SPEAKERS CONTENTS INSERTS
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REVIEW OF FEDERAL FARM POLICY
SATURDAY, MARCH 18, 2000
House of Representatives,
Committee on Agriculture,
Auburn, AL.
The committee met, pursuant to call, at 10:00 a.m., in the Auburn University Hotel and Conference Center, Auburn, AL., Hon. Larry Combest (chairman of the committee) presiding.
Present: Representatives Everett, Chambliss, Moran, Riley, Simpson, Stenholm, Bishop and Berry.
Staff present: William E. O'Conner, Jr., staff director; Alan Mackey, senior professional staff; Wanda Worsham, chief clerk; Christopher Matthews, press secretary; Hunter Moorhead, legislative assistant; Pam Scott, legislative assistant; Christy Cromley, legislative assistant and Vernie Hubert, minority counsel.
OPENING STATEMENT OF HON. LARRY COMBEST, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
The CHAIRMAN. Good morning. I want to thank everyone for coming, and welcome to this third of 10 hearings that the House Agriculture Committee is holding in different regions of the country. I want to thank everyone here for coming to this important event. We were in Lubbock, TX 11 days ago and Memphis, TN just yesterday. The time we have spent in the first two hearings has been quite profitable both for the members and the audience, and I am confident that the time that we spend here today will be no less valuable.
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I have the pleasure of introducing seven other Agriculture Committee members who are with us this morning. I am Larry Combest. I represent the High Plains of Texas. On my right is my good friend and neighbor Charlie Stenholm, who is also from west Texas. Terry Everett, I'm sure many of you know, represents the folks in southeastern Alabama. Saxby Chambliss has the district covering central and southern Georgia. Jerry Moran represents the western two-thirds of Kansas. Bob Riley's district is here in eastern central Alabama. Sanford Bishop is from just across the border in southwest Georgia and Marion Berry represents a district in northwest Arkansas.
Today we plan to hear from 17 people who have built their life around the industry of agriculture. We have sought to bring folks representing the different types of agriculture in the central region of the United States and representing a variety of thoughts on the issues facing our industry. It is my hope that everyone in this room can identify with at least one of our witnesses today. And we are encouraging anyone who would wish to submit written testimony, or additional testimony, it will be a part of the record and it will be weighed as heavily as those people who happen to give verbal testimony.
I would remind our witnesses that we are doing a live audio feed through our Web site, as we do in all of our Washington hearings, and as we are doing in our field hearings.
I do not want to speak long because I want to emphasize that we are hear to listen to you. But I do want to say that I think all the members at this table know that we have a problem in agriculture. What is more, we all fundamentally believe that it is in the best interest of this Nation to maintain and foster a diverse and strong agricultural sector for the future. So the question we want to answer today is how can we do that best. We want to find out what real producers think is working and what is not working in our current Federal farm policy. We will be going to all regions of the country asking the same questions and hope that we can find a consensus among producers for farm policy changes that you need.
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Again, I want to thank everyone for attending this hearing today, and our witnesses for taking their time.
I would like to recognize Mr. Stenholm for any comments he would like to make.
OPENING STATEMENT OF HON. CHARLES W. STENHOLM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. STENHOLM. Thank you, Mr. Chairman. It is good to be back in our colleague Terry Everett's district and area, and it is good to be in Alabama again.
I would just make one comment, building on what the chairman said, to all of our witnesses and to everyone that will be submitting record. We know how bad it is. We are not out here to learn how bad it is, because we know no matter what region, what commodity, we have very serious problems. What we are looking for is solutions and we are looking for those solutions, and we pick them up bit by bit from ideas that you submit as to how you would in fact propose solving the problem for whichever commodity or livestock or poultry industry concern that you might have. What our challenge is is the 51 of us then to take those ideas and put it together in legislative form that can get 218 votes and 51 votes and a Presidential signature, region by region, State by State, commodity by commodity. That is one of the real pluses of this hearing. I commend the chairman for this idea of taking the full committee into 10 regions of the country, 10 States, for purposes of gleaning this information from those who produce. That is what it is all about.
We thank you very much for your attendance today and for the witnesses and the testimony that will be forthcoming.
The CHAIRMAN. Mr. Everett.
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OPENING STATEMENT OF HON. TERRY EVERETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA
Mr. EVERETT. Thank you, Mr. Chairman. I would like to first start by thanking you for holding this Agriculture Committee hearing in Alabama. This is an historic occasion not only for Alabama, but the fact we are having 10 full Agriculture Committee hearings across the Nation. So we thank you very much. I appreciate it and so do these members who are here today, as well as our producers who are attending.
This is a bipartisan committee, and I appreciate your effort and the effort of Mr. Stenholm to make sure it continues to be that way. As Mr. Stenholm mentioned, he has been a visitor to my farm—and, Charlie, that cotton field you looked at last time is now a hay field. So I have gone from cotton to hay.
I would like to welcome all the panelists who have taken time out of their busy schedules to be with us here today. We all realize that it is a busy time of the year for producers since most are planning to put their crops in the ground in the very near future. I think we can all agree that one of the greatest provisions of the 1996 farm bill allows producers the flexibility to grow what they want, when they want and where they want. This freedom to farm is something we all want to—that freedom to farm is something we all would like to retain.
Gentlemen, U.S. consumers use only 11 percent of their spendable income on food and fiber. We want consumers to be—to appreciate how lucky they are to have such efficient U.S. producers. Our job on the committee is to keep others in Congress—to teach others in Congress how important it is to keep growing the Nation's food supply inside our own borders. Importing food is not an option. I am surprised often that in my district I have to tell business people—point out the fact that we spend only 11 percent of our disposable food—income for food and fiber. You take the next lowest in the Nation, which is around 20 or 21 percent, that frees up about 10 percent of disposable income in this Nation to spend on a $6.7 trillion annual economy. That is a huge amount of money that goes for other goods and services.
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We are in the heartland to hear from people that are most affected by our policies, the producers. I await the panelists testimony and hope we come away with at least an idea—a starting point on how we can help producers keep doing what they do best, supplying this great country with the most reliable, best quality food and fiber this planet has to offer.
Thank you.
The CHAIRMAN. Mr. Bishop.
OPENING STATEMENT OF HON. SANFORD D. BISHOP, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA
Mr. BISHOP. Thank you very much, Mr. Chairman. It is an honor to be here today to listen to farmers offer their solutions to the situation facing American agriculture today. I commend you, Mr. Chairman, for assembling these distinguished panels of working farmers. You have the best perspective to offer answers to the variety of problems facing American production agriculture. I am heartened to see so many farmers here from Georgia, here to give Congress guidance on Federal farm policy. We know that you took time from this busy planting season to be here today and we appreciate it very much.
While it is always a pleasure to be with you, we are all acutely aware of the fact that these are certainly not the happiest of times for farmers in the Southeast and for other areas of the country. We are in the midst of one of the worst farm crisis of the past two decades. Throughout rural America family farmers have been caught in the squeeze between high production costs and low commodity prices, and have been hit the hardest by droughts and other weather-related crop disasters that have struck repeatedly over the past few years. You are the farmers who provide the competitive backbone that our agricultural system must have to continue to lead the world in terms of quality and consumer affordability.
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While it is true that the number of people involved in farming has been declining for more than two centuries, it is also true that yields have steadily climbed, and the 2 million family farms that continue to exist today still produce most of the food and fiber consumed in our country and much of that consumed abroad. Our system is still a highly competitive one and the American consumer is the biggest beneficiary of this. The current crisis has already put an alarming number of farms out of business from pressures over which they have little or no control. Many others are on the brink, and if these conditions persist long enough, our whole competitive system will be in jeopardy.
The 1996 farm bill was based on a vision that we all support, less government; yet it also recognized the need for a continuing Federal role providing transitional assistance carrying forward revised programs and moving forward in agricultural conservation and research programs. The bill emphasized rural development to help communities that are suffering during the transition period. But overall, that bill was written for a bullish farm economy with the underlying assumption that high prices, good weather and strong exports would last forever. This may have been a visionary plan, but many of its provisions apparently had not been fully considered and developed at the time that it was enacted, and it offered little protection for when the going got really tough.
Now as we enter a new year and a new century we face many challenges. We must level the playing field in world trade. We must fix the farm safety net. We must continue the Government role in agricultural research to help farmers find new ways to reduce their cost of production. We need realistic environmental laws and regulations, not those that impose unnecessary burdens on producers. We need to clearly define the country's agricultural policy once and for all and enact the kind of programs that will effectively carry that policy out. The bottom line is this, we need a policy that enables farmers to succeed and which stops the trend toward concentration that threatens to literally destroy the country's traditional agricultural system.
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I truly do not believe anyone really wants America's agriculture system to be reduced to a few corporate megafarms on one hand and nothing more than hobby farms on the other. President Franklin Roosevelt made a statement in 1932 about the loss of family farms that I believe still applies very much today. He said, ''We cannot have national prosperity without farmer prosperity. It is economically unsound to sell out an honest, hard working, efficient farmer, but even more than that, such a procedure constitutes a social, moral and human wrong. For the sake of our national economic security and in the name of fundamental fairness, we must ensure that the family farmer has every opportunity to share in the American dream.''
I thank the chairman and I thank all of you for coming here today. This is your hearing, and I look forward with all of you to restoring American agriculture to profitability and prosperity.
The CHAIRMAN. Mr. Chambliss.
OPENING STATEMENT OF HON. SAXBY CHAMBLISS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA
Mr. CHAMBLISS. Thank you, Mr. Chairman. Let me just say, too, what a pleasure it is to be here and be hosted by a very fine group of folks in Alabama. Being from the University of Georgia, there are two things about the Georgia-Auburn rivalry that are unique. First of all, it is the oldest football rivalry in the United States. Second, it seems like the visiting team wins every year. Auburn came and whipped us so bad last year we are not sure we are going to play them this year. But when we came over here year before last, we put a good shellacking on Auburn. So I know that when I leave town today, it is going to be like after a football game over here, I am going to feel good because of what I am going to hear today. [Laughter.]
As I look out among this audience and have an opportunity to visit with a lot of you before this hearing, there are a lot of my friends here, both from Alabama, Georgia as well as Florida, because agriculture is a nationwide industry and it is an industry that we approach in Washington from a true bipartisan atmosphere. It is the people that we feed that are of concern, it is not political ideas and philosophies that are of concern to us. And it is up to us to try to figure out what is the best way for the Federal Government to be involved in agriculture and that is really what we are here to talk about.
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I commend the chairman for having these hearings. I think it is absolutely essential that we go to every part of the United States to hear from farmers, to hear from those folks who are out there struggling every day like a lot of you are to get a return on the investment that you have to make every year.
Most of you probably know that my son-in-law is a farmer and I am very proud of that. It is the greatest heritage, in my opinion, that we have in this country. And that is a heritage handed down from generation to generation on the family farm. My son-in-law struggles just like every one of you do who are out there farming every single day and struggling with the problems with nature as well as being subjected to arbitrary prices being imposed on you by the markets.
We are doing our best to try to level the playing field, No. 1; and second, to try to ensure that you do get a decent return on the investment that you have to make every year.
There are some things about the 1996 farm bill that I am very proud of. There are other things that are obviously not working and I am not happy with. And we expect to hear a lot of that today.
In 1996 when we passed that farm bill, it was not only the change in the way the Government participates in agriculture from a spending perspective that we promised you. We promised you that we were going to do some other things to make life on the farm more profitable and easier day in and day out. Those other things were that we were going to give you tax relief, we were going to give you regulatory relief, we were going to improve the trade aspect of the world markets, so that you would be on more of a level playing field, and we were going to provide you with real and meaningful crop insurance reform.
Well, frankly, we passed tax relief, and it was vetoed. We passed regulatory relief and it was vetoed. We are working hard on improving the trade status in agriculture all across the country right now as we speak. And then we passed meaningful crop insurance reform under the leadership of Chairman Combest and the House and it is going to be hopefully brought to the floor of the Senate here in the next couple of weeks, and we are going to come up with a real meaningful crop insurance reform package.
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So we have not delivered everything that we said we were going to do in 1996 and that is part of the problem, we know that. But we know that there are other problems out there too that we are going to be listening to you on today.
And again, I am very pleased to be here, I am very pleased to have any number of my constituents from the eighth district who are testifying today, some of whom are on my Agriculture Advisory Board, which is a group of about 30 farmers that I depend on and meet with regularly to get their advice about what is going on at the farmer level.
Mr. Chairman, again, I am very appreciative of you and Mr. Stenholm for agreeing to hold these hearings. I am glad you got this close to Georgia. It is a good feeling to be here because you are this close to Georgia. So we are looking forward to hearing you farmers today and taking back to Washington the ideas that we know we can incorporate into the remaining aspects of the current farm bill and carry forward into the next one.
Thank you.
The CHAIRMAN. Mr. Berry.
OPENING STATEMENT OF HON. MARION BERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARKANSAS
Mr. BERRY. Thank you, Mr. Chairman. We do want to thank you, Mr. Chairman, for holding these hearings, and the ranking member for his involvement in these hearings. As our ranking member says, just about everything has been said but everybody up here has not said it yet. I will try to keep mine——
[Laughter.]
I can tell you, it is always good to be in Alabama. We had a wonderful evening last night after we got off the plane and appreciate the hospitality that has been extended to us. I consider Senator Heflin one of my political mentors, he is a great friend. Ronnie Murphy, your deputy commissioner of agriculture is also a long time friend of mine. We were able to have breakfast this morning. And Jerry Newby has done a great job in agriculture leadership in this State. My chief of staff in Washington, DC named Thad Huguley is from this part of the State of Alabama, so I consider myself almost a citizen. I kid our Governor every once in awhile that they—Arkansas tends to forget the eastern part of the State, they would kind of like to forget us anyway. And I tell him we have applied for citizenship in the State of Tennessee but we are having trouble getting the Mississippi River moved. [Laughter.]
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But I do feel a kinship with Alabama and the agriculture interests here for sure. I would only add to what has been said, that I think agriculture is a national security issue. We do not ever want to get in the state with agriculture that we are in with oil production right now. And I think that is something that we need to keep under consideration.
It is nice to be here with you and I thank you for the opportunity.
The CHAIRMAN. Mr. Moran.
OPENING STATEMENT OF HON. JERRY MORAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS
Mr. MORAN. Mr. Chairman, thank you for allowing us to be in Alabama today and to hear from Alabama farmers. I am a member of Congress from Kansas representing about three-quarters of the State; we are wheat, cattle and corn country, slowly beginning to enter into cotton. But I would tell you that ALFA and its folks in Washington, DC as well as my two classmates that I arrived in Congress with, Robert Aderholt and Mr. Riley, have done a great job of keeping me informed and understanding the issues that the folks in Alabama and this part of the country care about.
It is surprising to me to be a Kansan and look at the panel here and discover that I am the guy from the north. [Laughter.]
My apologies for that. It would not probably hurt if you all would slow down you conversation, your testimony today so I can understand it.
I appreciate Auburn University as well as ALFA hosting us last night. I called my wife when I got back to the motel room last night to tell her what fine people, how nice you all are in Alabama. This is my first trip here and I am delighted to be in Alabama, but I am particularly delighted to be here with farmers because no matter where you are in this country, we have a lot at stake in the future of our Nation and we are all interested in the same kinds of things and we all care about kind of the same values and we work together to make sure that our way of life does not evaporate. I always tell my constituents that what I am about as a Member of Congress is what do you do to make it possible for my 9-year-old and my 12-year-old to grow up the same way we are trying to raise them and to keep rural America alive awhile longer because it is awfully important not only to my kids, but to the country.
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I am delighted to be with you and your Congressmen here today and look forward to hearing the testimony.
The CHAIRMAN. Mr. Riley.
OPENING STATEMENT OF HON. BOB RILEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ALABAMA
Mr. RILEY. Thank you, Mr. Chairman. Thank you for holding this hearing in Auburn, AL. One of the things that all of you will understand when you leave today is that you have just heard testimony from some of the most intelligent, insightful farmers in the country. Having an opportunity to do that is rare.
Let me give you just a little preface of what I think we ought to talk about today, because it is a deadly serious issue in this country.
I have been in agriculture now for about 30 or 35 years and I do not remember a time, at least in my lifetime, in my adult lifetime, when we have had all of our commodity prices depressed to the level that they are today. So I think we have got to make a fundamental decision in this country—are we going to allow our family farms to continue to diminish across this country, are we going to a different type of economy where we have more corporate farmers, or are we going to make the decision that we are going to do everything we can to sustain agriculture and make sure that we always have an agricultural base in this country.
Now that is not just philosophy. That is a critical decision we have got to make. When we have our farmers competing against the European Union where they have 35 and 40 percent subsidies, there is no way you can win. We have got to make a decision of whether or not we are going to play on that level playing field.
Outside of that, what my goal in agriculture is, is to allow you to become totally self-sufficient. We cannot continue to pass these $10–12 billion bills every year. And I think there are ways today that we can get to the point where you have the opportunity to retain some of your profits in the good times, spread it out over the bad times, give you some tax relief. And we have got to start thinking out of the box and not just go back and try to revisit the old policies that we have had for the last 30 years that have gotten us to the point we are today.
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I think that is what we want to hear from you. All of us I think understand the problems, but we are somewhat short on the solutions. And we want you to give us your best ideas about how we can change this, how we can change it fundamentally so we can not only protect the American farmer and that way of life, but also how we can make you competitive in the world market. It is going to be a big challenge for all of us, but we have to understand it is like Saxby Chambliss said a moment ago, it is not just farm policy, it is tax policy, it is the ability to have things like income tax averaging, it is things like investment tax credit, accelerated depreciation. There are so many other things out there outside of loan values and crop insurance that directly impact your ability to be successful in what you do. That is what we want to hear from you, we want to hear what your problems are, we want to take it back to Washington and we want to see if we can craft some kind of policy that once and for all gets government out of your lives where you can compete individually with your family farms on a global scale. If we can do that, then I think we will be successful.
So, Mr. Chairman, again, thank you for being here today, for bringing this down here. I think it is going to be interesting. I have read most of the testimony of people that are going to be testifying today and again, I think it offers some real opportunities for solutions and I look forward to it.
Thank you very much.
The CHAIRMAN. Just before I call our first panel, I want to thank my colleagues and fellow committee members for their time they are taking out and coming here. As we spread out across the country, we will at some point have had all of the 51 members of this committee attending these hearings, those that are here today and those that were in Memphis yesterday and those that were in Lubbock, TX are taking time away from their districts and their families and the jobs that they were elected to do, to be here and to be in those places because of their interest in the problem that we are discussing.
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Due to that fact, that there are some trying to get to other places as we go on throughout the day, there will be some that are having to depart to catch airplanes that will get them back home at an appropriate time for other commitments. And as they do depart, that will be the reason for that. And I wanted to just notify you of that up front.
I will call our first panel, if they would please come to the witness table: Mr. Ben Bowden, who is a row crop producer from Eufaula, AL—I can say that. Mr. Albert Groves Jeter, a wheat, cotton, peanut producer from Byromville, GA; Mr. Ronny Lawrence, a cotton producer from Fayette, AL; Mr. Jerry Newby, a cotton producer from Athens, AL and Mr. Carl Sanders, a cotton and corn producer from Brundidge, AL.
And if you would, please come and take a seat and we can start and receive the testimony in the order in which I had introduced you. One of the ideas of coming out into the field and getting people is to have people that traditionally would not be testifying in Washington and so I will tell all the witnesses, this little box with the lights on it is a 5-minute timer. If you could summarize as much as possible within that 5-minute period of time, your testimony in total and all of the testimony that would be submitted by individuals to the committee will be entered into the record in its entirety and that will then give the members some times for questions.
Mr. Bowden, please proceed, thank you.
STATEMENT OF BEN BOWDEN, ROW CROP PRODUCER, EUFAULA, AL
Mr. BOWDEN. Thank you, Mr. Chairman, for allowing me to speak at this meeting.
I have been working many years outside of my farm trying to improve agriculture prominence in the United States. I realize that I have failed miserably because today we are at the lowest profitable condition ever, and this covers all commodities. Our problem has been we have always sold cheap labor through commodities and we do not have it now. In the past—that was before chemicals and mechanical farming took over.
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For an example, it used to take 187 hours to produce a bale of cotton. Other commodities required proportionately the same number of hours. Our only cash input was fertilizer and it was about $25 to $27 a ton. Cotton then sold for 38 cents a pound and 7 bales would buy a pickup truck. This year's cotton sold for 38 cents a pound with no program benefit—it would buy nothing. In the past, if we lost a crop, we only lost our labor. Today on my farm, it takes 3 1/2 hours to produce a bale of cotton. Machinery, chemicals, fuel and fertilizer at today's inflated prices have replaced the remaining 183 hours. Now we have very little labor in a bale or bushel or pound of any agriculture commodity. Instead, we have a huge cash investment. Now when we lose, we lose our equity. Today, we are in a world market competing with that same cheap labor that we used to have. Today, outside the United States, subsidies are greater than they are here. Even China guarantees 85 to 91 cents a pound for cotton. European common market, $9 to $10 for a bushel of wheat.
You have before you there Auburn University's Agriculture Enterprise Analysis. This is over 5 of the last 6 years. It shows—there is an insert in there that is a summary of that whole book. It shows there is little or no profit in any commodity raised in Alabama. We cannot survive if we do not have greater support on these commodities. The only profitable farmers I know of today have a real estate development selling parts of their farm.
Free markets. We do not have competitive markets any more. All commodity markets have consolidated until two or three, four maybe, large companies control it. They set the prices wherever they want to and supply and demand has very little effect on the market.
Production research. That is what moved this country ahead of the rest of the world when we were aggressive with research here. We started cutting back on research money about 30 years ago and started giving it to the foreign countries. Now they feed themselves and become our competition. And still today, we are spending more money outside this country than we are inside. Additional Government support is one of our hopes for better profits in the future. Private research makes farming easier, but it does not add a nickel to the bottom line. They charge what it costs.
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Conservation. The 1996 farm bill messed up a good conservation program and it is under-funded. Now we are trying to micro-manage these programs from Washington with formulas, numbers, policy, rankings and priorities. We have taken management from the local people who are farmer-elected or governor-appointed. They have served on these committees free because they are dedicated conservationists. WHIP, EQIP, FIP, WRP, CRP—they are all a confusing tangle of unnecessary paperwork resulting in unproductive use of our professional resources. If these programs were working, we would not still be changing them every year.
The environment. Everyone wants clean water and air and farmers are the most environment conscious people in the world. If you help agriculture make a profit, you will see the difference. You do not have to have these hearings, talk to a farm credit supplier, a bank, a machinery or chemical dealer to recognize the economic condition of agriculture. And you all have already said this. When you ride down the road, you see it. If you ride down the roads in Europe where the subsidies are greater, the buildings are old but they are in good repair. Fences are good, equipment is fairly new and the land is manicured almost. In this country, it is just the opposite.
But right here in Alabama, there is an example of profitability. If you go to the catfish country where they make a little money, that community looks profitable. When the farmers have money, they are going to take care of the environment.
Future. We are doing exactly the same thing in agriculture we did to the oil industry. Because of rules, regulations and economic incentives, we have developed other sources of oil outside the United States and today it is costing everyone a pile of money and driving inflation. This is what is so pitiful here, people do not recognize it, we have already lost agricultural support industries—the chemicals, the machinery, the fertilizer and the fuel that we use are not produced by American companies, they are controlled by foreign governments. I wonder what is going to happen when we recognize we cannot control our food supply.
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Imports grow every year. Last year, it was some $40 billion I was told in Washington last week. Our number of farms are getting smaller, acres of land are going under concrete and subdivisions, prime farmland is lost forever. Young people do not feel farming has a future. My own sons did not want to farm, they are not. Today, my farm is the last dirt farm depending on row crops for a living in Russell County. Last December, we lost our last dairyman. Most farms today are part-time farmers that enjoy country life. They do not play golf, they do not take extended vacations. Farming is kind of a source of recreation. We have to change the personality, the profitability and the direction that farming has taken in the United States.
In summary I say we cannot compete with cheap labor and huge agricultural subsidies without more support.
We cannot survive without free markets.
We have to invest in agriculture research.
Conservation responsibility needs to be returned to the local level and funded.
Environmental excellence can be accomplished through additional funding through NRCS and not the EPA. The EPA is trying to recreate one of the most productive programs ever designed, this P.L. 566, Watershed Program. It is already in place. Land protection, land treatment, water quality and water quantity sections are in place and could be administered by an agency that is respected and accepted by landowners.
Future subsidies should be limited to actual producers of the commodities.
We need to invest in irrigation and we need some incentive payments to help farmers. And I would like to speak to that later. I know my time has run out.
[The prepared statement of Mr. Bowden appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you. Mr. Everett reminded me that is ''Bowden.'' We are going to get there.
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Mr. BOWDEN. That is getting close. You are not the first.
The CHAIRMAN. I will bet that is true. I have had fun made with mine too.
Mr. Jeter.
STATEMENT OF ALBERT GROVES JETER, WHEAT, COTTON, PEANUT PRODUCER, BYROMVILLE, GA
Mr. JETER. Crisis in America. Ladies and gentlemen, my name is Albert Groves Jeter. I am 55 years old, I live in Dooly County in southwest Georgia, and I am an American farmer. I am a 5th generation farmer on my land, and could very well be the last. I graduated from the University of Georgia in 1967 and have been farming and involved with agriculture for the past 33 years. My main crops are cotton and peanuts, but I also grow wheat and soybeans.
My wife, Mary Jo, and my daughter, Mary Margaret, are both teachers. My son is a pharmacist. Three years ago when my son, Walt, graduated from the University of Georgia with a degree in pharmacy, I talked him into farming with me and doing substitute pharmacy work on the side. Last November, when we had completed our harvest, Walt said, ''Dad, I know how you love this farm, but I do not see any future in it for me.'' It broke my heart, but down deep, I knew he was right. Today, with our present farm policy, there is no future for a young person in farming.
Farmers often work from daylight to dark, sometimes 7 days a week. When it is hot and dry, we work many hours during the night tending to irrigation systems. When the year has ended and the harvest is completed, we very often are left with nothing to show for our effort. Many prices for commodities are less today than they were 20 years ago, but our input costs have continued to rise.
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With the present farm policy and the Freedom to Farm Act, the American farmer has been thrown into a global economy without a level playing field. We are asked by Congress and the American people to produce food and fiber at a price less than the cost of production. We are expected to compete with other less developed countries who have a lower standard of living and whose production costs are much less than ours. While the American farmer is the most efficient producer in the world, we are not the cheapest producer.
In the 1930's, the ASCS, American Stabilization and Conservation Service, was formed to stabilize agriculture—and I emphasize stabilize. In 1996, the ASCS was changed under the new farm bill to be know as the Farm Service Agency. The key word missing in the new agency is stabilization. Without stabilization in agriculture, the American farmer will cease to exist.
To most people, the outward appearance of the American body looks great. We are springing uphill at a record pace, but if the real truth be known, the arteries are clogging and the heart is failing. Ladies and gentlemen, the American farmer is the lifeblood of this great Nation.
If I were to ask you to list in order of importance the people in your life that are the most important to you, you would probably say your wife or your husband, your mother and your father, children, maybe your doctor, minister, neighbor or best friend. Can you think of any others? I dare say that when asked this question, the great majority would fail to mention the most important person, and that is the farmer. You could live without your husband or your wife, mother and father and even your children. The one person you cannot live without is the food producer. Without him, we will all die.
Farmers make up less than 3 percent of the population of the United States. However, farming is without question the most important and essential profession. The United States is the only super power left in this world, but without a strong agricultural base, this great Nation could be brought to its knees in a matter of days. If we have to depend on foreign nations to supply our food for survival, just imagine what power those nations would hold over us. They could take us down without firing a shot. Try to relate this with what OPEC is doing today.
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The loaf of bread that I brought cost $1.99 at the grocery store. How much would you suppose the farmer gets for his wheat? Can you believe less than 5 cents? This cotton shirt cost $50. Do you realize that the farmer got less than 50 cents for the cotton it took to make this shirt?
This Nation is in a sad state of affairs. We gladly pay million dollar salaries to television and radio personalities, motion picture personalities and sport figures for entertaining us; yet, we do not want to pay the people that are feeding us enough to stay in business. Somehow or other, we are upside down in our priorities. So what can we do to help the American farmer? It is my belief that in the next farm bill, which we need right away, we must have stabilization put back into it. I believe that price protection and controlled allotments are a must in stabilizing agriculture.
I have one simple solution—so simple that you might think it would not work. However, after discussing this with many people, we have yet to figure out why it would not work.
When the consumer pays for this $1.99 loaf of bread at the grocery store, the cashier would add 4 cents as an Agricultural Security Assistance Payment—ASAP. This 4 cents would go directly back to the Farm Service Agency and ultimately back to the wheat producer. This would mean that the wheat producer would be getting $6 per bushel for his wheat rather than $3. Then he would be making a profit.
The same thing would happen for the $50 shirt. A 50 cent Agricultural Security Assistance Payment added at the register would ultimately go back to the farmer and he would be getting $1 a pound for his cotton rather than 50 cents. This could be done on all products produced on the farm.
This simple solution should eliminate many complicated and unworkable farm programs. The amount of the ASAP would be insignificant as to the total cost of the product.
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What could be simpler?
The Agriculture Security Assistance Payment would give the American consumer, for the first time ever, the opportunity to have a direct connection with agriculture in securing their future food supply. Join me in saying yes our American farmers are worth more than a nickel for a loaf of bread.
I also think there should be a committee made up of strictly farmers, possibly one from every State, that would be consulted before any provisions are passed in the new farm bill. Ladies and gentlemen, farmers are the only people that would know actually whether or not a provision or policy would work—the only people.
Thank you very much for your attention and I very much appreciate you giving me this opportunity to speak today.
[The prepared statement of Mr. Jeter appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Lawrence.
STATEMENT OF RONALD LAWRENCE, COTTON PRODUCER, FAYETTE, AL
Mr. LAWRENCE. Thank you. They were looking for someone outstanding in the field to speak today and they just happened to drive by and there I was. [Laughter.]
I know you have been listening to problems and I hate to bother you with problems. I do have some particular personal things that I have been through and I have tried to work with, but I do not have a solution, I do not. I wish I did.
My father started our family business, my grandfather, in 1927, a little place called Lawrence Mill there, and he started out by grinding corn, had a water mill, ginned cotton and sawmilling and operating a country store.
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I returned after finishing college in 1962 and then for 25 years after being in agriculture different ways, I have been in production agriculture and 10 years ago my oldest son Jay came in with me in the operation after teaching for a couple of years. We all have college educations, he has a masters degree. My other son is a pharmacist also, he could not take the farm.
Our operation consists of growing about 1,500 acres of cotton and about 500 acres of corn, operating one gin now and running a farm supply business with almost no farmers left. We are working hard to build a lumber building supply business. We are trying to get out, folks, we are trying to look—we have tried for a long time to get out. And if things do not change, I am hoping that is a way for us because we cannot—I cannot face it any more.
Our business has survived by us being diversified, by working 6 days a week and by managing carefully. Maybe we have been living too high. My wife works full time in the business and drives a 1994 Ford that has got 138,000 miles on it and I am fortunate to drive a 1996 pickup and mine was used when I bought it. The combine we run is 20 years old. I bought one new tractor in the last 21 years and it is a 1991 model. We run our own shop, we build, we repair and for the last 5 years we have gone almost completely to conservation tillage.
We use the latest genetic technology with crop rotation, with very few harsh chemicals, almost no aerial application and almost no profit. We have cleaned up the air and water through the use of genetics and now pressure is being brought to stop the sale of genetically altered grain. Now I do not know where we are to go.
Two of the last 3 years, we have had weather-related crop failures and crop insurance has been good to us, it has been a great help in pulling us through. But now our yield base has gotten so low that it is not likely to help in the future. And I am not familiar with your new changes there, so I hope there has been some help there.
When we try to rent land in our area, our greatest competition is the Federal Government. Now we are not talking about just marginal land going into CRP, 50 acres of the better bottom cropland we had rented last year is now in CRP pine trees. We are not big landowners, we rent most of our cropland. Unfortunately the present programs seem to be geared to help the landowner and to shutdown the renter.
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I am thankful that we could raise our family in a Christian home, raise them in the country. They learned values that they could not learn anywhere else. I would not take anything for it. But now I am 62 years old and my health is failing, I am tired. My retirement is tied up in the auction values of my land and equipment. It is geared to grow cotton and it is already mortgaged. My gin machinery is worth scrap iron value. I can still work 6 days a week, but I cannot stand the pressure of risking everything I have to put a crop into the ground under the present prices. I will not stand by to see my son continue to face the same pressure in the future.
I know I am not an isolated case, and you have talked about these problems, and I know you understand the problems. But I do not apologize for what I do, we are good at it. We produce food and fiber for what has been the greatest nation on Earth. But I think we are worth saving, I think these young people are worth saving, and I think you people are doing the best you know to try to find an answer. I wish I had the answers—I do not have them. I wish we could share in this booming economy that we hear about on the media all the time—I wish we could share in it.
I am troubled about America as a nation. We seem to be so concerned about the problems in our school families while we feed our children a constant diet of immorality and violence on the screen. We are ostracized if we mention Christian values. Many of the farm problems today are really a symptom of a greater problem in our country. Maybe I do not have the answer and maybe the answer is found in 2 Chronicles 7:14 which says:
If My people, who are called by My name, shall humble themselves and pray and seek My face, and turn from their wicked ways, then will I hear from Heaven and will forgive their sin, and I will heal their land.
Maybe that is the ultimate answer. But I wish I could help you more, fellows in the nearby situation.
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I thank you for your time.
[The prepared statement of Mr. Lawrence appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Newby.
STATEMENT OF JERRY NEWBY, COTTON PRODUCER, ATHENS, AL
Mr. NEWBY. Gentlemen, I would like to take this opportunity to tell you that I am a member of a diversified family farm operation in north Alabama. Also at this time, I am serving as president of the Alabama Farmers Federation and on behalf of the 400,000 members that we represent, I would like to thank you all for taking your time in being here today and listening to us.
My testimony will deal primarily with policies. I will talk a little bit about some of the commodities that are not going to have anybody speak about today, but you will be receiving written testimony about all the major commodities in the Southeast and you will have a lot of testimony on those today.
We are at a crossroads in America. We have to decide whether agriculture is really worth saving or whether we are going to be in the future depending on other countries to raise our food and our fiber. I do not think the American people really understand the situation and I hope and pray that they do not decide that agriculture is not worth saving, because we could be in the same situation with our bread in the grocery stores as we are with our fuel today with the high prices. I know that you all do not want that and we certainly do not want that.
There are four basic things that I would like to talk to you about today. One of those is about a safety net. Second, we would like to talk to you about risk management, coming up with a crop insurance program that would be fair and equitable for everyone. I want to talk to you about trade and I want to talk to you about investing more money into our research here at our land grant universities in Alabama and across this Nation.
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You know as well as I do that we could not have possibly survived in agriculture, a lot of us today would not be able to plant a crop in the year 2000 if it had not been for the tremendous help that you all have given us with the emergency programs that you have passed the last 2 years. I want to take this opportunity to thank you for that help that you have given us. I think we all appreciate it very deeply. But we really need to find a long-term solution. And I think when we do find that long-term solution, that it will be more economical for our Government and our taxpayers and our consumers in this country than having a disaster program like we have had to have over the last few years.
A financial safety net is important to us because we cannot grow crops for less than the cost of production. And I am sorry, I do not have the mechanism to do it, but we are going to have to ensure that we have a floor under the products that we grow so that we can continue to farm during the bad years.
We also need to ensure that our producers are the ones that receive the AMTA payments and whatever payments that do go out to our farmers. That is very, very important.
Our young farmers in the State of Alabama have gotten a lot more into cotton because of the great success of the Boll Weevil Eradication Program and they have begun to plant a lot of cotton, but they do not have any acreage, base acreage, that they can participate in the programs that we now have today. And this is really a problem for those young farmers that are trying to get established in agriculture. And we hope that you all can do something about that in the future.
We need affordable risk management. And I want to thank you all for passing H.R. 2559, it is very good. And we hope that the Senate will be able to come up with the same solutions that you all have come up with. I think it is a good start. We are going to hear some more today about some recommendations for crop insurance.
A lot of you talked about having a level playing field or a fair playing field. We certainly need that. If we cannot correct those trade inequities, we are always going to be struggling and behind the 8-ball. But I think that we need to play by whatever rules our competition in other parts of the world are playing with. If they will not play by our rules, we need to play by their rules and not let their products come into our country if they stop our products with high tariffs, or like the European nations are doing today, over environmental concerns, growth hormones and things like that. That is just another trade barrier that they put up to stop us from being able to trade.
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I think that our Nation has always been so successful in agriculture because of the hard work of the folks that are on the farm and because of the tremendous research programs that we have had. And we need to continue to fund them and fund them at a higher level than we are funding them today. I think that is very important for the future of agriculture.
I want you to know that we need to have fair regulatory—and we appreciate the Regulatory Fairness and Openness Act that was H.R. 1592. It has a common sense approach and it uses real world data and we ask you all to consider that.
