[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[House]
[Pages 16081-16085]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  2015
                             THE FARM BILL

  The SPEAKER pro tempore (Mr. Flake). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from Nebraska (Mr. Osborne) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. OSBORNE. Mr. Speaker, during the past 30 days of working recess, 
the number one topic in my part of the country has been the drought, 
and I would like to display a map of the drought as was portrayed at 
the end of August.
  Note here that roughly 45 percent of the country is in an extreme 
drought. The area that is brown is so excessive that there is 
practically nothing growing. Pastures are burned up, no dry-land crops, 
and even irrigated crops have a hard time surviving. The red area is a 
little better. Again, very little can grow there because the rainfall 
has been probably less than 50 percent of normal, and we have even seen 
some of this on the east coast. So very, very

[[Page 16082]]

few times in the history of our Nation have we had a drought that is 
this widespread, 45 percent, because in a normal year we normally have 
a drought covering somewhere between 10 and 15 percent of our Nation.
  The other thing that has been remarkable is not just the extent of 
it, but the severity of it. As I mentioned, we have a huge proportion 
of the country that is in extreme drought condition. Most years you 
might have a very small percentage that would have that type of 
drought. The other thing to mention is that this has been a very 
persistent drought. Many of these areas are currently in their 3rd or 
4th year of drought conditions, and so when a farmer or rancher has had 
to go through multiple years, obviously he becomes even more distressed 
than if it was just a 1-year occasion.
  So the situation is dire. Some type of help is needed, some type of 
disaster assistance. And the one thing I would like to point out is 
that in recent farm bills we have had what is called emergency 
assistance and in the last 3 or 4, 5 years we have averaged somewhere 
between 6 and $7 billion in emergency spending. That emergency spending 
has been primarily due to low prices, the fact that no one can get an 
adequate return on their crop.
  What we are talking about now is not low prices. We are talking about 
no crop at all, and we are also talking about really dire circumstances 
for the livestock producers because in these areas where there is no 
pasture, what has happened is that a great many people who own cattle, 
and in some cases even hogs, they have had to sell off their herds 
because there is nothing to feed them; and most of their feed for the 
winter has already been used up as well.
  So because of the glut on the cattle market, and in some cases the 
hog market, what we are finding is terribly low prices; and people are 
losing tremendous amounts of money, and a great number of cow/calf 
operations will be simply driven outside of existence because of this 
and of course a great many farmers as well. So this is a very difficult 
situation and one would assume that under these circumstances, it would 
be almost automatic that we would be able to come up with some type of 
assistance because the economic impact here will be much greater than 
the wildfires that we have seen in the West; and of course those were 
very serious and we certainly needed some aid, and we gave $700 million 
very quickly to provide assistance for the damage that was accorded to 
those wildfires; and yet here just in my State alone we are talking 
about roughly $1.4 billion, State of Nebraska, and we would multiply 
that by 10 or 15 when we look at this larger region. So the damage is 
tremendous.
  What we notice is that if we have a hurricane such as we had down in 
southern Florida a few years ago or if we had a tornado or a wildfire 
or even 9-11, the events are very dramatic. We see destruction, we see 
television 30-second soundbytes, and in a drought it is more insidious. 
It is slower, but the economic impact is every bit as great, if not 
greater than some of these other situations that we have addressed with 
disaster assistance. So, anyway, we feel this is a difficult situation.
  What I would like to do at this point, Mr. Speaker, is to amplify 
some of the arguments that have to do with why we are having such a 
difficult time getting the word out here in Congress and getting 
approval nationally for disaster assistance for agriculture; and the 
big problem that we have is that there is a widespread belief that the 
