[Congressional Record (Bound Edition), Volume 146 (2000), Part 1]
[Senate]
[Pages 605-607]
[From the U.S. Government Publishing Office, www.gpo.gov]



             THE ADMINISTRATION'S FARM SAFETY NET PROPOSAL

  Mr. HARKIN. Mr. President, I want to talk on the issue of agriculture 
and rural America, and the administration's proposal announced by 
Secretary Glickman yesterday for improving the farm safety net.
  At the outset, I am pleased that the administration has recognized 
that the Freedom to Farm bill has failed. The proposal the 
administration came up with is an impetus for change, and I think it 
will do a good deal to remedy the shortcomings of the Freedom to Farm 
bill.
  I think the administration proposals of yesterday are a good step 
forward. I will go through a number of those. However, I want to 
forewarn my colleagues, while I think there is a lot in the 
administration's proposal that is good and positive and moves us ahead, 
I believe there are some shortcomings in it also.
  First, on the conservation end, I believe the administration's 
proposal is a good step forward. It has some very positive features. 
The administration is proposing, for example, that we extend the 
conservation reserve program by 3.6 million acres up to 40 million 
acres. I believe that is a good proposal. That will do a lot to help 
conserve land and water and take some land out of production. It will 
help our wildlife. I think this is a good step.
  There is a proposal for $600 million for the conservation security 
program. This is a program that is designed after a bill I authored to 
set up a conservation security program whereby farmers and ranchers 
could, on a voluntary basis, carry out certain conservation measures on 
their land, and then they would receive payments for doing so. This 
program would be administered by the Natural Resources Conservation 
Service. Again, this is fully voluntary, but it is another means 
whereby farmers could, by engaging in certain conservation practices, 
shore up their income.
  The wetland reserve program has a cap right now of 975,000 acres. The 
administration would enroll an additional 210,000 acres in 2001 and 
another 250,000 acres in each subsequent year--again, a very positive 
step forward, to enroll land in the wetland reserve program.
  There are several other conservation proposals: new funding for the 
farmland protection program, the wildlife habitat incentives program, 
and the environmental quality incentives program. All of these are 
extremely good measures that will both help conservation but also 
improve farm income.
  The risk management provisions are positive. The administration is 
proposing about $640 million for a premium discount program for farmers 
and ranchers who take buy-up levels of crop insurance. That would help 
them reduce the cost and get better coverage. The administration also 
is proposing $100 million annually to develop a policy that covers 
multiyear losses. In places such as North Dakota, South Dakota, some 
parts of Minnesota, and others, we have had areas where they have had 
3, 4, 5 years of drought, floods, crop disease or other damaging 
conditions. We need a risk management program that covers those 
multiyear losses. I am glad to see the administration taking a step to 
address this problem in the budget.
  The administration is also proposing to establish a pilot program for 
insuring livestock. Currently there is no such insurance program. I 
hear a lot from livestock producers in Iowa that there should be some 
form of a risk management program, an insurance program for livestock 
production. Half of all our farm receipts come from livestock or 
livestock products. The administration is proposing a pilot program of 
$100 million annually to provide livestock producers with some form of 
price protection. I believe that is another good provision in the 
administration's proposal.
  There is another area I am very pleased to see the administration 
addressing. That is using $130 million in the next couple of years to 
establish new cooperative development programs to provide equity 
capital for new livestock and other processing cooperatives. This 
proposal would address concerns about market concentration by 
encouraging new entrants into the livestock processing market. It would 
also provide an additional source of income for farmers through the 
ownership of value-added processing. This is key. We have to help 
farmers to form more cooperatives, both for the marketing of their 
grains and livestock and also to develop value-added processing plants 
and enterprises that would help farmers obtain more of the value added 
to the livestock and crops they produce. Again, this is a good 
proposal.
  The administration is proposing to develop a new bioenergy program to 
encourage greater use of farm products for production of biofuels. 
Again, by supporting ethanol and other bioenergy feedstocks, we can use 
some of our land, perhaps even some of our conservation land, to 
produce energy sources such as switch grass, which can then be used to 
generate energy. We have a project ongoing in Iowa right now that will 
do that so we can use land set aside in the conservation reserve 
program. We can grow products such as switch grass. We can cut that 
switch grass and burn it for energy. So we get conservation, plus the 
farmer will get some additional income, plus it will cut down on our 
need for imported energy into this country. I am delighted the 
administration is moving ahead on that.