There are a lot of things that I would like to talk to you about today that I am going to run out of time on. My testimony has it written in it. But I do want to point out that we need to make sure that the USDA ARS does not have this $2.4 million taken away by OMB. We have research here at Auburn University, very important for catfish.
We very much need in the Southeast the Southeastern Dairy Compact. It is essential to stabilize milk prices and supply.
We need an 80 cents per pound marketing loan for honey for our beekeepers, that is very important for them.
And our pork producers are facing increasing costs because of environmental regulations and we hope that you all can assist them with more cost share.
I am encouraged by this hearing today. I thank you so much for being here. I do realize though that this year, because of the low prices and bad weather that we are expecting, that we are going to need some more assistance like we have had over the last 2 years. And we certainly appreciate your effort on that part.
I will remind you again, gentlemen, that we are at a crossroads. A lot of our young farmers are getting out of the business, a lot of our parents are not encouraging their children to come back into the business. And I do not think our Nation really wants to be in the position they are today with energy, with their food supply.
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Thank you very much.
[The prepared statement of Mr. Newby appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Sanders.
STATEMENT OF CARL SANDERS, PEANUT PRODUCER, BRUNDIDGE, AL
Mr. SANDERS. Mr. Chairman, members of the committee, I am Carl Sanders, a peanut farmer from Coffee County, AL and president of the Alabama Peanut Producers Association. I am also representing the Southern Peanut Farmers Federation that is composed of our organization, the Georgia Peanut Commission and the Florida Peanut Producers Association. We would like to thank you for conducting this field hearing today.
American agriculture is in crisis. Prices are depressed, production costs have continued to escalate and profit on the farm is virtually non-existent. For me as a farmer, the 1996 farm bill has been less than successful. We have some pretty tough challenges facing us today in the peanut industry.
Our challenges started with the passage of the NAFTA and the GATT. The passage of these agreements significantly reduced our border protection and under the NAFTA agreement, these protections will be eliminated during the next farm bill. Unfortunately, at the advent of the new bill in 2003, tariff rates will be so low that peanuts from Mexico will be able to enter the United States at prices below our current quota support rate. If the Free Trade of the Americas agreement is successfully negotiated, we could see Argentine and Nicaraguan access to our markets at a much more rapid rate. This is further complicated by the fact that candy and other confectionery products containing peanuts or peanut butter are not presently charged against the import quotas.
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The Peanut Program has been a model program with very little Government cost over the years it has been in existence. It has provided a constant and a stable supply of peanuts for the American consumer at a price that is reasonable for both the consumer and the producer. Now that program structure that has made it successful is in jeopardy.
If we are to keep peanut farmers growing peanuts in the United States, we are going to have to find a way to make our program trade sensitive. At times, this is going to mandate some government costs not now associated with our program. We must make our program fit within the rules of NAFTA and GATT and still maintain a level of support that continues to provide producers with a safety net that offers the opportunity of producers to earn a profit.
Our organization, as are others, is currently working to find suitable solutions to the dilemma that we face. We are looking forward to working with the Congress to assure that we will continue to have a viable and growing domestic industry. This has to start at the farm with a level of support that encourages the growth of the domestic industry. We believe that this can be accomplished as we work together toward the enactment of the 2002 farm bill.
Shifting focus to the present for a moment, peanut farmers in our area of the country are currently facing the potential for an increased marketing assessment due to extreme circumstances in marketing peanuts in 1998 and 1999 crop. Presently this assessment is estimated to be over $46 per ton. This is especially difficult given the disastrous weather of the past two seasons and the financial crunch that farmers are already experiencing. Furthermore, because of the structure of this program, this assessment will be levied only in the Southeast. We are currently working with the members of Congress to gain relief and we need your support in this initiative.
The impact of this assessment will be as devastating to southeastern growers as any weather disaster that we have ever seen. When you have weather disasters, you can make decisions to reduce costs and cut your losses. We cannot reduce our input costs in 2000. We will have to make every effort to make the best possible crop knowing that our price will be $570 per ton at best.
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For your reference and information, I wish to include for the record the attached economic evaluation. It shows the impact of this assessment on the Southeast. The total direct cost to real producers will exceed $33 million with a loss of nearly 2,000 jobs. The assessment is a critical peanut issue, but this is one part of the bigger problem.
We hope you will seek policy changes to stabilize American agriculture, recognizing that every commodity is different and has different needs. In the meantime, there must be quick action to allow us to survive until these answers can be found.
Again, I would like to thank you for conducting this hearing and for your support of the American farmer.
[The prepared statement of Mr. Sanders appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you very much to all of you. I want to just make a few general comments and turn to some other members for questions.
Mr. Jeter, you had listed the products and retail and farm value and percent and so forth. When I assumed the chairmanship of this committee, one of the things that I said that I wanted us to do was be a voice, an advocate for the American farmer and producer and we have on our web site the same list showing the difference between what it is that the producer receives versus what is received in the store. I think a lot of it is the fact that people do not understand. They go into the store and they buy that box of Wheaties for $3.50 thinking I think that the farmer probably receives the majority of that and recognizing that probably the box costs more than the farmer receives, and they do not realize that and I find that to educate people they have got to want to be educated, but that is one of the things we are trying to do, is to speak in behalf of the farmer.
On the crop insurance issue, and I think Saxby had mentioned earlier, the Senate is supposed to take action on a bill next Tuesday and we will ask for a conference very quickly after that, hopefully to be able to get that program into place.
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And in terms of the assistance this year, I think there is a recognition there is going to have to be. There will be, we will be discussing the method by which that comes to farmers in a timely fashion in the committee, but it will be certainly something that will be forthcoming.
Mr. Stenholm.
Mr. STENHOLM. The term we have been hearing a lot is the need of thinking outside the box. In many of your testimony today, you have given some thoughts that are truly thinking outside the box.
One question I am asking each witness: Do you support permanent normal trade relations with China? If so, a simple answer of yes; if no, some editorial comment would be appreciated.
Mr. Bowden.
Mr. BOWDEN. I hope my future as a farmer does not depend on China. President Clinton and AMS seem to think that is where we are going, but how can we sell them a commodity that they already have great surpluses of all of them and this is the same China that is threatening us every day about Taiwan and human rights. They are still buying destructive weapons from Russia and pointing them only at us. They do not honor contracts if the price changes.
How in the world, until they get to be something other than a Communist country, can we depend on them?
Mr. STENHOLM. Mr. Jeter—I take it your answer is no.
Mr. BOWDEN. No. [Laughter.]
Mr. JETER. I am not sure at this point. The idea I had to try to help the American farmer by placing a little bit of——
Mr. STENHOLM. I would appreciate it, with all due respect, if you would answer the question. We have 5 minutes too and I have got several things I would like to get in. A simple yes or no and then a qualification briefly would be appreciated.
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Mr. JETER. Okay, I am not sure at this time.
Mr. LAWRENCE. I have thought about it a lot, but I am not entirely sure.
Mr. NEWBY. Yes, sir, personally I would, but a lot of people in our organization do not favor it. Right now, we are dealing with China and they do not have any trade regulations that they have to follow and we feel like—I feel like personally that once they become part of the World Trade Organization that we will have some regulations that we can fight back against them when they do practice unfair trade laws.
Mr. STENHOLM. Mr. Sanders.
Mr. SANDERS. No, as a peanut farmer, I think it would not benefit me.
Mr. STENHOLM. Just for the record, up until this panel, 38 have answered yes and one has answered no and one has answered undecided with qualifications in the other two hearings which we have heard. The other hearing was in Texas; and in the Memphis area, is where that was.
Mr. Sanders, where you say if we keep our peanut farmers growing peanuts, we are going to have to make our program trade sensitive. Right on target and as we have said before, if we cannot change our rules to accommodate the world, the world has to accommodate us and that is what negotiations are about and I would respectfully ask each and every person here today to take a look at the China agreement and what it is and what it is not. If we are going to ever—how can we turn our back on the potential of 1.2 billion [person] market and allow our competitors to have that market, if we choose not to compete in it. And that is all that this vote is about.
Interestingly on your proposal, Mr. Jeter—and we have been comparing this, and I am comparing it to oil right now because not a person in this room was complaining about 50 cent diesel a year and a half ago. This is true—I represent the oil patch as well as the cotton patch and I am getting just as many complaints about $2 gasoline and $1.50 and going up to $2 diesel as anybody is. And contrary to popular wisdom, the oil industry in Texas does not want $30 oil. It is not good for the future because we know high prices bring low prices and we have been through it and the devastation that occurred at the low price is what we are going through in agriculture for the last 2 years. And therefore, one of the things that I am preaching is looking for ways to cooperate and to find a little cooperation between the oil and gas industry and the agricultural industry, because I have noted you cannot produce food and fiber without oil and gas; you cannot produce oil and gas without food and fiber. We are both minority interests, we both have environmental problems, we both have trade difficulties in which we have to find that ''elusive'' level playing field, and therefore, we ought to be looking together. And also, if we are going to solve our energy problem for the United States, agriculture has a role to play through gasohol, alternative energy sources, and there is an opportunity there for us if we choose to take it.
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End of sermon.
But from the standpoint of cooperation for agriculture, you got a little close to it with your suggestion, it is a thinking outside the box in having the consumer directly pay. One of the messages that I am saying to corporate America, it was about a year and a half ago, we had an increase—the wholesale price of Kellogg's cornflakes went up 9 percent in order to meet the increased marketing and advertising costs of Kellogg's—perfectly legitimate business decision, nothing wrong with that as long as you can pass it on to the consumer. My question is why do we not ever think about passing some of that back to the producer? This gets into peanuts too. Why does the peanut manufacturing industry always look at how to push back the cost on the producer instead of looking for ways to move the price up to the consumer or at least get more of the consumer price in the producer's pocket. I do not understand that.
The reason we have $30 oil today is pretty simple. The producers of oil are cooperating, they are managing their inventory, they are providing a market service. Every textbook in the United States says if you are going to be in business, you manage your inventory. What we have got to do is find ways to manage our inventory as producers in ways that keep us competitive in the international marketplace.
I really worry about those who believe that protectionism is the answer for agriculture for the future. With 95 percent of the world's consumers living outside the United States, I have a difficult time hearing from those of you saying that our future is in the United States. Our future has to be in the world and we have to do as you said, Mr. Sanders, we have to make our programs trade sensitive. That is a challenge, and we can do it. We can absolutely do it and do a better job for our producers, I am convinced, with our Government standing shoulder to shoulder with us.
Mr. EVERETT. Thank you, Mr. Stenholm. The rotation now comes to me.
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Jerry, you and I have talked on a number of occasions about the fact that Members of Congress are simply a reflection of the population in general. And I find that even in my district, which is an agricultural district and I would dare say in the districts of a lot of these folks, that many of our business folks and folks that are consumers really do not understand agriculture. One of the things I used to say is that the average American thinks a farm is a garden spot, a salad bar at a supermarket. Unfortunately, they have such a wide variety of choices, they have no idea where it comes from.
You all are involved in a program called Agriculture in the Classroom, would you discuss that briefly with us?
Mr. NEWBY. Well, sir, we have been involved in this program quite some time, but over this last year, we have voted to increase our funding about 5-fold. This program is going into the classrooms, hopefully to be in every classroom in the State of Alabama within the next 3 years, and we are going to teach or give the teachers an opportunity to learn about agriculture and give them materials that they can use in their room to teach their children about where their food actually comes from. We feel like if we can teach those children, that they will teach their parents. It is very, very important that we tell our stories to these children because they are being told a lot of stories that are not very favorable to us and they need to know the real truth about our food production.
Mr. EVERETT. Well, as I pointed our earlier, the American consumer only spends about 11 percent of their disposable income for food and fiber and that is the lowest in the world. But the average American consumer does not realize that. And when we talk about getting outside the box, we also are going to have to get the American consumer outside that box too.
Mr. NEWBY. We have just completed last spring or last summer a program where we were doing some ads for agriculture, talking about how farmers feed Alabama and it was very successful but it is very costly. We spent over $1.25 million on that program on TV ads and tapes and things that were given out across the State, but it was very successful. We just do not have the funds to do that as much as we would like to. We have got to find better ways to educate the consumer.
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Mr. EVERETT. Carl, would you touch on again how devastating it is going to be when this assessment hits the peanut farmer?
Mr. SANDERS. Yes. This assessment, as I said in my testimony, is $46 a ton. I am more or less an average size peanut farmer. That is $18,000 out of my profit. I am making very little profit now, you take $18,000 out of it, that is devastating to me.
Mr. EVERETT. Ben, I found your testimony, the part about irrigation, real interesting. Southeast Alabama and southwest Georgia have had a lot of problems concerning droughts in the last couple of years. How helpful would it be if you were allowed to set up irrigation systems with low-interest loans or by some other means?
Mr. BOWDEN. Well, irrigation, we have to look I think even a little further. Let me back up just a little bit on environmental desires. Everybody in this country is concerned about the environment and EPA seems to have as much or more money than any other agency in the whole country. I think we could use some incentives. We all agree that agriculture needs additional income and I think this is one way that we could put additional income to every farmer. We could go to those water-saving and energy saving practices like no-till, minimum-till. We ought to go further on irrigation to go to drip type irrigation, it is the most efficient type. We are having water problems all over the country and now it is hitting us here in the Southeast. We have got to develop water supplies and we need new and innovative ways to do that and I think we could pump water in surplus times into gulleys and into valleys and other places and save it and use it later on in the year. We do not have a lot of surface water in this part of the country. So irrigation is the limiting factor many times in the yields and in the profitability of farming and it is more so today in the Southeast than it has ever been.
Mr. EVERETT. I have heard both sides of the story. I have heard some producers say that irrigation does not pay in the Southeast. How would you answer that?
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Mr. BOWDEN. Well, I have got a little irrigation, 800 acres, I have had for some 15 or 18 years. It paid for itself the first year. Many, many times since then—my irrigated cotton last year went about 2.5 bales and my dry land went to 700 to 800 pounds, a little over a bale difference. It sounds like it is more efficient to me.
Now a lot of things about irrigation—we do not know as much about irrigation as we need to know. We need more research on irrigation because in a rainfall area, we do not live in a greenhouse environment like they do in California, most of the time up in the Lubbock area, they pretty well know what the weather is going to be, until one of those storms come along. But we have so much variability that we can over-water and actually hurt ourselves on irrigation. But it takes a lot of understanding to use irrigation in this part of the world.
Mr. EVERETT. Mr. Jeter, I found your testimony very compelling, it was good testimony and I appreciate you being here today. Also, Mr. Lawrence, your testimony was very good. Thank you very much.
My neighbor to the east of me, Congressman Bishop, from the second district of Georgia.
Mr. BISHOP. Thank you very much, Mr. Everett. Let me thank this panel for your very insightful comments. I certainly will do everything that I can to make sure that we remember what you say and consider it when we do take up the changes to the farm bill.
Let me just say that, Mr. Newby, I appreciate very much your comments about the Agriculture in the Classroom project that you are working on and I would like to urge Mr. Everett to get with you guys to see if you cannot bring that to Congress. We have got 435 Members of the House and the vast majority of them do not know anything about production agriculture.
Mr. NEWBY. We will get you the soybean crayons and the coloring books here today before you go back. [Laughter.]
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Mr. BISHOP. Again, let me go back——
Mr. STENHOLM. That might be the most constructive suggestion we have had all day.
Mr. BISHOP. Thank you, Mr. Newby.
Mr. Sanders, I too, and we in Georgia, have real, real concern about the peanut assessment. As you know, in Georgia, I think we are No. 1 in peanut production in the country and of course, the assessment is going to have a tremendous impact on us. And I appreciate your highlighting the impact it would have on you, but I certainly would like to echo that it will be just as devastating, if not more devastating, on the peanut farmers in Georgia.
Let me ask you if you have thought about any of the solutions. Just this past week the Agriculture Appropriations Subcommittee was considering whether or not to submit in the supplemental appropriations budget a request for some additional funds to address that assessment, and I think the decision was made at the time to hold back on that. But there are some other proposals also for language put into the bill that would allow a rollover of the assessment from this year to some future years, as we have done in the past.
Do you have any comment on that as a potential solution to the immediate crisis that peanut farmers, particularly in the Southeast, are facing with this assessment?
Mr. SANDERS. Yes, as you talk about the supplemental appropriation, from 1991 through 1995, peanut farmers of the United States contributed $56 million to the budget deficit reduction. So when we ask for an appropriation, we are just asking for part of that back. I understand that is not—did not pass or is not definite anyway. The rollover, the rollover is a viable alternative. We just need some relief as peanut growers. My neighbors, my friends, they say we cannot afford it—I agree with them. Now whatever means you in Congress find to take care of this, we would be very appreciative.
Mr. BISHOP. Thank you.
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Mr. Bowden, I appreciate very much, and Mr. Jeter, what you had to say about irrigation. Irrigation research perhaps would be extremely helpful, not just on when and how, but on some of the specific methods of efficiencies in terms of irrigation. There are some areas in the world that have a lot less rainfall than we have that are able to produce some pretty good peanut and cotton crops and fruits and vegetables, particularly over in Israel. And they have some efficiencies in irrigation because they have a lot less rainfall than we have, and they seem to be able to make it work. So perhaps we need to look at some of those efficiencies too.
I would like to get your comment on that.
Mr. BOWDEN. Well, you know, our problem I think is at certain times we can end up with too much water, create diseases and actually not be as efficient as you should be. There is a real fine line in a rainfall area with irrigation. It is not like using it in a rain deficit area where you know it is not going to rain, you can control it. So that is where we need the additional research I think that would be of great benefit to us.
Mr. JETER. I would like to say one of our limiting factors about irrigation, Mr. Bishop, is water. That is truly a problem in my area in north Alabama, being able to find a supply of water. If you do not have water, you cannot irrigate.
Mr. BISHOP. I think that we understand very well what your concern is because with Florida, Georgia, and Alabama in the water wars over the last decade, I think we are really searching for a solution. And it appears as if it is not just a battle between Georgia, Florida and Alabama; it seems as if it may be Georgia, Florida and Alabama, with the last three on the same side, if you know what I mean.
Mr. JETER. We are glad to have you. [Laughter.]
Mr. BOWDEN. I think I mentioned water storage and we have to use some new and innovative ways and you have a hard time getting permits for lakes and dams, but there are a lot of gulleys, there are a lot of little valleys with short watersheds and we have periods of the year most years that you have a surplus of water and it does not take much money to pump some of those things full of water and store it. And we can store surface water in this country and we are going to have to come to that. Of course we need some help to do that. But it would work real good in everybody's area.
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Mr. BISHOP. Thank you.
The CHAIRMAN. Mr. Chambliss.
Mr. CHAMBLISS. Thank you, Mr. Chairman. We came here to hear ideas and I think all of you are going to give us some solutions that at least are going to give us an opportunity to think about ways that we can change the farm bill the next time around, and I am very appreciative of that.
Mr. Bowden, your comments on incentives for irrigation is something that I am particularly sensitive to. There are a lot of parts of the country that do not need the irrigation like we do, but as all of you know, we are moving more and more in the direction of having to have that irrigation because it pays for itself in the dry year. And 1 out of 5 years, you will pay for that irrigation system.
Mr. Jeter, your idea about sort of a value-added consumption tax is really unique and I think very innovative and creative and is the type of thinking that we have got to have. We know we have got some changes we have got to make and that—it is a pretty simple concept, and I liken it to my comments about the flat tax. It is so simple that folks in Washington cannot understand it. So I think we have got to take what you said and we have got to incorporate that in and see if there are not some ideas in there that we can utilize.
Mr. Lawrence, I am particularly sensitive to what you said about conservation tillage. I think again unless our farmers are creative and innovative, then we are going to be going backwards. I had Chairman Combest down in my district last summer, down to a gentleman named Max Carter's farm over in Coffee County. Max does all conservation tillage, has for 20 years. And the savings that he has generated on his farm have been really kind of unbelievable. At the same time, his yields have improved.
And in talking about your problem with yields, that is one thing that we in the Southeast have particularly had a problem with on crop insurance, unlike anybody else. And we have addressed that in our crop insurance bill. And I think you will be pleased with what we have done there because it is going to allow you to continue to participate at a different level from what you are able to participate at now.
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Mr. Newby, you mentioned two things that I think are just absolutely the heart and soul of agriculture and that is research and trade. I mean whether it is domestic trade or foreign trade, obviously you can grow the greatest products in the world, but if you cannot sell them for a good price, what good does it do. We are seeing that right now. And without good solid research, we are not going to be able—the next generation is not going to be able to plant seeds that are more disease resistant and produce higher yields than what we are growing today. We have just got to have that. We are going to continue to emphasize that and Dr. Gale Buchanan, of course, is chairman of that research committee for the land grant colleges and universities. He was in town last week asking for more money and we are going to try to find at least what we put in last year. So we are particularly sensitive to that.
I want to say something, as we are talking about this China situation. I have been one of those folks who as a member of Congress has voted for most favored nation status with China and once they changed it to normal trading relations, I have also voted against it. I do not know what I am going to do this time, but I will tell you this, I have got a couple of tobacco growers who are going to be testifying a little bit later, the tariff on imported manufactured tobacco products in China today is 45 percent. They are a large importer of cigarettes and other manufactured products. They are also a large importer of leaf. The tariff on leaf is 40 percent. Once this agreement is approved and they come into the WTO, those tariffs are immediately reduced to 17 percent and 15 percent respectively. Now that is the type of agreement that is going to be beneficial to that aspect of agriculture. The other thing that I think is extremely important and merits a lot of discussion is the fact that right now, you are right, Mr. Bowden, China does not live up to their agreements. They are making military threats towards Taiwan, we do not know whether it is smoke or what it is. But you have got to make a decision of how do you deal with that. I do not like what is going on from a human rights perspective over there.
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But you either get them at the table and you are able to negotiate and dialog with them—and it is going to take years before you are ever able to change their policies outside of agriculture, but if you deal with them with respect to agriculture, with respect to high tech products, with respect to other manufactured products and you engage in a dialog with them, over a period of time—and it may take generations—I do think that there is a lot of benefit in that aspect of it from a trade standpoint that is going to carry over into these other areas. And if we do not trade with them, there are 1.2 billion people there that have got to eat and they will buy our agriculture products.
They are moving toward a more capitalistic society and if we can get them at the table, we can enforce those trade agreements because if they violate the agreements then nobody in WTO is going to trade with them.
So I think there is a lot of merit there that we have got to discuss and I appreciate your comments on that issue.
Mr. BOWDEN. I would like to comment a little further, I will not take much time.
I said my future is as a farmer, I think we have a lot of potential in other areas but right now cotton is cheap because they threatened to put all that cotton on the market; corn is cheap because they threatened to put all that corn and wheat on the market. They are the reason today—main reason, in my opinion—that our commodity prices are where they are. When we get a trade agreement with them, they are not guaranteeing us they will buy a nickel's worth of anything, they already have a surplus.
Mr. CHAMBLISS. See, that is exactly why we need to think about this though. Because if they were a member of the WTO, they could not do that. We have got anti-dumping laws in the WTO that would prohibit them from doing that. And that is why I think it is critical that we think about this in the near future.
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Mr. BOWDEN. They are controlling our markets today, for agriculture commodities.
Mr. CHAMBLISS. And we have got no leverage.
Mr. BOWDEN. None.
Mr. CHAMBLISS. If they were in the WTO, we would have real leverage over them and that is why we have got to think about it.
Mr. BOWDEN. You all are smarter than I am, I do not understand that.
The CHAIRMAN. Mr. Berry.
Mr. BERRY. Thank you, Mr. Chairman.
I think all of us would love to not even need a farm program, I know everybody on this panel and I suspect everyone on that one has thought that you would just much rather get this out of the marketplace and not have to even know where the FSA office was.
An idea that—and we are talking about thinking out of the box and I want to present something to you and see what your reaction to it is and I am interested in the reaction of the members of the committee also.
I did present this to one person that I thought was extremely knowledgeable about agriculture and they told me it was the craziest idea they had ever heard in their life. So I am taking some personal risk here by putting this out. [Laughter.]
But what would you think of a program—and I have no idea how we would work or enforce this program—where you did not plant, leave your tractor in the shed, and rather than plant, if the market price is cheaper than what you can produce it for, you buy a futures contract for this fall delivery. And you do not plant until the market is as high as you need it to be to break even at least.
Yes, sir.
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Mr. LAWRENCE. What do you do with the landowners that you have the land rented from?
Mr. BERRY. They would buy a futures contract too. I do not have the details worked out.
Mr. LAWRENCE. I think that would be one of the stumbling blocks.
Mr. BERRY. The thing is, as I believe you said, Mr. Lawrence, this thing is structured more for the landowners. And I am on both sides of it, I own land and I rent land and I know exactly what you are talking about and I have been in this business—until 1993, that is all I had ever done, almost. I know what you are talking about.
I am really more concerned about the renter side of it than I am the landowner's side of it. I do not have the details.
But it does not make any sense to me—and I have talked this over with my family, my brothers that still run that business in Arkansas—it does not make any sense if wheat is $2.30 on the board and it costs us $3.30 to raise it and we are out there planting it instead of buying it on the board. If we think it is going to go up, we could just buy it and make money and would not get near as tired. [Laughter.]
Mr. LAWRENCE. I admit it sounds good.
Mr. BERRY. I am interested in your thought about that. I am not trying to tell you it is the answer.
Mr. LAWRENCE. It does sound good, but I can see the complications of dealing with the land that way. To me, that would be the big problem, other than—it sounds like it would work if you owned the land and could do that and make your tractor payments with part of that.
Mr. BERRY. I can tell you—and I suspect that I will never actively farm again, but as a landowner, it concerns me who is going to farm that land. I am worried about them staying in business as I am as a landowner.
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Yes, sir.
Mr. JETER. Mr. Berry, would that not put us depending on foreign food?
Mr. BERRY. Not if we buy the futures contract. It would not work if you just did not plant, it would abdicate the market share to someone else. But if you bought the futures contract, you would own that much production, the same as if you planted it. You might come to the point where you would have to take delivery, you might have to drive to Chicago and pick it up. [Laughter.]
Mr. NEWBY. Mr. Berry, we tried supply-demand controls before, and we found what it has done, at least in my lifetime, it has encouraged other countries to plant more crops when we miss our crops, when we set aside acreage, it encourages other areas of the world to produce more crops. I can see how it could help in times of extreme world over-production like we have been in over the last 2 years, to have some supply control mechanism. But it has been, I think, counter-productive in my lifetime and my experience as a farmer, to have those controls.
Mr. BERRY. But we never before, we never entered into the equation—I am being argumentative here—we never entered into the equation, we just reduced our production. What I am talking about, part of the deal would be you would have to buy their production. If Argentina thinks they can produce soybeans for $2 a bushel, I do not think I can compete with them. So I will just buy theirs.
Mr. NEWBY. Well, I know I cannot compete with them at $2 a bushel.
Mr. BERRY. At that point too—like I say, it is just a thought.
Mr. NEWBY. And you are thinking out of the box, that is good.
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Mr. BERRY. That is sure out of the box, is it not? It may be off the planet, I do not know.
Mr. BOWDEN. Well, the only problem I have with that, Congressman, is that on the board I have not been able to find my commodities at a profitable position for me. Any of them right now are still below the cost of production, that I am aware of. And you cannot go on the board and get it higher. You are still losing money.
Mr. BERRY. This would have to be universal, it would not be something two or three guys could do by themselves.
Mr. BOWDEN. If enough people did that, then it would automatically kick the price up, hopefully.
Mr. BERRY. Thank you all very much.
The CHAIRMAN. Mr. Moran.
Mr. MORAN. Mr. Chairman, thank you.
Mr. Lawrence, first let me express to you my appreciations for the sentiments that you exhibited today. It was a good story and an awfully good reminder for me and my colleagues to recognize what tasks we have and why what we do matters and where we go in the future. So I appreciate what you had to say.
Mr. Newby, in your testimony, you talk about making certain that the producers receive the benefits. What has been the experience to the contrary, what is the examples of the problem?
Mr. NEWBY. Mr. Moran, in certain areas of our State, a lot of the land is rented for cash rent and the producers are losing this land that they rented for cash rent and the landowners are taking the land back and some of them are not even planting a crop but just drawing the check. And when you receive all of your payment through the AMTA payment, if you do have a cash rent and it does tie up the AMTA payment in part of that cash rent, all of that extra AMTA payment goes to the landowner rather than the producer.
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Mr. MORAN. So the current farm bill has encouraged landowners to take land out of production or to not rent their land to a tenant farmer?
Mr. NEWBY. It has made farmers out of some folks that has never farmed before; yes, sir.
Mr. MORAN. That is a better way of saying it.
Yes?
Mr. LAWRENCE. May I comment on it? The thing that usually happens is when the next generation takes over, or when a farmer quits farming and somebody else is up to rent the land, that is when the problem starts, you know.
Mr. MORAN. Well, I certainly recognize that—yes, Mr. Bowden.
Mr. BOWDEN. I just wanted to comment to what extent this is going on. I made a comment that I am the last dirt farmer in my county trying to make a living out of the soil. My county director in the AMS office—well, they change them so regular—they sent out some 200 checks to AMTA payments, small checks most of them. He said less than 10 went to people that bought seed, feed and fertilizer. The rest of them went to people that had no expenses whatsoever. So that is the extent that it is happening in certain areas.
Mr. MORAN. That is a good story for me to hear, that is slightly different than what I have experienced and I am glad to know what is going on.
Mr. BOWDEN. When you work and rent on a percentage, share rent, everybody contributes. They have money invested and they equally share the AMTA payments, but on cash rents, that is not so.
Mr. NEWBY. Mr. Moran, we understand why they have been done by the AMTA because it is a way they can get the money out into the field into the folks' hands that need the money, and it has been very much appreciated. But hopefully we can get all of the money in the future into the hands of the producers.
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Mr. MORAN. But your complaint is not just with the disaster payment, it is also with the original AMTA payment before the disaster.
Mr. NEWBY. Yes, sir.
Mr. MORAN. Just for my own understanding, what percentage of peanuts and cotton are sold domestically versus foreign? How important are foreign markets to peanuts and cotton?
Mr. NEWBY. Very important to cotton, 40 percent of the cotton is exported out of this country when our dollar is not so strong. That has not been the case over the last 2 years; of course with the reimplementation of the Step 2 Program, we see our export numbers going up greatly and we certainly appreciate you gentlemen's help on restoring that funding.
Mr. MORAN. We want a Step 2 Program for wheat. [Laughter.]
Mr. NEWBY. I hope you can get one, I will work with you too.
Mr. SANDERS. On peanuts, it is about three quarters domestic and the remainder—it varies from year to year with production.
Mr. MORAN. Thank you.
Mr. BOWDEN. But those peanuts are additional peanuts. The quota in peanuts is set up for domestic use. What has happened, we are not allowing for these imports that are coming in, they are replacing a lot of domestic production and we ended up with a surplus, and that is one of the reasons we are ending up with this cost problem that we have today. Our trade representatives have traded so that we can take in all these peanuts and they are not accounted for in domestic consumption, and we are producing a total amount for domestic consumption. So you will end up with a surplus.
Mr. MORAN. So it is a given then that any importation of peanuts is over and above the demand domestically.
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Mr. BOWDEN. As allocated by the Government, yes.
Mr. MORAN. And just one of the issues that is a consistent one at home and I want to see if this is a midwest issue or a nationwide issue, is the concern about lack of competition in agribusiness; who farmers buy from and who they sell to and also in transportation, kind of what is the state of your ability to get your products to market.
Mr. BOWDEN. Boy, that is a good one, I like that one. Peanuts, we ended up with four major buyers of southeastern peanuts and that is ADM, Cargill, Gold Kist and Alamente, they were the four. Would you believe, that this year, they have gone together and formed a partnership and now they are one. So where is the competition in those type deals? Now they also control Argentine peanuts, a big part of those, and they use them to beat us over the head and use us to beat them over the head. But is it not collusion any way that we can determine, but it actually is.
Mr. NEWBY. That is very much a concern in Alabama and the southeast United States just like it is in your area.
Mr. MORAN. My time has expired, thank you, gentlemen very much.
The CHAIRMAN. If Mr. Riley would indulge me for just a moment; Mr. Stenholm and Mr. Moran are going to have to leave and catch a plane and Mr. Stenholm wanted to make a comment.
Mr. STENHOLM. I apologize for having to leave, but I have got to get back to my own district tonight in time for an engagement. But just a comment following up on Mr. Berry's out-of-the-box thought a moment ago, and give you a real life experience.
In the fall of 1998, my son, who is carrying on our farming operation, which as most of you know, I am still actively involved in agriculture, called me as he was planting wheat and he said, ''Dad, this is crazy. The amount of money we are going to lose planting this wheat crop, I could lose less buying the same amount of contracts in the futures market.'' And he was right, we lost less by not planting wheat.
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So I would ask that everyone not dismiss this as just a crazy far-out type of an idea. Also, as we look now at the income question of agriculture, we are hearing at these hearings basically again this year, another AMTA payment, which last year we all agree saved a bunch of us. I mean the fact that we have appropriated $22 billion last year in order to help agriculture get through these difficult times, everybody appreciates, and in fact most of us would not be here were it not so, if you are actively involved in farming.
The question is how long can we keep doing that. And then the supplemental income plan that I have put forward is another thinking outside the box, rather than just giving payments to those who happen to have a history that was based on a 10 or 15 year ago plan, many of which are no longer farming, we are trying to look at how can we put the payments to the people actually trying to produce the crop, including peanuts. That makes more sense. That is another one.
Third, we are hearing now an increase in the market loan as a way to get more income to farmers, and we are looking at that. All of it costs money and that gets into next week's budget.
But final observation, we now have the lowest government inventory of commodity that I can remember. But somebody owns that. So when we were selling our cotton at harvest, when we were selling and we were doing our LDPs and on wheat, et cetera, somebody was buying that. Whoever that was had to go into the futures market and sell a contract because nobody has enough money to cover the inventory of all of these commodities, I do not care how big you are. As they were selling, what was that doing to the price? It was driving it down. And therefore, somewhere in this Government standing shoulder to shoulder with us, we have got to learn to use the futures market. The case Mr. Berry is talking about is a little innovative and there are all kinds of reasons why it will not work, if you are thinking all of it. But if you are thinking some of it, if you are thinking a part of it and you can actually buy your crop and take delivery, and that would mean having delivery points and cooperative efforts in which producers could physically take it. If you can buy it and take delivery and then sell it to the people using it, it would have a very positive effect, I think, on the market. Think.
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So before we just dismiss Marion as some of us quite often do, as just kind of being, you know, right off the wall——
[Laughter.]
This is the kind of thinking that we wanted to throw out. I appreciate him throwing it out and now everybody can mull it over.
I thank Mr. Riley for his generosity in yielding to me.
The CHAIRMAN. Mr. Riley.
Mr. RILEY. Thank you, Mr. Chairman.
Gentlemen, we have covered so much today, I do not even know where to start, but as far as Marion's plan, eventually we have got to buy that—if you buy that thing, eventually you have got to sell it. If you do that, I think, Jerry, you are absolutely right, what we are going to do is cause more and more of our productive land to go out of production. Once you lose it, you do not get it back. I think all of us understand that.
We have got to develop a plan. What Charlie Stenholm said just a minute ago, we spent $22 billion—with a b—$22 billion in emergency payments in the last 2 years. If we are willing to do that, what would have happened to your prices if we had given it to each one of you individually for your crops? You would have probably made money on each one of those crops. But because of the diffuse way that we spend that money, most of you still ended up losing money. And that is the thing that we cannot do. I promise you, gentlemen, when you look down the road 4 or 5 years, we are not going to continue to give $10 to $15 billion a year. We cannot do it.
But when you look at the European countries, when you look at other countries around the world, that is exactly what they do. And that is kind of a fundamental question we have got to answer right now—are we willing to do that? Well, we have done it for the past few years, but I think we did it in the wrong way. If we want to subsidize something, let us subsidize the price of what you get. There is a variety of ways to do that but the last thing that I would like to see us do is ever take any more productive farmland out of the market.
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And if you look what one of you said a moment ago about the pine tree program here, we have taken thousands and thousands and thousands of acres out, of productive farmland out of production. It will help the pine tree growers, I guess; but long-term, we cannot eat pine trees. And I think that that is probably a destructive policy when you look at how it impacts the farm community.
Let me go quickly to something else. This has been the first panel, and I want to tell you how much I sincerely appreciate you. When it comes to trade with China, Saxby and I are probably in the same boat. This has probably been one of the hardest decisions I have tried to make since I have been in Congress. But normally when we hear from farm groups, they uniformly—I think Charlie said we have only had one or two dissenting opinions in the first 50 people that we have had up until this panel got here. But I think you are the first ones to recognize that there is more involved in foreign policy than the ability to export. One of the problems that we have today is because of China. One of the reasons that we—and I think Ben is absolutely right, one of the reasons we have the problems we have today is because of China. Sometimes I think that we look more and pay more attention to expanding markets to China than we think about how important this market is to China. Forty-six percent of all of China's exports come where? United States. One percent of our experts go to China. I think that points up a failure of some of our policies in the past.