new farm bill that was passed just a few months ago is very fat, that 
it has all kinds of money in it; and therefore because of the excessive 
amounts of money in the farm bill, any disaster assistance for 
agriculture should be covered by the farm bill. And so you might say, 
well, is this perception correct, this perception that the farm bill is 
really overloaded with money?
  And I would like to point out just a few newspaper articles that I 
think pretty much capture the tenor of the time. One major newspaper 
said this and the headline said ``Farm Welfare'' and went on to say in 
an editorial ``. . . 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. Here they 
are talking about a Stalinesque farm policy which is, of course, 
totally a socialized system which is absolutely not true.
  The Washington Post said this: ``Cringe for Mr. Bush.'' This was the 
headline. And the editorial said ``Mr. Bush signed a farm bill that 
represents a low point in his presidency, a wasteful corporate welfare 
measure that penalizes taxpayers and the world's poorest people in 
order to bribe a few voters.'' So the President took some tremendous 
hits for signing this farm bill and the idea being that this was just 
done to appease a few farmers to get some votes and it was done at the 
expense of urban citizens and also the world's poorest countries.
  We will examine the accuracy of this statement in a little bit, but 
this again captures the tenor of the time. This is essentially how this 
is perceived in so many quarters, particularly in urban areas.
  The Wall Street Journal went on to say this. The headline was ``The 
Farm State Pig Out.'' The editorial said, ``That great rooting, 
snooting noise you hear in the distance, dear taxpayers, 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 in history, a sort of farm bill Great Society.''
  So the gist of this editorial was that it is going to be a huge 
economic transfer from urban areas to rural areas, kind of a get-rich-
quick scheme.
  So let us examine this a little bit in greater detail. Did the 
President really sell out for the farm vote? Did we really have a 
tremendous urban-to-rural transfer of wealth? Is the new farm bill 
obscene, as so many have said?
  I guess what we might do here is look at some figures. We will note 
here, Mr. Speaker, that under Freedom to Farm in 1999, 2000, and 2001, 
we spent an average of $24.5 billion a year on agriculture. This year 
in 2002, under the new farm bill, we are projected to spend $19 
billion; in 2003, about $22 billion; then $21 billion, and then $20 
billion. It will tail on down from there.
  So what we are saying is, projected for the first 4 years of the new 
farm bill, we are going to spend less than $21 billion a year on 
agriculture, whereas in the last years of Freedom to Farm, we spent 
$24.5 billion. So if that is the case, can we really say that this new 
farm bill is obscene, it is a sell-out to rural America? Is it 
something that is irresponsible? Should the President be castigated for 
signing this bill?
  I think very clearly the answer in this case is no, that this is a 
responsible piece of legislation. The thing that we will see later on 
is that actually now we have had enough production and crops are pretty 
much done in their growing season, and the prices are becoming more and 
more fixed for this year.
  Actually, this year, in 2002, and we know this is not going to be a 
projection, the reality is going to be that we are going to spend not 
$19 billion but we are going to be spending somewhere in the range of 
$15 billion this year, $14 billion, for the new farm bill; and we will 
go into the reasons for that.
  Instead of being up here, this bar should be down here. There is some 
pretty good evidence that leads us to believe that these may not be as 
high. So, actually, these estimates here may turn out to be a little 
bit on the high side, and obviously the new farm bill may actually 
prove to be a considerable savings over the old farm bill.
  Let us talk about this a little bit, too. Is the new farm bill a 
large part of the budget? As we read those editorials and as we hear 
conversation, we would assume that payments to the farm sector are 
maybe 10 percent of the total Federal budget; maybe 15, maybe 20, maybe 
even 25 percent.
  What is it? How much do we spend each year on agriculture? The actual 
case is that we spend a little bit less than or right at one-half of 1 
percent of the Federal budget on farm policy. So out of every $200 of 
tax money that is spent, roughly $1 goes to the farm economy, $1 out of 
every $200. So this

