Farm, Nutrition, and Bioenergy Act of 2007 -- Continued

Floor Speech

FARM, NUTRITION, AND BIOENERGY ACT OF 2007--Continued -- (Senate - December 13, 2007)

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Mr. CHAMBLISS. Madam President, I rise in opposition to the Klobuchar amendment.

Let me say first that I am disheartened that farm program critics continue to try to lead the general public and our elected officials into believing that there is a vast army of farm program participants who are receiving benefits to which they are not entitled. Stories about people living on the east and west coasts and everywhere in-between receiving program benefits continue to make the headlines. They are used as the poster children of those who do, but should not receive farm program benefits because they are wealthy landowners or millionaires, but more often than not there is no explanation or concrete definition of either.

Home prices have spiraled over the last decade and many families have homes, usually their single largest asset, worth hundreds of thousands of dollars. Individuals receiving farm program benefits obviously have an interest in an agricultural holding somewhere in the country. Hopefully, they also have a 401(k) or some other savings plan that will allow them to retire one day.

More often than not, the type of individual I just described is not a wealthy landowner. They have a home, a farm--which by the way, they might have inherited--and hopefully a retirement plan. They also have jobs and use the income to pay their mortgage, purchase a vehicle, raise their family, and save for college and every other imaginable cost associated with living. Most of the people I know in these situations don't consider themselves wealthy. Most of them will tell you that the adjusted gross income at the bottom of page 1 on their IRS form 1040 doesn't reflect what they would consider to be a wealthy landowner.

Another class of individuals that draws a lot of attention is millionaires. It is pretty hard to figure out who those individuals are unless you are their accountant. More importantly, I would hope that we all know there is a significant difference between having a million dollars in assets and having an annual income in the millions. In the vast majority of cases, most individuals receiving farm program benefits do not have anywhere near a million dollars in assets or income.

But as I will point out momentarily, it is not about wealthy landowners and millionaires receiving program benefits, it is really about farmers in general, regardless of their economic situation, receiving program benefits.

Let me back up for a moment, and provide some historical context to where we find ourselves today. Prior to the 2002 farm bill there had never been an income test with respect to the eligibility of individuals and entities to receive program benefits. Congress acknowledged those concerns and addressed adjusted gross income--AGI--in the 2002 farm bill. Beginning with the 2003 crop year, any individual or legal entity with an AGI of $2.5 million or more for the 3 prior years was not eligible to receive farm program benefits, unless at least 75 percent of their income came from farming, ranching and forestry operations. We believed that was a good first step and recognized that when it came time to write a new farm bill, as with any provision, we would take another look to see if the limits were appropriate.

The ink was hardly dry on the 2002 farm bill when the ``reformists'' started shouting once again that individuals and entities otherwise eligible for farm program benefits shouldn't receive farm program assistance because they were millionaires or wealthy landowners.

The bill passed by the Senate Committee on Agriculture, Nutrition and Forestry took a positive step to address the issues surrounding AGI. The Committee adopted an AGI provision that reduced the limit to $1 million dollars in 2009, and to $750,000 in 2010 and beyond, unless at least two- thirds of a person's income came from farming, ranching and forestry.

The reform minded AGI provisions adopted by the committee directly answered the calls to ensure that payments don't go to millionaires. We didn't go to $750,000 in the first year--not a reflection of resistance to change, but rather, recognition that land lease arrangements have already occurred with respect to the 2008 crop payment year because here we are in December of 2007, with farmers and ranchers all across America already in the final stages of planning for their 2008 crop year. In some instances--for example winter wheat--they have already got seed in the ground for the 2008 crop year.

In the 2002 farm bill we added a provision referred to as ``tracking of benefits''. This provision required the Secretary to attribute all payments to an individual, a partnership, or another legal entity back to a natural person or what some referred to as a ``warm body.'' The intent of this provision was to provide transparency and allow the agricultural community, general public, media and other interested parties to trace benefits paid to entities, partnerships, et cetera, back to a ``warm body''.