I have talked to Ms. Barshefsky and Secretary Glickman. I honestly think in the past that we have used agricultural products as a bargaining chip and we have given away some of our ability to export some of our markets in order to increase the viability of some of the manufactured products in this country. And that is something we cannot do any more. But it is more complicated than just sending products over there.
When we have the Defense Minister of China saying that war with the United States is inevitable, that is a fairly strong statement. If it is inevitable, then I am going to think long and hard before I do anything to help a Communist regime that we may have to fight. We have taken the last 10 years and with this $40 or $50 billion trade deficit, they have taken that and rebuilt their military to the point today that they can challenge us.
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We talk a lot about how much they have reduced their tariffs, and they have. As of today, most of your meat products going into China carry a 40 to 45 percent tariff. Now think about that. Sure, we are going to take it down to 10 percent, that is great. But I am not too sure that we should not take it down to zero and I think we need to remove all of these other obstructions in order to do it.
It is far more important that we make the right decision with China based on a multitude of factors and not just trade.
I hope that we make the right decision, because I cannot think of a decision that we will make that will not only affect just agricultural policy, I think it will affect basically the course of the next generation in this country. So when we look at it, I hope that we do not look at it just in how it affects our farm policy, because there is a lot more involved.
Somebody mentioned also a minute ago about controlling inventories. I wish we could control inventories, but you cannot in a global market, not until we have the ability to control another country's products, and we will never have that.
The fundamental problem is when you can make a living in Europe on 50 acres of soybeans—how many of you farm soybeans in here? How many of you could make a living on 50 acres? [Laughter.]
Mr. RILEY. That is the problem. We have to come up with some innovative programs and we have to come up with a solution that puts you on an even playing field. No matter how you control it, no matter how we try to control it in this country, we will never be able to compete worldwide unless we start taking some of this money, using it for research, using it for irrigation programs, using it for a way to make us more cost-effective and efficient. Until we do that, I think we are going to be hard-pressed to ever be competitive again like we were once in this country. I think it was Ben that said we lived off of cheap labor in this country for a long time. Today, we do not have it. So we have got to come up with some different solutions.
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But one of the things that I want you to understand is we do not have a lot of time. You have had 3 back-to-back bad years. We are to the point today if we do not do something relatively soon to change this policy, I think 3 to 4 years from now, we are going to look back—and what you said, Mr. Lawrence, is absolutely true. As you were saying that, I could not help but just think how that scenario has played out all across this country over the last 15 or 20 years, as we have let other generations have to move from the farm because they did not have any choice.
So we appreciate your comments, we really do. There are some people going to be coming up on the next panel that has got some really good ideas. Mr. Jeter, I thought your idea has a tremendous amount of merit. If it does not do anything else, it does convince the American people that the farmer is not getting the $3 for the cornflakes. And you are right, no one today understands that.
I am still of the opinion after living in Washington for the last 2 or 3 years that most people think all the food is produced, marketed and packaged within side the supermarket. Nobody understands what you are having to go through out there. So anything that we can do to raise their awareness, I think is going to be a great step forward.
Yes, sir?
Mr. LAWRENCE. Mr. Riley, the tragedy of that though is it is going to take a crisis, it is going to have to happen before the public will really see the problem. That is the tragedy of it.
Mr. RILEY. I think it would be interesting to ask the panels as they come forward how much longer can you continue to produce products at the prices under the regulatory structure we have—how long can you remain competitive?
You said yourself a moment ago that you are looking for a way out.
Mr. LAWRENCE. I think I have found it.
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Mr. RILEY. Well, I hope that we can make some adjustments before so many farmers across this country end up having to make that same decision.
Thank you, Mr. Chairman.
Mr. BOWDEN. If you want to get out of the box, I have got one little short thing, I know we are all out of time.
We keep talking about subsidy, subsidy, subsidy and that is a bad word to everybody, but hat about buying, an incentive for the things that people want in this country? You want clean air, you want clean water, you want to save energy. If we go to no-till farming, we have saved that. We fund it a little bit but we put very little money in there and it runs out and every farmer is not eligible for it. That is a buy-in to the things that people want.
This irrigation, you save energy, you save water, it is a buy-in to what people want in this country. And I think we ought to look at subsidizing, paying, renting up front; it does not matter where the money comes from in agriculture, if it is on the front end or the back end. The simple facts are we have to have more money in agriculture if we are going to stay in business.
Mr. RILEY. I think that is true.
The CHAIRMAN. I thank the panel.
I would now call our second panel to the witness table.
Mr. Darvin Eason, a peanut and cotton producer from Lenox, GA; Mr. Timothy McMillan, a cotton, tobacco and peanut producer from Enigma, GA; Mr. Mike Owens, tobacco and peanut producer from Lenox, GA; Mr. James Shirah, cotton and peanut producer from Pinehurst, GA and Mr. Ricky Wiggins, a peanut producer from Andalusia, AL.
I thank you very much for coming. If we could, those people who are moving around, if you could please hold the conversations down, the noise comes to the front and we need to continue.
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We will take the testimony in the order of the way the witnesses were introduced. Mr. Eason, please proceed.
STATEMENT OF DARVIN EASON, PEANUT AND COTTON PRODUCER, LENOX, GA
Mr. EASON. Good morning, Mr. Chairman and members of this committee. I appreciate the opportunity to appear before you and share some of the problems and opportunities we have in agriculture. My name is Darvin Eason and I am an agribusinessman and farmer in south central Georgia, from Lenox, GA. I have the opportunity of having basically two of my Congressmen here. Not too many folks have two Congressmen, but I farm and live in both Congressman Chambliss and Congressman Bishop's district. I live in Congressman Bishop's district but I farm and have business in Congressman Chambliss', so I appreciate that.
I think most of us realize that why we are here is for various reasons—multiple year droughts, depressed commodity prices, consolidation of buyers and suppliers, over-burdening regulations, additional risk brought on by NAFTA and GATT and lack of a farm safety net. But I'm going to get away from the printed text just a minute because I heard somebody say something awhile ago that really interested me. It is my stump speech usually, and I did not have it included, but 8 out of 10 years multiple droughts or droughts has caused most of our problems.
In Georgia last year, we had 2,600 pounds average peanuts and we averaged 531 pounds of lint cotton. You are going to go broke doing that, I do not care how much help you get from the Government. And it is mainly caused by drought, and irrigation is a problem.
Now I know that irrigation cannot be all the problem, but it is in my area, I feel, something that we need to look at. It also costs the Government the most money, drought does, because of assistance and emergency aid.
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But some way of subsidizing irrigation, I do not know—I am not an advocate of wells primarily, but reservoirs—and I know one size does not fit all in the country, but that one of the answers to part of our problem.
Today, I want to focus on four things. One is the emergency supplemental appropriations. And I want to just briefly say it is planting time in Georgia. We still have farmers in Georgia who have not got financing yet. I had two in my office Friday saying they had applications at banks, FSA, they still had not heard, they had been calling, worried about whether—they have got land rent to pay and we still, even after the assistance we had last year, we still are having problems getting financing in south Georgia.
In my small area since February I have had two bankruptcies of farmers, friends of mine, going bankrupt. But the greatest concern I have had is I have had 4 farmers, different neighbors, who had their sons left this year as a farmer. They had been farming with them for years, but most of the fathers are elderly, their fathers are left on the farm now to farm by themselves, the sons are out—one of them is driving a truck. They just had to quit because they could not make a living. That concerns me because this is really a problem. I applaud the committee for what you did last year for including peanuts in the disaster program. I want to say this, peanuts must be a part of any AMTA payments being considered this year.
We urge Congress to come forward with an equitable infusion of emergency supplemental appropriations for peanut producers suffering from drought losses and market collapse. I know this is a bandaid, but without the bandaid, Saxby, we ain't going to make it. We have got to have the bandaid. That is just something we have got to have.
Second—and I am not jumping on Freedom to Farm and NAFTA and GATT, but they have created some serious problems, particularly for peanut farmers. Imports have taken 12 percent of our domestic market and exports are down. Under our present system, it is going to get worse. Companies are taking advantage of the loopholes in the confections coming in and those peanuts not being counted as imports, sweet meats, origin of peanuts. We have got some serious problems there.
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I also want to talk a minute about—I heard somebody mention about food security. I was really disappointed, I was out in Seattle and I think Congressman Combest was in the meeting I was in where the EU fellow was talking about they were going to protect their farmers. And one of our U.S. officials said that is an evil thought—an evil thought. I do not know where—I think if you just look at the oil situation right now, I do not think it would be very evil, because I think it is a very serious consideration, that we have to protect our farmers and our agriculture if we are going to survive in this country.
My recommendation is this: Congress should insist that negotiators demand that foreign peanuts meet the same safety and environmental standards with which U.S. producers must comply. Also, before any further reductions occur in tariff rate quotas, wage and worker protection laws and related regulatory costs should also be factored into the formula when placing a value on foreign peanuts.
You are going to hear this from growers, it is going to be called ''enforce'' and ''equalize.'' I think we can compete if we are under that. Here we call it a level playing field or whatever you want to, but equalization is very important to the peanut farmer, it has got to be included in all these other things.
The no-net cost peanut dilemma, I just want to mention it. I want to thank you for helping us up to this point, but we have still got $35 million out there that has got to come out of somebody's pocket this fall. And if it comes out of the farmers' pocket, a lot of them are going to go broke, if it comes out at one time.
Let me make this recommendation to you: In keeping with our commitment to a No-Net Cost Program, it would be beneficial if the peanut marketing assessment were allowed to accrue within a Peanut Program trust account within the Commodity Credit Corporation. Call it a peanut trust, if you will. In lieu of increasing the market assessment of producers' marketing quota peanuts produced from the 2000 crop, the Secretary could borrow from CCC against all assessments for years 2000 and beyond, so as to offset any loan losses accrued due to quota oversupply.
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I know that may be simple, and I really do not believe, looking at what happened with the shellers and what happened to cause this buyback, I really do not believe we are going to have the problem again. I believe that shellers have learned and I think farmers have learned. And I think it can be shared between shellers, farmers and also can be shared with USDA for setting the quota at a point knowing that the supply was sitting there. We do not have any control over that.
The other thing is crop insurance reform. The package that the House has already passed and already agreed to is great and I want to thank Congressman Bishop and Congressman Chambliss for considering southern crops and understanding that one size does not fit all. That has been one of the problems with our insurance program, is everybody says one size fits all and it does not. Georgia is different from Texas and Texas is different from Minnesota. We have got to understand that.
The recommendations I have on this is:
More affordable policies to protect farmers against price and income loss, as well as production loss.
Cost of production coverage which allows producers to buyup to 100 percent.
And the third one, I will say this, I have lived through a lot of fraud in insurance. We have got to stop the fraud. I have sat there and watched these farmers and seen some of them do it in the past, but it has got to be stopped.
Last and I am going to quit, is the death tax. It is the most unfair tax and farmers are unfairly, I think, in this tax because of the way farms are structured and handed down father to son. That is a very unfair tax and needs to be eliminated.
I thank you and I appreciate the opportunity to share that with you.
[The prepared statement of Mr. Eason appears at the conclusion of the hearing.]
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The CHAIRMAN. Mr. McMillan.
STATEMENT OF TIMOTHY E. MCMILLAN, COTTON, TOBACCO, PEANUT PRODUCER, ENIGMA, GA
Mr. MCMILLAN. Thank you for letting me address you today. I am here today when I should be home working towards putting in the spring crop. Farmers, including myself however, have been negligent in tending to their business outside the fence rows. So I deemed it necessary to be here today.
In the past, farmers may have been guilty of crying wolf on certain issues, but just like in the fairy tale, the wolf eventually shows up. I am here today to tell you that the wolf is here and will devour our family farms if major changes are not made in our agriculture policy.
I would like to give you a few examples of the small share the farmer receives out of a finished product. And I do not mean to bore you with facts and figures you have already heard, but according to Dr. Bill Givan, an economist with the University of Georgia, this loaf of bread costs $1.99, the farmer received a nickel out of this same loaf. This pack of cigarettes cost $2.54, the farmer received 4 cents. This box of Wheaties cost $3.50, the farmer received only 3 cents. A certain celebrity's picture was on the front of a cereal box for advertising purposes, it is reported that the celebrity received 10 cents per box of cereal sold. And I remind you, the farmer only got 3 cents. Someone earlier said we are in an upside down world. I think maybe we are.
Farmers could actually give their product to the manufacturers and it would not change the cost of the final product. On the other hand, the farmers could be paid twice as much for their product and it still would not change the price of the box of cereal except for 3 cents. Now I know that we are not going to be able to force manufacturers to pay twice as much, but the consumer could pay twice as much through our Federal Government in subsidies, export enhancement programs, and safety nets. And by the way, I had not heard Mr. Jeter's idea before today, but I liked his idea.
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In the midst of a booming U.S. economy, U.S. agriculture has experienced a full-blown depression for the past 4 years. In the 1930's, the Agriculture Adjustment Act defined a set of basic commodities and set parity prices for them. These types of programs were essential to the Nation's wellbeing and the AAA programs were a boom to the U.S. economy. The 1996 farm bill, however, was designed to be a 6-year transition to eliminate the old farm programs. Congress and some farm leaders failed to see how brutal a free market can be. Most major commodity prices are now below production cost levels. Congress has responded with supplemental appropriations to prop up financially strapped farm operators. Farm payments were a record $22.7 billion in 1999, far above those levels of earlier farm programs. Farm lenders report many loan repayments were made with Government payments to farmers.
Abraham Lincoln once said, ''In all that the people can individually do for themselves, the Government ought not interfere.'' I agree with this statement. When given a chance to compete with other producing nations on an equal basis, U.S. farmers can hold their own and then some, but as long as Federal monetary policies tend to push up the prices of American commodities in foreign currencies and producers elsewhere are allowed to get away with subsidizing their exports, U.S. agriculture will suffer.
I consider myself a realist and I do not think we can compete with the rest of the world unless we are on a level playing field. At this point, we are playing with a different set of rules that handicaps our competitiveness. Our trade negotiators gave away agriculture in order to promote other industries. Why must we eliminate our import quotas, export enhancement programs, price guarantees, and other programs at American agriculture's expense? We should first bring all countries to our level and then negotiate from there. With carefully planned promotion and marketing programs, U.S. agriculture can reclaim some lost export markets. We can grab a share of the new business that will unfold as the economies of developing countries improve and provide them with the money needed to buy more agricultural products.
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In my area of the country, two programs that have worked well are the tobacco and peanut programs. The tobacco and peanut programs provided stability for its farmers. The farmers could make long-term decisions. With the Freedom to Farm Act, farmers can only plan 1 year at a time, which leads to stress and uncertainty. Both programs need to be kept to assure economic viability in those areas of the country where these commodities are grown. However, both programs have major problems that need to be addressed.
The question is simple: Do the American people and you, as their Representatives, want to keep family farms healthy and thriving? The options are:
1. Get us on a level playing field so we can compete on the world market.
2. Stay with the old farm programs with subsidies and target prices.
3. Depend on other countries for our food.
I feel that agriculture is a national security issue. We must maintain a strong national defense and be willing to maintain our agriculture. It is vital to our national security to be able to feed our own people. An oil embargo would be nothing when compared to a food embargo.
I plead to you; take our case to the American people. You have the forum to do this. This is a national emergency going unnoticed. I pray that this Nation will see the wolf before it is too late for America's family farmers.
Thank you.
[The prepared statement of Mr. McMillan appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Owens.
STATEMENT OF MIKE OWENS, TOBACCO AND PEANUT PRODUCER, LENOX, GA
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Mr. OWENS. Dear Honorable Members, I am grateful to be here today. Really, to be honest with you, I am here about my life. How am I going to live in the future and about my kids that I care very much about and other people's kids.
My name is Mike Owens, I am 44 years old and I have an 18-year degree in in agriculture. I am an all American, very hard-working farmer. I like to make my own way in life.
There are two very important issues in agriculture and that is farm families are losing their lives; and how important farmers are to our country.
Farm families are very good Americans. We work hard. We care about people. We are very proud of what we do for our country, but we are losing our farms, homes, our children's college money, their future and our pride. We are too honest for our own good and we are ashamed of where we have gotten.
The farmers make up 1 percent of the population, but we have no political power, but we are not giving up. We are very concerned about the survival of our livelihood.
Farmers are the first to start the economic train. Our money turns 8 to 10 times in the system. We feed our families, your families, the country and most of the world. We feed our school kids, armed forces and clothe us all. One of the most important things is to make sure that our children and our grandchildren will be able to eat the safest, the best and cheapest food in the future 10 or 20 years from now.
We are the masters of agriculture of the entire world, we are the rule book and we cannot understand why our country wants to take over 80 years of hard work and technology and taxpayers' money to teach other countries to condemn the American farmer that provides for us all.
Our thoughts on NAFTA:
We cannot compete in the world market. The environmental and health issues cost us dearly for the unions, the labors and the taxes. Most of the other countries do not have any of these to contend with. It costs us 3 to 5 times more to grow our crops than the other countries. In order to have a fair playing field, we need to get our fertilizer, chemicals, seed, insurance, bankers involved in the world market. We are the only business that pays what the companies tell us for their products and only have the choice of what they offer us. We believe that technology has taken off and left us for a purpose.
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Tobacco is the crop that we make the most money on. It pays our bills for the money we lose on cotton, peanuts, corn and soybeans. There is no alternative crop for tobacco that makes as much of the return on our investment. Tobacco keeps us alive. We know that tobacco is bad for our health but people still demand it. The tax it produces is unreal. Most of the universities in the East were built with tobacco money. Many a student's tuition was paid with tobacco money. The Tobacco Program is in jeopardy. USDA's best working program is being killed by corporate America. Tobacco farmers have nowhere to turn. Our quota has been cut in half, which means we lost half of our income. The nitrosamine issue is killing us. Tobacco quota is to us what stocks and bonds are to investors. An investor can buy and sell them without worrying about a 50 percent cut in 3 years. If his investment was cut that dramatically, he would be very upset. Let us, the American farmer, get compensated for our losses and our quota. Then the companies could get whoever they wanted to grow tobacco.
On the cotton issue, cotton prices are based on the world market, but our grading sheets look like hospital bills with pages and pages of deductions. Supply and demand is still the name of the game. We need to think about it.
On the hog issue, corporations have took over the operation. Many farmers lost everything they had producing hogs. The prices were cheaper than they were during the Depression.
On the weather issue, weather is the most important issue, as it can make or break us in one year. Due to the prices that we receive for our products, the weather is no worry to many of us.
We, the farmers, take that peanut issue is going to be the same as the tobacco issue. We will wind up growing the crop for nothing and corporations will reap the harvest. Peanuts are one of the healthiest foods in the world, especially when they are produced by the American farmer.
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Corn needs to be one of our best crops, but it has turned out to be the worst. OPEC is manipulating our fuel. Corn can be used to produce gasohol, which would allow us to use our product in a different form and not depend on OPEC.
We need to think long and hard about depending on other countries to produce our food supplies for our children, our grandchildren and ourselves. The farmer in the country can rule the world with food.
We, the farmers, are being forced to scam the system for our survival.
Thank you from the bottom of our hearts.
The American Farmer.
[The prepared statement of Mr. Owens appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you, Mr. Owens. Mr. Shirah.
STATEMENT OF JAMES W. SHIRAH, JR., COTTON AND PEANUT PRODUCER, PINEHURST, GA
Mr. SHIRAH. Mr. Chairman, I would like to thank you and the Committee on Agriculture for giving me the opportunity to testify today on issues affecting U.S. farm policy. It is not my intent to simply point out what I see is wrong with U.S. agriculture policy, except in context of what I see could improve an issue that needs improving. I am sharing perspective for your consideration as you continue your diligence on such an important mission.
First let me share with you a brief overview of how I got to this table. In 1996, two congressional initiatives had a major impact on how I pursued my livelihood. First, the Telecom Reform Act contributing to my accepting an early retirement from a 25-year career at BellSouth. Second, the Agriculture Reform Act gave me the freedom to farm. At retirement, I built a small cabin on the family farm in Dooly County, GA. The farm has been in my family for over 150 years. It was farmed through a shared tenant arrangement until 1997. In 1997, the son of the original shared tenant operator was forced to stop farming as an independent operator. The 1996 and 1997 crop years were so devastating to him that he liquidated his farming assets to save his home, even with crop insurance.
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Utilizing my Malcolm Baldridge training, I felt that I could deploy best practices techniques and have a viable farming operation to contribute to my early retirement. I have now farmed cotton and peanuts for 2 crop years as an owner/operator and, reluctantly, have begun my third year. Even after utilizing the practices of world class farmers and consultants, I still experienced significant farm losses in the crop years 1998 and 1999. Professionals who have assisted me over the past 2 years have advised me that 1997 was an unusual year. They told me again in 1998 that it too was an unusual year. Again, in 1999, the opinion was that it was an unusual year. When does the unusual become the usual? National Weather Service Director John Kelly says due to La Nina, year 2000 is indicating the drought probability to be another unusual, or usual, year, depending on your definition.
My reason for wanting to testify was not because of my expertise in row crop production techniques, but from the experience I have as a businessman in my previous life. I would like to concentrate my thoughts today on four areas of concern. Those are crop prices, crop yields, insurance and succession strategy for domestic agriculture.
Crop pricing cannot remain at a level below the cost of production for very long, especially when amplified by low yields. The loan rate for cotton is 51.92 cents per pound. I assure you that 51.92 cents is below the cost of U.S. production. Crop yields are affected by practices of the producers, but even utilizing a best practices approach, the producer is paled by the effects of nature. I have watched cotton go from bumper crop yields to disaster level in just 3 weeks time. The efforts of a whole year's work wiped out by heat and drought.
In these two issues, price and yield, lies the heart of the policy issues. If we can solve price and yield, we have solved 90 percent of the problem. The recommendation I support is a counter-cyclical approach to Government support of its agricultural resources. When world prices are down, have a price floor for the producer. When yields are down, have a national yield floor for the specific commodity. We have accountants that can build these models required to determine the specifics of those levels. To survive over time, these models must be indexed. Doan's Agriculture Report, Volume 63, Nos. 6–5 and 6–6 provides tables for these models.
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The next issue is insurance. Farmers need an affordable business insurance program that will recover their operating losses when an Act of God occurs. The current insurance programs are woefully inadequate for our industry, especially when compared with other industries. If I have done my part to produce a bumper crop and an act of God; in other words, drought; takes my crop yield below the cost of production, I should be able to buy reasonably priced insurance to protect me.
Finally, risk/reward ratio analysis of farming, to other types of businesses, would not lead to a financial decision to farm. As you know, farming is extremely capital intensive and requires annual operating budgets that cannot be serviced due to events totally out of the operator's control. Even when debt service on operating budgets and capital expense is achieved, it will generally leave a farming operation with a return less than that of a Treasury bond. For all the risk that is borne by the farmer, an annual rate of return in the neighborhood of 16 percent should be minimally expected.
Barriers to entry are extremely high. For this high cost of entry, it should have potential returns consistent with the risk. If we do not fix the previous issues, the succession plan for domestic agriculture will be to the default position, which clearly is not in the national security interest.
The average age of the Georgia farmer is 57 years, so if we want new entrants to transition the aging farmer base to the next generation, we must have a succession strategy. Most businesses have succession planning. I am very interested in the USDA's succession plan for our domestic agriculture program. The plan would need one major concept—profitability. If we show farming to be profitable, it will attract new entrants. You have heard farmers encourage theirs one to pursue other careers to establish a good lifestyle. Whether U.S. agriculture is attractive to a family farmer or to a corporate farm with stockholders, it must be profitable.
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Again, I appreciate the opportunity to offer this testimony and will avail myself at any time in the future to assure that I am not part of the problem, but part of the solution.
Thank you.
[The prepared statement of Mr. Shirah appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Wiggins.
STATEMENT OF RICKY WIGGINS, PEANUT PRODUCER, ANDALUSIA, AL
Mr. WIGGINS. Thank you, Mr. Chairman. My name is Ricky Wiggins and I am the managing partner in a family farming operation with my father and son in Covington County, AL. We produce cotton, peanuts, cattle and timber. I am involved in several farm organizations including Cotton, Inc., Southern Cotton Growers, Alabama Peanut Producers and Boll Weevil Eradication Foundation. I also serve as the southeast area vice-president for the Alabama Farmers Federation, the State's largest farm organization. It is my pleasure to speak to you today on behalf of my family and my fellow farmers across the Southeast.
The current agricultural economic crisis has proven that America's current crop insurance system does not adequately provide a financial safety net for farmers. While most producers realize that no one should be guaranteed a profit, we do see the need for a real crop insurance reform that will give good businessmen the tools they need to manage the unique risks involved in agricultural production.
In January of last year, Jerry Newby, president of the Alabama Farmers Federation, appointed a committee of producers from across the State of Alabama to look at risk management. I chaired that committee. After looking at the current crop insurance system and making suggestions for much needed change, we were still not satisfied. It was still too expensive at adequate coverage, too many producers were left out and there was too much room for fraud. At this point, I want to thank you all for the legislation that you have passed. It addressed the issues that concerned us under the current system, and I think you made some good adjustments to the current program.
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But today, I would like to propose to you a concept that came out of that committee. It will allow all farmers, regardless of size or commodity produced, to manage their risk and save USDA money. We call it IRMA—the Individual Risk Management Account.
The basic concept is that the producer takes the money he has been paying in crop insurance premiums and puts it into a tax-deferred, interest-bearing account. USDA in turn takes the money they have been subsidizing that premium with and matches the producer's money in the fund. USDA has no further responsibility. Producers of agricultural commodity could participate.
Bob Taylor, an agriculture economist at Auburn University has listed some specifics for your consideration on this program.
1. Annual additions to the account would be tax deductible.
2. Annual additions must be made to the account until it reaches its maximum. The minimum contribution would be 2 percent of the farmer's 3-year average gross income. The farmer can make a larger contribution at any time thereafter, subject to the maximum balance of the account.
3. IRMA funds must be invested in low-risk, guaranteed securities such as a bank CD or Government securities.
4. Interest and income from the IRMA account will not be taxed when it is earned, as we now have with IRA accounts.
5. Withdrawals from the account will be taxed as regular income.
6. Additions, withdrawals and balance of the account would be reported to the IRS with a form to a 1099 form.
7. In lieu of subsidized crop insurance for the participating farmer, the Government will subsidize the account at the rate at which they have subsidized crop insurance in the recent past, until the maximum balance for the account is reached.
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8. Withdrawals from the account can be made only if gross income in a given year is less than 80 percent of the 3-year average of gross income. The amount of the withdrawal would be restricted to the difference between 80 percent of the 3-year average and the actual gross income that year.
9. The maximum balance of the IRMA account will be 150 percent of the 3-year gross income average.
10. Gross income will be computed from line 11 of Schedule F of the Federal income tax form.
11. The participating farmer can purchase an unsubsidized agricultural insurance in addition to the IRMA account.
12. IRMA funds could be used as collateral for loans connected with farming activities.
13. The account would be closed out when a farmer leaves the farm for non-farm employment, retires, declares bankruptcy or dies. At this time, the remaining balance of the account would be taxed as regular income as it is withdrawn using similar provisions as with IRA withdrawals.
If a producer is not comfortable dropping all protection before he has some reserve built into this fund, we offer a suggestion for a transition period.
The first year, the producer would put 25 percent of his normal crop insurance premium into the IRMA and 75 percent into conventional crop insurance coverage. Producers would be covered at the same level as before, but with the condition that if he has a claim, his IRMA account would be exhausted before the insurance company paid out anything.
The second year, if he had good experience, you would go 50/50.
If you still had good experience the third year, you could go 75/25.
And by the fourth year, if he had no claims, he would probably be comfortable to go with his IRMA account.
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We feel that this simple concept could save USDA money and give the farmers of this Nation a workable tool to manage their risks.
If your objective is to save USDA money and to help the American farmer, I challenge you to take a serious look at this proposal.
Thank you for your time.
[The prepared statement of Mr. Wiggins appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you, Mr. Wiggins and of the panelists.
I want to kind of focus a little bit on the crop insurance thing. We have found in the 3 years we have had so far that we could have spent the entire discussion on crop insurance, which I think points out the fact that there is a continuing problem that we have got to address. I will say, as has been mentioned earlier, this committee recognized that and we passed in a very timely fashion a major crop insurance reform, which is the first time in my 16 years in Congress in which we have been able to add $6 billion. And as was mentioned, Mr. Bishop and Mr. Chambliss, Mr. Berry, Mr. Riley, Mr. Everett had a great deal to do with that, all on the committee. Unfortunately, the Senate was not quite as responsive but hopefully they will be soon.
But it is probably the most major reform we have seen, but I kind of have been referring to it as phase 1 of where I would eventually like to go. We have seen some really unique suggestions on crop insurance, this is certainly one of them. I would establish what I call the agricultural trust fund, which basically does the same thing, it is money that is there for help.
So I think what we want to do is to look at a whole variety and maybe a blend of some of these things to try to get us to where we need to be, to where crop insurance or risk management actually is something that is attractive to people in agricultural production, rather than as it is today, not a very good buy in many areas. We are even looking at a pilot program to provide a risk management program to livestock.
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Certainly extending risk management potential to every crop that a person produces is a goal which we have and which we look forward to. Let me ask you, if I might, Mr. Wiggins, in your proposal for IRMA, under the concept—let us say IRMA gets fully implemented and worked just as you said—would you still anticipate or be considering the fact that there would be some other type of farm program?
Mr. WIGGINS. Yes, sir, I would.
The CHAIRMAN. So this would strictly be from the risk management side and we would still have other types of programs which we would—whatever the program might be.
Mr. WIGGINS. Yes, sir.
The CHAIRMAN. In the consideration of risk management, one of the things that is a reality that we have to live within is that there have been assistance packages in the past 2 years and there will be another one this year. The idea is to develop a program that is good enough that—well, before I say that—those programs are politically driven. I mean I think everyone recognizes that. The disaster is so widespread, either you have had such a huge drought or too much water or too much whatever or you have had such a low market price, which is a combination the last 2 years and somewhat again this year, of both of those that have led to the fact that it is so widespread there are going to be enough people that are willing to, in the case of the two disaster programs last time, $15 billion and at least another $6 billion this year, willing to come up with that money that is unbudgeted for and it is still spent at. What a lot of us would like to do is build a program that recognizes where we have been and puts the money in the budget and we just have it there every year and do not have to depend on the fact we can get 218 of our colleagues in the House and 51 in the Senate to pass a program. But if you can replace that with a program that is so good, you can eliminate the need for a disaster program and you put some assurances out to the producer that they can take to their lender at the beginning of the year and show them basically what kind of coverage they can have.
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I think that—and the reason I asked you whether you were anticipating another program in place—I have been very upfront about this idea and this concept that in some areas the limitation of payments is not a big issue; in some areas it is. Generally throughout the South, we have found that payment limitations, the way that they are established, can dramatically change the effectiveness of a program. If it were up to me, I would not have payment limitations because I do not think you penalize efficiency—and again, no one knows what a family farm is and it takes a lot of acres in a lot of areas in the country to produce enough for a family of four to survive.
Mr. WIGGINS. I agree with you, sir.
The CHAIRMAN. But if you are dealing in a risk management program in which you are participating, then the small producer is not harmed by the fact that the larger producer is involved in it, and vice versa. And you are involved in it just up to the extent that you are big enough to walk up and participate. And that is why a number of people, including myself as one of them, is looking at if you can establish a strong enough risk management program, that might be the basis for the farm program. And many people, when this current program that we are operating under, was considered, were not really advocates of it, and eventually—have never been strong advocates of a lot of parts of it, but recognizing that it had no safety net. But many people felt like this was going to be the—and talked about the fact that this was the end of farm programs. Well, I never bought onto that deal and as far as I am concerned, the Government cannot get out of having a farm policy. And I do not know what it is going to be, but there is going to be a farm policy when this one goes away.
I want to pursue that. I am kind of getting out of the box like Mr. Berry did to some extent, to look and try to see if a risk management program in which farmers participate in can actually be the basis for an agricultural policy in the future. Because the biggest concerns that farmers tell us is—I mean even under market prices and certainly under current risk management programs that are available, you cannot even cover your cost of production. You have got to be able to ensure that you can cover your cost of production, and obviously we are concerned about market prices as well, so we are looking at a revenue assurance feature in some policies and so forth.
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But this is something that I suspect, this particular area of risk management, that this committee is going to be spending a great deal of time on over the next couple of years. I have seen blends of a variety of them. This is the first time I have seen this one exactly laid out and that is an extremely interesting concept.
And I have gone over my time. Mr. Bishop.
Mr. BISHOP. Thank you very much, Mr. Chairman. Let me thank each of these panelists for their testimony, particularly since it is the time when you could have been planting and should have been planting, and you took the time to come and help us, because really, you have the solutions to the problems that we face because you are where the rubber meets the road and you are the ones that can say ouch a lot better than we can because you feel the pain. And I want to thank you for coming.
Let me say to Mr. Eason, I agree with almost every word of your testimony. I think you are right on point and I would like to pick up where Mr. Stenholm left off, however, and ask each of the panelists here to comment on your thoughts about the normalizing trade relations with China. I look at it—everybody is commenting on it—as a national security issue in addition to being an economic security issue. I am mighty afraid that with our posture, our farm policy and our economic policy with China, that we are facing a new millennium version of the sale of scrap iron to the Japanese back around just before World War II. And I am mighty afraid that as we have exported our means of production in every way, all the way up through the information age, that which we did not sell, they stole, that we are now at the last level and that is the most basic thing, and that is our food production.
They are in a position to have a lot lower labor cost than we have. They are also in a position to have a lot less Government regulation in terms of environment, in terms of OSHA requirements, in terms of all of the regulations—wetlands and chemical use—that we are prohibited from using here, that you are prohibited from using, to compare with what they do.
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And the other thing has to do with enforcement. Let us assume that we let them in and we say that we will have leverage if they are members of the organization. I just do not know what leverage we will have even if they are members. How are we going to enforce it? And I am not so certain that the rest of the trading world, if we are dissatisfied, will go along with us and forego their markets with China. So I have got some serious concerns about it and I would like to hear what people from this part of the country feel about normalizing trade relations with China, which will affect cotton and our apparel production as well as peanuts which they compete with us on.
Mr. EASON. Congressman Bishop, I was just telling somebody in the back of the room when they asked that question awhile ago, that is sort of like watching your mother-in-law go over a cliff in your own Cadillac. You have got mixed emotions about how you feel about China. [Laughter.]
Number 1, I do not trust them, I really do not. If we could get all of the Chinese wearing one pair of cotton underwear we would really be in the cotton business. But peanuts, the commodity is not big enough, I think it would hurt us. The atrocities in human rights—2 out of 3, I would vote no.
Mr. MCMILLAN. Congressman, my first inclination is to say yes. But I have all the reservations that you have, so I have mixed feelings about it.
Mr. OWENS. My opinion is no until we can get, instead of 40 percent of their stuff in ours and we are getting 10 to them, equal that out. Another issue is we are worried about them getting our bomb technology or whatever, and then we give them all of our agriculture and I think that is just as important as any bomb they are going to build.
Mr. SHIRAH. If I say yes, I cannot give the ''but,'' so I am going to say no, but I could go along with it if things like when Taiwan has a free election and China threatens military interaction, I cannot go along with partnering with someone who takes that kind of a position.
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The second thing is 40 acres was mentioned as the average soybean size in China. The average cotton farm is 3 acres. So I do not know how they are going to help us with a lot of our cotton problems. So as a cotton farmer, I am concerned. No.
Also as a farmer, I believe that we could be used as a pawn in an international chess game. I understand if I am a pawn, but tell me in advance so I can prepare for it.
Mr. WIGGINS. I would lean toward being in favor of it with reservations. I am concerned about our negotiators and whether or not they negotiate the kind of deals that they need to for agriculture. I have reservations about whether or not we are going to be able to enforce any agreements that we have with them, and of course I am concerned about the hostility toward this country.
Mr. BISHOP. Thank you very much.
Mr. Eason, my time is up, I am sorry.
Mr. EVERETT. I think it rolls around to me.
Ricky, you and I have worked close to 2 years looking at this along with Dr. Bob Taylor, the new crop insurance look or out-of-the-box type approach that you presented here today. And I certainly hope the committee will take a close look at it and perhaps use that as a model to use it or some form of it as a pilot program. So I am going to certainly urge the committee to do that.
Mr. Eason, I have a letter, started Friday and have not had a chance to get around to all the members, urging the Congress to do exactly what you have said, that we take future money the producers are paying for those peanuts and have that against this year's allotment of some $46 or $47, whatever it is going to be. I am hopeful that we can get that done because I know in southwest Georgia over there, which most of the peanuts are grown, Georgia does lead the Nation in peanut growing. And I think Saxby's district is No. 1—no, No. 2—and Sanford is No. 1, as he quickly reminded me. [Laughter.]
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Mr. CHAMBLISS. We just grow better ones, Terry.
Mr. EVERETT. No, the better ones are grown in the second district of Alabama which I represent. I think we are No. 3.
So it is on the members' minds and we are trying to find a way to achieve that and we are working very hard to do it.