[[Page 16083]]

is not a huge giveaway. This is not something that breaks the Federal 
budget. I think it is important to realize this.
  Also, I think it is important for people to understand that out of 
that one-half of 1 percent that goes to the farm bill, the farmers do 
not receive all of that money. There are school lunch programs, there 
are conservation issues, there are environmental accounts. So actually 
the farmer himself receives only somewhere in the vicinity of 65 
percent to 75 percent of that one-half of 1 percent, so it is not 
nearly as big a boondoggle as some would have us believe.
  What do we receive in return for that one-half of 1 percent that we 
are spending in tax dollars? What we have is the most diverse, the 
cheapest, and the safest food supply in the world.
  In the United States, we have no foot-and-mouth disease, where many 
other countries do have that in their livestock herds. We have no mad 
cow disease, or BSE, in this country. We do not use DDT. We do not use 
dangerous chemicals in our livestock and in our crops. So for all of 
this, we have a very safe food supply, we have a very diverse food 
supply, and we are totally self-sufficient. We do not have to import, 
although we do import some, but we would not have to import to sustain 
ourselves.
  Then lastly, I would like to make the point that we spend less than 
10 percent of our total income on food. Now, most countries spend much 
more than that. They spend 15, 20, sometimes 25 or 30 percent of their 
total income to purchase food. In the United States, we have a cheap 
food supply that is safe, that is diverse, and is the best in the 
world. For that, we are spending roughly one-half of 1 percent.
  Another common myth is that farmers are getting rich off of this farm 
program. Let me just go through a few numbers here. Last year in the 
State of Nebraska, we lost 1,000 farmers in 1 year. There are not that 
many to lose anymore. We are down to under 2 million farmers and 
ranchers in the United States, whereas at one time it was many, many 
times that.
  In 1987, there were 12,600 farmers under the age of 35 in the State 
of Nebraska. Ten years later, in 1997, according to the U.S. census 
figures, the number of farmers under the age of 35 in the State of 
Nebraska was 5,500, so that is less than half of what we had 10 years 
before. That is a trend that is seen throughout rural America, not in 
Nebraska but in all States everywhere.
  So we are running out of young farmers, and we are running out of 
farmers, period. If it was so lucrative, if this was something that was 
a get-rich-quick scheme, then we would certainly see more young people 
coming into it. We would certainly see more people staying in farming 
and more people in ranching.
  The facts are that this is a very, very difficult profession; and it 
is very, very hard to make a living in it.
  One of the things that I have noticed in traveling my district is 
that out of the poorest counties in the United States, the three 
poorest counties, one, two, and three in ranking, are in my district in 
Nebraska. These counties are totally rural. They relay totally upon 
farming and ranching. There are no metropolitan areas, or there is not 
even a large town in any of these counties. So when we talk about per 
capita income, we are talking somewhere in the range of $6,000 per 
person. We can go to inner cities, to any part of the country, and we 
will find that the poorest counties in per capita income are in rural 
America. This is not a wealthy situation.
  I think one of the reasons we have this perception of how much of a 
giveaway the farm bill is is that the Environmental Working Group put 
up a Web site this past year in which they published the farm payments 
to all those who received payments over the last 4 years. Naturally, it 
is the exception that catches our eye.
  A lot has been made about the fact that Scotty Pippen, the 
professional basketball player, received some farm payments. He 
probably owned a farm and probably qualified for some farm payments.

