the survival of
the agriculture industry in the United States. That is one of my main
concerns.
Mr. BLUMENAUER. If the gentleman will continue to yield, Mr. Speaker,
I could not agree more. As someone who comes from an agriculture State
and somebody who is concerned about the relationship of prime
agricultural land to our cities, this interface, the urban-rural
interface, is critical to be able to maintain some of the most
productive farmland in America.
Right now, we do not have the tools to help preserve it; and sadly,
what we have been given from the conference committee makes this
situation worse. It cuts critical conservation programs by almost $3
billion from the Senate bill and left out national conservation
priorities. Even though the number of farmland acres lost to sprawl
doubled, doubled over the last 6 years, the negotiators, in their
wisdom, cut $1.25 billion out of the only Federal program to help
farmers curb sprawl.
The tension between landowners and Federal agency and conservation
interests over the endangered species issues have split communities all
over the country. Yet the Wildlife Habitat Incentives Program was cut
in half, from the Senate level of almost $1.5 billion to $700 million.
They dropped key language to address national environmental
priorities, like reducing runoff to the Chesapeake Bay, and, in my
region of the Pacific Northwest, missed an opportunity to reduce the
water use in the Klamath Basin, which has been brought to national
attention.
These farmers were promised more by the Federal Government over the
last century than nature can produce. This was an opportunity to help
solve the problem and protect the farmers. They turned their back. It
tilted the new grasslands easement program towards short-term contracts
instead of permanent easements, even though the overwhelming demand for
producers is for permanent easements.
They also failed to adopt Senate language that would have ensured
conservation programs work in every State and do not discriminate
against farmers and ranchers in areas with high land values. I just
find it tragic that our conferees turned their backs on a good product
that came from the Senate that would have helped farmers in all of our
communities.
I would just conclude my portion, Mr. Speaker, to commend the
gentleman from Michigan (Mr. Smith) and the gentleman from Florida (Mr.
Dan Miller), with whom I look forward again to working on the sugar
issue.
But this legislation that we are going to have before us tomorrow
represents a sad missed opportunity. It was a lost opportunity for the
environment, as I have outlined. It was a lost opportunity in areas
like animal welfare, the fighting birds that I mentioned, or being able
to take downed animals out of the food chain. It is a food safety, as
well as a humane, issue.
This is a lost opportunity for those of us who practice agriculture
in the West. This is not a good bill for Oregon, Washington, and
California. It hurts, it hurts the majority of farmers who, as the
gentleman pointed out, need our help.
I am hopeful, I am hopeful that this House tomorrow will support that
motion to recommit to reinstate those limits, to redirect the
priorities so that we can make a little progress on this important bill
for the future, not just of American agriculture, but for communities
from coast to coast, border to border.
{time} 1645
Mr. SMITH of Michigan. Well, I would just call to all our colleagues
and all staff that might be watching. There is not going to be any
debate allowed on this motion to recommit that sets real limits that
this House and the Senate has voted for. That motion will come up
tomorrow. The failure to include real payments limits in the farming
bill, I think, is an example of entrenched special interests
frustrating the will of the majority. The conferees, generally the most
senior Members of the House and Senate Committee on Agriculture have
chosen to ignore public sentiment and congressional sentiment in both
the popular vote in both the House and the Senate in favor of serving
the largest corporate farms and major grain traders.
They have also slighted I think our President, President Bush, who
last August noted the plight of medium-sized farms, and he promised,
and I quote again the President, ``One of the things that we are going
to make sure of as we restructure the farm program next year is that
the money goes to the people it is meant to help.''
Limiting subsidies for any single farmer is an idea whose time has
come. If we continue with unlimited government payments under the farm
bill for another 6 years, we will see increasing concern among the
American people as farmers with huge land holdings with a lower
marginal cost of production, pocket an ever-increasing share while more
small and medium-size farms go out of business.
The decision for extra production by the very large farmers should be
based on the market, not on a guaranteed government price. The public
expects farm policy to focus on helping average traditional size family
farms. Congress should respect that.