Mr. McMillan, let me just point out and reassure you that I have been in Congress now going on 8 years on the Agriculture Committee each year and this Agriculture Committee has used its position to make the plight of the American farmer known to the American people. We have got some problems in that. I think what has been done by ALFA, Mr. Newby's organization—I would like to see that go nationwide just like Sanford mentioned. We have to educate people. But that is a problem. Mr. Owens touched on part of it. We have got 1 percent of the population of this Nation that now produces. I am told that the Census Bureau does not even count farmers because they do not believe it is a significant demographic group any longer.
I compare that—we have talked a lot about food production being part of the national security and I believe that. If we have got two problems in Washington, it is with people who have a direct association with farming and people who have had an association with armed services. In my class of 147 in the 103rd Congress in 1993, only 13 percent of that 147 had ever served in the military and that figure is getting progressively lower.
Charlie has visited my farm down in southeast Alabama and Charlie, I think he told me that of the 535 Members of Congress, that I think maybe 20 or 30 of us have any direct association with farming.
So what I am saying to you is we need your help also. I speak to every farm group I can, city farm banquet and this sort of thing, but I am constantly, as I said in my opening statement, having to explain to business people in my district, who are heavily dependent on agriculture, the fact that 11 percent of the disposable income of the American consumer goes for food and fiber. And the next lowest I think is the Japanese with 19, 20, 21 percent, wherever it is. What they do not get often, and I like to point out to them, is that the gap there is 10 percent and that is 10 percent of a $6.7 trillion revolving national budget that frees that amount of money for other goods and services. I have had business people come to me, I say well, you are in the tire business, how do you think the consumers are being able to buy those tires or those automobiles or furniture or appliances? It is because of the money that that has come directly from agriculture producers of this country, they freed that money up.
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So let me just assure you that I do not know a single member in 8 years on the Agriculture Committee that has not used the podium up there to make sure that—do their part. But we need you to help too.
Yes, sir, Mr. Owens.
Mr. OWENS. I will probably get whipped when I get home, but farmers have go to realize what I call it is spare tire politics. We do not never come hollering until we get in trouble, we never call you all and tell you all what a good job you do or you should not have voted on this bill or nothing, and then we get in trouble. I want you all, when you are talking in farm meetings to tell these people to start getting involved in your business of what you do. We are the guilty party in this. The Constitution says ''We the people,'' it does not say ''We the Congressmen,'' ''We the President;'' it says us. We take you all, you all work for us, but if you do not know what we want you to do, where are you? I mean it is like raising kids. If you do not take care of them and tell them what is right and discipline them or whatever you have got to do, they are going to stray and somebody else is going to influence them. I mean, I am sitting here as I will say me as much as anybody. You have got to get involved. We have got the system set up as far as our growers' associations and everything. You give the money but then they tell me I did not like what Frank did over there. Did you call Frank and tell him what you wanted him to do? No, you gave him the money and then you get mad at him because of what he done with your money. You have got to get involved in your business.
I am proud for what all of you are doing. I have got two, in my opinion, two of the best we could have in Georgia working for us. But I just had to say that. Like I say, I may be tarred and feathered, but I might do better by that for the condition I am in.
Mr. EVERETT. Well, I can assure you you are well represented with your two Members of Congress, there is no question about that.
Mr. Berry.
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Mr. BERRY. Thank you, Mr. Chairman.
The ranking member, before he left, charged me with absolutely delineating how you stood on PNTR with China. So could I get you all to just go yes/no, how you feel very quickly?
Mr. EASON. I said no.
Mr. MCMILLAN. Yes.
Mr. OWENS. No.
Mr. SHIRAH. No.
Mr. WIGGINS. If I had to say today, I would have to say yes.
Mr. BERRY. Thank you very much.
Ricky, I thought your IRMA account idea is a very good one. I think we ought to pursue that. I certainly think it is something that we should look at and try to figure out a way to make it work.
Mr. Shirah, what would BellSouth do faced with your situation?
Mr. SHIRAH. Find a strategy quick.
What I have seen over the past 4 years or 3 years of doing this that I have been involved with it, and the one that bankrupted my lifelong friend, it just is not a good business to be in, it is a bad business. And if we cannot find something that is going to turn 4 data points around, and demonstrate it not only to the lenders who sometimes we have to spoof our lenders so they will go with us another year, but even though the data points tell us let us not do that. So it is not a business decision.
What I am placing my faith in is that we can take some action through programs like this to help effect a change that can turn agriculture around in America. And that we do it before—and I have got two neighbors that are really on the fence—if we do not do it this year, they are going to go bankrupt, and they are wonderful people, salt of the Earth American people. But on the business decision perhaps that is the eventual outcome.
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But I think a counter-cyclical proposal—I keep going back to that—can turn around and we could turn that around this year.
Mr. BERRY. Thank you. Mr. Eason, how would you deal with the crop insurance problem?
Mr. EASON. I do not know personally how I would deal with it. I just observed in the past the fraud that has went on and the problem that I see is lack of other farmers turning in their neighbors. Somehow, we have got to turn that around, we have got to say hey, you are wrong, you are not going to do it, it is affecting my bottom line. That is the biggest thing I would do is say hey, you have got to control—because the farmers know who is doing it. Fertilizer dealers know who is doing it. And it has just got to be stopped. And I think just say hey, it is wrong and I am going to turn you in if you do it that way.
Mr. BERRY. I would make the point on the PNTR for China that China is going to be admitted to the WTO and the agreement that we have negotiated with them for agriculture and other things outside of agriculture, if we do not approve that, that agreement goes away, they are still in the WTO. They have still got market access to our markets, that does not change.
The thing that changes when we approve PNTR with China is then we have access to their markets and we have lower tariffs going into their markets. But we would absolutely and complicate abdicate our leadership position as a world leader and in world trade if we do not approve PNTR for China. We have already, as a Congress, failed to approve fast track, which has been devastating to agriculture and our ability to do bilateral agreements and other agreements particularly as it relates to South America. I think that—I know this does not agree with most of you all, but I think it would be absolutely the dumbest thing this country has done in a long, long time to let this PNTR for China fail and not get it done. Because I do not think we will get another chance. If we do not get it passed and passed pretty quick in the Congress, I do not think we are going to get another shot at it next year or whenever, because I think the Chinese by that time are not going to need us any more because they are already going to have what they want. And the Europeans and the Canadians and the rest—Asia and the rest of the WTO is going to laugh all the way to the bank because we left ourselves out of all those markets. I would just make that point.
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As far as the human rights part of that, all the evidence that I have seen indicates that because of our engagement with them on various, not only trade but other things, the human rights thing has actually improved and that is verified by such people as Dr. Billy Graham.
Having said that, I will yield the rest of my time, Mr. Chairman.
The CHAIRMAN. Mr. Berry, would you yield for a moment to Mr. Bishop?
Mr. BERRY. Sure.
Mr. BISHOP. Thank you very much for yielding. Let me just mention to Mr. Eason that you are absolutely right about the fraud in the crop insurance. When Congressman Chambliss and I drafted our proposals for the crop insurance reform, we had some provisions in there that would have allowed and given incentives for farmers to report fraud and abuse. The committee in its wisdom, in an effort I think to pass the whole bill, took that out. I offered the amendment back in the full committee, but it was felt that it was not a good thing for farmers to be informants on other farmers. But I agree with you 100 percent, I think that farmers know who is doing it, fertilizer people know who is doing it. And we have got to accept some responsibility ourselves in our community. It is just like the honor system, we have got to have a code of honor in farming and in agriculture and that, I think, would go a long way toward it.
Mr. Owens.
Mr. OWENS. Mr. Bishop, I think it kind of works that way a little bit. The better crops you make, the less insurance you pay.
Mr. BISHOP. Right.
Mr. OWENS. Which it needs to be worked a little stronger. And my theory if a farmer is tending five farms, to stop a lot of it is combine all those into his one name and a lot of that will stop. That is just my opinion.
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Mr. BISHOP. We did put some better production incentives into the bill. So just like your car insurance, if you are a good driver, your premiums are less. In the new crop insurance reform package, if you are a good producer and you follow good farming practices, your premiums are less, you get incentives for that.
Mr. OWENS. And another thing, when we cannot insure but 75 percent of our crop, we need to work—I mean it like you are talking about the car, a brand new car, you are not going to just insure 75 percent, you have got to be able to cover what your interest is.
Mr. BISHOP. Thank you. I yield back.
The CHAIRMAN. Mr. Chambliss.
Mr. CHAMBLISS. Thank you, Mr. Chairman.
Jim, I am particularly glad to see you here today, because with all the tough times we are going through and seeing a real intelligent individual who later on in life chooses a second career to get into agriculture, I think that ought to be an encouragement to all these folks out there that are going through tough times. As I told you the other night, I am just pleased to bring somebody like you into the agriculture fold because it gives us another resource out there. And I like your idea on the price floor/yield floor concept. And again, I brag about my farmers all the time as being the most creative and innovative farmers in the country and you once again have proven that. Besides, you mentioned the average age of the farmer in Georgia is 57 years and I think you bring that down just slightly. So again, we appreciate you being here for that reason.
Darvin, you mentioned something that I think is critical, and you and I have had this conversation before. We were down in Texas, down in Mexico I guess about 3 or 4 years ago now, doing a NAFTA oversight and I told you about seeing the trucks at the border down there. At that border crossing, there were 800 trucks a day coming across the border bringing produce from Mexico into the United States. And in talking with the APHIS folks down there, we asked them about their inspection practices and they simply just did not have the manpower to look at every single truck, and we knew that there were a lot of those products coming in, both produce, peanuts, pecans and other products crossing that border that had been sprayed with chemicals we cannot use, fertilizer being used that we do not allow being used here. And there are any number of problems like that. And your point about making sure that standards of imported agriculture products meet our standards, I think is critical. The problem is being able to test them and that is something we have just got to continue to work on. That border crossing was not the busiest border crossing that we have. So it is a real problem.
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I just want to say one other thing, Tim, about what you said on this being not just an agricultural issue. I think you are absolutely dead on target. This is a national security issue.
One reason that the European Union subsidizes their farmers to the extent that they do, the French know what happens when you fail to be able to grow crops in your country to feed your people, and they learned a very valuable lesson about that. They are very open about that. In our discussions at WTO, this came out again. They are not going to let their country get back into a situation where they are dependent on foreign imports for food products. And that is one reason they have made a real commitment and one reason why they are so hard line on this. But we have just got to keep working on that.
I want to yield to my friend from Alabama for another comment.
Mr. EVERETT. Mr. McMillan, I just want to show the panel and those out there in the audience this newspaper article that was in last Friday's edition. If you cannot read it, what it says is ''Family Farms Are Growing and Thriving.'' [Laughter.]
Now you talk about miscommunication—that is what I am talking about, the reason we need your help. Now the article goes on to explain that they are talking about niche farming and that those doing $100,000 a year and more are still losing money and in desperate shape.
But the fact of the matter is, I was in the newspaper business for some 33 years, I came to Congress late, like you came to agriculture late, we both may have made a mistake, I do not know. I was in the newspaper business 33 years and I know from experience that unless you have a direct interest in farming, 90 percent of the people who see that headline will not read this story. And that is the problem.
Thank you, Saxby.
Mr. CHAMBLISS. I yield back the balance of my time, Mr. Chairman.
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Mr. SHIRAH. Mr. Chairman, one more comment. The insurance issue that I heard Mr. Bishop speak to, it needs to be changed and that is good and I am glad you have done that. But one of the shortcomings is that it does not insure the overall aspect of a farming unit, it only will look at a direct crop cost. There is so much indirect cost that the farmer still has, it slowly erodes his debt to equity by the insurance, even with a good claim, covering a payment that does not look at—so he is born still the total factory costs that have to get serviced and the insurance just does not cover it, it does not cover cost recovery. And not on farming practices but on things totally out of control, the drought issue strictly. Acts of God, that is the only thing that I see that it really needs to shore up better, is when it is an Act of God condition; when you can demonstrate all the best practices and document then, then Act of God has got to be able to be recoverable of all costs that the farmer bears that year.
Mr. CHAMBLISS. Jim, let me just tell you very quickly how we addressed that, because there is no way in crop insurance or any insurance program for that matter that you can cover every conceivable problem that you may have out there. But under the chairman's good leadership, we have devised a crop insurance reform package that is flexible and the main thing it changes is it takes a decision on crop insurance out of the hands of the Government and puts it in the hands of the farmer. And that is really where it ought to be. You are going to have the flexibility to decide how much coverage you want, what crops you want to insure, whether you want to insure irrigated versus non-irrigated. We put some incentives in there on the Government as well as the private sector to develop some policies that are just entirely different from anything we have right now. So we cannot cover every conceivable problem that may arise because we obviously do not know what all of them even may be now, but we put a lot more flexibility in this package than what we had before.
Mr. SHIRAH. Will it be retroactive to this crop year?
Mr. CHAMBLISS. No.
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The CHAIRMAN. We would have had it in place this crop year had the Senate acted.
Mr. Riley.
Mr. RILEY. Thank you, Mr. Chairman.
This has been a very enlightening panel, I have really enjoyed it. I think we are looking at this though in somewhat of a wrong-headed attitude.
Ricky, assume that we did implement something like your crop insurance program, your IRMA program. If you went 4 years and you were totally funded in it, what do you think the chances of any fraud would be in that program then?
Mr. WIGGINS. I think it would eliminate it.
Mr. RILEY. It would eliminate it, because the only person that you would be defrauding would be yourself. And that is the kind of systemic changes we need to make in this. If we could ever get to a point where you are doing what is best for you—I heard somebody testify yesterday and it really kind of disturbed me, about the level of fraud and abuse that is going on in these programs out there and when I heard a person sitting exactly where you are say there is 101 ways I can kill my crops and you will never know it. I can set the drill half inch too low and I will kill the crop and if I do not have any cost in it, I am going to make money.
But if we could go to a program, Ricky, like yours where over a period of time, we end up where you are literally self-insuring yourself, then I think we totally eliminate fraud. And folks, that is what we have got to do. If we could take what you have said on crop insurance, couple that with one other factor, and I like to call them farmer savings accounts, something like an IRA, so when you do have a good year, you can take 10 percent of that money and put it in something like an IRA. We have had cycles in agriculture ever since I have known, we will continue to do it because of weather conditions and a lot of other reasons. We have got to develop a way that you can level that out without the Government having to come in and write these $10 billion checks. And it looks to me like if we will let a Federal bank, or actually we mandate that a bank, set up a loan loss reserve, why can we not set up some kind of loss reserve for you so when you do have these bad prices, so when you do have some problem, that it is a tax-deferred account, something similar to an IRA, couple that with the program that you have on crop insurance and I think then if there is any reason for the Government to even participate, it would be only for catastrophic events, Acts of God. And it should be relatively cheap, but it would be almost like buying an umbrella policy, liability policy today, and I think that is—if we could move this country in that direction, I can see a time where we would not have to have a farm bill every year, we would not have to have this. And I think we can do it.
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Now how you get there, I do not know. It is going to be a long—the problem is we have got to have 2 or 3, 4 back-to-back good years for you to do it. But if we could do that and do something to make us competitive in the foreign markets, I think we could literally in the next 10 years get to the point that the Federal Government lets you make those decisions. We will eliminate fraud, we will eliminate most of these subsidy programs and I think the Government's intervention at that time would be minuscule.
Mr. Shirah, let me ask you one thing. In your service with BellSouth, if you were competing against countries that had 40 percent subsidies, what do you think BellSouth's position would be?
Mr. SHIRAH. Well, they are currently doing that today in many of the international markets. What I think they have is a strategic plan that says in 5 years here is where I hope to be, there may be some bumps along the way but here is where I hope to be in 5 years.
And so what I am concerned about on our issues is we have got a lot of casualties in the wake that are going to occur in America before we get to 5 years from now. And I am doing my best to make sure I am not one of them but there are some awfully good friends and awfully good neighbors and awfully good Americans that are going to lose their whole life's work.
Mr. RILEY. Oh, I know.
Mr. SHIRAH. In just a year or two.
Mr. RILEY. Saxby said a minute ago he really appreciated you being on this panel because of the intelligence you brought and I said this guy got into farming 3 years ago, so——
[Laughter.]
Mr. SHIRAH. I have an understanding of what our names are and we are after a famous movie and my name is ''Dumber.'' I did go into it under a lot of people advising me not to and that is a sad state of affairs in America today, where everybody you talk to when you say I am going to go into farming tells you no, do not do it, you have got to be crazy.
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Mr. RILEY. Well, and we hear that——
Mr. SHIRAH. And then you do it anyway.
Mr. RILEY. Yeah, we hear that everywhere. When you have parents advising children not to go into farming, not to go into any type of agriculture, I think that we have some problems, long-term problems that are going to be hard to overcome.
But again, as I look at it, and Ricky, I want to congratulate you on your program. I think it is a great model for us to start working with as far as providing crop insurance. If we can come up with something else to help you even out those low points, where you have some kind of reserve account that you can call on when prices are down or your yield happens—on your particular farm—happens to fall, I think we will go a long way toward solving most of the problems that you have outlined.
Mr. Owens.
Mr. OWENS. Mr. Riley, USDA statistics from the University of Georgia, in Georgia there are 40,333 farmers, under the age of 25 years old is 257.
Mr. RILEY. I think that is probably right. When I first got out of college, I went to a college on the other side of the State, but when I first got out of college and went into the egg business, there were 125 independent egg producers in the State of Alabama. Today there are two. That is not a trend that I would like to see this country encourage and I think we are doing more and more of it and we have to be efficient. And if you do not believe you are efficient today, when I first started selling eggs, I was getting 55 and 60 cents a dozen for them, that is 35 years ago. Today, they are still 60 cents a dozen. Back then I could buy a new car for $2,200, today it is $22,000. And that egg producer is still getting the same price for his product.
So if you do not believe that we have raised the level of efficiency in this country, you take just about any of our agricultural products, they are pretty well stagnant where they were 20 or 25 years ago and the only way you could possibly survive is to become more efficient.
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But now we need to capitalize on that efficiency, we know how to do it and I think if we can get the Government out of your way, you will be a lot more likely to do it.
Thank you very much.
The CHAIRMAN. I thank the panel very much.
I will call our third panel: Mr. Jerry Parham, timber and cattle producer from Reform, AL; Mr. Louie Perry Jr. is a livestock, peanut, cotton producer from Moultrie, GA; Mr. Allen Whitehead, a peanut, livestock, cotton producer from Ashburn, GA and Mr. Dean Wysner, a cattle operator from Woodland, AL.
Mr. Parham, you may begin whenever you wish, please, sir.
STATEMENT OF JERRY H. PARHAM, TIMBER PRODUCER, REFORM, AL
Mr. PARHAM. Thank you, Mr. Chairman, members of the committee, I am Jerry Parham, president of Alabama Farm Bureau. I live in Pickens County where I own and operate an 800-acre tree farm. I want to thank you for the opportunity to address you today concerning my personal farming operation and, with your indulgence, agriculture in general.
My 800 acres were once used for cattle farming and forestry, but due to low cattle prices in the early 1980's, I converted to more trees and fewer cows. The price cycles in agriculture, in this case cattle, forced me to abandon one form of farming and adopt another. The price cycles in the timber industry are still there, but they are much broader is range. I know by today's standards an 800-acre operation is small, and I also know that if I had not had a position as a school teacher, I would have lost the farm due to the price cycles. I worked off the farm in order to keep the land that is so dear to me. The price cycles have forced some small and large farmers in my area into bankruptcy.
Earlier this year, I served as a delegate to the American Farm Bureau Federation annual meeting where we overwhelmingly adopted a resolution supporting implementation of a counter-cyclical safety net as a supplement to the Agricultural Market Transition Act payments. We believe such a policy we address sharp declines in prices without relying on large financial assistance packages from Congress. I believe such a safety net could keep many farmers in the industry and keep many farms in production.
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When farmers go bankrupt, the land will usually go into forestry or be bought by land speculators and be taken out of agriculture altogether. When prices are low, other farmers do not have the financial resources to buy this land. However, speculators find this land most desirable because it is clear, well-drained and accessible. Like today, when farm economy is low, many times the rest of the American economy is booming. We must keep our best agricultural lands in production if we are to maintain our world dominance in agriculture and a positive exportation of agricultural products.
A significant amount of work has been done to develop a more comprehensive crop insurance program that would allow farmers to better protect themselves against yield and price variations. With the increased number of producers relying on crop insurance as their primary risk management tool, Congress must complete the task begun over a year and utilize the $6 billion set aside for the program in last year's budget resolution.
I think we would all agree that risk management is important in any business. I feel that I must point out a growing segment of our agricultural industry that cannot use crop insurance as risk management tool—that is contract farmers. I believe that contract farming will continue to grow in size and numbers. We are all aware of contract farming in the poultry and swine industries, most of us know that some cattle farms are under contracts with feedlots and I recently found contract farming of special cultivated crops. Yes, even in my beloved forest industry, we find landowners under contract to large companies to grow trees.
Now I would like to talk about the largest contract farming operation in Alabama, which is poultry. For example, Mr. Smith, who lives on a 120-acre farm that is a cattle and poultry farm in north Alabama, lost approximately $4,500 during a 10-week period in 1999. If you would refer to the income and expense schedule that I have at the back of this for you.
Contributing factors causing Mr. Smith's loss were the size of his birds, 7.129 pounds; the external temperatures in northwest Alabama during July and August averaged about 95 degrees when normal temperatures advantage 89 degrees; and not having the ability to sell any earlier than the processing plant schedule would accommodate. Also lost during the 10-week period was Mr. Smith's labor and time. I understand that even contract farmers must provide necessities for their families and Mr. Smith was able to sell all of his cattle so he could survive for 10 more weeks. The sale of cattle is no longer an option. Mr. Smith needs a risk management tool such as crop insurance. Since Mr. Smith does not own his product, the birds, he cannot buy insurance. There must be a way to recognize Mr. Smith as a farmer so that he can participate in governmental programs as well as risk management options.
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I would like you to note I am not asking for welfare for contract agriculture. I am asking that options be made available for the farmer. I would also like for you to note that these modern day sharecroppers have more to lose than ever. To be a modern day sharecropper, you must own your own land and be willing to put your land at risk. No other industry would place so much at risk without some form of insurance.
While Congress is raising the minimum wage, the amount still to be determined, fuel prices are skyrocketing. Not only does the farmer not get a cost of living raise, he is faced with higher energy costs. I ask you how much longer can our industry survive.
My concern is for the future of agriculture and the family owned farms. I believe the direction has been set for contract farming in all commodities, including forest products. I ask this distinguished body to continue providing the leadership necessary to keep the United States as the No. 1 country in agriculture.
Thank you.
[The prepared statement of Mr. Parham appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Perry.
STATEMENT OF LOUIE PERRY, JR., LIVESTOCK, PEANUT, COTTON PRODUCER, MOULTRIE, GA
Mr. PERRY. Thank you, Mr. Chairman, I appreciate the opportunity to appear before this panel today, you and your distinguished colleagues, especially Mr. Bishop and Mr. Chambliss. I was sitting back there in the audience thinking some 36 years ago I was on another mission over here, I was over here packing up a young lady to rescue her from Auburn and take her back to Georgia. And I do not know whether that was a good decision or not.
My name is Louie Perry and I am a producer of cotton, peanuts, tobacco and beef cattle from Moultrie, GA. Today I am speaking basically on behalf of cotton farmers.
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Currently, the U.S. economy is very robust, but its agriculture producers are not sharing in this prosperity.
With planting season approaching, prices for cotton and alternative crops show little potential for sufficient return to cover the full cost of production. Considering this and grim weather forecasts, agriculture will need again Federal assistance to realize a profit or stay in business. I hope this committee realizes the dire circumstances which trade issues and irresponsible monetary policies of other countries which are out of our control. If any emergency assistance is approved, I urge that it be distributed through the Farm Service Agency, along with other farm program benefits.
Producers receive less for their cotton today than they did at the 25-year low price in December. The world price has risen, but the actual cost to the farmer has decreased. The fixed AMTA payments add about 7 cents to this with a return of 62 cents to the producer. Latest USDA statistics show the average southeastern production cost is 72 cents a pound. This means securing financing for this year's crop while showing such a loss will be difficult.
In 1999, 3 million acres of cotton were planted in the south east and producers received AMTA payments on just 2 million acres. All other Cotton Belt States, AMTA payments exceeded acres planted. Due to this, we received less program benefits than other cotton production regions. Payments to producers give growers out of the West 23 cents per pound whereas the Southeast receives 10 cents per pound. We cannot continue to survive this inequity. When you deliver the supplement payments through disaster type payments, that multiplies the effect of it.
Mr. Chairman, changes in distribution of program benefits among production regions will be controversial. Our cotton organizations hope to provide this committee a consensus recommendation for equitable adjustments without penalizing any region.
Planting flexibility and the marketing loan provisions are strong points of the FAIR Act and the 3-step competitive program fulfills its purpose to keep cotton prices competitive to our customers, while underpinning the price of seed by the producer. The major problem with the FAIR Act is its inability to provide adequate income protection during these periods of low prices.
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Any new farm policy should provide an adequate low price safety net through a long-term policy as opposed to uncertain annual relief packages. In short, unless this country is prepared to sacrifice agricultural production to heavily subsidized producers, commercial farming operations must have a workable partnership with our Government. We feel that supply management programs are ineffective and encourage foreign production.
We do favor reasonable conservation and wetland reserve program as they have generated optimum returns for marginal land while providing profound environmental benefits.
Cotton industry organizations are discussing policy recommendations regarding whether farm program benefits could be coupled or decoupled along with the pros and cons of fixed benefits versus price or income-related benefits. Perhaps a combination of these would best serve our country's interest. We have already heard that mentioned by several panelists here today.
Producers are also discussing methods to update payment basis and yields.
The lack of genetic diversity in our cotton varieties is also a great concern.
Public sector research is vital to agriculture's future and increased Federal funding would allow USDA and university scientists to develop germ plasm with traits to reduce chemical application and to enhance crop quality.
Efficient water use and conservation methods also need more study in our region. You have already heard irrigation issues and I second those comments.
Finally, as a traditional farmer, most of us would like to pass our baton to our children and grandchildren but the economic incentives are just not there. The family farm is disappearing, and with it, some of our best and brightest young people are lost to other endeavors. The result is the loss of the work ethic and values that have contributed to the greatness of our Nation.
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I hope that solutions to these problems and others I have mentioned will be included in new legislation. And again, I thank you for the privilege of appearing today.
[The prepared statement of Mr. Perry appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Whitehead.
STATEMENT OF ALLEN WHITEHEAD, PEANUT, LIVESTOCK, COTTON PRODUCER, ASHBURN, GA
Mr. WHITEHEAD. Thank you, Mr. Chairman and members of the committee. I appreciate the opportunity to present my idea about agriculture. As we have all discussed today, the American farmer is important to the wellbeing of our consuming public and the security of our Nation.
One concern I have is about food safety of imports. Government inspected produced and processed food in the United States is the safest in the world. Imported food does not always necessarily meet the strict EPA and FDA standards imposed on our farmers and food processors.
As a college student, I learned the importance of farmers to the Nation. All great civilizations of our world fail because of their loss of morals and their dependence on food from other countries. As has been stated earlier, recent high gasoline practices show how our dependence on foreign oil can affect us. If we continue to lose our farmers to foreign competition, we can easily become dependent on food produced in other countries. Suppose then that that same group of nations decided that they wanted to limit production and raise prices.
The 1996 farm bill has not helped me make a profit or compensate me for my time and efforts. GATT and NAFTA have also failed to open foreign markets when over-production has existed in the United States. Since the 1996 farm bill, we now receive an inflation-adjusted price for domestic peanuts that has been reduced by over 26 percent. The consumer price for peanuts and peanut products in the same time period has not gone down. The safety of imported peanuts is unknown because they do not have to pass the strict grading guidelines required for U.S. peanuts. I would like to see country of origin labeling on peanuts and peanut products. Given that knowledge, I think that consumers will choose American peanuts.
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The Peanut Program before the 1996 farm bill included a clause that increased prices paid to a farmer as the farmer's cost of production increased. The cost of production clause was a safety net designed to keep prices in line with costs. When the new price support for peanuts is established, the price should reflect inflation for the entire time that this price has not been adjusted upward. This adjustment should be added to the current price support for peanuts in order to compensate producers for cost increases since the beginning of the 1996 farm bill. The Market Assistance Program for peanuts passed recently by Congress shows your realization that prices received for peanuts have been too low and need to be raised.
Recent depressed prices and back-to-back droughts have caused profits from cotton also to vanish. Provisions of cotton's 3-step competitiveness program have worked well to promote profitability when the price of cotton is moderately low. Under the present extremely low prices received for cotton, the program does not go far enough. With prices in the 50's and 60's, the production cost near 72 cents per pound, it is easy to see why farming cotton has become unprofitable. Other crops, such as corn and soybeans, offer less opportunity for profit in our area.
As Mr. Perry just discussed, I would like to see the AMTA payments that are made to farmers be tied directly to acres produced and price. Low prices emphasize the need for the partnership between government and the farmer. When the price is high, farmers need less government support through payments. The Southeast has been penalized because we began to grow cotton at about the same time that the cotton base acres were established. Therefore, the Southeast has fewer cotton base acres than other areas of the United States. These base acres were used to establish AMTA payments and the emergency relief funds. Do not misunderstand me, these emergency relief funds did go a long way toward helping keep a lot of farmers in our area from going bankrupt. We appreciate the willingness of Congress to help when an emergency arises.
Crop insurance has failed considerably in its objective to help in times of bad weather to protect farmers. The Southeast has had drought conditions for the last several years. Since crop insurance is based on an average of the last several years crop production, our crop insurance yields have also fallen dramatically. I think that any federally declared disaster year's production should not count against the actual production history of a particular farmer. Deleting that disaster year production would allow the actual production history to more accurately reflect a normal year's yield.
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Premiums should be kept low enough to entice more farmers into the system. As we have seen in the buydowns in recent years, the lower cost insurance would attract more participation.
Insurance fraud by farmers should be investigated more thoroughly and those caught should be prosecuted to the fullest extent of the law. Farmers that are farming for the insurance only should be removed and not allowed to obtain crop insurance again.
My last topic that I would like to cover is over-regulation of the farming industry. When the 1996 farm bill passed, farmers were promised that over-burdensome regulations would be reduced to improve the profitability of the farmer. That has not happened. Wetland regulations are an example of over-regulation that creates property taxes for local governments and helps to increase our land payments. But these wetlands cannot be used for any purpose. There are extra costs to preserve wetlands and to irrigate the adjoining field. In order to protect that area, thousands of dollars must be spent. In essence, the U.S. Government has performed a taking of my land without compensation.
Other topics that probably should be discussed, that have already been touched on today are China, foreign imports and foreign tariffs, but time does not permit.
Mr. Chairman and other members, thank you for listening to our producers today. We know that this is an important issue and we also realize that you are here because you are concerned.
Thank you.
[The prepared statement of Mr. Whitehead appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Wysner, I hate to do this to you right before your testimony, but I have been asked to inform the crowd that ALFA and Auburn have bought barbecue and it is in an adjoining room—there may be a mass exodus, is the reason I said that—for people to eat. Mr. Wysner, you may want to go get some as well. [Laughter.]
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STATEMENT OF DEAN WYSNER, CATTLE AND POULTRY OPERATOR, WOODLAND, AL
Mr. WYSNER. Mr. Chairman and members of the committee, my name is Dean Wysner, my family operates a diversified farm in Randolph County in Congressman Riley's third district, where we produce beef cattle, hay and timber. We also have a laying hen operation that produces over 11 million eggs per year.
I would like to thank you for holding the field hearings here in Auburn, AL. I appreciate the opportunity to offer these comments on behalf of the beef cattle and poultry producers.
Farming has been a way of life for us and has been good to me and my family. However, it has become more of a struggle to maintain a lifestyle that we feel comfortable with. Even though cattle prices have made big improvements over the last year, production costs continue to rise at an unpredictable rate. For instance, fuel prices are increasing at an alarming rate, over 30 percent in the last few weeks. That can wreck any budget in addition to increasing production costs. There are many other factors that affect farm profitability and there are many ways that Congress and Government programs can help keep farming profitable and preserve America's rich farming heritage.
To help ensure that market forces work, there should be Government programs and regulations that expand foreign markets, address unfair international trade barriers. We must enforce trade agreements that should give our trade representatives more power in requiring our trade partners to live up to their part of the trade agreements.
The companies that purchase raw agricultural commodities and process food products are becoming concentrated in the hands of a few giant foreign and domestic companies, reducing competition. Government should play a critical role in ensuring competitive market systems through strong oversight, taking the necessary enforcement actions when situations involving collusion, antitrust and price fixing unfairly and illegally impact markets. There should be open competitive markets, firm policy regulations should ensure this open market policy.
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There are many Government regulations—the Clean Water Act, Endangered Species Act—that could have a negative effect on farmers, processors and others. These regulations should be based on scientific data, not fear of political reaction. There should be incentives to help farmers comply with many of these regulations.
There should be legislation to protect individual property rights, we should require Federal agencies to prepare impact assessments prior to taking action, provide litigation relief for landowners and provide for compensation of property that has been taken for public use.
We support the 100 percent deductibility of health insurance premiums for self-employed. We also support reduction in capital gains taxes and repeal of estate or death taxes.
There are many positive ways that Congress can help livestock producers, such as implementing dealer trusts to protect the financial stability of producers when buyers of livestock file bankruptcy. Congress could also support litigation that allows meat inspected by state departments of agriculture to be shipped across State lines. Meat from foreign countries can be shipped across State lines, why can ours not be? Ensure that mandatory price reporting of cattle purchased by producers is implemented so that producers have complete price information when making marketing decision. There is also a big need for research funding to increase the productivity of pasture programs in this entire region. With the climate and rainfall in this region, year-round grazing systems need to be developed to optimize production and increase profitability.
Even with the best intentions of Congress, USDA and others, combined with best management, there are still many factors over which I have little or no control. There needs to be risk management and/or disaster insurance programs that would assist producers when Mother Nature hits a particular area or region with drought, flood, blizzards, hurricane or other natural emergency situations. There are many programs being studied and livestock producers need to be included in future risk management programs.
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In summation, agriculture is the backbone of business in Alabama and the Nation. I ask that you consider many options and give farmers the opportunity to produce a profit now and in the future. It is a matter of national security that farming be strong and profitable.
Gentlemen, no country in the history of the world has ever been successful without a strong agriculture. And to be able to supply food for the people, please do not ever let this country be held hostage by food supply.
Thank you.
[The prepared statement of Mr. Wysner appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you very much.
Mr. Bishop.
Mr. BISHOP. Thank you very much.
Let me thank the panelists and especially thank those of Georgia who have come over.
And let me ask a quick question on the permanent NTR. Right now, as you know, we approve it on a year-by-year basis, which many feel allows some yearly accountability. Of course, if we do a permanent NTR, then we do not have that opportunity for the yearly accountability.
But if you would just very quickly, before I get to the other questions, let me know how you feel on the NTR with China.
Mr. PARHAM. I too would like to say yes, but I cannot comment, so I am going to say no. I think it is very important that we monitor exactly what happens. I am afraid of China, many people have expressed the same thing. I believe that it could be very good and after having my comment, I would say a reluctant yes, as long as we can monitor that they are willing to uphold their end of the bargain.
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Mr. BISHOP. So you say yes and no, huh?
Mr. PERRY. Congressman, I do not feel like I can hardly answer the question with my knowledge today. We are in a world economy, I am for free trade, I am also for fair trade. I feel like as a producer, I can compete with any farmer in the world, but I cannot compete with other governments.
Mr. WHITEHEAD. I have mixed emotions I guess would be the word. On the one hand, yes, I see that as a huge market. But I also, on the other hand, have reservations in that sometimes just because we say we are going to trade with them, it is not necessarily fair. If we can go into the negotiations—and of course, you are our representatives and we expect you to do that, I would have to leave some of that judgment up to you all because I do not know all the answers.
Mr. WYSNER. Mr. Bishop, I have a firm no. I have a lot of problems dealing with people that do not tell the truth and if you and I are in a business partnership and you do not tell me the truth, then I cannot deal with you, sir.
Mr. BISHOP. Thank you.
Mr. Perry, you cite the USDA cost of production data that shows that southeastern farmers spend 72 cents to grow a pound of cotton. What does the price increase on diesel fuel do to your bottom line with respect to cotton?
Mr. PERRY. Well, this testimony was written before we had the drastic jump in diesel prices, but it affects us in every way, our chemicals, fertilizer, diesel fuel. When petroleum products go up, then that——
Mr. BISHOP. Irrigation?
Mr. PERRY. Everything is affected in that manner. So it has a drastic—if you have gone up two-thirds in the petroleum products in the last few months, you can see what that would do to the cost of production.
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Mr. BISHOP. I am going to yield back my time, Mr. Chairman.
The CHAIRMAN. Mr. Everett.
Mr. EVERETT. Thank you, Mr. Chairman.
Mr. Perry, on labeling, I know there are a couple of us here today and maybe more, I do not know who is on the bill, but we are on a bill that would require labeling on peanuts and peanut products. So that is in the works. The problem in the past has been getting it through the Ways and Means Committee.
Mr. PERRY. Yes.
Mr. EVERETT. Which has been a terrific problem for us.