                              {time}  2030

  But the typical farmer, the average person who is in farming and 
ranching, is not Scottie Pippin. They point out the fact that some 
people make large amounts of money. And the assumption is if somebody 
got a $200,000 check or a $300,000 check or a $500,000 check, that that 
is net profit, that that farmer took that check to the bank and put it 
away because it was profit.
  Let us take a hypothetical situation here. Let us suppose someone has 
2,000 acres of corn, which is a large but not real large farm in our 
part of the country.
  Let us say the cost of the production for a bushel of corn is $2.20 a 
bushel, which is about what it is. So by the time you bought your 
seeds, you bought your fertilizer, you planted, you put on some water 
if you irrigate, and you bought your machinery and it is about $2.20 a 
bushel. But in recent years the price that you receive at the 
marketplace for a bushel of corn is about $1.70 a bushel, some cases 
more, some cases less.
  So what it means is that the cost of production is about 50 cents 
higher than what you receive in the marketplace. So if you produce 200 
bushels of corn per acre, that means you are losing $100 per acre. If 
you have 2,000 acres of corn, that means you have lost $200,000 simply 
in terms of what your cost of production was in comparison to what you 
receive at the marketplace.
  So if that farmer gets a $200,000 payment, he does not have any net 
profit. He has not even paid himself a salary. He has nothing left for 
his family. He has simply covered the cost of production.
  If he is a larger farmer and he has 5,000 acres of corn, he would get 
a payment of $500,000 under this set of figures to break even. And so 
what we are seeing here are some false assumptions, the assumption that 
because someone is getting a payment from the government is that they 
are getting wealthy, that they are putting that money in the bank, when 
in actuality many people are not even breaking even with government 
payments. So this is the thing that I think is important for people to 
understand.
  Let us take a look at why we need a farm bill. I think this is 
something that people sometimes do not totally understand and I will 
try to take a shot at explaining why I think it is important that we do 
have a farm bill.
  The first reason I will mention that I think is important is that 
farming is a unique industry and the first thing we might mention is 
that farming is almost totally weather-dependent. If we think about it, 
just think of any industry that you can think of and you would be hard-
pressed to find one that was almost totally dependent on the weather. 
So a farmer can plant at the right time. He can put his fertilizer on 
at the right time. He can do everything right. And if he has a hail 
storm the day before he harvests, he has nothing. He could be totally 
wiped out in 20 minutes. Or if he does everything right and he has no 
rain and he has dry crops, he has got no crop at all. If his irrigation 
water gets shut off, which happened in many parts of the West this year 
halfway during the growing season, he makes no crops. So all 
agriculture is almost totally dependent on the weather.
  Secondly, in agriculture it is almost impossible to control 
inventory. That may sound like a strange thing to say, but when you 
plant your crop in the spring you have absolutely no way of knowing 
what the worldwide production is going to be in the fall. You do not 
know whether there will a drought in China. You do not know what the 
production of the United States will be.
  For instance, if we took corn as an example this year when we 
planted, people assumed that we would have 10 billion bushels of corn 
as a harvest. But because of the drought we will have less than 9 
billion bushels, so no one can control that inventory. If you are 
making Ford automobiles and you have too many Ford Explorers out there, 
you simply shut down an assembly line. Instead of operating 24 hours a 
day, you operate 14 hours a day. If you are making suits of clothes and 
there are too many in the store and you cannot sell them, you simply 
cut down the

[[Page 16084]]

