Farm, Nutrition, and Bioenergy Act of 2007

Floor Speech

FARM, NUTRITION, AND BIOENERGY ACT OF 2007 -- (Senate - December 12, 2007)

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Mr. GRASSLEY. Mr. President, I wish to speak in support of a provision in the bill that the amendment before us is going to strike, the Farm and Ranch Stress Assistance Network, which is included in the underlying bill of the Agriculture Committee.

This network is a critical service to help American families, particularly rural families. I oppose the amendment offered by the senior Senator from New Hampshire that would strike this measure.

Without a doubt, farmers and ranchers face unique challenges in providing food and fuel for this country. Farming is one of the most stressful and dangerous occupations in the United States. There are environmental, cultural, and economic factors that put farmers and ranchers at a higher risk for mental health problems.

Stress in agriculture contributes to rates of depression and suicide that are double the national average. This is true even in good times for farmers. As a farmer myself, this troubles me.

It also concerns me when rural residents, especially those involved in agriculture, are disproportionately represented among the uninsured of the United States. One-third of the agricultural population lacks health insurance coverage for behavioral health conditions. With the rising cost of health care and many farmers and ranchers in business on their own, the cost of health care can be too much to handle.

We have a long way to go to make sure there is parity in our health care system. Those suffering from mental health problems do not always enjoy the same benefits of treatment because health coverage discriminates against illness of the mind.

On top of the risk and cost to farmers and ranchers, access to behavioral health care is more limited in rural areas. There are fewer professional providers, and there is a stigma on this type of care, especially among rural Americans. This is why the Farm and Ranch Stress Assistance Network is needed. It is included in the farm bill because we need to provide better mental health care for people in rural areas.

I will be the first to admit that things are looking good for agriculture right now because prices, particularly of grain, are good. We are developing and strengthening our safety net for producers. The renewable energy progress that we have made has helped rural economies. But just because that is a reality today does not mean that it will continue forever.

Our farmers and ranchers will face challenges that are out of their control. They will face instances of terrible weather and disaster. They will see droughts and low prices. Good times do not last forever, and that is when our farmers and ranchers will need the support that this provision of the bill gives.

One of the most challenging factors that we farmers face is not being able to predict outcome. We are forced to take risk. We face severe consequences when we are wrong.

I remember the agriculture depression of the 1980s and what a toll it took on farmers in my State. I wondered if things would be different if the Farm and Ranch Stress Assistance Network had existed prior to the beginning of that depression.

This network may support a crisis telephone hotline that farmers can access. Our rural residents and family farmers should have access to confidential and highly trained professionals during these tough times. The network could provide counseling services while working with extension offices to reach farmers.

Finally, the Senator sponsoring the amendment should be aware that this network is simply authorized in the underlying bill. We are not adding mandatory money for the program. We are simply providing authority to develop this network with dollars that may be appropriated later on.

So this amendment will not save money. Rather, what the amendment will do is do away with much needed support for those who work hard every day to put food on our plates, fiber for our clothing, and fuel for our economy.

So let's not eliminate this essential program without taking into account the bad years that could lie ahead. I strongly urge my colleagues to oppose the amendment.

I yield back the remainder of my time.

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Mr. GRASSLEY. Madam President, I think everybody in this body would agree we need to provide an adequate safety net for our family farmers, and I think I ought to be totally transparent with the taxpayers who might be listening, as well as my colleagues. I want you to know that I farm in a crop share--in Iowa, we call it a 50-50 arrangement--with my son. If we get farm payments, I get 50 percent of those payments. So I have received farm payments and presently do. That is assuming prices are low enough so you do receive those payments. Right now, they aren't that low.

We are talking about an adequate safety net. In recent years, however, assistance to farmers has come under increased scrutiny by urban communities and the press. The largest corporate farms are getting the majority of the benefits of the farm payment program, with 73 percent of the payments going to 10 percent of the farmers. With a situation such as that, we could lose urban support for the safety net for farmers.

Government payments were originally designed to benefit our small- and medium-sized farmers, but instead, now, as you can see, the vast majority of them are going to the smallest percentage of the farmers--the biggest farmers. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices. Increased land prices and cash rents are driving family farmers and young farmers from the business of farming. I have mentioned this before in other debates. Land in Iowa generally, but I will use as an example land near my farm in New Hartford, IA, has skyrocketed and is selling anywhere between $4,000 and $6,000 an acre. In my home county, the value of an acre is up 64 percent since 2000.

Anybody listening might say, well, why is that bad for farming? Well, family farmers don't buy land one day and sell it the next. You buy it for the long haul. Sometimes farms have been in what we call century farms, for well over 100 years. So this doesn't put income in farmers' pockets. It does give them value. And if they were to die, I suppose their heirs would get a lot of money.