Mr. Speaker, I understand, the gentleman from Florida (Mr. Miller) is
[[Page H2008]]
considering leaving Congress after this next term. He has been a strong
voice in an area that usually has not had a voice, and so he certainly
has the appreciation of me and many Members of this Congress in his
willingness to speak out on some of these tough issues.
Mr. DAN MILLER of Florida. Mr. Speaker, let me repeat some numbers I
said just to confirm what you said about not helping small farmers, 88
percent of the money will flow to the top 20 percent. The bottom 80
percent of the recipients that receive subsidies will only get 12
percent of the money. It is overwhelmingly going to the large farmers.
And really, basically, 90 percent of the money goes to wheat, corn,
cotton, rice and soy beans.
So it is very targeted. Obviously, to get votes they throw in the
peanut program. A few billion here, a few billion for sugar. They also
have added in small chick peas. I do not know what they do with big
chick peas, but small chick peas they will now be subsidized, lentils
and dry peas. Well, I am really excited. We do not do a lot of small
chick peas business. We get them in cans in my district. Lentils,
lentils makes good soup. But why is the Federal Government getting into
the subsidy business? It makes no sense to keep expanding the size and
scope of the federal government.
The Heritage Foundation estimates that this bill will cost entire
taxes to households $1,805, $1,805 per household is the cost to every
tax-paying household in this country.
Mr. SMITH of Michigan. Really, that is essentially through taxes, but
an increase in the cost of their food. If you add to that maybe some
production that the market is paying more than it otherwise would, than
there is even additional costs.
Mr. DAN MILLER of Florida. It is targeted. And I admire these States
for having the gumption to go out and fight for it, the Dakotas and
such.
Florida does not benefit. But I am not saying we should get it
because I am a fiscal conservative.
The tomato people do not get it. The cucumber people, the bell pepper
people in my district, the orange and grapefruit people, they do not
get any subsidy check. This is an entitlement they are creating for the
click pea people and the honey people. It is an entitlement. It is not
even the discretionary appropriations process.
Now there are some good things in this bill. I support agricultural
research. When we look at pests that are brought into this country,
that we need to find ways to solve those problems and we have that
challenge in our citrus industry. But the problem we have in this bill
is it is targeted to big rich farmers and to certain crops in Texas
where they get cotton and rice, and Mississippi benefits from it. So
for those few States that is their sugar daddy, but it is wrong for the
American taxpayer.
Mr. Speaker, I commend the gentleman from Michigan (Mr. Smith) for
taking a leadership role in trying to let the American people know that
this is bad for Congress. This is bad as a Republican and it is just
bad for the taxpayers of this country.
Mr. Speaker, I insert in the Record the following article entitled
``Harrowing U.S. Taxpayers with Ill-Designed Farm Bill.''
Harrowing U.S. Taxpayers With Ill-Designed Farm Bill
Committees of Congress last week reached an agreement on a
farm bill that could cost as much as $100 billion in the next
six years and would increase farm subsidies to $191 billion
in the next decade.
The reconciled farm legislation, which still must pass the
full House and Senate, is an abandonment of the policy
established in the Freedom to Farm bill passed six years ago,
designed largely to end farmers' dependence on subsidies and
allow free markets to determine what and how much they
planted.
But every year since 1996 as the economy slowed and prices
fell, Congress passed special ``emergency'' measures to keep
farmers afloat. Subsidy payments swelled last year to $20
billion.
What's most insulting to taxpayers about the new
legislation is that the vast majority of the money the
government will pay out does not go to save the fabled family
farm, but to increase the profits of big agricultural
companies, owners of huge tracts of land that will then use
the subsidy payments to buy up the little farms next door.
In December, President Bush told Congress he wanted to see
legislation that provides farmers with a safety net based on
savings accounts. He wanted fiscally responsible legislation
based on free market principles that would expand
international trade. The new legislation fails on all counts.
The subsidy payments contemplated for commodity crops like
wheat, corn and cotton will be based on production--the more
you grow, the more money you receive. So of course the farms
with the largest number of acres under cultivation will
benefit most, receiving money to buy the small farms the law
is supposed to protect.