During the committee markup, Senator Klobuchar said she wanted to stop millionaires from receiving payments. She mentioned the names of several persons that had received payments with the obvious reference to laws that needed to be revamped. That might be true if you are referring to the 2002 farm bill, but not when compared to the provisions adopted by the committee to keep these individuals from receiving payments.

I am pleased that there is acknowledgment that the tracking of benefits provision worked as it was intended, as it is obvious she and her staff have researched a certain database Web site that is accessible to the general public. I am equally pleased that the adjusted gross income provision that was included in 2002 also worked as intended.

What I am not pleased about is the mischaracterization that people who are no longer eligible for payments because of the provisions contained in the 2002 farm bill are somehow skirting the system and still receiving payments.

One name that frequently comes up is Scottie Pippen, whom we all know to be an outstanding NBA basketball player. When you look through a certain Web site database you will notice that Mr. Pippen received Conservation Reserve Program payments, CRP as it is commonly referred to, for the 2003 through 2005 program years through an entity named Olympic Land Company Incorporated.

USDA tells me that Scottie Pippen owns 100 percent of Olympic Land Company Inc. Olympic Land Company purchased a farm in 2003 that had an existing CRP contract. Because the contract was in existence prior to the 2002 farm bill, the new AGI limits did not apply. The CRP contract expired on September 30, 2005 and Olympic Land Inc. did not enter into a new contract with the 2002 farm bill AGI provisions obviously playing a role in the decision.

Another name used frequently is Ted Turner, who has extensive agricultural holdings in Montana, New Mexico and other States. Mr. Turner bought property in Stanley County, SD, that had several CRP contracts initiated prior to the 2002 farm bill AGI limitations becoming law. Once again because these were multiyear contracts and entered into prior to the 2002 act, AGI provisions did not apply to Mr. Turner until the contracts expired. These contracts expired on September 30, 2007, and Ted Turner did not enter into a new contract with the AGI provisions obviously playing a role in that decision.

I believe these are just two of many examples where the AGI provisions contained in the 2002 farm bill worked as intended, and what we have done in this bill is reduce that limit by an additional 70 percent. There isn't anyone who can stand before this body today and say that a 70-percent reduction in the AGI test is not real reform.

Landowners and producers often jointly share in the risk and production of the crop in a manner that is normal and customary for the area. When the landowner shares in the production risk, by covering costs such as fertilizer or harvesting, the producer benefits from: No. 1, reduced risk in producing the crop, No. 2, reduced capital requirements, and No. 3, a landowner's greater general appreciation of the operation.

I can tell you what is going to happen as we continue to lower the AGI and it is very simple. Landowners intend to capture a return on their assets and unless there are special circumstances, the landowner is going to change from a share lease to a cash lease. Instead of participating in the risk of producing the crop this policy will shift all of the production risk and input costs onto the back of the producer. The landowner will cash lease the land and walk away with a guaranteed lease payment and the producer comes away from the deal with higher production costs and more risk. Do we really want to make it more difficult for the folks who are actually out there getting dirt under their fingernails, driving the tractor and caring for the land?

I want to repeat again what I said earlier, this debate is not about wealthy landowners and millionaires receiving program benefits. It is really about farmers in general, regardless of their economic situation, receiving program benefits. A few short months ago the debate was about making payments to millionaires and now we are at $750,000 and people want to go even further. This amendment is actually an assault on everyday farmers; but is disguised as an assault on wealthy landowners and millionaires.

I am urging my colleagues to vote no on the Klobuchar amendment.

I reserve the remainder of my time.

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Mr. CHAMBLISS. Madam President, I have one comment on the statement the Senator from Illinois made. Let me make sure there is no misunderstanding because he misstated something. This amendment has nothing to do with amount of payments. This has to do with the eligibility of payments.

I assure you, anyone who has an adjusted gross income of $750,000 from a farming operation, which is required under the bill that is before this body, has invested millions and millions of dollars into their trough in order to be able to achieve that goal, and they probably had a pretty good year to do that.

There is nothing in this amendment that says to that farmer, if you lose all those millions of dollars, that we are going to do something for your benefit. That is what our safety net is all about. That is why this is such a bad amendment.

I yield the balance of the time remaining on this side to the Senator from Arkansas, Mrs. Lincoln.

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