[Congressional Record Volume 148, Number 95 (Monday, July 15, 2002)]
[House]
[Pages H4673-H4675]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  GENERAL PERCEPTION OF THE FARM BILL

  Mr. OSBORNE. Mr. Speaker, I would like to thank the gentleman from 
Colorado for yielding this time, appreciate his insights on the 
business community and some of the difficulties we have been having; 
and Mr. Speaker, tonight I would like to discuss the general perception 
of the farm bill that was passed in May, the Farm Security and Rural 
Investment Act.
  It has been very interesting as we have watched what has gone on 
around the country, particularly in the urban areas, particularly areas 
of both coasts here in Washington.
  The farm bill has been labeled as obscene. It has been labeled as 
fat. It has been labeled as pork, et cetera. I would like to read just 
three quotes from leading newspapers that pretty much express the 
general sentiments that we have been hearing.
  This was from the Las Vegas Review Journal. The headline was ``Farm 
Welfare,'' and the body of the article said this: ``The House voted to 
slide backwards some 70 years, choosing socialism and abandoning 
market-based reforms in the Nation's Stalinesque farm policy in voting 
for the new farm bill.'' Those are very strong words, that we decided 
to slide back 70 years, chose socialism and Stalinesque policy.
  The Washington Post, under the headline: ``Grins for Mr. Bush,'' 
editorialized, ``Mr. Bush signed a farm bill that represents a low 
point in his presidency, a wasteful corporate welfare

[[Page H4674]]

measure that penalizes taxpayers and the world's poorest people in 
order to bribe a few voters.'' So the farm bill was labeled as a bribe 
and was a low point of the Bush presidency.
  The Wall Street Journal, under the headline, ``The Farm State 
Pigout,'' says this: ``That great rooting snooting noise you hear in 
the distance, dear taxpayer, is the sound of election year farm State 
politics rolling out of the U.S. Congress. This alone amounts to one of 
the greatest urban to rural wealth transfers to wealth in history. A 
sort of farm bill great society.''
  The question is are these perceptions, are these quotes truly 
representative of the farm bill? Is this what we are all about? I would 
like to take a look at some of the actual data concerning this farm 
bill that was passed in May.
  We will see that the spending on agriculture in 1999 was about $19 
billion. In 2000, under Freedom to Farm, spending was roughly $33 
billion; and in 2001, a year ago, it was roughly $23 billion. So those 
were the last 3 years of Freedom to Farm, and the amounts above these 
marks here were emergency payments. In other words, farmers were losing 
their livelihood so Congress passed emergency payments.
  Here we see a substantial increase of about $12 billion emergency 
here, an increase of 6 or $7 billion for emergency payments. The 
interesting thing is that if we look at this very carefully, we will 
find that the average here of these last 3 years of Freedom to Farm 
were $24.5 billion per year.
  We look at the new farm bill, 2002. We are projecting roughly $19 
billion. Then it goes up to 22. Then it starts to level off, and from 
that point on it is projected to go down. So what we are talking about 
in the first 4 years of the new farm bill, the projection, a little 
less than $21 billion a year, which means that is $3.5 billion less 
than what we averaged in the previous 3 years under the old farm bill.