Think of it. The legislation represents an agreement to
subsidize farmers' income at a time when grain and cotton
prices are at record lows and production is at an all-time
high. Not surprisingly, these crops are grown primarily in 10
Midwestern and Southern states that are considered key to the
midterm elections as well as the presidential race in 2004.
The plan amounts to a renewal of corporate welfare to achieve
a quick bump in farm state politicians' fortunes.
Although the Congressional Budget Office estimates the cost
of the measure at $171 billion over 10 years, we don't really
know the total cost because it depends greatly on the
performance of the farm sector. As the Heritage Foundation's
Brian Riedl points out, ``If historical patterns hold and
actual agriculture spending ends up double the forecasted
level, the farm bill's final cost would increase to $342
billion.''
Consider 1996. As Congress contemplated scaling back the
subsidies, lawmakers estimated it would cost some $47 billion
between 1996 and 2002. But when commodity prices plunged
between 1998 and 2000, Congress instead added $27 billion in
emergency payments to farmers. The 1996 law ultimately cost
$123 billion.
Despite these scary numbers, consumers are unlikely to feel
the cost, spread out as it is among millions of taxpayers.
Nevertheless, it is disgusting to contemplate paying out
billions to rich farms owned by agricultural companies. It is
reckless to contemplate subsidizing already thriving
industries.
encouraging yet more production
The farm bill is based on the premise that a surplus of
crops caused prices to drop so low that farmers need
subsidies to recover lost income. Yet under the legislation
the amount of money handed to a farmer depends on how much he
grows--thus encouraging yet more production. Inevitably, that
will lead to increased subsidy payments.
Although the conference bill contains a $360,000 limit,
there are so many exceptions that the number is little more
than symbolic.
To be sure, there are some worthy aspects of this
legislation. Of importance to Florida is a provision that
within two years would require a country-of-origin label to
mark meats, fish and fruits and vegetables raised or grown in
America. And environmental groups should be pleased with the
$17 billion earmarked for conservation.
But those provisions don't justify a bill that perpetuates
misguided and outdated policies. If the reconciled measure
reaches the president's desk, he should veto it.
Mr. SMITH of Michigan. Mr. Speaker, and that is bad for farmers. The
question is how big is a family farm and Members can get into that
argument. But the average-size farm in the United States is 460 acres.
The average size commercial farm that does not have other outside
income has been reported to be 960 acres.
How big would it be if we reached the limits that we are calling for
in this motion that we are passing tomorrow? Using average prices for
the 2002-01 crop year, it would take 27,392 acres of corn to reach the
payment cap without the loophole. It would take 11,195 acres of cotton,
2,683 acres of rice, 5,261 acres of soybeans to run up against the
limit in the House and Senate bills. Wheat and sorghum farmers could
harvest an unlimited amount of acreage without reaching the limit
because average harvest prices exceeded the loan price last year.
The Congressional Research Service, CRS, also calculated the acreage
needed to branch the proposed cap based on the lower harvest period
prices. What farmers do is they try to farm the program. So they get
the largest government benefit when that daily reported price is the
lowest. So when the market is the lowest, that is when they want to go
to their USDA office and say this is the day that I want the difference
between today's local price and the price that you are guaranteeing me
for this product.
So that is going to increase the amount that they get from
government. And then, of course, they try to sell their commodity
either on contract or a forward pricing arrangement where they try to
maximize the market price that they get for that product. So most every
farmer in the United States ends up receiving more per bushel or per
pound of that commodity than is called for in the loan price, the price
support subsidy that is given for commodities.
Limits on payments are popular with both the public, with this House.
We
[[Page H2009]]
need to move ahead and pass this motion to recommit tomorrow. I hope my
colleagues will study this issue. Call any of us on the House floor.
Call any of the 265 members that voted for an identical provision in
our motion to instruct on April 18.
Mr. Speaker, I thank my colleagues for participating.
Mr. Speaker, I also submit for the Record at this time some
additional details and language of the price limitation provisions.
Republican Study Committee,
May 1, 2002.
Quick Facts on the Farm Security Act Conference Report
1. Cost: Condenses the approximately $75 billion, 10-year
cost of the House bill into 6 years.