I have another bill, for instance, on labeling vegetables. I have introduced that bill now I think for 3 or 4 years running and there again, it is a bill that is very difficult to get through the Ways and Means Committee. The problem is that by law, it is already supposed to be done and my bill would just sort of enforce current law. But current law is not being enforced. I got onto it because my wife was looking for some broccoli and unlike President Bush, my family does enjoy broccoli, and she was looking in the case at the grocery store and should could not find any broccoli. We shop America first, it is just a habit in my family. And she could not find—nor could she find where this stuff was made. And she went on to take a look at other frozen vegetables and she could not find out where they were packaged.
So labeling is an issue that a lot of us are interested in and we do intend to keep pushing it. I do not know how far we will get with it, but we certainly will continue to push it.
Mr. Wysner, the trade issue—for everybody, trade issue is going to be real important. I have not made up my mind completely. In the past I have voted no. There are a lot of questions I would like to see answered. In 1996 alone, I think some 50 million additional acres, global-wise, came into production agriculture. A lot of that outside this country, a million acres a year come in from South America. How does that equate into this, how do we get all of that on a level playing field or what we consider a level playing field. So I just have to tell you I do not know where I am on the issue, I am considering both options.
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Mr. Whitehead, let me ask you something directly. How do we stop fraud, because this has been a big issue in my district and I have had a lot of meetings on it with my farmers, but nobody has been able to tell me how to stop fraud.
Mr. WHITEHEAD. I do not know the exact answers, but I know that it is going on. I know several years ago there was a crop insurance agent that went to a farmer's field that was growing wheat on the final planting day for peanuts. He stood in the field, made a videotape of that day's newspaper and still nothing was ever done to that particular farmer. The insurance company knew about it because I talked to them, they knew it, but nothing was ever done. We have got to go to the insurance companies I guess and make them do their—I honestly do not know.
Mr. EVERETT. Let me give you one option to it.
Mr. WHITEHEAD. Sure.
Mr. EVERETT. There is an 800 number that goes directly to the USDA IG and I know this guy because I have talked to him before, he is a tough ex-FBI agent. And I would suggest that we are never going to stop fraud until farmers themselves get involved in reporting fraud. I have had people tell me, well, Congressman, you ought to do it. I cannot police it, there is no way in the world I can police it. But you can call that 800 number and you can immediately request a whistleblower status and when you do that, you can report that fraud and they will investigate. The IG for USDA is aching to get involved in this. He would really like to get involved in it, but he has got to have some first-hand information before he can do it. So my suggestion, folks, would be if we are going to ever stop fraud in these programs, it is going to have to start on a grassroots level.
Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Berry.
Mr. BERRY. I do not have any questions at this time, Mr. Chairman, thank you.
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The CHAIRMAN. Mr. Chambliss.
Mr. CHAMBLISS. Thanks, Mr. Chairman.
Along that same line of fraud and abuse, Allen, when we were talking about that earlier, I knew there was something that we had in our crop insurance reform package and we did not get Sanford's whistleblower provision in there, but we did have an amendment to require RMA and FSA reconciliation at the end of the year on numbers of acres and on yield, so there is some built in protection, but it is not the total protection frankly that we need.
Again, on your issue regarding throwing out that one bad year, we did change that. That was a very difficult issue all through the crop insurance reform dialog and we had in our bill one way to compute it, Larry had another way, and there was a third way out there. What we did was wind up throwing all of those out and come up with using the T-yield, which is going to be fair for everybody. You will be able to use your own history or the T-yield, whichever is higher. So it is going to be a lot better than what it is now.
Mr. Parham, on your issue of insuring contract farmers, that is a difficult issue. The real problem with it, frankly, is money. It is so expensive to insure livestock and poultry, we think—we do not really know, but we think that is the case. Chairman Combest did insert a provision in our bill that is going to provide for a pilot program on insuring livestock and depending on what that—how that comes out will determine whether or not we are able to provide some long-term crop insurance for contract farmers like you. So we will just sort of have to see where that goes.
The one thing we did do in there too is we expanded our NAP coverage. We included a lot more products and I know we got some fruit and vegetable folks that are going to be testifying, we expanded that so that a lot more of their products are going to be covered and we are not having to spend any more money to do it. So we may find out on livestock that it is not as expensive as we think and we will be able to move into livestock and poultry.
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My only other comment is that Louie has been my friend for almost all that 36 years, Louie, not much less than that, and a guy that I have a lot of respect for and he and Allen both are very good friends and serve on my agriculture advisory committee. I know the kind of farmers that you are and I know your interest in agricultural affairs generally. And frankly, we have got to get you all more educated on this China issue because we need your input. You are looking at three guys right here who have voted against it in years past, and we are wavering on voting for it this time because we see it as having a potential for a huge market for all of our folks involved in agriculture. There is a question of whether or not we shut the door and lose that market and give it to South American countries and European countries or whether we go to the table and try to negotiate agreements that we can hold their feet to the fire to. I do not know what the answer to it is, none of us do obviously.
But I am a little bit concerned that we have not gotten you all educated to the point and you all I am sure are typical of every farmer in my district and Alabama and what-not. We have got to get you all up to speed on this so we can get your input into it.
Mr. Parham, for example, the poultry folks in Georgia really are pushing permanent NTR. The reason they are is because China is one of the biggest importers of our poultry products. So I think it is a critical issue for the long-term viability of agriculture and we have got to continue that dialog as we move into this. We are probably going to be voting sometime in either late May or June, so we have got to be working on this in short order.
Mr. PARHAM. I just wanted to say I thank you for your comments about the contract farmers and it is very important that we recognize them, our numbers are very, very small and they are going to be growing in numbers, and just as this—by the way, Mr. Smith is a real person, this was his documents that were provided, and it is necessary to count them, we need them. I will also say I do not think we have a choice, we have got to be in trade with China.
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Mr. PERRY. Saxby, the China trade issues are a big concern of ours. You mentioned South American countries. To me, that is a sleeping giant, what we do not provide, they can take it up quickly. But then again, when I look at 14 million bales of cotton goods imported into this country, Congressman Everett, I am like you, I like to buy American, but as I was dressing today and looking at the labels in my clothes, I would have had to come in my socks if I had to come in U.S. [Laughter.]
Mr. CHAMBLISS. I have seen you do that before in your younger days, Louie. [Laughter.]
Let me just close by making one comment because, Louie, you being here as a farmer and also as a board member of the National Cotton Council, I cannot help but tell you what a great job National Cotton Council has done with respect to promoting products made in the U.S.A. I wish we could get every aspect of agriculture on board with that kind of promotion. I think it would go a long ways towards helping our situation with a lot of the issues that Terry talked about too.
Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Riley.
Mr. RILEY. Thank you, Mr. Chairman.
Mr. Perry, I do not know how close you and Saxby were, but that would have been quite an observation to make. [Laughter.]
Real quickly, we have been holding these hearings now, I guess we have had 40 witnesses, and this is the first opportunity we have really had to talk to anyone about contract farming. I know Mr. Wysner is a contractor, you are a contractor, and if you look at the total agricultural products that we produce in Alabama, I would say the majority of them now are under some kind of contract.
We have to come up with some kind of program. And I have been on both sides of this. Mr. Wysner, at one time I had an egg operation and he raised birds for me, I later raised them for Cargill. So I think I have a pretty good appreciation of how this cuts across both parties.
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The one thing that I would encourage you, for God's sake, do not get the Government involved in it. The last thing you want is another Government bureaucracy that you have to deal with. There has to be a better way, especially with the contracting the size of most of the contractors in Alabama today. I do not know if the Gold Kists or the Cargills or the Tysons of the world could come up with some kind of program, but I think we do have to have something so Mr. Smith does not have to sell his cattle. And maybe it is a participatory program where each one of you pay into something to help you get through that. You have a service man that is already there that would be somewhat of an arbiter between you and the company. If that is not a workable solution, maybe ALFA should look at a way that each one of the producers, the contract producers in this State, might begin a bond, a co-op of a type, to take care of these disaster programs.
I do not know if you remember it, you are probably not old enough to remember it but we had insurance programs for——
Mr. PARHAM. Thank you.
Mr. RILEY. We had insurance programs that dealt on conversion, on mortality, 30–35 years ago. It was done in the private sector. To say it was a dismal failure would be an understatement. And it all gets back to a fraud and abuse type program.
If we are going to set up something like that, and I honestly think we should because so many people today out there are going from one batch of chickens to the next or one batch of hogs to the next; when you lose a batch, it is hard to ever recover. You never have the option to have the real high markets to come back. And one of the things I can guarantee, the person that produces your chickens, the hatchery that produces them, the feed that they get is going to be more of a determinant on what kind of job you do than just about anything you do. So I think that we need to seriously think about expanding the contractors' responsibility to you. If they put a bad batch of chickens in your operation that you have no control over, then I think that there needs to be some programs that allow that to be spread. And you have got enough people in this country today or in this State today, to have an adequate spreading of risk.
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But I would caution all of you, be careful what you ask for because if you ask for a Government program that allows you to participate, I think ultimately you will rue the day that Government became involved between you and your contractor.
Mr. PARHAM. Let me just add what happened in this case was the temperatures above 100 degrees, approximately 104 degrees, for 3 days, and it is very difficult to take 20,000 chickens at 7 pounds out of a poultry production. This is the risk management—and I like what you said about self-funding, I like what I have heard today with some options out of the box, as you call it, about the producers can work in their own program, fund it, if there is any fraud, they only defraud themselves. This is an excellent idea and I have learned a lot today.
Mr. RILEY. Well, I think that is an excellent suggestion. I hope it is something maybe ALFA will look at because you do need something. But just like you said a moment ago, it is not that producer's fault that the chicken happened to be 7 1/2 weeks old, if that chicken was 3 weeks old, he wouldn't have had a problem. He has no control over when it goes to market, he has no control over what it is being fed. He has no control over the quality of the bird that he originally got. So I think that whether we do it within the contractor's purview or if you do it outside through an arrangement that you have with the other contractors, I think that you have a scope of scale large enough to more than accommodate the kind of risk you have. I think it is an excellent idea that we do that.
Mr. PARHAM. Thank you. Also, I would like to say that we are looking at making the grower eligible for low-interest loans to survive through these periods and things like that. This is the only governmental part that I was really referring to. Seed money to educate us, to set up a program or something like that I think would be good. Your comments are excellent.
Mr. RILEY. I think that is an excellent idea. I hope that—if I can assist in something like that. I think it is something, like you say, we have gotten to the point in this country today that most of us that live on the farm today are working with a contractor.
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My time is up and I apologize, but thank you for your comments.
The CHAIRMAN. Mr. Berry.
Mr. BERRY. Thank you, Mr. Chairman.
As you all know, I, without apology, support permanent NTR with China and I think it is a terrible mistake—a couple of points I would make on that issue. Someone said awhile ago that we should not trade with people that do not keep their word. I can tell you every trade agreement is broken. That does not mean it is all right to do it, but we fight that battle every day.
Before I was in the Congress, I was the Special Assistant to the President for Agriculture Trade and Food Assistance. I dealt with that stuff every day. I have negotiated those agreements, I have tried to negotiate when they are broken. And there is nobody violates these trade agreements any more than the European Union. I think I would put them at the top of the list. They are keeping our beef out right now; bananas, I do not know why we are in that fight, but we are. And rice, we have had a devil of a time with them on that. But I can tell you every—and I suspect we break our agreements sometimes too.
But this gives us an ability to deal with China that we do not have right now, if we do this. I think that is a point that we should make.
Also, this agreement that we have negotiated with China would provide that they would reduce their subsidies to cotton, which would help keep that cotton build up from happening over there. Right now, part of the reason that they are keeping those subsidies up is trying to keep people out in the countryside. They are having a migration into the cities and they do not know what to do with some of those folks and they are trying to keep them out there as much as they can. But that would begin to phase that out also.
And I would also just like to say, Mr. Perry, your son Louie and the National Cotton Council do an outstanding job, you can be proud of what they do not only for the cotton industry but as they represent American agriculture and I can say the same think about ALFA and the great job they do. I think Mike Owens said awhile ago that we all need to be more involved as farmers and I certainly agree with that. Those two organizations are top notch in the job they do of representing agriculture and the great job that they do.
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Mr. PARHAM. Mr. Berry, that I guess is one of my biggest concerns here today. I watched this table over here today, there was about five or six young people sitting there that I know very well and they work with you folks in Washington very day. Those young people came off family type farms. I wonder if 15 or 20 years ago where are we going to get those people. And that is as big a concern to me in agriculture as anything, and profitability is what it is going to take to get them in the business.
Mr. BERRY. I share that with you. My son will be the first generation in my family not to live on that land and operate it. He is clerking at the Supreme Court in Arkansas right now and it breaks my heart to have to tell you that.
Mr. PARHAM. Well, I have four kids. Like I say when I packed that girl up over here in Auburn and took her back home the result was two boys and two girls and they all are in agriculture but none of them are on the farm. My farm has been in the family since 1830 and I am like you, I am the last generation I guess that will farm it from our family.
Mr. BERRY. We were taught in my family that the only honorable way to make a living was farming. My dad, my parents have been gone a long time and I can only imagine how disappointed they are in how I turned out. [Laughter.]
But until 1993, that is the way I made my living too.
The CHAIRMAN. I thank this panel very much for your information and for your time spent with us today.
I would now invite our fourth panel: Mr. Carl Loop, fruit and vegetable producer from Jacksonville, FL; Mrs. Clara Spivey, a peanut and fruit producer from Louisville, AL; and Michael Stuart, fruit and vegetable producer from Orlando, FL.
At your pleasure, please proceed in the order of your introduction.
STATEMENT OF CARL B. LOOP, JR, FRUIT AND VEGETABLE PRODUCER, JACKSONVILLE, FL
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Mr. LOOP. Thank you, Mr. Chairman and members of the committee. My name is Carl Loop, I am a nurseryman from Jacksonville, FL and I also serve as president of the Florida Farm Bureau. First of all, I would like to thank the committee for having the field hearing and allowing farmers the opportunity to provide input in the farm policy development process. I will keep my comments brief and refer to my written testimony.
Before I discuss in more detail the issues of concern to my specific segment of the industry and other non-program crops, let me take a moment to review some facts about Florida agriculture.
Florida is the Nation's ninth largest agricultural State with annual farm cash receipts totaling more than $6 billion.
Florida farmers account for more than 50 percent of the U.S. cash receipts for nine major commercial commodities. We have 240 commodities that are grown commercially in Florida. Among those we produce 100 percent of tangelos, temple oranges; 95 percent of tropical fish; 80 percent of eggplants and ferns; 77 percent of the grapefruit and 75 percent of the Nation's oranges. And that is just a few.
Florida is the leading milk producing State in the Southeast.
Florida ranks No. 2 nationally in horticultural production.
Florida does not qualify in the top 20 States, nor does any Florida county rank in the top 100 counties for Government payments.
Crops such as peanuts, sugar, cotton, soybeans and other field crops play an important role in Florida's agricultural economy. Peanut production in Florida is woven into the fabric of agricultural life. More than 1,000 peanut farm families are located in primarily north and west Florida. You have heard much discussion about the peanut program and I will not comment on that.
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Another crop produced by Florida farmers has had an enormous regional impact and that is sugar cane. At this time, sugar growers are experiencing a 30-year low in prices and many in the industry are wondering how long they can survive with these low prices.
Florida farmers who produce field crops have faced drought, floods, low prices and costly regulations. The members of Florida Farm Bureau support the current no-net cost programs for the above-mentioned commodities and support efforts to provide a safety net for these producers.
As I stated earlier, I am president of Loop's Nursery and Greenhouses, a family business I started in 1949. We produce flowering potted plants and indoor foliage plants to the wholesale market. At the present time, we employ about 85 people and many of our employees have worked for our family business for decades. Florida nursery and greenhouse sales were valued at $1.46 billion in 1997. The industry is second only to the State's citrus industry and it is a fast growing part of agriculture in Florida.
Horticulture shares with other specialty crops the same concerns. The issues that I will discuss are not new, and in fact, Congress made commitments to farmers in the development of the FAIR Act of 1996 that we would see relief from over-burdensome regulations, additional and improved risk management tools and tax reform.
First, the risk management. Crop insurance is one tool available to producers for risk handling. Unfortunately, policies available for specialty crops do not cover the unique characteristics associated with the planting, growing and harvesting of specialty crops. In a recent report issued by the General Accounting Office on USDA's progress in expanding crop insurance coverage for specialty crops, it stated the existing crop insurance program will fail to cover approximately 300 specialty crops that make up 15 percent of the market share.
Another issue of concern to me and fellow specialty crop producers is regulatory reform. Every day I am confronted with burdensome rules and regulations. The issues boil down to the fact that the U.S. growers are required to meet countless regulations and at the same time are expected to compete with other countries that have an artificial competitive advantage because of their lack of environment and worker standards.
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As in many other States, preventing and combatting invasive pests and plants is of extreme importance to my operation and all growers in Florida. Out of control invasives are costing our State and growers a lot of money. For example, Florida is currently faced with a citrus canker outbreak that has the potential of drastically impacting the citrus industry.
Last but not least is the trade area. This is a difficult issue to address because in trade discussions, many issues play a role in trade policy. Approximately one-fifth of our agricultural production is exported. Specialty crop producers such as myself need a fair playing field to operate in if we are going to survive. Market access is denied for Florida agricultural products for a host of reasons. The most frequent reason we experience for denying market access for our products is scientifically unfounded sanitary and phyto-sanitary reasons. Lack of rapid dispute settlement mechanisms compounds the problem of denials of market access for phyto-sanitary reasons.
Our State applauds the recent efforts of the USTR and USDA to gain an agreement on citrus, meat and wheat with China. However, we must remember that trade is a two-way street. We do not need to sacrifice our domestic market to gain access to foreign markets.
In closing, Florida farmers and ranchers play an important role in producing the food and fiber for this country. Specialty crop producers such as myself must be included in any national farm policy dialog. Florida's growers and ranchers encourage Congress to pursue the ways to provide more risk management for growers, reduce burdensome regulations and combat invasive plants and disease.
We appreciate your willingness to listen to our concerns and we stand ready to assist you in your efforts to improve national farm policy.
[The prepared statement of Mr. Loop appears at the conclusion of the hearing.]
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The CHAIRMAN. Thank you. Ms. Spivey.
STATEMENT OF CLARA SPIVEY, PEANUT AND FRUIT PRODUCER, LOUISVILLE, AL
Ms. SPIVEY. I am Clara Spivey from Louisville, AL. In the past year, we have had a cattle and hog market to close, which has been in business for 50 years; an fertilizer and seed store to close that has been in business for over 100 years. This was a result of poor economic conditions. In most small rural towns, all business is agriculture related in some way; thus, the economic health of the farmer is vital to the economic wellbeing of the entire community.
Women Involved in Farm Economics, the organization that I am representing, is a grassroots organization committed to improving profitability in production agriculture through education, legislative, communicative and cooperative efforts.
One commodity that is very important to the economic base of the Southeast is peanuts. Peanuts contribute billions to southwest Georgia, southeast Alabama and northern Florida. Legislation that oversees peanuts is unique in that it is structured so that it requires no Government cost. At the same time, it provides a safety net for the consumer.
Peanuts, like many other commodities, are finding themselves facing greater global competition. This trend is likely to continue. Peanuts and all of agriculture must be protected and treated fairly in upcoming trade negotiations. All commodities are unique and we hope that the individual needs will be considered and not try to establish general policies to fit all of agriculture.
Two things that would improve the peanut program are:
Escalation clause to raise the price support each year as the cost of production goes up.
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Eliminate the per ton assessment being assessed on the 2000 peanut crop.
The peanut farmers have had to accept a reduction in the quota support rate from $678 to $610 per farmer stock ton. With the escalator clause being removed, the $610 price was locked in for the entire 7 years of the farm bill. Costs of production have increased steadily over the first 3 years of the farm bill and with fuel prices skyrocketing, this year will be even worse. Outside forces have placed the peanut farmer in jeopardy.
The U.S. farmers are not being able to compete on a level playing field in the competing world markets. The trade agreements that were to open markets for our commodities and products has not happened. We have found there is no one standing up for agriculture producers. We must have fair trade.
Trade agreements must create a level playing field for all concerned parties. U.S. farmers and ranchers cannot be subjected to regulations and restrictions enforced here in the United States that are not being enforced in countries that compete with our markets. The dumping of agricultural products from those countries in competition with our domestic production calculates into a guaranteed loss for American farmers and ranchers. This is not a level playing field.
Farmers and ranchers do not need additional loans, they need a means by which to meet the cost of production plus a reasonable profit. Laws are being passed to raise the minimum wage. Where does the farmer and rancher get a cost of living raise or minimum wage? The interests of U.S. farmers and ranchers must be a priority with the powers that be when setting agricultural policy. Policy should be set by someone who understands farming and ranching.
Our dependency on food should not be like depending on OPEC for oil. Our food supply is a critical component of our national security system. It has always been and will continue to be an important factor in keeping our Nation independent and secure. Therefore, we must keep our farmers and food system viable. Other countries highly subsidize their farmers because they know the importance of a food supply because they have known hunger. I do not believe the general public realizes the extreme importance of keeping food production in the hands of the family farmer and rancher. Most consumers believe there will always be an abundant supply of food at the grocery store. They do not seem to realize who is responsible for this abundant supply of food. Historically, it has been the family farmer who has supplied our food supply and that must continue. What will happen if our food supply becomes like our oil supply? Crops have to be planted at the correct season, you cannot just increase production at any time.
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Farmers and ranchers are doing a good job of protecting and enhancing the environment. They are not abusing the land. If farmers were abusing the land then it would be impossible for farms to continue to operate generation after generation.
In the animal feeding operations and the confined animal feeding operations, there needs to be more funding to help the farmers implement this regulations and/or low interest loan or tax incentives. There needs to be more money appropriated for research that would help eliminate some of the environmental issues cause by the AFO and CAFO.
American farmers are good stewards of the land and should be rewarded, not penalized, for doing a good job. We are producing a safe, abundant and affordable food supply. We must use the best science available in setting policy and not let human emotion dictate policy. There are some individuals who do not understand nature and the production of food, yet they influence policy. Unfortunately their voices are being heard and these unfounded accusations are creating unrealistic and unnecessary regulations. Such is the case with the FQPA. If FQPA is not enforced as Congress intended with studies based on sound science and actual farm use of organophosphates, the farmers of this country could possibly lose valuable tools that are essential to the success of their farming operations. These regulations drive up the cost of production and make it more difficult for farmers to stay in business.
What must be realized by the regulators and the public as well, is that farmers are as concerned with food safety as they are. Our own families are the first to be affected if we do not follow product label instructions when using pesticides. Farmers use only the dosage allowed and pesticides are used only when necessary. No way are we going to put our families' lives in jeopardy. I urge you as members of the committee to listen to the voices of the true environmentalist, the farmer, when setting policy or regulations.
I want to thank you for giving me the opportunity to express my views on agriculture. I would like to close with a quote from William Jennings Bryan, ''Burn down your cities and leave our farms, and your cities will spring up again as if by magic, but destroy our farms and the grass will grow in the streets of every city in the country.''
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[The prepared statement of Ms. Spivey appears at the conclusion of the hearing.]
The CHAIRMAN. Mr. Stuart.
STATEMENT OF MICHAEL J. STUART, FRUIT AND VEGETABLE PRODUCER, ORLANDO, FL
Mr. STUART. Thank you, Mr. Chairman. I appreciate the opportunity to appear before you today and I appreciate also you hanging in here with us for the last panel. My father once gave me some very good advice. He said do not stand in the way of the door when it is quitting time. So I will try to be brief, but hit some of the highlights. I have submitted a rather lengthy statement for the record and I will just try to briefly summarize some of the key issues.
The fruit and vegetable industry in this country, as I am sure you know, is a formidable industry. In 1998, the farm gate value of the industry was about $20.7 billion and that represented about 22.3 percent of American agriculture. We receive no AMTA payments, we really have no quotas. We get no emergency relief, but nevertheless, the industry has some very significant challenges and threats in front of it.
We have experienced, as has all of agriculture, in the last 2 or 3 years, extremely low producer prices, many below the cost of production. We have been suffering, particularly since the implementation of NAFTA with increased import competition, particularly from Mexico and Florida. We are on the verge of losing a lot of very valuable production tools, in particular methyl-bromide which is an extremely important soil fumigant and post-harvest fumigant for Florida agriculture and we are also looking at the possibility of the loss of a variety of tools as a result of the implementation of the Food Quality Protection Act.
We have got problems in terms of access to a stable and legal workforce. We have had problems with the consolidation, the rapid consolidation, of a number of retail food institutions around the country. And as Mr. Loop mentioned, we have been invaded by a whole variety of exotic pests, particularly over the last few years.
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It is interesting to note, as we talk about another farm bill, that back in 1990, you all passed a farm bill that specifically had a fruit and vegetable title, and if I am not mistaken, it was the only farm bill in history that dealt specifically with fruits and vegetables. One of the over-arching statements made in that title is that fruit and vegetable production is an integral part of this Nation's farm policy. You directed the Secretary of Agriculture at that point in time to conduct a study on the overall health of the industry, and ideally, for the Department to develop some regulations on how this industry might better compete in the global and domestic marketplace in the years to come. And do you know, in the 10 years since that study was requested by all of you, the Department has never released it?
Today, some 10 years later, growers in Florida that produce fruits and vegetables are mired in a deepening crisis. Small growers are finding they simply cannot compete in this marketplace, but large growers are having problems as well. Acreage, particularly for vegetables, is falling on a regular basis. And this production is not necessarily moving to other States, it is moving offshore. And as you have heard said many, many times today, once it is gone, it is not going to come back.
So I think it is critically important that we are having this discussion at this point in time, because I think it is extremely important that our industry and all of you work very closely together over the next few months to develop both some short and long term strategies that will help this industry survive and be successful in the future.
In my statement, I listed a variety of different issues that we got into a fair amount of detail on, but in the interest of time here this afternoon, what I would like to do is just hit on about three of them just to get them out on the table. And they are basically three areas that you have not heard a lot about here today.
The first has to do with planting flexibility, and you would not think that would be something particularly the fruit and vegetable industry would be concerned about. But back in the 1996 FAIR Act, as Mr. Combest recalls, we had quite a bit of controversy over planting of fruits and vegetables on contract acreage. And I would urge the committee, as you start work on the successor to the FAIR Act, to maintain that prohibition on the planting of fruits and vegetables on contract acres. It simply is not equitable to require traditional fruit and vegetable producers to have to compete against subsidized growers, not only in the European community where they are subsidized to the tune or $15 billion a year to zero in the United States, but then also to have to compete against subsidized growers for fruits and vegetables here in the United States. The penalties that are contained in the FAIR Act, I believe should be maintained but at the end of the day if you so choose to allow flexibility to extend over to fruits and vegetables, I think you have to be prepared to pay the same payments to fruit and vegetable producers that you pay to others.
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The second area I would like to talk about piggy-backs on something Mr. Loop was saying in the area of exotic pests. USDA's plant safeguarding mechanisms and systems have to be improved dramatically. We are literally under siege at this point in time in Florida, and it is a battle unfortunately we are losing. In the last 6 weeks, we have basically lost 50 percent of our Nation's domestic lime industry due to citrus canker and the situation stands to get a heck of a lot worse if we do not get a handle on it here very, very shortly.
Over the last 5 years, the State of Florida, the Federal Government and industry have spent over $250 million to control and eradicate exotic pests, just in Florida alone, and that does not count the expected $175 million we are going to have to spend on citrus canker eradication just in the next 12 to 18 months to try and get it out of the State. So it is an issue that is extremely important to us.
A couple of things on that before I get off. There is a report that was issued by the National Plant Board looking into APHIS' plant safeguarding mechanisms that I think is absolutely outstanding. It provides over 300 recommendations on how to improve that system and I would encourage all of you to look at it carefully and provide some oversight to USDA in ensuring that those recommendations are fully implemented.
You also have a piece of legislation on front of you called the Plant Protection Act, which I also think would provide the industry with some valuable tools as well as USDA in going after smuggling problems that are rampant in this particular situation, as well as providing them some investigatory tools to try and prevent this kind of thing from happening in the future.
The third area I would just like to touch on before I finish is the area of international trade. I think it is extremely important that we maintain a focus on export market development, but we cannot sacrifice import sensitive commodities for the goal of advancing our exports. Import sensitive commodities have to have a seat at the table, particularly for perishable and seasonal crops. There are safeguards that are absolutely necessary and any future trade agreements that we enter into in this country have to take those import sensitive commodities into account.
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Again, my time is up, I want to thank you very much for taking the time to listen to all of us today. I think you have heard it many, many times today, American agriculture is at a crossroads. What we do in this country over the next few months and the next couple of years is going to make the difference as to whether we have a long term agricultural industry in this country. I thank you for your time and support here today.
[The prepared statement of Mr. Stuart appears at the conclusion of the hearing.]
The CHAIRMAN. Thank you very much.
I would just like to say, Ms. Spivey, I host the Texas WIFE group every year when they come to Washington and when I first became acquainted with WIFE, I told them how nice they all looked in their red blouses and dresses and they—I was told that they were wearing red because that was symbolic of the fact that farming was in the red. And I told them that my goal was, before I left Congress, for them to all come to Washington wearing black. And I hope to see you in black soon.
Ms. SPIVEY. We hope you are retiring next year. [Laughter.]
The CHAIRMAN. Mr. Berry.
Mr. BERRY. Well, Ms. Spivey, my wife has been a member of your organization for a long time. I think you know that, in fact I think you have been to our home county. But we do appreciate the job that you have done.
Let me ask all three of you the question that I have been charged with keeping account of and that is how do you feel about permanent normal trading relations with China.
Mr. LOOP. I have some concerns, but I do not think we have any choice except to support it at this time.
Ms. SPIVEY. I think we have to support it, but agriculture has to be treated fairly and the rules have to be enforced.
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Mr. STUART. In Florida, we are going to be divided. It holds some tremendous potential for the citrus industry and from that standpoint alone, it is worth supporting, the recent agreement was outstanding. But the vegetable industry in the State I have to tell you has not seen a trade agreement in the last 5 years that it has liked, and it is extremely wary about the potential impact of that China agreement. China has the ability to be a tremendous producer of vegetables—it already is for that matter. And could be a world dominator.
Mr. BERRY. Thank you.
It is always tough to be the last ones to present your statements and you all have done an outstanding job and I appreciate what you have done. I will just close with this, a few weeks ago I noticed in the Sunday paper that the soft drink industry in this country took in $58 billion last year. The farm gate—now that was gross. But farmers took in $50 billion net at the farm gate in that same period of time, $22 billion of that came from the United States Government. So we actually took in half as much or less than half as much for all produce from all the farms in this country as what we spent in this country on soda pops. And that has stuck with me and I cannot get it out of my mind, it just does not make any sense. It shows you how out of whack this thing is, but again, we appreciate you all and the effort you went to to be here and to present your statements and the good job you did.
The CHAIRMAN. Mr. Everett.
Mr. EVERETT. Thank you, Mr. Chairman. I too am a fan of WIFE. When I first ran for Congress, I remember contacting or being contacted immediately by Chris Peele, who was then the president, and we had a long lunch at McDonald's and we—she told me of the great work that they are doing. And we do appreciate your testimony here today.
Ms. SPIVEY. Thank you.
Mr. EVERETT. And if you will, tell Mac and Chris I said hello and tell Mac that I still think he married over his head.
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Ms. SPIVEY. They should have been here today. You want me to tell them that you said they should have been here today also?
Mr. EVERETT. Absolutely. And make sure that Mac understands that I think he married over his head.
Ms. SPIVEY. We tell him that regularly.
Mr. EVERETT. Mr. Stuart, you are right, your tomato industry just about got destroyed because of trade agreements, basically NAFTA, and there is a lot to be desired there. So I can understand why you stated you will be split on it.
Mr. Loop, I am particularly glad to see you since you run a nursery. I am looking for some Satsuma cold-hardy orange trees.
Mr. LOOP. There is a lot of breeding work going on, but we do not want them to be any cold-hardier than the Florida-Georgia line. [Laughter.]
Mr. EVERETT. Well, that is kind of our problem. Baldwin County, AL, around the turn of the century, they had about 18,000 acres of Satsumas down there and I have some—I am on the other side of the State, that is Sonny Callahan's district, I am on the southeast side. And we are doing—we have got some Satsumas growing in and I understand there is a new plant from Japan that is a little more cold-hardy. So I tell you, we may be coming at you in a few years.
Mr. LOOP. If we do not do something to control citrus canker, our industry is going to be really in trouble.
Mr. EVERETT. Yes. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Chambliss.
Mr. CHAMBLISS. Thanks, Mr. Chairman. Speaking of citrus canker, I am sure you have been following the latest supplemental and know that Chairman Young is working with a number of us to make sure that we get some relief to you all. Now again, that is temporary relief, that is not permanent and that is what we have got to look at, is some sort of permanent resolution of that.
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Mr. STUART. We greatly appreciate it.
Mr. CHAMBLISS. In talking about trade agreements, we have got an unusual problem with our citrus going into Mexico. You would think that after NAFTA has been in place for all these years that we ought to be able to freely ship our fruits and vegetables across the border just like they ship it into here, and I do not know whether you all were sitting here when I was talking to Mr. Eason about the 800 trucks a day that come across at the border where we were, and that is not the biggest crossing. My son in law being primarily a produce farmer, I am particularly sensitive to that. We are going to continue to work on that issue until we hopefully can come to some resolution of it.
And along that same line, the food safety issue I think is particularly critical to your folks, produce folks. We have got to make sure that people who are shipping these products in here are using the same chemicals that you all are limited to using.
I mentioned one other thing that, Mr. Loop, as a nurseryman, I know you are very sensitive to and have a great interest in, and every produce farmer I know of has an interest in, and that is our labor problem. That has been another passion with me since I have been in Washington, we have been working very hard on this reform bill. I will tell you that we had a little bit of a breakthrough 2 weeks ago. Mr. Pombo and I met with our Judiciary Committee Subcommittee Chairman Lamar Smith and we think we have got something that we can work on now that we are going to be able to push through this H(2)(a) reform that is going to be much less paperwork, much cheaper on our folks and is a real workable solution that is going to generate a good quality legal supply of labor for folks involved in your particular industry for many years to come.
Thanks, Mr. Chairman.
The CHAIRMAN. Mr. Riley.
Mr. RILEY. Thank you, Mr. Chairman. To the panel, let me apologize, I had a meeting outside I had to take, so I missed most of your testimony, but we do appreciate you taking the time to be here today and I promise I will read it on my way home. My wife is here, so she can drive and I can read. But I do appreciate you being here today, taking your time out from a Saturday afternoon to talk to us.
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We have got some real problems in this country, and as the last Congressman here on the last panel, let me just urge all of you and all of you in the audience, any time that we negotiate one of these policies, remember NAFTA, remember what it—some of the problems it has caused. We cannot let the same thing happen to our agricultural commodities, to our farmers in this country that happened with the textile industry in Alabama. And if we are not careful, I am afraid it will. This giant sucking sound that Ross Perot talked about, it happened. I am also in the trucking business, 5 or 6 years ago, probably 85 to 90 percent of our trucks ran up and down the east coast. Today, 90 percent of them go to El Paso or to Laredo. We are very, very close, when you listen to the testimony that has gone on for the last couple of days, in talking about the State the agricultural industry is in today, of it almost becoming like our textile industry where we are totally dependent. And we cannot let that happen and as we negotiate these trade policies, whether it is trade with China or anyone else, I think we have come to the point now that if we do not do everything possible to protect our own industries and our own interests for a change, then I think that long-term this country is going to be poorer for it.
So thank you for taking your time, thank all of you for being here today.
The CHAIRMAN. Mr. Stuart, did you have a comment?
Mr. STUART. Mr. Combest, thank you, Mr. Chairman. I just wanted to comment just briefly and thank Mr. Everett for his comments on the country of origin labeling issue. This is something that I think you are aware we have been doing in Florida since 1979 in the fruit and vegetable area and it is something that consumers tell us they want, that retailers have been able to deal with I think very effectively and something that I think would benefit consumers nationwide. All the surveys that we have seen have a real strong interest in knowing where their fruits and vegetables come from. As you said, it is already on the books, it is just a matter of getting that information from the back room out into the produce stand and I think it is something that as a national policy would be valuable for this country.
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Mr. EVERETT. The objections we have gotten to it have not been valid objections, frankly. We have gotten some from the retailers, but we give them 6 months to use up the printed labels they already have. I was approached by some of the retailers that said this would just end up costing us too much money. Well, wait a minute, I was in the printing business for 30 years, I know how you change labels, it is just a matter of a few dollars, to be honest with you.
So given the fact that we are giving them 6 months to use up the present supply of labels and the fact that it really does cost nothing to change those labels and put that information on the front where it should be so the American consumer could see it, I have hopes that if we cannot pass this legislation this year, that we will be able to do it next year.
Thank you.
Mr. STUART. Thank you, Mr. Chairman.
The CHAIRMAN. I want to, in wrapping up this hearing, the third of 10, I want to mention three quick things.
First, I want to thank Auburn University for the use of this facility, this was a great facility and opportunity to have this testimony.