                              {time}  2215

  Now, as far as I can tell, this does not represent a huge increase. 
Actually, it is a decrease. I do not believe that this is irresponsible 
policy.
  And so the thing that people need to remember is that the reason that 
the new farm bill was passed was people decided that we could not 
continue to rely on emergency payments. These emergency payments were 
not made until October-November, so the banker did not know at the 
planting time what the farmer was going to receive and the farmer did 
not know what he was going to receive until well after harvest. So in 
this policy we have folded in what is emergency payments, and we 
believe this is a more reasonable approach and, actually, probably, 
will save money at this point.
  Is this farm bill 15 percent of the Federal budget? We have heard of 
all the anguish, the weeping, wailing, and gnashing of teeth about how 
expensive it is. Is it 20 percent of the total tax bill? Is it 25 
percent of the Federal budget? The answer, Mr. Speaker, is that this 
farm bill costs roughly one-half of 1 percent of the total Federal 
budget. Roughly one-half of 1 percent. And, actually, less than one-
half of 1 percent goes to farmers, because 30 percent of the farm bill 
goes to school lunch programs through nutrition programs.
  So we feel the question probably should be asked then at this point, 
is that one-half of 1 percent being well spent? Certainly, even though 
it is not a huge amount of the Federal budget, do we want to waste that 
money? I guess if people think about it, they will realize that in that 
one-half of 1 percent, the United States has the safest food supply in 
the world. We have no foot-and-mouth disease in this country. We have 
no mad cow disease in this country. When we buy a piece of fruit at the 
grocery store, we know it has not been sprayed by DDT. So we have the 
safest food supply, we have the most diverse food supply, and we also 
have the cheapest food supply in the world.
  We spend roughly 9 percent of our total income on food in this 
country, whereas most countries are spending 20, 25, 30, sometimes as 
much as 50 percent for food. So I think that this one-half of 1 percent 
is certainly well spent.
  Another question that might arise is, are farmers getting rich? That 
is the perception, that this farm bill makes farmers wealthy and it is 
sort of a welfare system, as one of the newspaper articles said, for 
agriculture. Actually, I guess I can speak in terms of what my own home 
State has experienced. Last year, we lost 1,000 farmers in the State of 
Nebraska. These were farmers who no longer could keep going. Most of 
them left because of financial reasons.
  The census figures in 1997 indicated that there were 5,500 farmers in 
the State of Nebraska that were under the age of 35 years of age. Ten 
years before that, in 1987, there were 12,600 farmers under 35 years of 
age. So we lost 60 percent of our farmers 35 years of age and younger. 
There simply are not young farmers in the business any more because it 
is not profitable.
  So you may say, well, certainly the older farmers increased. And 
actually, again in Nebraska, the ages between 60 and 64 declined. Two 
thousand farmers left the profession at that point. So we have been 
losing all age brackets in the farm community.
  In addition, I might mention, Mr. Speaker, that at the present time 
Nebraska has the three poorest counties in the country in terms of 
average per capita income. Now, that does not mean just three of the 
poorer. It is the three poorest, one, two and three. In one of these 
counties, the average per capita income is a little over $4,000 a year 
per person. The other two counties are in the $5,000 range. All of 
these counties do not have any urban area. They are totally rural. They 
are totally dependent upon agriculture. So I can assure my colleagues 
that we do not find that agriculture is something where people are 
getting rich.
  The environmental working group has published a Web site in which all 
of the farm payments over the preceding 4 years have been published and 
anyone can access that site and see the horror stories that Scotty 
Pippin, the NBA player, got some farm payments; and we see cases where 
multiple entities of 10 or 15 or 20 or 30 people have gone together and 
maybe they have received payments of $1 million. So the assumption is 
that those payments represent net profit. And yet I guess anybody in 
agriculture understands that that is not the case.
  Now, let me give an example. Over the past 3 or 4 years, the pricing 
of a bushel of corn, what it will bring at the elevator, has probably 
averaged about $1.70 per bushel. The cost of production for a bushel of 
corn is roughly $2.20 per bushel. So after paying for fertilizer, seed, 
equipment, the combine, the tractor, the pesticides, it costs about 
$2.20 a bushel, on the average, to produce a bushel of corn, which 
means, obviously, that the farmer is losing 50 cents a bushel.
  So if that farmer has a couple thousand acres of corn and they are 
losing 50 cents a bushel and their yield is roughly 200 bushels per 
acre, that means, essentially, that the farmer would need a $200,000 
payment just to break even. Now, that does not allow the farmer any 
profit. It does not allow for any surplus of any type and obviously, he 
goes out of business if all he does is break even. So most of these 
farm payments have been to cover rather severe deficits in the farm 
economy.