2. Future Deficits: The high loan rates will stimulate
overproduction, lead to lower prices and force excessive
government outlays. This bill will quickly surpass budget
estimates and lead to dramatic deficits.
3. Farm Income: Government payments already represent more
than 40 percent of net farm income.
4. Food Stamps for Legal Immigrants: Reinstates benefits
(which many states are already providing) for legal
immigrants who have lived in the U.S. for at least five
years. Also restores benefits for legal immigrant children
and disabled individuals without minimum residency
requirements.
5. TANF: Provides five months of transitional benefits for
households leaving Temporary Assistance to Needy Families
(TANF).
6. Across-the-Board Increases in Subsidies: Direct subsidy
support payment rates are raised (relative to current law)
for all crops and soybeans, and minor oilseeds are
established as new contract crops eligible for direct
payments.
7. Milk: Makes permanent the Milk Price Support Program
currently set to expire at the end of May 2002.
8. Dairy: Creates a new 3\1/2\-year National Dairy Program
to provide monthly and certain annual payments to all U.S.
dairy producers. Not one producer has requested this federal
manipulation of the private market.
9. Country-of-Origin Labeling: Implements a costly,
mandatory, country-of-origin labeling program for meat,
fruits, vegetables, fish, and peanuts.
10. Wool and Mohair: Permanently re-institutes the
marketing loans and LDPs eliminated in 1996 and only
partially and temporarily implemented since then.
11. Honey: Permanently re-institutes the marketing loans
and LDPs eliminated in 1996.
12. Peanuts: Establishes new fixed payments and counter-
cyclical payments for peanuts (in the same fashion as such
payments for grains, cotton, and oilseeds). There is no such
provisions for peanuts in current law. ``Buys out'' peanut
farmers at 55 cents-per-pound over five years in exchange for
the elimination of peanut quotas.
13. Apples: Creates a new commodity program.
14. Onions: Creates a new commodity program.
15. Sugar: Eliminates the loan forfeiture penalty in
current law and the House bill.
16. McGovern-Dole: Authorizes $100 million to the George
McGovern-Robert Dole International Food for Education and
Child Nutrition Program, which would permit the President to
direct a selected federal agency to provide U.S. agricultural
commodities and financial and technical assistance for
foreign preschool and school feeding programs to reduce
hunger and improve literacy (particularly among girls), and
nutrition programs for pregnant and nursing women and young
children.
17. Violations of trade agreements: U.S. trade agreements
limit domestic farm supports most likely to distort
production and trade to no more than $19.1 billion per year.
There is little doubt that under this bill we will exceed
these limits: 96 percent of the world's consumers live
outside of the United States; agricultural trade is vital for
our farmers, and this bill will surely spur our partners to
retaliate. For proof, just look at how some of our trading
partners are reacting to the new steel tariffs.
18. Grasslands Reserve Program: Creates a new program to
enroll up to two million acres of virgin and improved
pastureland at a cost of $254 million over six years.
19. Farmland Protection Program: Implements a 20-fold
increase in the funding for this program committed since the
last farm bill.
20. Wildlife Habitat Incentives Program: Implements a 10-
fold increase in the funding for this program committed since
the last farm bill.
21. Conservation Security Program: Creates a new national
incentive payment program for maintaining and increasing farm
and ranch stewardship practices at a whooping cost of $2
billion over six years. If you wanted to walk one mile for
every dollar committed to this untested program, you could
walk between Washington, DC and Los Angeles almost 667,000
times!
22. Market Access Program: More than doubles (to $200
million annually) the funding for this program.
23. Target prices: Re-institutes ``target prices''
eliminated in 1996. [Target prices are the prices per bushel
or other appropriate unit of a covered commodity used to
determine counter-cyclinal payment rates.]
24. Loan Deficiency Payments: Expands authority for loan
deficiency payments (LDPs) to grazed wheat, oats, barley,
triticale, small chickpeas, lentils, and dry peas.
[Currently, LDPs can only apply to grains, upland cotton, and
oilseeds.]
25. Nutrition Programs: Increases funding for several
nutrition programs, including the Emergency Food Assistance
Program and the WIC Farmers' Market Nutrition Program.