[[Page 606]]

  Lastly, the area I am concerned about with the administration's 
proposal is sort of the heart and soul of it, which is farm income 
support. Again, the administration recognizes that we need some kind of 
countercyclical type of support. That is true. That is what we need. 
That is what Freedom to Farm does not provide. It does not provide an 
adequate safety net. It does not provide for countercyclical help. 
Nevertheless, the administration proposal misses the mark. They are 
proposing that under this program they are going to have supplemental 
government payments, in addition to the AMTA payments under Freedom to 
Farm, to eligible producers if projected gross income for the crop 
falls below 92 percent of the preceding 5-year average. Gross income 
would include gross market revenues for the crop plus government 
payments, including AMTA payments, marketing loans, and loan deficiency 
payments.
  That is where I have a problem with the administration's proposal. 
First of all, they are going to use a 5-year average. That is fine. But 
what are they using? They are using gross income over 5 years. They are 
throwing into the gross income all of the government payments, loan 
deficiency payments, marketing loan gains, everything. Farm income 
should not be looked upon as government payments. Farm income ought to 
come from the marketplace. That is where the farmer ought to get a 
better share of the marketing dollar. If you are going to use gross 
income for 5 years, what about the farmer's costs? Seed goes up in 
price; fertilizers go up; fuel costs are sky-rocketing; machinery and 
equipment continue to go up. And, thanks to the Federal Reserve System, 
interest rates are going up. So if you are just going to take gross 
income over the last 5 years and not take into account the cost to the 
farmer, you are already downgrading the net income farmers get.
  A farmer can tell you--I don't care how much gross income they get--
they have to know what their bottom line is. You might say a farmer has 
a gross income of $100,000. That sounds great. But you add up all the 
costs of feed, seed, fertilizer, machinery, fuel, equipment, interest 
rates and the like; if his costs are $92,000, the farmer has made 
$8,000. That is what we are seeing happening out there. To use gross 
income over 5 years, I think, is inadequate, ineffective, illogical, 
and not in the best interest of trying to get net income up to farmers.
  That is what I am interested in--net income. I don't care about gross 
income. I want to know what the net income of farmers is. What are they 
going to have left afterward to put away for a rainy day, to help their 
bottom line, to help put their kids through school, to keep a roof 
overhead, to help buy some better machinery in the future, to help 
provide for their retirement, to pay off their land costs? This is what 
we ought to be thinking about.
  I am disappointed that the administration would use gross income over 
5 years and average it out that way. Again, that is better than the 
Freedom to Farm bill, which is fixed and declining payments based upon 
acreages and yields from 20 years ago. That is totally illogical. So is 
this better than Freedom to Farm? Yes, a little bit, but it still 
shortchanges farmers. Quite frankly, I think we are going to have to 
modify that. I am disappointed, I must say, in the administration for 
using gross income figures over 5 years. That is not the right way to 
base the income support.
  Again, they have tried to target the payments to family-size farms. I 
am all for that principle, and, quite frankly, the way they have 
figured it, most of the income support would go to the bulk of the 
farmers who need the help. I won't get into the mechanics of that, but 
it basically looks that way at this point. The idea of sending the bulk 
of the support to family farms who need the help is good, but they are 
basing it over income of 5 years--gross income--and farmers would be 
getting shortchanged.
  Secondly, the administration, in establishing and sort of outlining 
and coming up with this program, said in their release:

       Rising crop surpluses, continued low prices and declining 
     incomes will contribute to increasing farm financial stress 
     in 2000, indicating a need for further Federal assistance. 
     However, added assistance should not be made in the form of 
     emergency legislation with the bulk of the payments in the 
     form of Agricultural Market Transition Act payments. That 
     approach, taken the past two years, is not in the best 
     interests of farmers and taxpayers, as the assistance is ad 
     hoc and ineffectively targeted.

  Well, that is partially true--certainly about the AMTA payments. 
Listen to this again:

       Rising crop surpluses, continued low prices, and declining 
     incomes will contribute to increasing farm financial stress 
     in 2000, indicating a need for further Federal assistance.