Second, I would like to mention—a number of people have addressed it and I want to finalize it in this way, 21 members of our committee went to Seattle to the World Trade Organization discussions and we were there in behalf of American agriculture and met constantly throughout with our trade negotiators. The position put forward by the United States, hopefully to reach agreement on future trade negotiations on WTO simply called for at least the beginning of the discussion of the ending of export subsidies. And as I am sure you all know, primarily the European Union export subsidies are many, many times higher than ours are. And unfortunately, that agreement to even begin the discussion of the elimination of export subsidies was not possible. And the meeting broke up with no resolution.
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I put out a statement at that time and I am extremely serious about it. That I believe a trade war or a bidding war internationally on trade would be a travesty, but if we cannot at least even begin the discussions of the Europeans ending their export subsides, then as chairman of this committee, I intend to not only look at every possible tool that we currently have in enhancing our export subsidies, but looking at anything else that we might possibly even envision. And if we are going to enter a bidding war, I do not intend for American agriculture to be outbid.
And last, I would say, and I do not speak for my colleagues on this committee, they are all, as you know, capable of speaking for themselves, but I think I fell comfortable in summing up our concerns about American agriculture in this way—we are here because we know there is a problem and we are here because we care. About 2 years ago in my district in Texas, we were suffering a significant drought and the largest church in my hometown of Lubbock held a prayer vigil on a Wednesday evening and most of the 10,000 members of this church are not farmers, but they held a prayer vigil for rain. And interestingly enough, while this is not a part of the story, not long after that, that church literally was under water and they had to move to another location to have services. So that worked. [Laughter.]
I was asked to address the congregation there as Chairman of the House Agriculture Committee and what I told them was that there is a lot more at stake here than the fact that someone may or may not be able to stay in business. This is a way of life and the biggest emotion, the largest emotion that I can see coming from people involved in agriculture is fear. We are talking about generations of people who have farmed the land, they do not know what—if they cannot continue to do that, they do not know what they are going to do. They do not know what kind of a job they are going to be able to get. They are talking about something that they chose and due to no fault of their own may lose and it is highly emotional and it is something that goes well beyond just the fact of the statistics and the numbers and who is making a profit and who is not. It is something that is extremely personal and it is something that is extremely—that is of extreme concern to us. And when we go into this process of trying to determine what the solution is, we are not looking at it from an abstract far-away view, we are looking at it as keeping people surviving and keeping a way of life that has been the root of the economic foundation of this country, profitable and in business.
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We appreciate the time that all of you who were witnesses spent with us today, we appreciate the time of those who of you who are not witnesses but are here out of interest. And I think that if we will continue to put our nose to the grindstone and roll up our sleeves, that somewhere, some day, some how, we are going to come up with an end to this and hopefully a solution to it.
I appreciate it very much and the hearing is adjourned.
[Whereupon, at 2:28 p.m., the committee was adjourned, subject to the call of the Chair.]
[Material submitted for inclusion in the record follows:]
Testimony of Carl Loop
My name is Carl Loop. I am a nurseryman from Jacksonville, and serve as president of Florida Farm Bureau. I would like to thank the committee for having this field hearing and allowing farmers the opportunity to provide input in the farm policy development process.
Before I discuss in more detail the issues of concern to my specific segment of the industry and other non-program crops, let me take a moment to review some facts about Florida agriculture and provide this committee the policy of Florida Farm Bureau on program crops produced in Florida.
Florida is the Nation's ninth leading agricultural State, with annual farm cash receipts totaling more than $6 billion.
Florida farmers account for more than 50 percent of the U.S. cash receipts for 9 major commercial crops: 100 percent of tangelos and temple oranges; 95 percent of the tropical fish; 80 percent of eggplants and ferns; 77 percent of the U.S. grapefruits and 75 percent of the Nation's oranges.
Florida is the leading milk producing State in the Southeast.
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Florida ranks No. 2 nationally in horticulture/greenhouse production.
Florida has a mixture of program and non-program crops. Program crops such as peanuts, sugar, cotton, soybeans and other field crops, play an integral role in Florida's agriculture economy. Peanut production in Florida is woven into the fabric of agriculture life. More than 1,000 farm families produce peanuts in primarily North and West Florida. Peanuts are grown in many counties where the average income is lower than the State average. Thus, peanut production contributes $62 million to the agricultural economy of the State and most importantly to rural economies.
FLORIDA FARM BUREAU POLICY REGARDING PEANUT PROGRAM
We support the current no-net cost peanut program. We support the efforts of growers and USDA to develop expanded export markets for peanuts. We support an increase in quota support price based on cost of production. On upcoming trade talks, we favor freezing at the 1998 levels import quotas in peanuts, peanut butter, and peanut paste. We also encourage customs identify and regulate incoming peanut products in these quotas. We oppose the establishment of free trade zones to import peanuts for use in the U.S.
Another crop produced by Florida farmers that has an enormous regional economic impact is sugar cane. At this time, the approximately 200 sugar growers are experiencing a 30-year low in prices and many in the industry are wondering how long they can survive with these low prices. Many believe that the reason the sugar industry is facing these low prices can be traced back the flexibility provided in the 1996 FAIR Act that abolished base planting requirements and provided decoupled contract payments. As a result of low commodity prices for program crops in recent years, many acres under Production Flexibility Contracts have shifted into the production of sugar beets and sugar cane. The increase in sugar acreage caused by the shift out of program crops into sugar beets and cane combined with high yields has caused domestic sugar production to significantly outpace domestic consumption.
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FLORIDA FARM BUREAU POLICY REGARDING SUGAR
We support legislation that includes provisions that insure a strong and economically viable domestic sugar industry. We support continuation of agricultural production in the Everglades Agricultural Area and support the Everglades Forever Act. Any changes made in the Everglades Forever Act must be based on sound scientific evidence and a cost-benefit analysis. We oppose any increased imports of sugar from countries that have less stringent environmental, labor and safety standards or less stringent enforcement of these standards than the standards of the United States. We request research to identify the environmental impact of displacing the sugar industry from the United States to countries with less stringent standards.
Besides peanuts and sugar, there are crops such as cotton, soybeans and corn that are important to the agricultural economy of Florida. Many farm families must plant a combination of crops in an effort to make a living. In addition, they are trying to cope with the low prices for their commodities and the changes in farm policy implemented in the 1996 FAIR act. We are pleased with the flexibility to adjust crop acreage in response to both economic and agronomic factors and the market provides producers with pricing opportunities while AMTA payments and loan rates are providing a partial ''safety net.'' However, Florida farmers have faced drought, floods, ruinous prices and costly regulations. The members of Florida Farm Bureau support the current no-net cost programs for the above-mentioned commodities and support efforts to provide an improved safety net for these producers.
As stated earlier, I am president of Loop's Nursery, a family business I started in 1949. We produce flowering potted plants and indoor foliage plants for the wholesale market. At present time, we employ about 85 people and many of our employees have worked for our family business for decades.
A small business industry with a big business impact. This is perhaps the quintessential description of Florida's horticultural industry. Florida's nursery and landscape industry has a strong visual impact on Florida, a healthy environmental impact on its quality of life, and a positive impact on its employment.
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Florida is ranked the second largest environmental/greenhouse horticulture production State in the Nation. Nursery growers generating $1.464 billion in plant sales in 1997 is quite a tribute and success story of an industry whose strong backbone is characterized by small family-run businesses. Floriculture and environmental horticulture is the fastest growing segment of American agriculture averaging annual growth much beyond that of other agricultural segments according to the U.S. Department of Agriculture. The economic value added to Florida's economy by the wholesale, retail and landscape sectors of Florida's environmental horticulture industry in 1997 totaled $5.351 billion.
Nurserymen share with other specialty crop producers many of the same concerns. The issues that I will discuss are not new and in fact, Congress made a commitment to farmers in the development of the FAIR Act of 1996 that we would see relief from over burdensome regulations, provide additional and improved risk management tools, and address the inadequacies of some trade policies.
First, risk management. Crop insurance is one tool available to producers for handling risk. Unfortunately, policies available for specialty crops do not cover the unique characteristics associated with the planting, growing, and harvesting of specialty crops. In a recent report issued by the General Accounting Office on USDA's progress in expanding crop insurance coverage for specialty crops, it stated the existing crop insurance program will fail to cover approximately 300 specialty crops that make up 15 percent of the market share. Legislation is currently making it way through Congress that will address many of the concerns of Florida's specialty crop producers in respect to crop insurance. I believe this legislation is a step in the right direction and look forward to its passage.
There are other ways to provide improved risk management tools for Florida's growers and ranchers. One of the most promising proposals is detailed in legislation pending in Congress to create tax-deferred Farm And Ranch Risk Management (FARRM) Accounts. The legislation passed last year in the tax reduction package but was vetoed by the President. Under the legislation, farmers and ranchers could reserve 20 percent of their net farm income in a tax deferred FARRM Account. Funds could be held in the account for up to 5 years with withdrawals added to a producer's gross income. Only active farmers and ranchers could participate. The FARRM legislation and crop insurance for specialty crop producers would provide much needed risk management assistance to Florida's producers.
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Another issue of concern to me and fellow speciality crop producers is regulation reform. Every day I am confronted with burdensome rules and regulations. Experts put the cost of Federal regulations borne by the private productive economy at $688 billion annually—20 times the size of the projected Federal deficit for FY97 of $34 billion. This estimate is low because it does not include the cost of lost productivity. It is estimated that the cost of Federal regulations on production agriculture exceed $20 billion annually. This estimate is based on farm production accounting for 3 percent of Gross Domestic Product and therefore 3 percent of the overall Federal regulatory burden of $688 billion. We believe that the share of total Federal regulatory costs borne by production agriculture is probably greater than $20 billion since farmers and ranchers are at the eye of the environmental regulatory storm due to our dependence on land, water and air. The issue boils down to the fact that U.S. growers are required to meet countless regulations and at the same time are expected to compete with other countries that have an artificial competitive advantage because of their lax environmental and worker standards. What we need is fairness and the promised governmental regulation relief.
As in many other States, preventing and combating invasive pests and plants is of extreme importance to my operation and all growers in Florida. Out of control invasives are costly to our State and growers. For example, Florida is currently faced with a citrus canker outbreak that has the potential of drastically impacting the citrus industry. The exclusion of pest species from our country should be the major focus of USDA/APHIS. Our society has advanced to the point that we are truly global in many respects. This is especially true for our agricultural marketing system. We now compete in a truly global agricultural marketplace. Expanding world trade has increased risks associated with the introduction of invasive foreign plant and animal pests and diseases. Invasives threaten everyone. They can disrupt, damage or destroy our Nation's ability to feed itself. Invasives also threaten precious natural resources, including wetlands, marine estuaries, sensitive forest ecosystems, native plant and animal communities.
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Florida's geographical location, extensive trading practices, huge tourism industry and subtropical climate make this a sentinel State,'' for pest introduction. Our State's Sentinel status should motivate agencies to increase safeguarding measures here to prevent invasives from spreading to other States. Exclusion should be the top priority. Exclusion programs, when successful, lessen the need for costly detection, eradication and control measures. Therefore, funding for exclusion programs should be increased. Funding should come from all segments of society because this problem doesn't threaten any one sector more than another. Adequate funding underlies the success of all efforts aimed at exclusion, control and eradication. The agricultural industry supports the creation of Zero-year Fund for eradication. Such a fund would not be tied to any specific fiscal year and would therefore be exempt from annual budgeting requirements. This would enable rapid start-up of emergency eradication measures.
There are two ways Congress can immediately help to combat invasives. First, pass The Plant Protection Act (H.R. 1504/S.321) that is currently pending before Congress. The Plant Protection Act will provide an improved regulatory framework, eliminating many of the impediments associated with current programs. Secondly, the Federal government should assist with an educational campaign designed to advance public knowledge and acceptance of every individual's responsibilities to protect our Nation from invasives. Special emphasis should be placed on educating middle school children and the traveling public in this area.
Last but not least is the area of trade. This is a difficult issue to address because many issues play a role in trade policy. Approximately one-fifth of our agricultural production is exported. We are proud that Florida ranks ninth in value of agricultural products sold in 1997. Eight of our counties are in the top 100 agricultural counties nationally, with Palm Beach county being 11th. All eight of these counties are in the top 100 because of their production of import sensitive crops (sugar, vegetables and citrus). It's interesting to also look at government payments to farms. Florida does not qualify in the top 20 States nor do any Florida counties rank in the top 100 counties for government payments. This demonstrates that there is significant differences within the agricultural industry and that there is little if any opportunity or ability to correct public policy impacts on import sensitive crops through government payments. There is currently no mechanism in place to pay a perishable grapefruit grower for below cost of production prices like there is for a producer of a storable crop with a formal Federal farm program.
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For this reason, agriculture needs the opportunity to negotiate specific treatment for specific crops rather than a one size fits all process. Florida agriculture urges that the request offer process be used as a part of the negotiations. In the case of Florida producers of fresh fruits and vegetables there have been self imposed market development costs for the domestic market. These self-imposed costs have not only developed the domestic market for our producers but has made that market attractive for foreign producers. As an example, in 1997–98 the average Florida grapefruit grower invested more than one hundred dollars per acre in domestic market development for a crop that was worth $300 per acre on tree value. Florida growers left unharvested more than eight million boxes on more than 11,000 acres due to economic conditions. They have received no governmental help or support. We saw the lowest prices and value in more than 35 years. Our government should fight to keep Florida producers in the domestic market just as surely as we fight to keep our domestic producers in foreign markets that we have developed. A market is a market and our domestic market should not be sacrificed to gain foreign markets.
We continue to ask that an equitable dispute resolution process be established for perishable agricultural products. This process should consider seasonality, pricing, cost of production, import surges with targets or triggers established through historical market access that would automatically begin a U.S. investigation. Constitutionally we are guaranteed a due process, but under our current trade laws that govern dispute resolution that process is extremely convoluted and costly. In agriculture, production is fragmented among many farmers without anyone having an appreciable market share. In Florida alone there is probably 15,000 farmers that have cattle. Each cannot be surveyed for damage because, outside of program crops, there is no sure list of farmers. It is imperative that a viable dispute resolution process be established for agriculture.
We have watched the NAFTA and the ensuing Mexican peso devaluation, the Asian economic collapse and other areas of internal policy impacts with many of our trading partners. It appears that there should be safeguards when internal policy decisions shifts and distorts trade. As trade policy and negotiations progresses, negotiators use a broad-based set of assumptions. In the event that actual practices change from the assumptions producing unforseen incentives for imports to disrupt the domestic marketplace we ask that safeguards be put in place so that our foreign competitors do not have preferential access to the domestic market.
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Florida truly is a magnet for tourism and trade. We ask that sanitary and phytosanitary standards (SPS) not be sacrificed on the altar of market access. Sound science must be used and in this way market access can be assured without the threat of new and invasive pests and the cost of eradication. In the past, agriculture was singled out as the responsible party for eradication of invasive pests. Our government agencies need more resources focused on our borders as trade increases. In today's global economy we must partner not only with State and Federal agencies but also with our trading partners for exclusion, detection and eradication. Unfortunately, we continue to see trading partners that gain access to our market but through false SPS complaints keep our products from their markets.
In summary, trade is a two-way street. We don't need to sacrifice our domestic markets to gain access to foreign markets. Our producers need effective dispute resolution processes. With import sensitive crops, when the regulatory cost is considered, our producers are least cost producers. As we talk about market development there is a need to recognize the domestic market as one that has been developed by domestic growers and they need continued access to that market.
In closing, Florida's farmers and ranchers play an important role in producing the food and fiber for this country. Specialty crop producers such as myself must be included in any national farm policy dialogue. Florida's growers and ranchers encourage Congress to pursue ways to provide more risk management methods for growers, reduce burdensome regulations and combat invasive plants and diseases. We appreciate your willingness to listen to our concerns and we stand ready to assist you in your efforts to improve national farm policy.
Statement of James W. Shirah, Jr.
Mr. Chairman, I would like to thank you and the committee on Agriculture, for giving me the opportunity to testify today, on issues affecting the U.S. farm policy. It is not my intent to simply point out what I see is wrong with U.S. agriculture policy; except, in context of what I see could help improve an issue that needs improving. I am sharing a perspective, for your consideration, as you continue your diligence on such an important mission.
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First, let me share with you a brief overview of how I got to this table. In 1996, two congressional initiatives had a major impact on how I pursued my livelihood. First, the telecom reform act contributed to my accepting an early retirement from a 25 year career at BellSouth. Second, the agriculture reform act gave me the freedom to farm. At retirement, I built a small cabin on the family farm in Dooly county, Georgia. The farm has been in my family for over 150 years. It was farmed through a shared tenant arrangement until 1997. In 1997, the son of the original shared tenant operator was forced to stop farming as an independent operator. The 1996 and 1997 crop years were so devastating to him that he liquidated his farming assets to save his home, even with crop insurance.
Utilizing my Malcomb Baldridge training, I felt that I could deploy ''best practices'' techniques and have a viable farming operation to contribute to my early retirement. I have now farmed cotton and peanuts for two crop years as an owner/operator and, reluctantly, have begun my third year. Even after utilizing the practices of world class farmers and consultants, I still experienced significant farm losses in the crop years 1998 and 1999. Professionals who have assisted me over the past 2 years have advised me that 1997 was an unusual year. They told me again in 1998, that it, too, was also an unusual year. Again, in 1999, the opinion was that it was an unusual year. When does the unusual, become the usual? National Weather Service Director John Kelly, says, due to La Nina, Year 2000 is indicating the drought probability to be another unusual, or usual year, depending on your definition.
My reason for wanting to testify was not because of my expertise in row crop production techniques, but from the experience I have as a businessman in my previous life. I would like to concentrate my thoughts today on four areas of concern. Those are, crop prices, crop yields, insurance, and succession strategy for domestic agriculture.
Crop pricing cannot remain at a level below the cost of production for very long, especially when amplified by low yields. The loan rate for cotton is 51.92 cents per pound. I assure you that 51.92 cents is below the cost of U.S. production.
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Crop yields are affected by practices of the producer, but even utilizing a best practices approach, the producer is paled by the affects of nature. I have watched cotton go from bumper crop yields to disaster level in just 3 weeks time. The efforts of a whole year's work wiped out by heat and drought.
In these two issues, price and yield, lies the heart of the of the policy issues. If we can solve price and yield, we have solved 90 percent of the problems. The recommendation I support is a counter cyclical approach to government's support of its agricultural resources. When world prices are down, have a price floor for the producer. When yields are down, have a national yield floor for the specific commodity. We have accountants that can build the models required to determine the specifics of those levels. To survive over time, these models must be indexed. Doane's Agriculture Report, Vol. 63, No. 6–5 and 6–6 provides tables for these models.
The next issue is insurance. Farmers need an affordable business insurance program, that will recover their operating losses when an act of God occurs. The current insurance programs are woefully inadequate for our industry, especially when compared to other industries. If I have done my part to produce a bumper crop and an act of God, i.e., drought, takes my crop yield below the cost of production, I should be able to buy reasonably priced insurance to protect me.
Finally, risk/reward ratio analysis of farming, to other types of businesses, would not lead to a financial decision to farm. As you know, farming is extremely capitalintensive, and requires annual operating budgets, that cannot be serviced due to events totally out of the operator's control. Even when debt service on operating budgets and capital expense is achieved, it will generally leave a farming operation, with a return less than that of a treasury bond. For all of the risk that is borne by the farmer, an annual rate of return in the neighborhood of sixteen percent, should be minimally expected. Barriers to entry are extremely high. For this high cost of entry, it should have potential returns consistent with the risk. If we don't fix the previous issues, the succession plan for domestic agriculture will be to the default position, which clearly is not in the national security interests. The average age of the Georgia farmer is 57 years, so, if we want new entrants, to transition the aging farmer base to the next generation, we must have a succession strategy. Most businesses have succession planning. I am very interested in the USDA's succession plan for our domestic agriculture program. The plan would need one major concept, profitability. If we show farming to be profitable it will attract new entrants. You have heard farmers encourage their sons to pursue other careers to establish a good lifestyle. Whether U.S. agriculture is attractive to a family farmer or to a corporate farm with stockholders, it must be profitable!
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Again, I appreciate the opportunity to offer this testimony and will avail myself at any time in the future to assure that I am not part of the problem, but part of the solution. Thank you.
Statement of Louie Perry, Jr.
Mr. Chairman, my name is Louie Perry, Jr., and I am a cotton, peanut, tobacco and beef cattle producer from Moultrie, Georgia. Today I am speaking on behalf of southeastern cotton farmers and, Mr. Chairman, I want to thank you and your committee members for giving me this time to deliver my message.
Currently, the U.S. economy is very robust, but its agricultural producers are not sharing in the prosperity. With planting season approaching, prices for cotton and alternative crops are depressed and show little potential for sufficient returns to cover the full cost of production. Considering this and grim weather forecasts, agriculture will again need Federal Government assistance to avoid financial catastrophe. I hope this committee realizes these dire circumstances, which include trade issues and irresponsible monetary policies of other countries, are out of our control. If any emergency assistance is approved, I urge that it be distributed through the Farm Service Agency along with all other farm program benefits.
The New York cotton futures price has risen over ten cents since the 25-year low point last December, but the adjusted world price has risen so the producer will receive less for his cotton, in spite of a significant price increase. Based on this, cotton growers producing base grade cotton will receive about 55 cents per pound. The fixed AMTA payment adds about 7 cents to this with a return of about 62 cents to the producer. Latest USDA statistics show the average southeastern production cost is 72 cents per pound. This means securing financing for this year's crop, while showing such a loss will be difficult.
In 1999, 3 million acres of cotton were planted in the southeast and producers received AMTA payments on just 2.1 million acres. This reduced crop revenue by 2 cents. All other cotton belt States' AMTA payment acres exceeded those planted. Due to this, we receive less program benefits than other cotton production regions. Payments reconciled to production give growers out west up to 23 cents per pound, while the southeast receives 10 cents. This inequity also exists in the distribution of disaster and emergency benefits.
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Mr. Chairman, changes in the distribution of program benefits among the production regions will be controversial. Our cotton organizations hope to provide this committee a consensus recommendation for equitable adjustments without penalizing any region.
Planting flexibility and the marketing loan provisions are strong points of the FAIR Act and the three-step competitiveness program fulfills its purpose to keep the cotton price competitive to our customers, while underpinning the price received by producers. The major problem with FAIR is the inability to provide adequate income protection during these periods of low prices.
Any new farm policy should provide an adequate low price safety net through a long-term policy, as opposed to uncertain, annual relief packages. In short, unless this country is prepared to sacrifice agricultural production to heavily subsidized foreign producers, commercial farming operations must have a workable partnership with our government. We feel that supply management programs are ineffective and encourage foreign production. We do favor reasonable conservation and wetlands reserve programs, as they generate optimum returns from marginal lands while providing profound environmental benefits.
Cotton industry organizations are discussing policy recommendations regarding whether farm program benefits should be coupled or decoupled, along with the pros and cons of fixed benefits versus price or income related benefits. Perhaps a combination of these would best serve our country's interests. Producers are also discussing methods to update payment bases and yields.
The lack of genetic diversity in our cotton varieties is also a great concern. Public sector research is vital to agriculture's future and increased Federal funding would allow USDA and university scientists to develop germplasm with traits to reduce chemical application and enhance crop quality. Efficient water use and conservation methods also need more study in our region.
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Finally, as traditional farmers, most of us would like to pass the baton to our children and 3 grandchildren but the economic incentives are not there. The family farm is disappearing and with it some of our best and brightest young people are lost to other endeavors. The result is the loss of the work ethic and values that have contributed to the greatness of our nation. I hope that a solution to this problem and others I have mentioned will be included in any new farm legislation.
Again, thank you for the opportunity to make these comments.
Statement of Albert Groves Jeter
My name is Albert Groves Jeter. I am 55 years old. I live in Dooly County in southwest Georgia, and I am an American farmer. I am a fifth generation farmer on my land, and could very well be the last. I graduated from the University of Georgia in 1967, and have been farming and involved with agriculture for the past 33 years. My main crops are cotton and peanuts, but I also grow wheat and soybeans.
My wife, Mary Jo, and my daughter, Mary Margaret, are both teachers. My son is a pharmacist. Three years ago, when my son Walt graduated from the University of Georgia, with a degree in pharmacy, I talked him into farming with me, and doing substitute pharmacy work on the side. Last November, when we had completed our harvest, Walt said, ''Dad, I know how you love this farm, but I don't see any future in it for me.'' It broke by heart, but deep down I knew that he was right. Today, with our present farm policy, there is no future for a young person in farming.
Farmers often work from daylight to dark, sometimes seven days a week. When it's hot and dry we work many hours during the night tending to irrigation systems. When the year has ended and the harvest is completed, we very often are left with nothing to show for our efforts. Many prices for commodities are less today than they were 20 years ago, but our input costs have continued to rise.
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With the present farm policy and the Freedom to Farm Act, the American farmer has been thrown into a global economy without a level playing playing field. We are asked by Congress and the American people to produce food and fiber at a price less than the cost of production. We are expected to compete with other less developed countries who have a lower standard of living and whose production costs are much less than ours. While the American farmer is the most efficient producer in the world, we are not the cheapest producers.
In the 1930's, the ASCS (American Stabilization and Conservation Service) was formed to stabilize agriculture, and I emphasize stabilize. In 1996, the ASCS was changed under the new farm bill to be known as The Farm Service Agency. The key work missing in this new agency is stabilization. Without stabilization in agriculture, the American farmer will cease to exist.
To most people, the outward appearance of the American body looks great. We are sprinting up hill at record pace, but if the real truth be known, the arteries are clogging and the heart is failing. Ladies and Gentlemen, the American farmer is the lifeblood of this great nation.
If I were to ask you to list in order of importance the people in your life that are the most important, you probably would say your wife or husband, mother and father, children, maybe your doctor, minister, neighbor, or best friend. Can you think of any others? I dare say that when asked this question, the great majority would fail to mention the most important person—and that is the farmer. You could live without your husband or wife, mother and father, and even your children. The one person you cannot live without is the food producer. Without him, we would all die.
Farmers make up less than 3 percent of the population of the United States; however, farming is without question the most important and essential profession. The United States is the only ''superpower'' left in this world, but without a strong agricultural base this great Nation could be brought to its knees in a matter of days. If we have to depend on foreign nations to supply our food for survival, just imagine what power those nations would hold over us. They could take us down without firing a shot.
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The loaf of bread I brought cost $1.99 at the grocery store. How much would you suppose the farmer gets out of this for his wheat? Can you believe less than five cents! This cotton shirt cost $50.00. Do you realize that the farmer got less than fifty cents for the cotton it took to make this shirt?
This Nation is in a sad state of affairs. We gladly pay million dollar salaries to television and radio personalities, motion picture personalities, and sports figures, for entertaining us, and yet we do not want to pay the people that are feeding us enough to stay in business. Somehow or other we are upside down in our priorities. So what can we do to help the American Farmer? It is my belief that in the next farm bill, which we need right away, we must have stabilization put back into it. I believe that price protection and controlled allotments are a must in stabilizing agriculture.
I have one simple solution—so simple that you might think it would not work. However, after discussing this with many people, we have yet to figure out why it would not work.
When the consumer pays for this $1.99 loaf of bread at the grocery store, the cashier would add four cents as an ''Agricultural Security Assistance Payment'' (ASAP). These four cents would go directly back to the Farm Service Agency, and ultimately back to the wheat producer. This would mean that the wheat farmer would be getting $6.00 per bushel for his wheat rather than $3.00 per bushel. Then he would be making a profit.
The same thing would happen for the $50.00 shirt. A fifty cent Agricultural Security Assistance Payment added at the register would ultimately go back to the farmer, and he would be getting a dollar per pound for his cotton rather than fifty cents. This could be done on all products produced on the farm.
This simple solution should eliminate many complicated and unworkable farm programs. The amount of the ASAP would be insignificant as to the total cost of the product.
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What could be simpler?
The Agricultural Security Assistance Payment would give the American consumer, for the first time ever, the opportunity to have a direct connection with agriculture in securing their future food supply. Join me in saying yes, our American farmers are worth more than a nickel for a loaf of bread.
I also think that there should be a committee made up of strictly farmers, possibly one from every State, that would be consulted before any provisions are passed in the new farm bill. Ladies and Gentlemen, farmers are the only people that would actually know whether or not a provision or policy would work—the only people.
Thank you very much for your attention, and I very much appreciate your giving me this opportunity to speak to you today.
Testimony of Darvin Eason
Good morning Mr. Chairman and distinguished members of the committee. I appreciate the opportunity to offer a few comments regarding current conditions in Georgia agriculture and to commend to you several relevant policy options as we move forward in the new millennium. I'm a farmer and an agribusinessman from Lenox, Georgia located in the south-central part of the State. My livelihood is based on the success of my major crop enterprises, which include primarily cotton and peanuts. Today, my comments will be focused on peanut related Federal policies and the steps Congress may wish to consider in addressing the current crisis in American agriculture.
The peanut industry in Georgia and across the Nation is suffering from a wide array of economic factors adversely affecting profitability. Producers have found themselves in a precarious situation, with increasing economic instability reaching alarmingly high levels. Contributing factors include multi-year droughts, extremely depressed commodity prices, consolidation among buyers and suppliers, and unwieldy environmental regulations. The additional risk brought about by an inadequate farm safety net has forced producers to turn to short-term strategies in the management of their operations.
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Today I would like to focus on four major policy options for your consideration. The first is a Band-Aid for the crisis at hand. The three remaining suggestions will address the long term success of peanut producers. They include the following recommendations:
Emergency Supplemental Appropriations for Drought Losses and Market Collapse; Aggressive Enforcement and Equalization of Trade Agreements; The Establishment of a Peanut Program Marketing Assessment Trust Account; Reform of the Crop Insurance System
Bckground. It's planting time in South Georgia and in my area we have seen many peanut producers continue to struggle for access to operating capital. Even as we approach April, I'm aware of a number of farmers that have yet to secure financing for vital crop inputs. This is occurring even after the emergency supplemental assistance payments of 1999. It's clearly a signal that we must reevaluate our current policies.
I believe the future for the domestic peanut industry hinges largely on the balance between producer profitability and international trade policy. Specifically, the interface between the 1996 Federal Agriculture Improvement and Reform Act (FAIR) popularly (or unpopularly) known as Freedom to Farm, the General Agreement on Tariffs and Trade (GATT), and the North American Free Trade Agreement (NAFTA). The combination of these policies has presented peanut producers little if any gains and substantial reductions in income.
Peanuts Pay the Bills on Many Southern Farms
Peanuts are a very important crop to Southern agriculture, generating annually about $1 billion in income at the farm level in nine Southern States. Peanut production in Georgia was over 700,000 tons harvested on 540,000 acres in 1999, approaching 40 percent of the total U.S. crop of some 1.9 million tons. The story here though is not where the production is, but the profit. Peanuts accounted for a very high percentage of profits on Georgia farms and ultimately subsidized lesser profits (or losses) from other enterprises, such as corn or wheat production.
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A number of counties in Georgia and Alabama acquired over 70 percent of crop income from peanut production, according to the 1992 Census of Agriculture. These counties are among the poorest in the nation, with persistent poverty rates well in excess of 20 percent. Peanuts pay the bills in these counties and across many communities in South Georgia. I know—I live in one of those counties.
Problem 1. Take My Freedom Away-I'm Broke!
Under Freedom to Farm, the value of peanut production fell below $1 billion to $970 million for the first time since 1982. Georgia's farmgate value slipped from a high of $631 million in 1991 to less than $400 million in 1997. In that first year, the University of Georgia estimates the economic impact of the Act on peanut producers to be a $276 million reduction in gross income.
Since the enactment of FAIR, we have lost an estimated 35 percent of U.S. peanut farmers. Compounding the problem, the value of imported peanuts and peanut products exceeded $100 million in 1996. The legislation eliminated the cost of production price support escalator and producers now receive an inflation-adjusted price for domestic peanuts is over 22 percent lower than prior to the Act. The Act imposed a substantial cut (19 percent) in quota that effectively created a supply and demand imbalance for the quota. Thus, quota rental rates went up, putting a further squeeze on producers by raising production costs. In my area we have seen quota rental rates escalate as much as 25 percent. This is because some producers have made huge investments in equipment trying to gain efficiencies and to hold their acres they've been forced to go to extremes.
Stop the Hemorrhaging
I am very concerned that the current agricultural depression is too severe to ''ride out'' until new policies are considered when the FAIR Act expires. I applaud the House Agriculture Committee's proactive efforts to gather information on how to correct deficiencies in the current farm policy. For the immediate future, however, I believe it is necessary for Congress to again step in to assist farmers with additional emergency supplemental assistance payments. Fundamentally, I believe the necessity for these infusions of capital is a band-aid approach to a gaping wound. We need to address the fundamental shortcomings in the current farm safety net and not default to ad hoc remedies for a depressed farm community. But short term, we must do something to prevent a complete collapse of the farm economy in the Southeast.
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RECOMMENDATION 1 Peanuts must be included along with any Agricultural Market Transition Act (AMTA) payments being considered. We urge Congress to come forward with an equitable infusion of Emergency Supplemental Appropriations for peanut producers suffering from drought losses and market collapse.
Problem 2 Freedom to Farm + Free Trade = Economic Disaster
NAFTA and GATT are exacerbating our peanut market problems. These free trade agreements have ushered more producers off the family farm since there enactment. The intent of these agreements is to achieve greater trade liberalization and foster exports for all U.S. producers. Yet our export markets have not offset the tremendous losses the imports have taken from U.S. producers. If trade liberalization is expanded in future agreements without consideration for domestic market structures, it will be difficult for U.S. peanut producers to survive. Part of the problem stems from a lack of adequate resources to enforce existing trading rules, such as rules of origin. Equally problematic are loopholes, which allow unfettered access to U.S. markets by foreign products containing peanuts, such as confections and sweetmeats.
The Uruguay Round of GATT removed Section 22 and replaced it with tariff rate quotas. Under GATT, imports without tariff from Argentina will increase to 74,449 farmers stock tons(fst) on April 1, 2000. At the same time, other countries will receive access to the U.S. market in excess of 15,270 fst under this agreement. GATT Duty on peanut butter and peanut paste is 131.8 percent at this time. Annual access of peanuts and peanut butter has hit a record 144,000 farmer stock tons, now eclipsing 12 percent of the U.S. domestic quota.
NAFTA places tariffs on Mexican peanut imports, which decline to zero during the 15-year phase-in of the agreement. Peanut butter from Mexican produced peanuts can enter the U.S. in unlimited quantities duty free, thus fostering the export of our processing industry seeking to take advantage of this loophole in the trade law. We now know that major companies are ramping up peanut butter production in Mexico, preparing to capture the profits this loophole will afford them. Should Mexico become a major exporter, the effect on U.S. peanut farmers would be devastating.
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Trading Away Our Markets. Since attending the World Trade Organization (WTO) Seattle Round in 1999, I am convinced that U.S. negotiators within the Administration are not providing the kind of leadership the agricultural sector must have in these important discussions. I believe our country's ability to feed and clothe our people is vital to our national security interests. However, I watched in utter amazement in Seattle as one U.S. official proclaimed that this approach was evil policy. It seems as though American farmers are being asked to unilaterally disarm, while cheap foreign-produced commodities flood our markets. I believe that I can compete with any farmer anywhere, but I cannot compete with the treasuries of foreign nations like China, while my government turns its back on me.
We know that foreign producers are often subsidized by their governments and in some cases at ten times the level offered by modest U.S. agricultural policies. Multinational companies are now choosing to kick in the subsidies as well for foreign producers, offering them inputs and land for cheap labor and a less burdensome regulatory environment. This investment in developing countries by big corporate food companies is only accelerating. Command and control U.S. policies carried out under the seemingly unlimited regulatory power of agencies like the EPA, the IRS, OSHA and a myriad of other government-sponsored hurdles to business are putting me out of business.
When peanut producers agreed to significant reductions in peanut program support during the last Farm Bill, we were told that regulatory relief and reduced taxes would offset the new market instability. That just has simply not occurred. Now we're off on another Round of trade negotiations to further abandon the provisions that give American farmers a modest safety net for our risky endeavor. It appears to me that our government does not care if we have a domestic food supply or if the family farm even survives.
Recommendation 2—Enforce and Equalize. As we discuss new liberalization of our markets under WTO, Congress should insist our negotiators demand (read: enforcement) that foreign peanuts meet the same safety and environmental standards with which U.S. producers must comply. In addition, confectionery items containing peanuts must be equated into imported raw peanut poundage. Currently, peanuts entering in as confectionery items, such as candy bars are not counted as imported peanuts.
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Before any further reductions occur in Tariff Rate Quotas(TRQ's), wage and worker protection laws and related regulatory costs should also be factored into the formula when placing a value on foreign peanuts. In peanut circles we have discussed this in terms of an Equalization Rate System. It would reflect and balance the differences between trading countries.
Problem 3. Marketing Peanuts in the New World Order. The domestic marketing environment for peanut producers in 2000 is nowhere remotely near perfectly competitive. Three buyers handle at least 70 percent of the peanut crop, according to USDA. There are two major mergers underway, further compounding the concentration among our limited marketing outlets. Historically, the peanut program provided a support base for peanut producers in marketing their crop. For the reasons I laid out earlier and with this continued consolidation of our industry, alternative policies should be explored.