26. Free Food: Implements a pilot program through which
fresh fruits and vegetables will be provided for free in
schools.
27. Rural Development Programs: Creates and increases funds
for rural development programs, including programs that fund
high-speed Internet access and the training of local
emergency personnel.
28. Initiative for Future Agriculture and Food Systems:
Gives a 67% increase in funding for this research program.
Reauthorizes and establishes new agriculture research
programs.
29. Forest Management: Creates a new $100-million program
to assist private, non-industrial forest landowners in
adopting sustainable forest management practices.
30. Bioenergy Programs: Creates 126 million-dollars-worth
of new bioenergy programs, including a program to educate
government and private fuel consumers about the benefits of
biodiesel fuel use.
31. Opposed by Conferees: Vice Chairman of the House
Agriculture Committee, Rep. John Boehner (R-OH), and Rep. Cal
Dooley (D-CA)--both conferees on this farm bill--have
released statements opposing the conference report.
____
The Heritage Foundation,
Washington, DC, April 30, 2002.
[From Backgrounder, No. 1542]
Still at the Federal Trough: Farm Subsidies for the Rich and Famous
Shattered Records in 2001
(By Brian M. Riedl)
Members of Congress who are poised to spend at least $171
billion on direct farm subsidies over the next decade would
be wise to examine newly released statistics detailing who
actually receives these subsidies. In 2001, fortune 500
companies and large agribusinesses shattered previous farm
subsidy records, while small family farmers saw their share
of the subsidy pie shrink.
These subsidy programs tax working Americans toward
millions to millionaires and provide profitable corporate
farms with money that has been used to buy out family farms.
The current farm bills would provide even greater subsidies
for large farmers, costing the average household $4,400 over
the next 10 years, while facilitating increased consolidation
and buyouts in the agricultural industry.
how farm subsidies target large farms
Legislators promoting subsidies take advantage of the
popular misconception that farm subsidies exist to stabilize
the incomes of poor family farmers who are at the mercy of
unpredictable weather and crop prices. If that were the case,
the federal government could bring the income of every full-
time farmer in America up to 185 percent of the federal
poverty level ($32,652 for a family of four in 2001) for just
$4 billion per year. In reality, however, the government
spends nearly $20 billion annually on programs that target
large farms and agribusinesses.
Eligiblity for farm subsidies is determined not by income
or poverty standards but by the crop that is grown. Growers
of corn, wheat, cotton, soybeans, and rice receive more than
90 percent of all farm subsidies, while growers of most of
the 400 other domestic crops are completely shut out of farm
subsidy programs. Further skewing these awards, the amount of
subsidies increase as a farmer plans more crops.
Thus, large farms and agribusinesses--which not only have
the most acres of land, but also, because of their economies
of scale, happen to be the nation's most profitable
farms--receive the largest subsidies. Meanwhile, family
farmers with fewer acres receive little or nothing in
subsidies. In other words, far from serving as a safety
net for poor family farmers, farm subsidies comprise
America's largest corporate welfare program.
With agricultural programs designed to target large and
profitable farms rather than family farmers, it should come
as no surprise that farm subsidies in 2001 were distributed
overwhelmingly to large growers and agribusiness, including a
number of Fortune 500 companies. The top 10 percent of
recipients--most of whom earn over $250,000 annually--
received 73 percent of all farm subsidies in 2001.
The main losers in 2001 were the bottom 80 percent of farm
subsidy recipients, including most family farmers, who saw
their collective share of the subsidy pie shrink from 16
percent throughout the previous five years to 12 percent in
2001. This represents a decline of 25 percent in the share of
subsidies received by these farmers.
At the same time, the number of farms receiving over $1
million in farm subsidies in one year increased by 28 percent
to a record 69 farms in 2001. Topping the list was Arkansas'
Tyler Farms, whose $8.1 million bounty was 90,000 times more
than the median farm subsidy of $899--and nearly equal to the
total
[[Page H2010]]
of farm subsidies distributed to all farmers in Massachusetts
and Rhode Island combined.