  There is nothing in their program--the administration's proposal--
that will tend to reduce crop surpluses. A little bit of the land taken 
out for the CRP, or WRP, that is fine. That is mostly marginal land 
anyway. But there is nothing in here that will tend to get our 
surpluses down and thus, increase the market price, or the price 
farmers get when they sell their crops. That is the problem.
  It seems to me that the administration has sort of bought into the 
idea that we are going to plant fence row to fence row, we are going to 
continue to produce everything we can produce--the sky is the limit--
and we are going to come in with some kind of targeted Federal 
assistance. On the one hand, I believe we do need some Federal 
assistance. On the other hand, we need to get out of the mindset we are 
in; we need to have a different mindset, one which says we can shape 
programs that will help get the surpluses down and thus increase the 
price at the farm gate.
  I would hope that we can put some money into a shorter-term reserve 
program, something that would be 2 years, or maybe a 3-year program, to 
facilitate taking some land out of production and putting it into 
conservation use for a while. I am talking about land we will not get 
into the 10-year CRP. Farmers will not tie up relatively productive 
land by agreeing to take it out for 10 years. You can't pay them enough 
to do it. But I believe they will take some land out in this period of 
very low commodity prices for maybe 2 years. That should help alleviate 
the surpluses and improve market prices. I would think we would have a 
target of saying we want to enroll a certain number of acres in a 
short-term program, which would tend to get some of our surpluses down. 
So I hope we can come up with the funding to attract land into a 
shorter-term reserve or paid set-aside program.
  Lastly, there is nothing in the administration's proposal that will 
provide farmers the assistance they need to store grain so they can 
market their grain in a more orderly fashion. The Farmer Owned Reserve 
was taken away by the Freedom to Farm bill. It was one of the best 
programs we ever had. Right now, farmers harvest grain and they can put 
it under loan for a time, but there are no storage payments. And then 
they have to sell their crops even if the price is very low. Well, we 
need a program for on-farm storage, where they can store it at the farm 
or in an elevator, but the payments ought to go to the farmers.
  There is nothing in the administration's proposal that would do that. 
Now, there is a provision--and I haven't looked at it that closely--
which says:

       Using existing authorities to implement a new on-farm 
     storage loan program to facilitate farmers' marketing 
     opportunities.

  Well, I don't know exactly what that is, a loan program. I am talking 
about storage payments to farmers, which we had before, and not some 
kind of a loan program just for the facilities. So I think while there 
are some good things in their proposal in terms of the conservation 
programs that are in there, the new amount of money for cooperatives, 
to encourage cooperatives for marketing--I ask unanimous consent for 
another 3 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. There is a good proposal in there on the bioenergy. But 
when you get to the heart of it, and

[[Page 607]]

what we are going to do to get away from this mindset of the Government 
supplying the income to the farmers--that is the heart of what the 
problem is--and get to the mindset of how do we get the prices up at 
the farm gate, this is where the administration's proposal falls short. 
I am hopeful as we move ahead we can convince the administration to get 
off of that mindset, to provide for perhaps some increased loan rates 
for farmers, to provide for storage payments to farmers, and to provide 
for a shorter-term paid set-aside program. Again, as the administration 
said in their proposal:

       Rising crop surpluses, continued low prices, and declining 
     incomes will contribute to increasing farm financial stress 
     in 2000, indicating a need for further Federal assistance.