  The question we might ask ourselves is, well, why do we need a farm 
bill? People often wonder, well, the person who runs the drugstore on 
Main Street, the person who has an implement dealership or a clothing 
store has no guaranties. If Wal-Mart moves in, they have trouble. Why 
in the world should we help farmers? Let me talk a little about that 
tonight, Mr. Speaker.
  I believe there is some reasons why we want to think about the 
importance of agriculture and why agriculture deserves some special 
attention.
  First of all, farming is a unique industry in this sense. Farming is 
almost totally weather-dependent. I cannot think of any other industry 
where you can work a whole year and do things right, and in 10 minutes 
of hailstorm lose your whole crop. You cannot make it rain nor can you 
have it rain too much. You cannot prevent a 60 or 70-mile-an-hour 
windstorm that knocks down all your corn or your wheat. So because of 
the fact that agriculture is totally weather-dependent, it is somewhat 
unique.
  Second, in regard to agriculture, it is impossible to control 
inventory. When you start to plant your crop in the spring, you have no 
idea what your

[[Page H4675]]

yield is going to be, you have no idea what the yield around the United 
States is going to be, you have no idea what the yield in Australia or 
China or the European Union is going to be. And so there is no way, if 
there is too much of a crop, to cut back at that point.
  Now, if you work for Ford, and there are too many SUVs on the road, 
you close down a production line or you begin to cut back on a whole 
plant. If there are too many suits of clothes on the market, then you 
begin to produce fewer suits of clothes. It is impossible for the 
agriculture industry to do this in adjusting their inventory.
  Third, producers do not set the price. Now, I cannot think of any 
other industry where the person producing does not decide what it is 
going to cost, what the price is going to be. If you produce an 
automobile, you put a sticker on there that says $20,000, $25,000, 
$30,000. A suit of clothes is $300, $400, or whatever. Yet the farmer, 
when he has harvested his crop, goes down to the elevator and finds out 
what the elevator operator will pay him for his crop. It may be $2.50 
for a bushel of corn, it may be $1.50 for a bushel of corn. The same is 
true of the livestock producer. The cattleman has to go to the packer, 
the pork producers go to the packer to find out what he can receive. So 
in agriculture, the producer does not set the price.
  Fourth, and this is a very important point, farming is critical to 
national security. And the reason I say this is if we think about our 
oil industry, our petroleum industry, about 15, 20 years ago we 
realized that we could buy petroleum from OPEC for roughly $12 a 
barrel, $10 a barrel. In this country, it was costing $18, $22 a barrel 
to produce. So what we did is we quit exploring, we shut down our 
wells, and we began to decrease the number of refineries and began to 
shift our petroleum industry overseas. We decided if we could get it 
for $12 a barrel from OPEC, that was a good deal. So now, all of a 
sudden, we wake up and one day we find that we are roughly 60 percent 
dependent on OPEC for our oil.
  As we begin to add up the price of the Gulf War, as we begin to 
consider what it cost to keep the fleet in the Gulf and all of the 
military maneuvers that we have had to protect our oil supply, we would 
probably have to admit that we are now paying $60, $70, $80, maybe even 
$100 a barrel for that oil. So we have let our petroleum industry slip 
overseas.
  The point is, Mr. Speaker, that this can easily happen to our 
agriculture. If we begin to ignore agriculture, it can easily go to 
other countries and then, all of a sudden, we are dependent upon our 
food supply, which is even more critical than being dependent upon the 
petroleum industry from OPEC.
  Fifth, there is no level playing field worldwide. So it is assumed 
right now by many who have criticized the farm bill that the United 
States is the only country in the world that is helping our farmers, or 
farmers in general. And, actually, Mr. Speaker, the European Union 
subsidizes their farmers more than $300 per acre, Japan subsidizes 
their farmers more than $1,000 per acre, and in the United States our 
average subsidy is $45 per acre. So it is a tremendous disparity here. 
It is much less than these other nations are subsidizing their 
agriculture.
  So when we throw in the fact that our agricultural exports are being 
taxed or have tariffs of roughly 60 percent as they are sent overseas 
to other countries, and as goods come in from other countries to our 
Nation the tariff is roughly an average of 12 percent, and we look at 
that great disparity and then look at the difference in subsidization, 
we realize our agriculture producers right now are at somewhat of a 
disadvantage.