Peanut producers firmly believe that our Nation's food security is important and we urge our Federal policy makers to embrace domestic agricultural policies that reflect this belief. One need only look to our European trading partners to quickly see what food security means to those who have faced hunger and desperation due to a shattered agricultural infrastructure. They are unwilling to expose their farmers to the extreme volatility and unforgiving realities of a boom or bust market cycle.
The No Net Cost Peanut Dilemma. The present marketing situation for peanut farmers is bleak. In the Southeast, an overuse of the buyback provision with the 1999 crop forced quota peanuts into the loan. These peanuts are being sold into the oil and meal market at a loss to the quota pools of approximately $450 per ton. Compound this with huge stocks of 1998 crop peanuts in commercial cold storage, resulting mainly from over 208,000 tons of additional buy back peanuts, and we have a surplus in the domestic edible market. Now in the face of some of the worst economic times in Georgia agriculture we've ever seen, the no-net-cost provisions of the peanut program will likely spell the end for many peanut producers across the State.
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This is because the 1996 farm bill (Federal Agriculture Improvement And Reform Act of 1996) mandates that quota peanut losses be offset by increased assessment on future quota marketings by producers. The law provides that the increased assessment will apply only to quota peanuts in the production area covered by the pool. From the 1999 crop, Southeast peanut producers must therefore cover a $450 per ton loss on 158,000 tons of quota that was placed into loan and crushed for oil. With a total Southeast quota of 767,000 tons, this would result in a $71 million loss.
Thanks to the hard work of several Members of the House Agriculture Committee, total grower and sheller marketing assessments for the crop years 1996–99 will be used to offset nearly $28 million of this problem. However, this is still far short of the level needed to prevent an increased assessment for producers in the Southeast in 2000. We must still somehow find another $35.4 million to prevent the devastating cut in support price a quota assessment would bring. A $35 million loss divided by 767,000 tons of quota in the Southeast would equate to around $46.20 per ton assessment on each ton of quota marketed.
Each producer that markets quota peanuts in year 2000 would pay the assessment whether their peanuts were placed into loan or bought commercially in 1999. This will make the support price for the year 2000 to be $563.80 per ton, far below production cost for the vast majority of producers.
Recommendation 3—A Marketing Assessment Trust Account
In keeping with our commitment to a No Net Cost Program, it would be beneficial if the peanut marketing assessment (PMA) were allowed to accrue within a Peanut Program trust account within the Commodity Credit Corporation (CCC). Call it the Peanut Trust if you will. In lieu of increasing the marketing assessment for producers marketing quota peanuts produced from the 2000 crop, the Secretary could borrow from CCC against all assessments for years 2000 and beyond, so as to offset any loan losses accrued due to the quota oversupply.
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Problem 4 Managing Risk without the Right Tools
With regard to risk management, the efforts to Reform the Crop Insurance system, such as the package passed by the House Agriculture Committee, should be applauded. I particularly want to thank Georgia Representatives Sanford Bishop and Saxby Chambliss, for their work on this bill to ensure Southern crops were considered. Farmers need the risk management provisions this bill offers. It would provide affordable coverage at every level, with strong incentives that increase participation in the program, and new flexibility for producers to choose the level of coverage that best meets their needs. The Senate would be wise to provide farmers these risk management options by enacting similar legislation.
Recommendation 4: enact Crop Insurance Reform which provdes: More affordable policies to protect farmers against price and income loss, in addition to production loss,
Cost of Production coverage, which allows the producer to buy-up to 100 percent coverage, and Strong compliance and enforcement provisions against fraud, to protect those of us who seek a risk management tool and not a handout.
This approach would ameliorate the need for future ad hoc disaster payments, if coupled with a reformed farm stabilization program.
Passing Along the Family Farm. Few young people are pursuing the peanut farming profession in Georgia with the huge capital investments needed to begin. The average age of the Georgia farmer has steadily increased to 55.9 years in 1997, according to the University of Georgia. Many argue that we are in the worst agriculture economy in Georgia since the Great Depression. The best indicator of our present farm crisis—before the 1999 harvest, peanut producers in Georgia had dwindled down to only 4800 in number. Source: USDA, Farm Service Agency (FSA)
I'm afraid to guess what that number is today as we enter the most expensive production season ever with the 2000 crop.
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The kinds of policy changes I've outlined today would give family farmers the opportunity to preserve our capital reserves while stabilizing farm credit lending institutions. Coupled with the requisite tax policy (i.e.; Estate/Death tax reform) and regulatory reform, farmers will once again have the choice of keeping the family farm in the family.
Thank you for the opportunity to share my ideas with you here today.
Statement of Dean Wysner
My name is Dean Wysner and my family and I operate a diversified farm in Randolph county, where we produce beef cattle, hay, and timber. We also have a laying hen operation that produces over 11 million eggs per year.
I would like to thank you for holding this field hearing here in Auburn, Alabama. I appreciate this opportunity to offer these comments on behalf of beef cattle and poultry producers.
Farming has been a way of life for us and has been good to me and my family; however, it becomes more of a struggle to maintain a lifestyle that we feel comfortable with. Even though cattle prices have made big improvements over the last year, production costs continue to rise at unpredictable rates. For instance, fuel prices are increasing at alarming rates, over 30 percent in the last few weeks and can wreck any budget. In addition to increased production costs, there are many other factors that affect farm profitability and there are many ways that Congress and government programs can help keep farming profitable and preserve America's rich farming heritage.
Market forces should determine the price and value of beef cattle and other agricultural commodities. Farm programs that subsidize agriculture through direct payments can distort supply and demand signals to producers and negatively impact supply and demand and prices of all commodities.
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To help insure that market forces work, there should be government programs and regulations that expand foreign market access, address unfair international trade barriers and/or provide humanitarian assistance to those less fortunate. We must enforce trade agreements and should give our trade representative more power in requiring our trading partners to live up to their part in trade agreements.
The companies that purchase raw agricultural commodities and process food products are becoming concentrated in the hands of a few giant foreign and domestic companies, reducing competition. Government should play a critical role in ensuring a competitive market system through strong oversight, taking the necessary enforcement action when situations involving collusion, anti-trust and price fixing, unfairly and illegally impact markets. There should be open competitive markets and firm policy. Regulations should insure this open-market policy.
Many of these companies also are involved in contract farming which continues to expand and move into new commodity groups each year. These corporate integrators strengthen their positions at the expense of the farmer contractors. Laws are needed to protect contract growers' rights and strengthen contractual agreements.
There are many governmental regulations (e.g. The Clean Water Act, Endangered Species Act, HACCP, CAFO, etc.) that could have a negative effect on farmers, processors and others. These regulations should be based on scientific data and not fear or political reaction. There should be incentives to help farmers comply with many of these regulations.
There should be legislation to protect individual property rights. We should require Federal agencies to prepare impact assessments prior to taking action, provide litigation relief for landowners, and provide for compensation for property that has been taken for public use.
We support the 100 percent deductibility of health insurance premiums for the self-employed. We also support reduction in capital gains taxes and the repeal of estate or death taxes.
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There are many other positive ways that Congress could help livestock producers. Such as implementing a dealer trust to protect the financial stability of producers when buyers of livestock file bankruptcy. Congress could also support legislation to allow meat inspected by state departments of agriculture to be shipped across State lines. Meat from foreign countries can be shipped across State lines. Why can't ours? Insure that mandatory price reporting of cattle purchased by producers is implemented so that producers have complete price information when making marketing decisions. There also is a big need for research funding to increase the productivity of pasture programs in this entire region. With the climate and rainfall in this region, year round grazing systems need to be developed to optimize production and increase profitability.
Even with the best intentions of congress, USDA and others combined with my best management, there are still many factors over which I have little or no control. There needs to be a risk management and/or disaster insurance program that would assist producers when Mother Nature hits a particular area or region with drought, flood, blizzard, hurricane or other natural emergency situation. There are many programs being studied, and livestock producers need to be included in future risk management programs.
Agriculture is the back bone of business in Alabama and the Nation. I ask that you consider the many options and give farmers the opportunity to produce a profit now and in the future. It is a matter of national security that farming be strong and profitable.
Statement by Jerry Newby
Gentlemen, my name is Jerry Newby. My family produces cotton, soybeans, corn, beef cattle and timber in Limestone County, Alabama, and I currently serve as president of the Alabama Farmers Federation. On behalf of our 400,000 members, I would like to thank you for taking the time to listen to our concerns and recommendations.
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You will receive written testimony from farmers representing every major agricultural commodity produced in the Southeast. Therefore, I will confine my comments to general farm policy recommendations and specific suggestions concerning commodities for which no oral testimony will be given.
Let me begin by saying we sincerely appreciate your support during the economic crisis of the past 2 years. Without the relief Congress provided, many farmers would not have been able to plant a crop this year. Now, we must get to work on long-term solutions. These solutions will require a serious budget commitment. But in the long run, it will be more economical than funding ad hoc disaster programs year after year.
I believe America is at a crossroads. We must decide whether we are going to invest in agriculture and keep farmers in business, or are we going to depend on other countries for our food and fiber. Vice President Al Gore has suggested that America can import all of its food. I disagree.
Consider the current oil situation. Because we depend on other parts of the world for petroleum, we have seen crude oil prices rise to their highest level since 1990, and farmers are paying almost twice as much for diesel fuel as they did a year ago. Imagine what would happen if shoppers suddenly had to pay $4 for a loaf of bread because Canada had a wheat shortage. Worse yet, what if there was no food at all? Remember waiting in line for gas in the 1970's?
As the shapers of America's farm policy, you have the opportunity to ensure we never witness the same kind of lines at our supermarkets. First, you can restore a financial safety net for farmers by providing protection against low prices. Second, you can help farmers manage their risk by passing sensible crop insurance reforms. Third, you can level the playing field between American farmers and those in other countries by correcting regulatory and trade inequities. And finally, you can enhance the profitability of agriculture by continuing to support research and marketing programs.
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With farmers facing record-high production costs and low commodity prices, we need a financial safety net now more than ever. A priority for this Farm Bill should be developing a market-oriented national farm policy that establishes minimum prices for major farm commodities without robbing producers of their planting flexibility. While the AMTA program has given farmers that flexibility and helped USDA make payments quickly, we must ensure producers are receiving the benefits. Many areas in the Southeast have new acreage in production due to the success of programs like the Boll Weevil Eradication Program. Because the current payment system is based on crop acreage bases from 1985–1990, many producers—especially young farmers—do not have the benefit of a safety net. Their non-program acreage is not eligible for AMTA payments, LDPs or marketing loans. This is a major concern for our producers and should be addressed in the Farm Bill.
Price protection, however, is just one part of the solution. Farmers also must have affordable risk management tools. House passage of H.R. 2559 was a good first step toward real crop insurance reform. I commend the committee for its hard work on this bill, and I hope the Senate will follow suit.
Our next suggestion pertains to the equalization of regulatory and trade conditions for American farmers in the global marketplace. Indeed, had these issues been fully addressed in 1996, Freedom to Farm might have had greater success. Our request is simple: Make farmers in other countries play by the same rules as American farmers.
In the U.S., we have opened our borders to imported food and fiber without questioning the environmental and safety standards under which it was produced. Meanwhile, we have watched as our own products—which are the safest in the world—are rejected by European countries that mask their trade barriers as environmental concern. It's time for us to hold importing countries to the same high standards as American farmers.
Finally, we encourage you to support science-based research. Whether the objective is to find a cure for peanut allergies or a new catfish vaccine, sound research is critical to the future of American agriculture. Even today, as we discuss the future of America's farm policy, research is underway here at Auburn University and at Tuskegee University and Alabama A&M University that could revolutionize the way we farm. But we also must ensure environmental research is based on sound science. The Regulatory Fairness and Openness Act of 1999 (H.R. 1592) would go a long way toward incorporating common sense and real-world data into the evaluation of crop protection chemicals. We encourage you to support this bill and fully fund agricultural research.
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Horticulture is one area where additional research funding would pay dividends for farmers. As profit margins shrink for traditional row crops, many farmers are investing in horticulture, nursery and sod operations. Already, greenhouse and nursery is the fourth largest commodity in Alabama in terms of cash receipts. This is truly a bright spot for Southeast agriculture, and we should continue to support it as we shape the next the next Farm Bill.
Meanwhile, we must be vigilant to ensure regulatory agencies don't overstep their authority and create additional obstacles for farmers. A prime example is EPA's plan to arbitrarily classify certain silvaculture operations as point-source polluters. We ask the committee to take a leadership role in ensuring the interests of farmers and forest owners are fairly represented in the regulatory process.
In addition to these suggestions and the oral comments of my colleagues, written testimony submitted to the committee includes the following requests and recommendations:
Our catfish producers request that USDA-ARS funding for catfish health research be restored. OMB recently cut the funding by $2.4 million. Promising catfish vaccine research at the ARS lab here in Auburn is among the projects that would be jeopardized if funding is cut.
The number one need for Southeast dairy producers is for Congress to pass the Southeast Dairy Compact legislation. The compact, which already has proved successful in the Northeast, would allow dairy producers to stabilize milk supplies and prices throughout the region.
Bee and honey producers request a market loan program for honey at the rate of 80 cents per pound.
And, Alabama pork producers encourage you to examine opportunities in the Farm Bill for providing growers with cost-share assistance that would help them comply with increasing environmental regulations.
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Regardless of what changes are made to the Farm Bill, however, they probably won't be in time to prevent another emergency assistance program this year. USDA's chief economist has predicted crop prices for the next 12–18 months will be the lowest since the 1970's, and the National Weather Service is predicting a drought for much of the southern U.S. Already, the month of February was the driest in more than a century, and commodity prices, in some cases, are below the cost of production.
Still, I am encouraged by your decision to hold these field hearings, and I am confident these producer recommendations will help you develop a national farm policy that will reduce farmers' dependence on future disaster programs.
Statement of Michael J. Stuart
Mr. Chairman and members of the committee, on behalf of the Producer members of Florida Fruit & Vegetable Association, I greatly appreciate the opportunity to appear before you today to talk about some of the challenges facing fruit and vegetable growers in Florida. While our focus obviously is on issues facing Florida producers, it is important to note that our challenges are not unique. In recent years many of our growers have begun farming in other States, such as Georgia, the Carolinas, and Virginia, in an effort to compete in an increasingly global marketplace and to satisfy the ever changing demands of buyers. What we've learned as this migration has occurred over the past few years is that growers of fruits and vegetables throughout the Southeast, and indeed throughout the country, are facing many of the same challenges.
As Congress begins to look at farm policy issues leading up to the expiration of the FAIR Act in 2002, it is extremely important that you focus on issues affecting our country's fruit and vegetable growers. As an industry, it is formidable. The combined fruit, vegetable and nut industry in the United States produced crops valued at $20.7 billion in 1998, which represented 22.3 percent of the total crop value of agriculture in the nation. Historically, producers of these crops have not relied on farm programs for their economic survival. Their marketplace is based purely on the basic law of supply and demand. These markets can be highly volatile. Even the slightest changes in volume can have a significant impact on market prices.
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As with much of U.S. agriculture, commodity prices for many fruit and vegetable crops have recently been very low, with many at or below the cost of production. There are a variety of reasons for this, not the least of which are increased imports, excess domestic production, and increased buyer leverage caused by the consolidation of retail supermarket chains.
Increased regulation of agriculture has also created both production and competitive challenges for fruit and vegetable producers. The loss of methyl bromide as a fumigant, for example, has been forecast to create a loss estimated at $1 billion. The Food Quality Protection Act presents similar problems for the industry as growers deal with the loss of critical production tools, while their competitors in other countries continue to have access to them. Growers face a myriad of other challenges, as well, such as threats from exotic pests and shortages of labor.
While the rest of the U.S. economy enjoys unprecedented growth and success, much of agriculture, including the fruit and vegetable sector, is mired in a deepening crisis. In Florida, many small and medium sized growers are either shutting down their operations or are being swallowed-up by large, highly diverse producers. But, even large producers are in many cases finding it difficult to compete. Acreage devoted to many fruit and vegetable crops has declined in recent years. The production is not moving to other States; rather, it's moving offshore where labor costs are lower and environmental regulations are less restrictive.
The Food, Agriculture, Conservation, and Trade Act of 1990 was the first farm bill to contain a fruit and vegetable title. It found that fruit and vegetable crops were ''a vital and important source of nutrition for the general health and welfare of the people of the United States.'' A key section of that title declared that the domestic production of fruits and vegetables is an integral part of this Nation's farm policy. The bill called for the Secretary of Agriculture to conduct a study on the impact of several issues affecting the Nation's fruit and vegetable industry. It asked for recommendations on how producers could participate in existing market assistance programs, and on additional programs that could be developed to assist producers in expanding domestic and foreign markets for their products. Today, some 10 years later, that study has yet to be released.
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The bottom line is that fruit and vegetable growers in Florida and elsewhere in the southeastern United States are in crisis. If the situation is not reversed, the United States will lose agricultural production capacity. Significant portions of our domestic food supply will come from abroad, and with it the potential adverse implications to consumers and the economy. While the farm bill may not be the proper vehicle to address many of these issues, it is critical that Congress focus on both short and long-term solutions to this crisis as they begin work on the successor to the FAIR Act.
If the next farm bill contains farm payment programs, Congress should continue the FAIR Act prohibition on planting fruits and vegetables on subsidized or contract acreage.
In the 1996 FAIR Act, Congress sought to provide planting flexibility for producers who historically participated in farm programs. While this was a worthwhile policy objective, fruit and vegetable growers were extremely concerned that, if it were applied to fruit and vegetables crops, they would be forced to compete in the marketplace with subsidized producers. Fruit and vegetable producer organizations across the country argued successfully for language in the legislation that prohibited the planting of fruit and vegetables on contract acreage. *Federal Agriculture Improvement and Reform Act of 1996,* Sec. 118.
The market conditions and potential for disruption that led to the industry's concern in 1996 over planting flexibility have not changed. If anything, they have worsened. Traditional fruit and vegetable producers in recent years have switched acreage between different crops, particularly vegetables, in order to find profitable niches. Federal incentives for program crop participants to plant fruit and vegetable crops would likely exacerbate an existing over-supply situation for those commodities, and cause significant injury to growers. Non-subsidized fruit and vegetable producers should not have to compete in the marketplace with producers who are receiving direct government payments.
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U.S. farm policies that provide for planting flexibility on subsidized or contract acres now and in the future should specifically prohibit the planting of fruits and vegetables. Significant penalties must remain in place to ensure that there is an effective deterrent to violations of the planting prohibition. If, in the future, Congress elects to provide payments to farm program participants, and allows them to grow fruits and vegetables on those acres, then traditional fruit and vegetable producers should have equal access to those payments.
USDA's systems designed to prevent the introduction of exotic plant pests and diseases should be significantly strengthened.
Increases in the importation of fruits and vegetables, as well as other agricultural products, into the United States has also increased the risk of the introduction of plant pests and diseases that threaten domestic production. Fruit imports increased from 1.35 million metric tons in 1990 to 2.82 million metric tons in 1999. Imports of fresh citrus products alone increased from 101,000 metric tons in 1990 to 348,000 metric tons in 1999. Vegetable imports increased from 1.90 million metric tons in 1990 to 3.73 million metric tons in 1999. Fresh tomato imports have doubled during that period. Van Sickle, John, *Perspectives on Invasive Pests and USDA*s Commitment to Fresh Fruit and Vegetables,* UF/IFAS, February 2000.
Florida and other southern States are also seeing record numbers of tourists and other visitors arrive each year. Some 48 million visitors entered Florida through airports, seaports and highways in 1998, an increase of 3.7 percent over the previous year. Florida Department of Tourism, 1998.
Our increased ethnic diversity has also brought a greater demand for fruits, vegetables, and other commodities from pest-infested regions. Increases in tourism and legitimate trade aren't the only culprits. Smuggling of prohibited host materials is also a significant problem, and is no doubt a major pathway for medfly, citrus canker, and other pests and diseases. During blitzes conducted by the Florida Interdiction and Smuggling Team (FIST)—a Federal/State cooperative program—officials intercepted numerous illegal shipments of fruits and vegetables that were later found to be infested with pests not known to occur within Florida.
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Today, we are losing the battle. The introduction of both animal and plant pests and diseases in Florida alone has had a huge financial impact on both government and industry. The Florida Department of Agriculture and Consumer Services estimated that as of September 30, 1999, the five-year impact for control of exotic pests to be well over $250 million. Florida Department of Agriculture and Consumer Services, *Five Year Impact of Foreign Plant/Animal Pests/Diseases,* September 30, 1999.
That estimate does not include current costs for the on-going citrus canker eradication program in south Florida. In the past month, approximately half of the Nation's domestic lime industry has been lost as a result of the canker infestation. When you add in the cost of lost sales for the industry during the five-year period, the numbers skyrocket. The Department estimates the sales loss to Florida agriculture as a result of pest and disease introduction since 1995 at nearly $900 million. Ibid.
Congress should support the implementation of the recommendations contained in the Safeguarding American Plant Resources report.
Recognizing the tremendous challenges faced by USDA's Animal and Plant Health Inspection Service (APHIS) in pest and disease exclusion, the agency contracted with the National Plant Board to conduct a formal review of the entire APHIS plant protection and quarantine system. In July 1999, the review panel issued a report, entitled: Safeguarding American Plant Resources—A Stakeholder Review of the APHIS-PPQ Safeguarding System. The report contains over 300 recommendations covering a wide variety of topics ranging from the need for legislation to changes in procedure with the agency to the need for more public education.
Recommendation number one in the report is passage of the Plant Protection Act (H.R. 1504). National Plant Board, *Safeguarding American Plant Resources,* July 1999.
We greatly appreciate Rep. Canady's sponsorship of this important legislation. Among the bill's many provisions is a call for significant increases in civil penalties that can be imposed on those who bring illegal fruits, vegetables, and other host materials into the United States. The current levels of civil penalties are no longer a deterrent, and are viewed by smugglers as merely a cost of doing business.
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FFVA strongly believes the recommendations contained in the report, if implemented, would significantly improve the existing plant protection and quarantine system. Improvements in this system are not only necessary; they are imperative if the fruit and vegetable industry is to have any chance in the battle against invasive pests and diseases. In reviewing U.S. farm policies, Congress must ensure that USDA has the tools it needs to fulfill its mission of protecting American agriculture.
Funding must be increased to strengthen USDA's pest and disease exclusion and detection capabilities.
While trade in agricultural products has increased significantly in the past 10 years, USDA/APHIS' total budget has risen only slightly. The portion of the APHIS budget funded from appropriations has actually declined during the past 7 years, from $440 million in 1993 to $347 million in the 2000 budget. User fees during that period increased from $25 million in 1993 to $141 million in 2000. The bottom line is that the financial resources allocated to APHIS have not kept pace with the increased pest and disease pressure brought on by the rapid growth of imports and tourism.
In 1997, the General Accounting Office confirmed this in a report entitled: Agricultural Inspection—Improvements Needed to Minimize Threat of Foreign Pests and Diseases. The report pointed out that despite changes to USDA/APHIS' funding and programs, inspectors at the ports are struggling to keep pace with the increased workload. Heavy workloads have led to inspection shortcuts, which raise questions about the efficiency and overall effectiveness of these inspections.
Ultimately, more resources and personnel will be needed to fight this battle. We recognize the difficulty in increasing government spending in a period of fiscal restraint; however, in this case, increased spending makes good sense. Strengthening and improving our pest exclusion and detection systems would result in fewer and less expensive eradication programs. This will require additional resources to hire more inspection personnel and fund increased research to improve exclusion, detection and eradication methods.
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In reviewing USDA/APHIS funding, Congress should also ensure that the agency has full access to fees its collects at air and seaports. The FAIR Act authorized USDA to collect user fees for agricultural quarantine and inspection activities (AQI). *Federal Agriculture Improvement Act of 1996,* Sec. 917, *Collection and Use of Agriculture Quarantine and Inspection Fees.*
These fees have been utilized by the department to bolster its inspection programs at key points of entry for exotic pests. However, Congress required the appropriation of the first $100 million. Since the provision has been in place, the full $100 million has not been appropriated for AQI activities. FFVA strongly urges the committee to allow the appropriation requirement to sunset when the FAIR Act expires in 2002. In the meantime, Congress should appropriate the full amount of funds generated from AQI user fees for the purpose for which they were intended.
U.S. international trade policies affecting agriculture should take into account the needs of import sensitive commodities as well as the interests of export oriented crops.
While exports of horticultural products from the United States have increased over the past 5 years, fruits and vegetables entering the country from abroad have risen significantly. Since the North American Free Trade Agreement (NAFTA) took effect in 1994, U.S. imports of fruits and vegetables have grown dramatically. Data show that for many crops, and in particular fresh tomatoes, Florida's growers have lost a considerable share of the U.S. market to Mexican imports. Florida Tomato Committee, Orlando, Florida.
NAFTA contributed to this situation by, first, reducing U.S. tariffs which made low-priced imports even more competitive; and, second, by spurring investment in Mexico's agricultural industries from non-traditional sources. A third factor, which was not addressed in the NAFTA and which has had a major impact on the competitive relationship between growers in Florida and Mexico, is the continual devaluation of the Mexican peso.
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The Uruguay Round only increased the competitive pressures brought on by the NAFTA on import-sensitive fruit and vegetable growers. By reducing U.S. tariffs across the board, even on import-sensitive commodities, the Uruguay Round reforms have made Florida's fruit and vegetable sectors more vulnerable to imports. At the same time Florida growers have been losing domestic market share, their ability to develop export markets has been hampered by non-tariff trade barriers and a strong dollar abroad. Under the Uruguay Round agreements, U.S. growers, as a result of their superior quality and technology, were expected to benefit more than most foreign producers from increased global access. For Florida, the global market gains have been minimal, offering little offsetting relief from increased competition in the domestic marketplace. There has been some limited progress made in opening new markets for Florida fruit and vegetable products. For example, Florida growers are slowly developing the Japanese market for fresh tomatoes. And, we're optimistic about the potential of the new agreement with China for Florida citrus. But, on balance, Florida's fruit and vegetable industries are losing domestic market share much faster than they are gaining export markets.
Improved safeguard provisions are needed for import-sensitive fruit and vegetable products.
To help offset the effects of tariff reductions that were expected to result in increased imports, both the NAFTA and the Uruguay Round agreements promised to provide safeguard provisions that would deliver temporary relief to injured, import-sensitive industries. For Florida's growers, these measures have failed to function as intended.
In preparation for negotiations on the new round of WTO negotiations, as well as the Free Trade Area of the Americas, FFVA has advocated the development of special rules governing trade in perishable, seasonal commodities. We support the concept of a price-based safeguard measure specific to fruits and vegetables. Such a measure should be automatically triggered when a price threshold is reached in order to prevent injury to growers of perishable crops.
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FFVA has also argued that a mechanism is needed to cushion the effects of currency devaluation on market access concessions. As Florida's growers experienced with the devaluation of the Mexican peso since the implementation of the NAFTA, the devalued peso meant that Mexico's exports to the United States were significantly cheaper and increased dramatically, while U.S. exports to Mexico became more expensive and declined markedly. Although difficult to address, the issue of currency devaluation cannot be ignored. One possible approach might be to use a safeguard-type mechanism that would be triggered only when currencies devalue by a certain percentage over a specified period of time.
Funding for foreign market development should be increased significantly to help develop and expand export markets for fruit and vegetable commodities.
Fruit and vegetable growers in Florida and elsewhere in the United States face significant obstacles to the development of export markets for their commodities. Chief among them are non-tariff trade barriers, such as phytosanitary barriers, and subsidized competition. The European Union and other foreign competitors outspend the United States by some 20 to 1 in export subsidies and market promotion expenditures. U.S. Department of Agriculture.
The EU provided more than $15 billion in subsidies to their fruit and vegetable producers in 1997. European tomato growers received nearly $5 billion of that total. Citrus producers received well over $1 billion. U.S. tomato and citrus growers, on the other hand, received no comparable support. Yet, our growers are forced to compete against European and other subsidized producers in world and domestic markets.
The United States must significantly increase its commitment to export market development if the fruit and vegetable industry is to compete in global markets. Funding for USDA's Market Access Program (MAP) should be increased substantially. Legislation has been introduced that would authorize up to $200 million for MAP, which currently is funded at $90 million. It also would provide a minimum of $35 million for the Foreign Market Development Cooperator Program, and allow up to 50 percent of the available funds under the Export Enhancement Program (EEP) to be used for related market development and promotion activities.
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The new farm bill should further strengthen programs to enhance the fruit and vegetable industry's competitiveness in world markets. Absent aggressive action, U.S. agricultural exports will continue to stagnate, and farm income will continue to fall.
Congress should direct the appropriate Federal agencies to closely scrutinize supermarket retail chain mergers, and the impact of that consolidation on fruit and vegetable growers and shippers.
Fruit and vegetable growers are deeply concerned about the consolidation of retail food marketers in the United States. The five largest food retailers in the country accounted for a whopping 40 percent of industry-wide sales of $270.7 billion in 1998 compared to 5 years earlier, when it took the top 20 companies to reach the same percentage. The Food Institute Report.
As buying power concentrates within the retail grocery industry, fruit and vegetable producers have fewer customers to whom they can sell their highly perishable and price sensitive commodities. The net result is continued pressure to reduce prices paid to growers. Unfortunately, consumers rarely see the benefit of these lower producer prices at the supermarket. Surveys conducted by the Florida Department of Agriculture and Consumer Services show a wide disparity and general lack of relationship between farm and retail prices.
In addition to heightened pricing pressures, fruit and vegetable growers and shippers are increasingly being asked to provide trade promotion payments, such as slotting fees, allowances and rebates to retailers, ostensibly to support the marketing costs of the growers' crops. In practice, however, growers report that these pay to play payments rarely result in visible benefits, and may only serve to boost profit margins for retailers. Ultimately, the cost of these fees comes from the grower's profit margins, which in today's environment are very slim, and in many cases non-existent.
The antitrust and anticompetitive implications of the rapid consolidation of food retailers should be thoroughly reviewed by Congress. The impact on fruit and vegetable growers and shippers should be a major component of that review. Appropriate Congressional action should be taken to ensure that a fair trading environment exists in the marketplace.
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6. A major overhaul of USDA's produce inspection service is needed in order to restore industry faith in this vital system.
The recent bribery and racketeering scandal at the Hunts Point terminal produce market in New York has destroyed the fruit and vegetable industry's confidence in USDA's inspection system. Fruit and vegetable growers, and indeed the entire industry, depend heavily on the inspection system to provide a credible and consistent third party analysis of product condition at both shipping point and upon arrival. Without a sound inspection system in place, growers are at the mercy of unscrupulous buyers who would use bogus condition problems to leverage a reduction in the price of the load. That is precisely what happened in the Hunts Point case. Unscrupulous buyers teamed up with corrupt Federal inspectors to defraud growers of over $100 million over a four-year period. Viadero, Roger, Inspector General, USDA. Comments at the United Fresh Fruit & Vegetable Association Convention, February 2000.
It is critical that the entire USDA inspection system be overhauled to ensure that this kind of corruption of the system is eliminated. The department is now reviewing its entire inspection service to determine what safeguards can be put in place to prevent future abuses. We strongly support that effort. It's crucial that confidence in the system be restored as soon as possible. Congress should provide oversight as this process moves forward at the agency. Congress should also provide USDA with sufficient resources to upgrade and modernize the system.
U.S. farm policy should support consumption of at least 5 servings of fruits and vegetables every day.
Research shows that increased fruit and vegetable intake reduces the risk of cancer and numerous other serious illnesses, including heart disease, stroke, and diabetes. The health care costs associated with these diet-related illnesses cost over $4.5 billion per year. Through increased fruit and vegetable consumption, it is estimated that such health care costs could be substantially reduced, even cut in half. However, accomplishing this will require a coordinated effort and an increased funding commitment by the Federal Government and the produce industry.
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a. The Federal Government should substantially increase its commitment to promote 5 A Day to the public.
Currently, the Federal Government is providing only $1 million per year through the National Cancer Institute's 5 A Day program to promote its effort to inform the public of the benefits of a diet rich in fruits and vegetables. This is woefully inadequate. We recommend that Congress establish a program at USDA that would provide matching funds to industry expenditures on commodity promotion for the generic promotion of the 5 A Day message to consumers across the country.
USDA should expand its nutrition and feeding programs to include more fresh fruits and vegetables.
The department's Food and Nutrition Service should create and test dietary intervention strategies to improve the American diet, with an emphasis on increasing consumption of fruits and vegetables among targeted population groups, particularly children. Current USDA programs such as food stamps, school lunch, and WIC should be the initial focus of this effort.
Fruit and vegetable growers produce crops that are vital to the health of Americans and represent a significant segment of American agriculture. Because they are not considered so-called program crops, fruits and vegetables are often ignored when it comes to the development and implementation of U.S. farm policy. Yet, like producers of program crops, fruit and vegetable growers face significant challenges in the production and marketing of their commodities that must be addressed if they are to be competitive in an increasingly global marketplace. We urge the committee to take these issues and the many other challenges facing the fruit and vegetable industry fully into consideration as you move forward in the development of the successor to the FAIR Act.
Testimony of Clara J. Spivey
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Welcome to Alabama. I am Clara J. Spivey, from Louisville, Alabama, a small rural agriculture town in South Alabama. In the past year we have had a cattle and hog market to close, which had been in business for 50 years, and a fertilizer and seed store to close, that had been in business over 100 years, this was a result of poor economics conditions. In most small rural towns all business is agriculture related in some way, thus the economic health of the farmer is vital to the economic well being of the entire community.
Women Involved in Farm Economics (WIFE) is a grassroots organization committed to improving profitability in production agriculture through educational, legislative, communicative and cooperative efforts.
One commodity that is very important to the economic base of the southeast is peanuts. Peanuts contribute billions to Southwest Georgia, Southeast Alabama, and Northern Florida. Legislation that oversees peanuts is unique in that it is structured so that it requires no government cost. At the same time it provides a safety net for the consumer.
Peanuts, like many other commodities, are finding themselves facing greater global competition. This trend is likely to continue. Peanuts and all of agriculture must be protected and treated fairly in upcoming trade negotiations. All commodities are unique and we hope that the individual needs will be considered and not try to establish general policies to fit all of agriculture.
Two things that would improve the peanut program are:
Escalation clause to raise the price support each year as the cost of production goes up.
Eliminate the per ton assessment being assessed on the 2000 peanut crop
Peanut farmers had to accept a reduction in the quota support rate from $678 to $610 per farmers stock ton. With the escalator clause being removed the $610 price was locked in for the entire 7 years of the farm bill. Costs of production have increased steadily over the first 3 years of the farm bill and with fuel prices skyrocketing, this year will be even worse. Outside forces have placed the peanut farmer in jeopardy.
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The. U.S. farmers are not being able to compete on a level playing field in the competing world markets. The Trade Agreements that were to open markets for our commodities and products has not happened. We have found there is no one standing up for agriculture producers. We must have fair trade.
Trade agreements must create a level playing field for all concerned parties. U.S. farmers and ranchers cannot be subjected to regulations and restrictions enforced here in the U.S. that are not being enforced in countries that compete with our markets. The dumping of agricultural products from those countries in competition with our domestic production calculates into a guaranteed loss for American farmers and ranchers. This is not a level playing field.
Farmers and ranchers do not need additional loans—they need a means by which to meet the cost of production plus a reasonable profit. Laws are being passed to raise the minimum wage, where does the farmer and rancher get a cost of living raise or minimum wage? The interests of U.S. farmers and ranchers must be a first priority with the ''powers that be'' when setting agricultural policy. Policy should be set by someone who understands farming and ranching.
Our dependency on food should not be like depending on OPEC for oil. Our food supply is a critical component of our national security system. It has always been and will continue to be an important factor in keeping our Nation independent and secure. Therefore we must keep our farmers and food system viable. Other countries highly subsidize their farmers because they know the importance of a food supply because they have known hunger. I do not believe the general public realized the extreme importance to keeping food production in the hands of the family farmer and rancher. Most consumers believe there will always be an abundant supply of food at the grocery store. They do not seem to realize who is responsible for this abundant supply of food—historically, it has been the family farmer who has supplied our food supply and that must continue. What will happen if our food supply becomes like our oil supply. Crops have to be planted at the correct season; you can't just increase production at any time.
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Farmers and ranchers are doing a good job in protecting and enhancing the environment. They are not abusing the land. If farmers were abusing the land then it would be impossible for farms to continue to operate generation after generation.
In the AFO (animal feeding operations) and the CAFO (confined animal feeding operations) there needs to be more funding to help the farmer implement this regulations and/or low interest loans or tax incentives. There needs to be more money appropriated for research that would help eliminate some of the environmental issues caused by the AFO and CAFO.