production. But in farming there is no way in the spring that you can 
control inventory because you do not know what is going to happen 
during the growing season. So inventory is impossible to control.
  A third factor is producers do not set the price. In farming, 
interestingly enough, you do not say, well, I am going to charge $2.50 
per bushel of corn. You go down to the elevator and you say, What will 
you give me? If the elevator operator says, We will give you $1.90, 
that is what you get. If they say $1.70, that is what you get. But in 
almost every other industry, if you are manufacturing an automobile, if 
you put a sticker on there of $25,000, if you make a suit of clothes, 
it is $400, $500, if it is a box of grapenuts, that is $3. But the 
producer sets the price. In agriculture the price is set for the 
producer. So again that is a little bit different than most any other 
industry.
  Fourthly, farming is critical to national security. We have to have a 
food supply. If you do not have a food supply, you are in bad shape. 
Let me give you an example of how this can work. About 15, 20 years ago 
in the petroleum industry we found that we could get petroleum from 
OPEC for roughly $10 a barrel, $10, $12 a barrel and it was costing us 
about double that amount to produce petroleum here in the United 
States. So we said, okay, we will take you up on this, OPEC, we will 
buy from you. And as a result we began to shut down our exploration. We 
shut down some of our refineries, some of the pipelines, and we began 
to reduce our production and we farmed our petroleum industry overseas. 
And now we find that we were roughly 60 percent dependent on foreign 
oil. Much of that is from OPEC. And, of course, we are very concerned 
because we are so dependent on countries that are so volatile and many 
of whom do not like us. And so the situation can be very similar in 
farming.
  If we do not have a farm program, if we do not support our farmers in 
some way, very quickly much of our agriculture will be sent overseas. 
And that $10, $12 a barrel that we paid OPEC for the last 10 or 12 
years is now in the 20s. And furthermore, many people have estimated 
that when you figure out the cost of the Gulf War, which was basically 
over oil, maintaining a fleet in the Gulf, maintaining a military 
presence in the Middle East because of oil, that our actual cost of oil 
has not been $10 a barrel, it has not been $20 a barrel, it has been 
somewhere between 70 and $100 a barrel. That is what we have actually 
spent on our oil supply to keep it safe and keep it coming to the 
United States.
  Now that can happen very quickly to agriculture. If you do not 
support your farmers, if you let all of our farmers fail, it is not 
long before our food supply goes overseas and then you are at the mercy 
of other people for your food supply. We cannot afford to do this. This 
is a national security issue to some degree which many people do not 
think about because we assume every time we go to the grocery store you 
will have what you need. So you take it for granted, but it is not 
something we can take for granted.
  Fifth, there is no level playing field worldwide. It is important to 
understand this: The European Union has been very critical of our farm 
policy. They do not like us having any type of farm support. Yet in the 
European Union they subsidize their agriculture roughly $300 per acre; 
$300 per acre in the European Union. Japan subsidizes their agriculture 
more than $1,000 per acre.
  In the United States with our farm program we would subsidize our 
agriculture roughly $45 per acre which is one-sixth of the European 
Union and, of course, much, much less than what Japan subsidizes their 
agriculture. And so just to maintain some type of parity, we have to 
have some type of farm program, some type of price support so we can be 
competitive with these other countries.
  Also I think it is important to understand that land, labor and 
production costs vary widely worldwide. I was in Brazil in January. It 
is very interesting, you can buy topflight soil down there, topflight 
land, the topsoil is 50 feet deep. In many cases you can grow two crops 
because of the rainfall and the weather, and that land will cost an 
average of about $100 or $500 an acre, probably an average of about 
$250 an acre. That land is equivalent to the very best land in the 
United States. That land in the United States would cost somewhere 
between $2,000 and $3,000 per acre. So we are dealing in multiples of 
ten here.
  Farm labor in Brazil averages somewhere around 50 cents an hour. The 
United States, it would be $8, $9, $10, $11 an hour. So again our costs 
are much higher.
  The other thing that is different about Brazil and the United States 
is that there are very, very few environmental regulations. In the 
United States the agriculture people have to comply with clean air, 
clean water standards, use the right kinds of pesticides and 
fertilizers and so on, so it is a more expensive proposition. So what 
we are saying is if we do not have a farm program, we are really at the 
mercy of the European Union and other countries who subsidize 
agriculture. And we are also at the mercy of those developing countries 
who have extremely low production costs.
  We think that for $45 per acre in the United States, we receive a 
tremendous benefit at a very reasonable price when looked at the 
worldwide situation. So I think that this here is something that we 
might think about a little bit.
  So you might say, well, given all of these facts and given the fact 
that we have a drought and maybe people will concede the fact that the 
farm bill is not quite as bad as it has been portrayed. Maybe the 
President did not sell out. Maybe the President did a pretty good thing 
by signing the farm bill. If all this is true, then what do we do? What 
do we do to resolve the situation with the drought? What can be done 
with those farmers who are hanging on? There is no question in talking 
with those people who are bankers and agriculture lenders that we will 
lose more farmers and ranchers this year than we ever have because of 
the drought situation.
  So what is the possible solution to this? And I think that what we 
would like to do here is talk a little bit about a proposal that the 
gentleman from South Dakota (Mr. Thune), the gentleman from Kansas (Mr. 
Moran) and myself have introduced that we think makes some sense. We 
will take a look at it at this time.
  Mr. Speaker, what we are going to do now is just focus in on 2002. As 
I mentioned earlier, what was budgeted, the predicted cost of the farm 
bill for this year, the new farm bill, was going to be roughly $19 
billion. In actual fact, as I mentioned earlier, what we are going to 
spend, based on August prices, is probably going to be about $14 
billion, maybe a little bit less, that we will spend this year, which 
leaves a shortfall of roughly $5 billion.
  You say why did that happen? How could that be? How could you be off 
by $5 billion? What has happened, as mentioned earlier, the estimated 
corn production for this year was going to be just slightly under 10 
billion bushels of corn. What it looks like now that the growing season 
is almost done is that we are going to have roughly 8.9 billion bushels 
of corn primarily because of the drought in those States that we saw on 
the map earlier. So our production for corn, for soybeans, for sorghum, 
for rye, for barley, and for wheat is going to be down about 10 percent 
across the country. And as a result, we will not need farm supports 
because prices are higher. We have less product, so when you have less 
product, the demand is greater, and when the demand is greater, the 
prices are higher.
  So instead of $1.70, $1.80 for corn, we will see something like 
$2.50, $2.60 per bushel. The same thing for wheat, soybeans and other 
products.