WHY FARM SUBSIDIES WILL CONTINUE TO TARGET LARGE FARMS
Although farm subsidies have been of greater help to large
farms for decades, the evolution of farm subsidies into a
corporate Welfare program has accelerated in recent years for
3 reasons: Congress has siphoned record amounts of money into
farm subsidies since 1998; and Farm subsidies have helped
large corporate farms buy out small farms and further
consolidate the industry.
The big grain and cotton traders benefit from programs that
encourage more production.
Despite an attempt to phase out farm programs in 1996,
Congress reacted to slight crop price decreases in 1998 by
initiating the first of four annual ``emergency'' payments to
farmers. Subsidies increased from $6 billion in 1996 to
nearly $30 billion a year in the new farm bill. Predictably,
as subsidies increased, the amounts of subsidies for large
farms and agribusinesses also increased.
Although increased subsidies help explain why large farms
are receiving more money, however, they do not explain why
they are receiving a larger portion of the overall farm
subsidy pie. Since 1991, subsidies for large farms have
nearly tripled, but there have been no increases in subsidies
for small farms. Large farms are grabbing all of the new
subsidy dollars from small farms because the federal
government is helping them buy out small farms.
Specifically, large farms are using their massive federal
subsidies to purchase small farms and consolidate the
agriculture industry. As they buy up smaller farms, not only
are these large farms able to capitalize further on economies
of scale and become more profitable, but they also become
eligible for even more federal subsidies--which they can use
to buy even more small farms.
The result is a ``plantation effect'' that has already
affected America's rice farms, three-quarters of which have
been bought out and converted into tenant farms. Other farms
growing wheat, corn, cotton, and soybeans are tending in the
same direction. Consolidation is the main reason that the
number of farms has decreased from 7 million to 2 million
(just 400,000 of which are full-time farms) since 1935, while
the average farm size has increased from 150 acres to more
than 500 acres over the same period.
This farm industry consolidation is not necessarily
harmful. Many larger farms and agribusinesses are more
efficient, have better technology, and can produce crops at a
lower cost than traditional farms; and not all family farmers
who sell their property to corporate farms do so reluctantly.
The issue of concern is not consolidation per se, but
whether the federal government should continue to subsidize
these purchases through farm subsidies and whether
multimillion-dollars agricultural corporations should
continue to receive welfare payments. When President Franklin
Roosevelt first crafted farm subsidies to aid family farmers
struggling through the Great Depression, he clearly did not
envision a situation in which these subsidies would be
shifted to large Fortune 500 companies operating with 21st
century technology in a booming economy.
millions for millionaires
A glance at some of the recipients of farm subsidies in
2001 shows that many of those receiving these subsidies
clearly do not need them. Table 1 shows that 12 Fortune 500
companies received farm subsidies in 2001. Subsidies to the
four largest of these recipients--Westvaco, Chevron, John
Hancock Mutual Life Insurance, and Caterpillar--shattered
their previous record highs.
Table 2 lists other rich and famous ``farmers'' who
received massive farm subsidies in 2001. David Rockefeller,
the former chairman of Chase Manhattan and grandson of oil
tycoon John D. Rockefeller, for example, received a personal
record high of $134,556. Portland Trailblazers basketball
star Scottie Pippen received his annual $26,315 payment not
to farm land he owns in Arkansas. Ted Turner, the 25th
wealthiest man in America, received $12,925. Even ousted
Enron CEO and multi-millionaire Kenneth Lay received $6,019
for not farming his land. Chart 4 shows how these amounts
tower over the amount received by the median farm subsidy
recipient, who has received just $899 per year since 1996.
The Heritage Foundation concludes: The farm bills currently
being considered by a House-Senate conference committee would
further accelerate the transformation of farm subsidies into
corporate welfare programs. Most of their enormous $171
billion cost would subsidize highly profitable Fortune 500
companies, agribusinesses, and celebrity ``hobby farmers''
and help fund their purchases of small family farms, and the
average American family would be left paying $4,400 in taxes
and inflated food prices to benefit millionaires--unless
Congress or President George W. Bush finally puts and end to
this counterproductive waste of taxpayer dollars.
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