American farmers are good stewards of the land and should be rewarded not penalized for doing a good job. We are producing a safe, abundant and affordable food supply. We must use the best science available in setting policy and not let human emotions dictate policy. There are some individuals who do not understand nature and the production of food, yet they influence policy. Unfortunately their voices are being heard and these unfounded accusations are creating unrealistic and unnecessary regulations. Such is the case with the Food Quality Protection Act (FQPA). If FQPA
is not enforced as Congress intended with studies based on sound science and actual on-farm use of organophosphates, the farmers of this country could possible lose valuable tools that are essential to
the success of their farming operations. These regulations drive up the cost of production and make it more difficult for farmers to stay in business.
What must be realized by the regulators and the public as well, is that farmers are as concerned with food safety as they are. Our own families are the first to be affected if we do not follow product label instructions when using pesticides. Farmers use only the dosage allowed and pesticides are used only
when necessary. No way are we going to put our own family's lives in jeopardy. I urge you as members of the comittee to listen to the voices of the ''true environmentalist'' the farmer when setting policy or regulations.
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I want to thank up for giving me the opportunity to express my views on agriculture. I would like to close with a quote from William Jennings Bryan, '' Burn down your cities and leave our farms, and your cities will spring up again as if by magic, but destroy our farms and the grass will grow in the streets of every city in the country''.
Testimony of Jerry Parham
Mr. Chairman, members of the committee, I am Jerry Parham, President of Alabama Farm Bureau. I live in Pickens County where I own and operate an 800-acre tree farm. I want to thank you for the opportunity to address you today concerning my personal farming operation and, with your indulgence, agriculture in general.
My 800 acres were once used for cattle farming and forestry, but, due to low cattle prices in the early 1980's, I converted to more trees and fewer cows. The price cycles in agriculture, in this case, cattle, forced me to abandon one form of farming and adopt another. The price cycles in the timber industry are still there but they are much broader in range. I know by today's standards an 800-acre operation is small and I also know that if I had not had a position as a schoolteacher I would have lost the farm due to the price cycles. I worked off the farm in order to keep the land that is so dear to me. The price cycles have forced some small and large farmers in my area into bankruptcy.
Earlier this year I served as a delegate to the American Farm Bureau Federation annual meeting where we overwhelmingly adopted a resolution supporting implementation of a countercyclical safety net as a supplement to the Agricultural Market Transition Act (AMTA) payments. We believe such a policy could address sharp declines in prices without relying on large financial assistance packages from Congress. I believe such a safety net could keep many farmers in the industry and keep many farms in production.
When farmers go bankrupt, the land will usually go into forestry or be bought by land speculators and be taken out of agriculture altogether. When prices are low, other farmers do not have the financial resources to buy this land. However, speculators find this land most desirable because it is cleared, well drained and accessible. Like today, when farm economy is low, many times the rest of the American economy is booming. We must keep our best agricultural land in production if we are to maintain our world dominance in agriculture and a positive exportation of agricultural products.
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A significant amount of work has been done to develop a more comprehensive crop insurance program that would allow farmers to better protect themselves against yield and price variations. With the increased number of producers relying on crop insurance as their primary risk management tool, Congress must complete the task begun over a year ago and utilize the $6 billion set aside for the program in last year's budget resolution.
I think we would all agree that risk management is important in any business. I feel that I must point out a growing segment of our agricultural industry that cannot use crop insurance as a risk management tool—contract farmers. I believe that contract farming will continue to grow in size and numbers. We are all aware of contract farming in the poultry and swine industries, most of us know that some cattle farmers are under contracts with feedlots, and I recently found the contracted farming of special cultivated crops. Yes, even in my beloved forestry industry, we find landowners under contract to large companies to grow trees.
Now, I would like to talk about the largest contract farming operation in Alabama—poultry. For example, Mr. Smith, who lives on a 120-acre cattle and poultry farm in north Alabama, lost approximately $4,500 during a 10-week period in 1999. Please refer to the attached income and expense schedule.
Contributing factors causing Mr. Smith's loss were the size of the birds, 7.129 pounds, the external temperatures in northwest Alabama during July and August averaged about 95 degrees when normal temperatures average 89 degrees, and not having the ability to sell any earlier than the processing plant schedule would accommodate. Also lost during the 10 week period was Mr. Smith's labor and time. I understand that even contract farmers must provide necessities for their families and Mr. Smith was able to sell all of his cattle so he could survive for 10 more weeks. The sale of cattle is no longer an option. Mr. Smith needs a risk management tool such as crop insurance. Since Mr. Smith does not own his product, the birds, he cannot buy insurance. There must be a way to recognize Mr. Smith as a farmer so that he can participate in governmental programs as well as risk management options.
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I would like you to note that I am not asking for welfare for contract agriculture. I am asking that options be made available for the farmer. I would also like for you note that these modern day sharecroppers have more to lose than ever. To be a modern day sharecropper you must own your land and be willing to put your land at risk. No other industry would place so much at risk without some form of insurance
While Congress is raising the minimum wage, the amount still to be determined, fuel prices are skyrocketing. Not only does the farmer not get a cost of living raise; he is faced with higher energy costs. I ask you how much longer can our industry survive.
My concern is for the future of agriculture and the family owned farms. I believe the direction has been set for contract farming in all commodities including forest products. I ask this distinguished body to continue providing the leadership necessary to keep the United States as the No. 1 country in agriculture.
Statement of Mike Owens
My name is Mike Owens. I am 44 years old. I have an 18-year degree in agriculture. I am an All-American very hard working farmer. I like to make my own way in life.
There are two very important issues in agriculture:
Farm families are losing their lives and
How important farmers are to our country.
Farm families are very good Americans. We work hard. We care about people. We are very proud for what we do for our country, but we are losing our farms, homes, our children's college money, their future and our pride. We are too honest for our own good and we are ashamed of where we've gotten.
The farmer makes up 1 percent of the population. We have no political power, but we are not giving up! We are very concerned about the survival of our livelihood.
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Farmers are the first to start the economic train. Our money turns 8 to 10 times within the system. We feed our families, your families, the country and most of the world. We feed our school children, armed forces and clothe us all. One of the most important things is to make sure that our children and our grand children will be able to eat the safest, the best and the cheapest food in their future 10 or 20 years from now.
We are the masters of Agriculture over the entire world. We are the rulebook and we cannot understand why our country wants to take over 80 years of hard work and technology and taxpayer's money to teach other countries to condemn the American farmer that provides for us all.
Our Thoughts on NAFTA: We cannot compete in the world market. The environmental and health issues cost us dearly for the unions, the labor and the taxes. Most of the other countries do not have any of these to contend with. It costs us 3 to 5 times more to grow our crops than the other countries. In order to have a fair playing field we need to get our fertilizer, chemicals, seed, insurance and bankers involved in the world market. We are the only business that pays what the companies tell us for their products and only have the choice of what they offer us. We believe that technology has taken off and left us out for a purpose.
Tobacco is the crop that we make that most money on. It pays our bills for the money that we loose on cotton, peanuts, corn and soybeans. There is no alternative crop for tobacco that makes as much of a return on our investment. Tobacco keeps us alive. We know that tobacco is bad for our health but people still demand it. The tax it produces is unreal. Most of the university's in the East were built with tobacco money. Many a students' tuition was paid with tobacco money. The tobacco program is in jeopardy. USDA's best working program is being killed by cooperate America. Tobacco farmers have nowhere to turn. Our quota's been cut in half, which means we've lost half of our income. The nitrosimins issue is killing us. Tobacco quota is to us what stocks and bonds are to investors. An investor can buy and sell them without worrying about a 50 percent cut in 3 years. If his investments were cut that dramatically, he would be very upset. Let us the American farmers get compensated for our losses and our quota then companies could get who ever they wanted to grow tobacco.
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Cotton: Cotton prices are based on the world market but our grading sheets look like a hospital bill with pages on pages of deductions. Supply and demand is still the name of the game. We need to think about that.
Hogs: Corporations have take over this operation. Many farmers lost everything they had producing hogs. The prices were cheaper than during the depression.
Weather: Weather is the most important issue, as it can make or break us in one crop year. Due to the prices that we receive for our products the weather is not worrying too many of us.
We the farmers think the peanut issue is going to be the same as the tobacco issue. We will wind up growing the crop for nothing and corporations will reap the harvest. Peanuts are one of the healthiest foods in the world especially when they are produced by the American farmer.
Corn needs to be one of our best crops but it has turned out to be the worst. OPEC is manipulating our fuel. Corn can be used to produce gasohol which could allow us to use our product in a different form and not depend on OPEC.
We need to think long and hard about depending on other countries to produce our food and supplies for our children, our grandchildren and ourselves. The farmer can rule the world with food.
We the farmers are being forced to scam the system for our survival.
Thank you from the bottom of our hearts. The American farmer
Statement by Ricky Wiggins
My name is Ricky Wiggins and I am the managing partner in a family farming operation with my father and son in Covington County, Alabama. We produce cotton, peanuts, cattle and timber. I am involved in several farm organizations including Cotton Inc., Southern Cotton Growers, Alabama Peanut Producers and the Boll Weevil Eradication Foundation. I also serve as the Southeast area vice president for the Alabama Farmers Federation—the States largest farm organization. It is my pleasure to speak to you today on behalf of my family and my fellow farmers across the southeast.
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The current agricultural economic crisis has proven that America's current crop insurance system does not adequately provide a financial safety net for farmers. While most producers realize that no one should be guaranteed a profit, we do see the need for real crop insurance reform that will give good business men the tools they need to manage the unique risks involved in agricultural production.
In January of last year Jerry Newby, president of the Alabama Farmers Federation, appointed a committee of producers from across the State of Alabama to look at risk management. I chaired that committee. After looking at the current crop insurance system and making suggestions for much needed change we were still not satisfied. It was still to expensive at adequate coverage, too many producers were left out and there was still too much room for fraud.
Today I would like to propose to you a concept that came out of that committee. It will allow all farmers, regardless of size or commodity produced to manage their risk and save USDA money. We call it IRMA—the Individual Risk Management Account
The basic concept is that the producer takes the money he has been paying in crop insurance premiums and puts it into a tax deferred interest bearing account. USDA in turn takes the money they have been subsidizing that premium with and matches the producers money in the fund. USDA has no further liability. Producers of any agricultural commodity could participate.
Bob Taylor, an ag economist at Auburn University has listed some specifics for your consideration.
Annual additions to the account will be tax deductible.
Annual additions must be made to the account until it reaches its maximum. The minimum contribution will be 2 percent of the farmer's 3 year average gross income. The farmer can make a larger contribution at any time thereafter subject to the maximum balance of the account.
IRMA funds must be invested in low-risk, guaranteed securities, such as a bank CD or government securities.
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Interest and income from the IRM account will not be taxed when they are earned, as we how have with IRA accounts.
Withdrawals from the account will be taxed as regular income.
Additions, withdrawals and balance of the account will be reported to the IRS with a form similar to the 1099 forms.
In lieu of subsidized crop insurance for the participating farmer, the government will subsidize the account at the rate at which they have subsidized crop insurance in the recent past, until the maximum balance for the account is reached.
Withdrawals from the account can be made only if gross income in a given year is less than 80 percent of the 3 year average of gross income. The amount of the withdrawal would be restricted to the difference between 80 percent of the 3 year average and actual gross income that year.
The maximum balance of the IRMA account will be 150 percent of the 3 year gross income average.
Gross income will be computed from the line 11 of Schedule F of the Federal income tax form.
The participating farmer can purchase any unsubsidized agricultural insurance in addition to the IRMA account.
IRMA funds could be used as collateral for loans connected with the farming activities.
The account would be closed-out when the farmer leaves the farm for non-farm employment, retires, declares bankruptcy or dies. At this time, the remaining balance in the account would be taxed as regular income as it is withdrawn using similar provisions as with IRA withdrawals.
If a producer is not comfortable dropping all other protection before he has some reserve built into his fund, we offer a suggestion for a transition period.
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First year producer would put 25 percent of normal crop insurance premium in IRMA and 75 percent in conventional crop insurance. Producers would be covered at same level as before but with the condition that if he has a claim, his IRMA would be exhausted before insurance company paid out any thing, (high deductable)
Second year 50 percent IRMA, 50 percent crop insurance
Third year 75 percent IRMA, 25 percent crop insurance
Fourth year 100 percent IRMA
By the fourth year, if he had no claims, he would probably be comfortable to go with IRMA.
We feel that this simple concept could save USDA money and give the farmers of this Nation a workable tool to manage their risks.
If your objective is to save USDA money and help the American farmer, I challenge you to take a serious look at this proposal.
Thank you for your time.
Statement of Ronald Lawrence
Mr. Chairman, members of the committee:
I am Ronald Lawrence. My grandson, Clark Lawrence, represents the fifth generation of my family to greet our customers at Lawrence Mill. We are located in Fayette County in northwest Alabama, population 16,000. We did live in the country, but now there's a Wal-Mart Super Center two and one half miles away, right in the middle of what used to be a big cotton field. My grandfather started our family business in 1927, grinding corn with a water mill, ginning cotton, saw milling, and operating a country store. We are still operating out of the same building which is over 100 years old.
After finishing college in 1962, when I returned to the family business, I built a fertilizer plant and another cotton gin in Tuscaloosa county. I ran two gins, a farm supply, and an aerial application business. For the last 25 years, I've been in production agriculture. Ten years ago my oldest son, Jay, came into the operation after teaching agribusiness for 2 years. My youngest son, Garry, is a pharmacist in nearby Tuscaloosa.
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Our operation consists of growing about 1500 acres of cotton and 500 acres of corn, operating one gin, and running a farm supply business with almost no farmers. We are working hard to build a lumber/building supply business. I am providing full employment for 10 people, plus some part-time help. Fayette County has no full-time farmers left under retirement age, with the exception of three struggling dairies and three chicken operations. Most of them have some off-farm income.
So far our business has survived by being diversified, by working six days a week, and by managing carefully. Maybe we've been living too high. My wife, who works full-time in the business, drives a 1994 Ford with 138,000 miles on it. I drive a 1996 pickup; both were bought used. Our combine is 20 years old and we've bought one new tractor in the last 21 years, a 1991 model.
We run our own shop; we build; we repair, and repair, and repair. For the last 5 years we have gone almost completely to conservation tillage. We use the latest genetic technology with crop rotation, very few harsh chemicals, almost no aerial application, and almost no profit. We've cleaned up the air and water through the use of genetics-now pressure is being brought to stop the sale of genetically altered grain.
Two out of the last 3 years we have had weather-related crop failures. Crop insurance has been a great help in pulling us through, but now our yield base is so low, it is not likely to be enough in the future.
Now, when we try to rent land in our area, our greatest competition is the Federal Government. We are not talking about just marginal land going into CRP. Fifty acres of the better bottom crop land we rented last year is now in CRP pine trees. We are not big land owners. We rent most of our crop land. Unfortunately, the present programs seem to be geared to help the land owner, and to shut down the renter.
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My wife and I are thankful to God every day that we have been able to raise our family in a farm environment. We have taught them Christian values and have been able to work and struggle together with them to try to meet our obligations. As a result, we are a close family. I am very proud of them.
I am 62 years old, my health is failing, and I'm tired. My retirement is tied up in the auction values of my land and equipment, which is geared to grow cotton, and is already mortgaged. My gin machinery is worth scrap iron value. I can still work six days a week, but I can't stand the pressure of risking everything I have to put a crop in the ground under the present volatile prices. I will not stand by and see my son continue to face this same pressure in the future.
Am I an isolated case? Not so! I represent one of the last survivors in a group that is already less than 2 percent of the population. Maybe the group I represent is not worth saving. America is eating for a little over 10 percent of her disposable income. Much of it is coming right off our backs.
I do not apologize for what we do. We are good at it, and we produce food and fiber for what has been the Greatest Nation on Earth. But if we are not worth saving, OK. We can still eat out of our gardens, and also add a little meat. Can you do that?
When you pull up to the gas pump and pay that $1.65 or more for a gallon of gasoline, just think-the same thing could happen at the supermarket if we become dependent on foreign countries for our staple food items.
Are we worth saving? I don't have the answers, but you are in the position, and have the responsibility, to help. I ask you as a committee to help convey this message to the American people, then maybe room can be made for us to share in the booming economy we hear so much about in the media.
I am troubled about America as a nation. We seem to be so concerned about the problems in our schools and our families, while we feed our children a constant diet of immorality and violence on the screen. We're ostracized if we mention Christian values. Maybe the farm problem is really a symptom of a greater problem in our country. Maybe I do have the answer. Maybe the answer is found in 2 Chronicles 7:14 which says:
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''If My people, who are called by My name, shall humble themselves, and pray, and seek My face, and turn from their wicked ways, then will I hear from Heaven, and will forgive their sin, and I will heal their land.''
Thank you for your time.
Statement of Carl Sanders
Mr. Chairman, members of the committee. I am Carl Sanders, a farmer from Coffee County, Alabama and the President of the Alabama Peanut Producers Association. I am also representing the Southern Peanut Farmers Federation that is composed of our organization, the Georgia Peanut Commission and the Florida Peanut Producers Association. We would like to thank you for conducting this field hearing today.
Our individual organizations are also members of the National Peanut Growers Group. Through that group we will be working with other peanut States to forge a unified position before the next farm bill.
American Agriculture is in crisis. Prices are depressed, production costs have continued to escalate, and profit on the farm is virtually non-existent. For me as a farmer the 1996 farm bill has been less than successful. We have some pretty tough challenges facing us in peanut production today.
Our challenges started with the passage of NAFTA and GATT. The passage of these agreements significantly reduced our border protections and under the NAFTA agreement these protections will be eliminated all together during the next farm bill. Unfortunately, atthe advent of the bill in 2003, tariff rates will be so low that peanuts from Mexico will be able to enter into the U.S. at prices below our current quota support rate. If the Free Trade Area of the Americas is successfully negotiated, we could see Argentine and Nicaraguan access our markets at a much more rapid pace. This is further complicated by the fact that candy and other confectionery products containing peanuts or peanut butter are not presently being charged against the quota.
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The fact is that under GATT, NAFTA and the program rules of the 1996 farm bill, our peanut program has already been systematically dismantled. It is just happening during the early years of this decade. We are concerned that if things keep going as they are, we will end up with a program that leads to the total purchase of peanuts from foreign sources.
The Peanut Program has been a model program with very little government cost over the years it has been in existence. It has provided a constant and stable supply of peanuts for the American consumer at a price that is reasonable for both the consumer and the producer. Now that program structure that has made it successful is in jeopardy.
Our first desire would be to undo the trade agreements and keep a quota program that supports our producers at a profitable level. Unfortunately, we understand how improbable this is of happening.
If we are to keep peanut farmers growing peanuts in the US, we are going to have to find a way to make our program trade sensitive. At times this is going to mandate some government cost not now associated with our program. We must make our program fit within the rules of the NAFTA and GATT and still maintain a level of support that continues to provide producers with a safety net that offers the opportunity of producers to earn a profit.
Our organization, as are others, is currently working to find suitable solutions to the dilemma that we face. We look forward to working with the Congress to assure that we will continue to have a viable and growing domestic industry. This has to start at the farm with a level of support that encourages the growth of the domestic industry. We believe that this can be accomplished as we work together toward the enactment of the 2002 farm bill.
Shifting focus to the present again for a moment, peanut farmers in our area of the country are currently facing the potential for an increased marketing assessment due to extreme circumstances in marketing peanuts in the 1998 and 1999 crops. Presently, this assessment is estimated at over $46 dollars per ton. This is especially difficult given the disastrous weather of the past two seasons and the financial crunch farmers are already experiencing. Furthermore, because of the structure of the program, this assessment will be levied only in the southeast. We are currently working with members of Congress to gain relief and we need your support of this initiative.
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The impact of this assessment will be as devastating to southeastern growers as any weather disaster we have seen. When you have weather disasters you can make decisions to reduce cost and losses. We cannot reduce our input cost in 2000. We will have to make every effort to make the best crop possible knowing that our support will be $570 at best.
For your reference and information, I wish to include for the record the attached economic evaluation. It shows the impact of this assessment on the southeast. The total cost directly to real producers will exceed $33 million with a loss of nearly 2000 jobs. Also, the counties hardest hit will be the counties who can least afford economic losses. Included in the study is the impact on real producers and their operations. Small to mid-size operations will be hardest hit. The reduced price support in 1996 caused us to lose approximately 15 percent of our producers. This one assessment will add many more to the list of producers who have gone out of business.
As I stated in the beginning, American Agriculture is in crisis. The assessment is a critical peanut issue, but this is one part of the bigger problem. We hope you will seek policy changes to stabilize American agriculture recognizing that every commodity is different and has different needs. In the mean time, there must be quick action to allow us to survive until these answers can be found.
Again, thank you for conducting this hearing and for your support of the American farmer.
Testimony of Ben Bowden
Thank you for allowing me to speak at this meeting. When you look at my bio I hope you can see that I can speak from many, many experiences over several years. I have been working for many years trying to improve agricultural prominence in the United States.
I realize I have failed miserably. Today, we are at our lowest profitable condition ever. This covers all commodities. Only a few commodities have a market niche that is profitable. All these markets are so small they can be over-produced by others very easily.
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Our main problem is agricultural commodities, since the world began, have always been produced with cheap labor. We do not have cheap labor today. In the past, we sold our cheap labor through commodities before chemical and mechanical farming took over.
Yesterday we used 187 hours to produce a bale of cotton. Other commodities required proportionately the same number of hours. About the only other input was fertilizer, at $25.00 to $27.00 per ton. We farmed with very little cash outlay. Cotton sold for 38 cents per pound; back then seven bales would buy a pick-up truck. This year's cotton crop sold for 38 cents per pound with no program benefits. In the past, if we lost a crop, we only lost our labor. Today, on my farm, it takes 3 1/2 to 4 hours to produce a bale of cotton. Machinery, chemicals and fertilizer, at today's inflated prices, replace the remaining 183 hours. We have very little labor in a bale, bushel or pound of any agricultural commodity. Instead, we have a huge cash investment. Now if we lose a crop, we lose our equity. Today, we are in a world market competing with the cheap labor that we used to have. Only today, each country subsidizes greater than here in the United States. Even China guarantees 85 to 91 cents per pound for cotton. European common market guarantees $9 to $10 per bushel for wheat.
I have an ''Auburn University Agricultural Enterprise Analysis'' edited by the Department of Agricultural and Economics and Rural Sociology, an example of actual farmer's economic performance. Insert shows the summary of the entire book. It shows there is little or no profit in any commodity raised in Alabama. We cannot survive if additional support is not provided for all commodities. The only profitable, successful farmers I know have real estate developments in their farms. They are selling their farms out from under themselves. These farmers will soon be out of business if we have no positive improvements in agricultural policy.
FREE MARKET
We do not have competitive markets anymore. All commodity markets have been consolidated until three or four large companies each now control them. They can set prices wherever they please, because they have no competition. The old market mover, supply and demand, that used to move markets up and down, has very little affect on market prices anymore.
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If you have questions, I will speak more on this later.
PRODUCTION RESEARCH
Research moved this country ahead of the rest of the world when we were aggressive at home. We started cutting back on research in this country about 30 years ago and gave our research money to foreign countries. Now they feed themselves and have become our competition. We are spending more research money outside our country than in. Additional government-supported research is one of our hopes for better profits in the future. Private research makes farming easier but does not add a nickel to the bottom line. Private research costs as much or more than it saves.
CONSERVATION
The 1996 farm bill messed up a good conservation program and is under-funded. Now we are trying to micro-manage the program from Washington, DC, with formulas, numbers, policy, rankings and priorities. We have taken the management from the local people who are farmer-elected or governor-appointed. They have served on these committees because they are dedicated conservationists. They are well prepared and fair to all that want to be a cooperator; people you call customers. WHIP, EQIP, FIP, WRP and CRP are all a confusing tangle of unnecessary paperwork resulting in unproductive use of professional resources. If these programs were working as intended, I do not believe we would still be changing rules and guidelines every year. Let's go back to the old simple, effective, and efficient program and accomplish a lot more. Again, we need to have additional funding. We need at least one new program for water conservation and irrigation.
ENVIRONMENT
Everyone wants clean air and water. Farmers are the most environmental-conscious people in the world. Their livelihood depends on protection and improvement of our soil and water. If you help agriculture make a profit, you will see a great difference. You would not have to have these hearings; you do not have to talk to a farm credit supplier, a bank, or a machinery or chemical dealer to recognize the economic condition of agriculture. All you have to do is ride down a few country roads and observe the buildings, fences and equipment and the conditions of the land. These will tell you if a farm is profitable. In Europe, where the subsidies are greater and the profit higher, buildings are old but in excellent state of repair, fences are good and the equipment is fairly new. The land is free of weeds and trash and mown almost landscaped. If you ride around in this country, you will see the fences are terrible, buildings are falling down, equipment is old. Too many times, the land is less than attractive. Another example of profitability is the catfish area in this State, probably the most profitable commodity at this time. The whole community looks profitable. When farmers have money, the first thing they do is take care of their environment (home).
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FUTURE
We are doing exactly the same thing to agriculture that we did to the oil industry. Because of rules, regulations and economic incentives, we have developed other sources of oil outside the United States. Today, it is costing everyone in this country a pile of money and driving inflation. We have already lost agriculture support industries; chemicals, machinery, forestry and fuel are already produced and controlled by foreign governments. I wonder what will happen when we recognize other countries control our food supply. Each year our import of foods increase, over 40 billion dollars in 1999. Our number of farms get smaller every year. Many acres of land go under concrete and subdivisions. Prime farmland is lost forever. Young people do not feel farming has a future in this country. My own sons did not want to farm. I spent my whole adult life accumulating land and machinery so they would have a good start. Today my farm is the last dirt farm depending on row crops for a living in Russell County. Last December we lost our last dairy farm. Most farms today are part-time farmers that enjoy country life. They don't play golf; don't take extended vacations. Farming is a source of recreation because they have income from other sources. These farmers can quit at any time. We have to change the personality and profitability and the direction that farming has taken in the United States.
SUMMARY
We cannot compete with cheap labor and huge agricultural subsidies that are given around the world without more support.
We cannot survive without competitive free markets.
We have to invest in Ag research again (Beltsville, Maryland was the premier research center of the USDA and it is a disgrace today.)
Conservation responsibility has to be returned to the local level with increased funding.
Environmental excellence can be accomplished through additional funding through NRCS and not the EPA. The EPA is trying to re-create one of the most productive programs ever designed, PL566-Watershed Program, that is already in place in NRCS. Land treatment, land protection, water quality and water quantity sections are already in place and would be administered by an agency that is respected and accepted by landowners.
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Further subsidies should be limited to actual producers of commodities.
Let me again emphasize the need for irrigation in agriculture.
I hope my future as a farmer does not depend on China, as President Clinton and AMS seem to be dwelling on. How can we sell them any commodity they already have an excess of? This is the same China that every day threatens us about Taiwan and civil rights; the same China that is still buying destructive weapons from Russia to use on us. Surely we can find other countries that would be a better partner.
Statement of Timothy E. McMillan
Thank you for letting me address you today. I am here today when I should be home working towards putting in the spring crop. Farmers, including myself, have been negligent in tending to their business outside the fence rows. So, I deemed it necessary to be here today.
In the past, farmers may have been guilty of ''crying wolf'' on certain issues. But, just like in the fairy tale, the wolf eventually shows up. I am here today to tell you that the ''wolf'' is here and will devour our family farms if major changes are not made in our agricultural policy.
I would like to give you a few examples of the small share the farmer receives out of a finished product. According to Dr. Bill Givan, an economist with the University of Georgia, this loaf of bread cost $1.99. The farmer received 0.05 out of the same loaf. This pack of cigarettes costs $2.54. The farmer received 0.04. This box of cereal costs $3.50. The farmer received 0.03. A certain celebrity's picture was on the front of a cereal box for advertising purposes. It is reported that the celebrity received .10 per box of cereal. Farmers could actually give their product to the manufacturers, and it would not change the cost of the final product. On the other hand, the farmers could be paid twice as much for their product, and it still would not change the price of the box of cereal except for the .03. Now, I know that we are not going to force manufacturers to pay twice as much, but the consumer could pay us twice as much through our Federal Government in subsidies, export enhancement programs, and safety nets.
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In the midst of a booming U.S. economy, U.S. agriculture has experienced a full-blown depression for the past 4 years. In the 1930's the Agricultural Adjustment Act defined a set of basic commodities and set parity prices for them. These types of programs were essential to the Nation's well being and the triple-A programs were a boon to the U.S. economy. The 1996 farm bill was designed to be a 6-year transition to eliminate the old farm programs. Congress and some farm leaders failed to see how brutal a free market can be. Most major commodity prices are now below production cost levels. Congress has responded with supplemental appropriations to prop up financially strapped farm operators. Farm payments were a record $22.7 billion in 1999, far above those levels of earlier farm programs. Farm lenders report many loan repayments were made with government payments to farmers.
Abraham Lincoln once said, ''In all that the people can individually do for themselves, the government ought not interfere.'' I agree with this statement. When given a chance to compete with other producing nations on an equal basis, U.S. farmers can hold their own and then some. But, as long as Federal monetary policies tend to push up the prices of American commodities in foreign currencies and producers elsewhere are allowed to get away with subsidizing their exports, U.S. agriculture will suffer. I consider myself a realist, and I do not think we can compete with the rest of the world unless we are on a level playing field. At this point, we are playing with a different set of rules that handicaps our competitiveness. Our trade negotiators gave away agriculture in order to promote other industries. Why must we eliminate our import quotas, export enhancement programs, price guarantees, and other programs at American Agriculture's expense? We should first bring all countries to our level and then negotiate from there. With carefully planned promotion and marketing programs, U.S. agriculture can reclaim some lost export markets. We can grab a share of the new business that will unfold as the economies of developing countries improve and provide them with the money needed to buy more agricultural products.
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In my area of the country, two programs that have worked well are the tobacco and peanut programs. The tobacco and peanut programs provided stability for its farmers. Farmers could make long term decisions. With the Freedom to Farm Act, farmers can only plan one year at the time, which leads to stress and uncertainty. Both programs need to be kept to assure economic viability in those areas of the country where these commodities are grown. However, both programs have major problems that need to be addressed.
The question is simple: Do the American people and you, as their representatives want to keep family farms healthy and thriving? The options are 1: get us on a level playing field so we can compete on the world market, 2: stay with the old farm programs with subsidies and target prices, or 3: depend on other countries for our food. I feel that agriculture is a national security issue. We must maintain a strong national defense and be willing to maintain our agriculture. It is vital to our national security to be able to feed our own people. An oil embargo would be nothing when compared to a food embargo.
I plead to you; take our case to the American people. You have the forum to do this. This is a national emergency going unnoticed. I pray that this Nation will see the ''wolf'' before it is too late for America's family farmers. Thank you.
Statement of Allen Whitehead
Mr. Chairman and members of the committee, I appreciate the opportunity to present my ideas about agriculture. I would like to discuss where we are now and where we should be to help American agriculture stay the best in the world. My ideas include why the American farmer is important to the well being of the consuming public and the security of our nation.
As an American consumer, I am concerned about the use of more and more food from foreign countries. There are several reasons for my concerns. My first concern is that of food safety. The food produced and processed in the United States is the safest in the world. Government inspectors check our food supply from the seed to the table to make sure that it is safe. Food produced in other countries and imported into this country does not necessarily meet the strict EPA and FDA standards imposed on our farmers and food processors. As a consumer, I know that I want to ensure the viability and reliability of food and fiber products grown by American farmers.
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American farmers are important to the security of our nation. As a student in college, I had a history professor explain the importance of farmers to a nation. All great civilizations of our world fell because of their loss of morals and their dependence on food from other countries. As we have seen recently in the face of high gasoline prices, dependence on oil from foreign sources can greatly affect our nation. If we continue to lose our farmers to foreign competition, we can easily become dependent on food produced in other countries. Suppose then, that instead of OPEC deciding to curtail production of oil to raise prices, some group of nations decides that the time has come to raise the price of food by cutting production. Then the United States goes from being the low cost food producer of the world to buying food from a nation that is using food to improve its own wealth.
I strongly believe that our Nation has an obligation to help keep American farmers farming and doing so profitably. The 1996 Farm Bill has not helped me accomplish the feat of growing food and fiber while consistently making a profit that will compensate me for my time and efforts. GATT and NAFTA have also failed to open foreign markets that were supposed to help make-up for any shortfalls in our domestic agriculture programs by disposing of any large commodity carryover.
The two commodities that interest me right now are cotton and peanuts. They are the commodities that fit into the production capabilities of my farm and area of the country. First, I would like to discuss peanuts. Since the 1996 Farm Bill, we now receive an inflation-adjusted price for domestic peanuts that has been reduced by over 26 percent. At the same time, the consumer price for peanuts and peanut products has not gone down. More foreign peanuts enter our country. These peanuts do not meet the strict standards imposed on peanuts produced in our country. The safety of imported peanuts is unknown. Peanuts produced in foreign countries do not have to pass the strict grading guidelines as required on U.S. peanuts. For this reason, I would like to see country of origin labeling on peanuts and peanut products. Given the knowledge of where peanuts are grown, I think that consumers will choose American products.
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The peanut program, before the 1996 Farm Bill, included a clause that increased prices paid to a farmer as a farmers' cost of production increased. This provision was necessary to help the farmer keep income in line with the cost of production and therefore keep him in farming. The cost of production clause was a safety net designed to help the American farmer keep up with inflation. When the new price support for peanuts is established, the price should reflect inflation for the entire time that the price has not been adjusted upward. This adjustment should be added to the current price support for peanuts in order to compensate producers for cost increases since the beginning of the 1996 Farm Bill. The Market Assistance Program for peanuts passed by Congress recently shows the realization that the prices received for peanuts have been too low and need to be raised. If the prices received for peanuts remain flat while our costs continue to climb, more peanuts will be imported and more farmers will look elsewhere for employment.
Peanuts are important to all the people in our area of the country. Peanuts provide jobs for people in the rural areas that are so important to our economy. Peanuts increase the tax base that help the tax digest of small rural counties that need the money to raise the standard of living for many. Also, peanuts are a good source of nutrition and protein for many of our school kids.
Cotton is a crop that is adapted well for the Southeast. Cotton works fairly well for the producers in our area. The crop grows well, when supplied with sufficient water. Cotton also works well with peanuts in our area.
However, in recent years with depressed prices and back to back to back droughts, profits for the crop have vanished. Provisions of cotton's 3-step competitiveness program have worked well to promote profitability when the price of cotton is moderately low. Under the present extremely low prices received for cotton, the program does not go far enough. As a U.S. grower, our costs can only be cut so low. With prices in the low 60's and production costs near 72 cents per pound, it is easy to see why farming cotton has become unprofitable. You might say, why not try other crops. Other crops, such as corn and soybeans, offer less opportunity for profit in our area.
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The 1996 Farm Bill does not go far enough to protect the farmer in times of extremely low prices. I would like to see the payments that are made to farmers be tied directly to acres produced and price. When the price is low, I think that the partnership between government and the farmer becomes critical. When the price is high, farmers need less government support through payments.
The Southeast has been penalized because we began to grow cotton at about the same time that the acre bases were established for cotton. Therefore, the Southeast has fewer base acres. These base acres were used to establish AMTA payments and the emergency relief funds. However, the emergency funds did go a long way toward helping keep bankruptcies from being a reality for even more of the farmers in our area. We appreciate the willingness of Congress to help when an emergency arises. I do believe that a long-term solution to our problem should be forthcoming to ensure the viability of the American farmer. Long-term solutions should address the low price squeeze that has been placed on many producers. Lenders would certainly be more understanding about the value of agriculture when they can see that the Federal Government is willing to step forward and participate when prices are low.
Another topic of particular interest is crop insurance. Crop insurance has failed considerably in its objective to help in times of bad weather to protect farmers. The Southeast has had drought conditions for the last several years. Since crop insurance is based on an average of the last several years' crop production, our crop insurance yields have fallen dramatically. Therefore, our protection from these drought years has fallen. I think that any federally declared disaster year's production should not count against the actual production history of a particular farmer. Deleting that disaster year production would allow the actual production history to more accurately reflect a ''normal'' year's yield.
Premiums should be kept low enough to entice more farmers into the system. As we have seen in the buy downs in recent years, the lower cost insurance would attract more participation. Fraud in the insurance program should be investigated more thoroughly and those caught should be prosecuted to the full extent of the law. Farmers that are ''farming for the insurance;; only should be removed and not allowed to retain crop insurance again.
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One last topic of concern is over regulation of the farming industry. When the 1996 Farm Bill was passed, farmers were promised that over burdensome regulations would be relaxed to improve the profitably of the farmer. One such example of over regulation is wetlands. Wetlands are a good idea at first glance. The idea is to help preserve the waters of the US. The idea has gone too far. Land that I am paying taxes for and also making payments on cannot be used for any purpose because it is wetland. It costs extra to work around that land and extra to make it feasible to irrigate the land that adjoins this wetland. Sometimes, we are talking about an area of two to 3 acres in size. In order to protect that area, thousands of dollars must be spent to work around that plot. In essence, the U.S. government has performed a ''taking'' of my land without compensation.
Other topics that should be discussed include China, foreign imports, and foreign tariffs, but time does not permit.
Gentlemen, thanks for being here today. Thanks for taking the time to listen. I think that the hearings that you are conducting are the just the beginning. The corrections to our farm policy should come swiftly in order for our farmers to survive.
"The Official Committee record contains additional material here."