                              {time}  2045

  So when we have higher prices, the government does not have to 
provide the price supports. There will be no loan deficiency payments. 
There will probably be no countercyclical payments this year so there 
will be a saving of roughly $5 billion this year.
  What the gentleman from Kansas (Mr. Moran) and the gentleman from

[[Page 16085]]

South Dakota (Mr. Thune) and myself are proposing is that we take this 
difference of $5 billion and we allocate that in the form of disaster 
assistance to those very people who have, because of their loss of 
crops, because of the crop failure that have caused this gap to occur, 
because if they had not had the crop failure we probably would not have 
the higher prices, we probably would have had more government payments 
coming out and so we need to do something for those people who have had 
the trouble.
  Of course, the other thing we might mention here is that the 
livestock producers basically receive almost no Federal subsidies. 
Whatever they receive is very, very minimal in the form of equipment 
dollars, and so the livestock people who have lost their pasture and 
feed and herds in many cases are really on the verge of simply going 
out of existence in many areas. So we think that they need to have some 
aid here along with the crop producers.
  Anyway, this is our proposal. We say let us take this gap here, let 
us take this money here and let us give it back to the people who were 
hurt so badly, that caused the prices to go up and resulted in no price 
supports and very low farm payments that has resulted in the $5 billion 
shortfall.
  One of the solutions that many people have advocated is that we 
simply take the money out of the new farm bill, and my hypothesis here 
and the reason I am appearing on the floor tonight is to explain to 
people that this is something that absolutely cannot happen. We have 
shown earlier that the new farm bill does not appear to be more 
expensive than what we were doing. It seems to be more accountable. It 
provides a better safety net, and the other thing to remember is that 
there is an 80 percent increase in conservation payments. Most 
environmentalists, most people in cities, most people around the 
country would say, yeah, we need to protect our environment, and the 
farm bill does this.
  The other thing that is in the farm bill that we did not want to see 
attacked is rural economic development. We are losing young people at a 
tremendous rate in rural America. They are simply leaving and they are 
not coming back. If we do not do something to diversify the economy, if 
we do not do something to shore up our rural areas and to build up our 
small towns and to bring in broadband services where they can have high 
speed Internet access, we are simply going to have a more and more 
difficult time and we are going to unravel more and more.
  We think this is a responsible solution. It does not break the budget 
because we are not talking about spending money over and above what we 
thought we were going to spend in the first place. The House has a 
budget. The House has to stay with a budget. The other body does not 
have a budget; therefore, they can propose whatever they want to and 
then ask the President to pass it or veto it. In our case, we have to 
stay within the budget. In this case, we feel that we are staying 
within the budget, and we think it is the best thing for agriculture. 
We think it is the best thing for the country because it is not in the 
national interest to see a bunch of farmers and ranchers go out of 
business because of the draught.
  Mr. Speaker, I conclude my remarks and we certainly urge 
consideration for those farmers and ranchers out there who are 
struggling with drought. We hope some disaster assistance will be 
forthcoming, and we certainly hope that my colleagues here on the floor 
of the House will see fit to help them out in the near future.

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