  Sixth, I might mention this, that land, labor, and production costs 
vary widely worldwide. In Brazil, for instance, you can buy top quality 
land for $100 to $500 an acre. About an average of $250 an acre. And 
that is top grade land. The topsoil is 50 feet deep, enough rainfall to 
sometimes produce two crops in one year on that cropland. And cropland 
like that in the United States would cost at least $2,500 to $3,000 an 
acre. So you can buy it in Brazil for one-tenth what you would spend 
here in the United States.
  The labor cost in Brazil is 50 cents an hour. Here in the United 
States it would be at least 20 times that amount. And, of course, in 
Brazil and many South American, many Third World countries, there are 
absolutely no environmental regulations. Of course, here in the United 
States, we have those regulations.
  So the point of all this argument is that if we do not do something 
to protect our farmers, if we do not have a farm bill of some kind, we 
will simply be run over by what is going on around the rest of the 
world, and we need to be competitive because we do not want to rely on 
someplace else and the rest of the world for our food supply.
  Let me also mention another item here, Mr. Speaker, that I think is 
very important. It may have some relationship to our previous speaker, 
the gentleman from Colorado. And the reason I am going through all of 
this background work is that at the present time we are experiencing a 
tremendous drought throughout much of this country, particularly in the 
Western States.

                              {time}  2230

  At the present time, roughly 40 percent of the United States is in a 
severe drought situation. In an average year, we have 15 percent of the 
country in a drought. So we have reached a crisis situation. Looking at 
this chart, we can see the areas that are heavily affected. Most of the 
western States are in severe drought. For instance, the home State of 
the gentleman from Colorado (Mr. McInnis) had the driest spring ever in 
recorded history, the last 97 years. They are in this black area. 
Arizona is in a huge drought. Southern California is in the same 
situation. We see the same thing in North Dakota, South Dakota, Kansas, 
Nebraska and so on.
  Our livestock producers, particularly our cattlemen, have no pasture. 
The roots are dead in the pasture. There is no moisture. Cattlemen are 
very independent people. These people have no safety net. They do not 
participate in hardly any of the farm bill. Right now we are concerned 
because these folks need some type of disaster assistance. Yet because 
of the perception of the farm bill, that it is so fat, there is so much 
money for agriculture, it is going to be very, very difficult to get 
any help for these people who are going to have to sell their herds 
because there is no pasture.
  When everybody sells their herds at the same time, there is a huge 
glut and the price goes way down. We have been told that we have to 
have an offset from the present farm bill. In other words, we have to 
get some money from the farm bill that is already in the bill from 
somewhere else, and that is going to be very, very difficult to do. So 
the perception makes it difficult for agriculture at the present time.
  If we think about New York State, if they had a huge flood, we would 
expect that they would get some disaster assistance, and we would hope 
that somebody would not say New York State has already received a great 
deal of disaster help for other causes and, therefore, they really 
should not get any more. This is the mentality that we are concerned 
about with regard to this drought and particularly with regard to our 
livestock producers at the present time.
  Mr. Speaker, this really is pretty much the summary of what I wanted 
to say tonight. I appreciate the gentleman from Colorado (Mr. McInnis) 
yielding me this time. I would imagine that the gentleman has a comment 
or two regarding the drought situation that he has endured in his 
State.
  Mr. McINNIS. Mr. Speaker, reclaiming my time, I think the comments by 
the gentleman from Nebraska (Mr. Osborne) are particularly appropriate 
at this point.
  Out in Colorado, we are suffering the most significant drought that 
we have seen in the last 97 years that the gentleman from Nebraska (Mr. 
Osborne) mentioned. The only reason I say that, that is as far back as 
the records are kept. It is impacting our cattle people significantly. 
We are looking for a pretty tough year out there. I appreciate the 
gentleman's comments, and I thank the gentleman for working with me 
this evening.