  We have to get off of that mindset. We have rising surpluses. Well, 
let's get them down and provide for the kind of programs that will get 
the surpluses down. Continued low prices--get those low prices back up 
at the farm gate--that is the mindset we have to get on, and I hope we 
can take the good things in the proposal, but get to the heart and soul 
of it, which is getting farm income up--not from Government payments, 
but from the prices farmers receive for their products. That is what we 
have to do.
  I see my friend from Minnesota is here to speak on this. Again, we 
have talked about this, and we share the same strong feelings that this 
is not adequate, this needs some additional work in the Congress. I 
hope we can get the administration to help us on that.
  I yield the floor.
  Mr. WELLSTONE. Mr. President, I say to the Senator from Iowa--and I 
see the Senator from Oregon--I want to come out on the floor next week 
with some other Senators from farm country, and I think we should talk 
more about it. As I understand the Senator from Iowa--and he can 
correct me if I am wrong--it is that we don't want to wait until 2002 
for a new farm bill. We want to reopen this farm bill and give our 
farmers some leverage so they can get a decent price.
  What we are doing is essentially saying to these grain companies and 
to these packers: Go ahead. You can get by with not having to worry 
about paying producers as little as possible because you have all the 
power of the marketplace. Then they will have enough money to support 
their families. Then we come in and provide them with some money so 
they can support their families. We are basically subsidizing these big 
grain companies and these packers. We are not getting to the root of 
the problem. If it is a farmer-owned reserve we are talking about, CRP, 
mid-size and family farmers, that is what people want. Zeroing in on 
mid-size farmers is what people want. They want to be able to make a 
decent price.
  Isn't that really what the Senator from Iowa was saying?
  This will be on my time.
  Mr. HARKIN. It is exactly what we are talking about. I point out that 
in the administration's proposal for their farm support this year, they 
will use a 5-year average of gross income--gross income. Look, what 
about the increased price of fuel, machinery, fertilizer, seed, and, 
thanks to the Federal Reserve System, increased interest rates? I said 
before and I say to my friend again that the farmer has a $100,000 
gross income averaged over 5 years. But if his costs are $92,000, what 
does that mean? It doesn't mean anything.
  Mr. WELLSTONE. I say to my colleague from Iowa the other thing which 
worries me is we had an estimate the other day by the USDA that net 
farm income was going to go down 17 percent this year. As I look at 
their figure for some sort of income support, it isn't going to be 
enough to provide even a safety net. But the point is it doesn't deal 
with the root causes.
  Let's have some fight. Let's say this farm bill is a miserable 
failure. Let's have some antitrust action. Let's have a level playing 
field. Let's give our farmers some leverage so they can get a decent 
price in the marketplace.
  I think there are a number of us who are going to come out on the 
floor with just those proposals.
  Am I correct?
  Mr. HARKIN. The Senator is absolutely correct. I look forward to 
working with him and others to set forth proposals that will move us in 
the right direction.
  Mr. WELLSTONE. I will make one final point, I say to the Senator from 
Oregon. It looks to me as if--I think it is going to happen--the 
religious community, the AFL-CIO, the farm organizations, and the 
environmental organizations are all beginning to organize for March 20-
21. Basically, rural America is coming here to raise the roof. I think 
it will be healthy for all of us.
  I think the pressure should be put on dealing with the price crisis 
and dealing with other issues that are important to rural America, 
which for too long have been out of sight and out of mind. I think we 
have to get off the dime. We have to make a difference.
  Mr. President, I want to reinforce what my colleague from Iowa said. 
I think what the President and the administration suggested for family 
farmers is too timid. Where is the fight? I appreciate getting some 
help to people--sort of safety-net help. Getting some income to our 
family farmers is not going to be enough. It doesn't deal with the root 
of the problem. We don't want to wait until 2002 to write a farm bill. 
It is a failed farm bill. It is a failed farm policy. We are grinding 
family farmers up into pieces. We are driving people off the land. It 
is an economic convulsion, and it calls for bold action.
  I don't know where the fight is. To tell you the truth, I don't see 
the fight. I say to the Senator from Iowa that we have different 
positions in the Presidential race. This has nothing to do with who we 
are supporting.
  But where is the fight? Where is the boldness? Where is the 
leadership? We need people--starting with the President--to come out 
and say this ``freedom to fail'' bill has not worked. There is 
tremendous economic pain. Time is not on our side. There is an economic 
convulsion out there. Family farmers in rural communities want a decent 
price. We want farmers to get a fair shake in the market. We want 
antitrust action. We want a fair trade policy. We want stable 
agriculture. We want a different farm policy. In all due respect, this 
proposal will only help people somewhat. Thank you. But we have to do a 
lot more.
  Mr. HARKIN. Will the Senator yield on that?
  Mr. WELLSTONE. I am pleased to yield.
  Mr. HARKIN. We have to get away from thinking that agriculture is 
some sort of a minor entity out there, some kind of a sidebar issue. 
Agriculture is still, if I am not mistaken, something like 20 percent 
of our gross national product. I think we are up from 20 percent, if I 
am not mistaken. People still have to eat. Food is one thing we can't 
do without. Yet we sort of treat agriculture as sort of--well, it is 
sort of a sidebar, sort of a side item. We have to think of agriculture 
as a central, integral part of our entire economic structure in 
America.
  Mr. WELLSTONE. I thank my colleague.

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