Across the State of Iowa, the average land value per acre rose 72 percent in the last 6 years. All these figures I am citing have something to do with the inability of young people to get started farming. When the average age of farmers is 58 in my State, we ought to start thinking about what we can do to make sure that young people, the next generation of farmers, can get started.

My State isn't the only one where this is occurring, an increase in land values. In a report published by two agricultural economists at Kansas State University, land values have increased 64 percent since 2002. This trend is occurring in many other States as well. The average of typical cash rents per acre in Iowa rose 25 percent in the same period of time. Because if you can't buy land, and you want to farm, you rent land. How are family farmers and young farmers going to survive with prices like this? How can they even get started?

This brings to mind a conversation I had within the last week with a young farmer near my home. He knows who gets these big payments in the State of Iowa, and he said, so-and-so--and I am not going to give the names out--just bought 600 acres of land. Why don't you guys do something about subsidizing these big farmers to get bigger? Now, this same young farmer would say to me, any farmer can get bigger all they want to. That is their business. That is entrepreneurship. But should we be subsidizing the biggest farmers to get bigger? He says, if you want to do something to get young people started--this young farmer said to me--put a cap on what they are getting paid from the Federal Treasury. In other words, 10 percent of the biggest farmers getting 73 percent of the benefits out of the farm program is just plain bad policy.

I have been hearing directly from producers for years what former Secretary Johanns heard in his farm bill forums held across the 50 States. Young farmers can't carry on the tradition of farming because they are financially unable to do so because of high land values and cash rents. If that was the market, okay. But if it is being influenced by subsidies for big farmers to get bigger, they would say it is wrong. They would also say it is wrong when you have 1030 exchanges, when it is cash free, as having something to drive up the value of land as well.

Professor Terry Kastens, of Kansas State University, came out with a report on this subject. The report states that since the 1930s, government farm program payments have bolstered land values above what they otherwise would have been. Dr. Neil Harl, an Iowa State University emeritus professor, worked with Professor Kastens on this subject, and he determined that:

The evidence is convincing that a significant portion of the subsidies are being bid into cash rents and capitalized into land values. If investors were to expect less Federal funding--or none at all--land values would likely decline, perhaps as much as 25 percent.

That would give young farmers better opportunities to buy or cash rent for less in order to get started farming. And that is necessary, because the average age of farmers in the Midwest is about 58 years.

The law creates a system that is clearly out of balance. If we look at the results posted here, it emphasizes what I have already said: Ten percent of the farmers get 73 percent of the benefits out of the farm program, and the top 1 percent gets 30 percent.

Senator Dorgan and I have offered this payment limits amendment which I believe will help revitalize the farm economy for young people across this country. This amendment will put a hard cap on farm payments at $250,000. For a lot of farmers in my State, they say: Grassley, that is ridiculously high. But we have to look at the whole country, so this is a compromise.

No less important, we tighten up the meaning of the term ``actively engaged,'' a legal term in the farming business. What that means is that people have to be farming, because if we are providing a safety net to someone in farming, I think they should be required to actually be in the business of farming, sharing risks and putting their money into the operation.

I wish to make a very clear distinction here. Some Members of the Senate have advocated that the Dorgan-Grassley amendment is not as tough as what is in the Senate Agriculture Committee bill or some say it might be too tough. I want to say why this is not true, and I have a chart here to bring this to your attention. We have to compare apples to apples. That is what my chart does. Saying that the committee has a hard cap on payment limits of $200,000 is not accurate. They only have a hard cap on direct payments and counter cyclical payments. Let me remind my colleagues, we have direct payments, we have loan deficiency payments, and we have countercyclical payments. Out of those three, the bill before us that we are amending has a hard cap on direct payments and countercyclical payments, not on loan deficiency payments. The Dorgan-Grassley amendment actually caps direct payments and countercyclicals at $100,000.

In addition, the amendment will cap marketing loan gains at $150,000. While the committee--this is the loophole, this is the weakness of the argument that this bill tightens things up--it leaves loan deficiency payments unlimited. This actually weakens current law. So while the committee took some correct steps by closing the loopholes I have advocated against by including the ``three entity rule'' and by including direct attribution, it also takes a step in the wrong direction by making payments virtually unlimited. This whole debate is about good policy. Fixing one problem but leaving other doors open does not do any good.

I also wish to make a clarification for some of my colleagues. I have gotten quite a few questions about how the payment cap will actually work. We set nominal limits at $20,000, $30,000, and $75,000 respectively, then we allow folks to double. So a single farmer who would get $20,000 in direct payments can actually double to $40,000. We set it at $20,000, so if they want to attribute the payments to a husband and wife separately, they can. So a husband can have $20,000 attributed to him and $20,000 to the wife, for a total of $40,000, just like a single farmer. One more clarification: If a farmer is working with his two sons, each would be eligible for the $40,000 individually.

I wish to address some of the falsities my colleagues have raised since the payment limit debate. They have argued that this is not reform because it targets crops but not the Milk Income Loss Contract Program or conservation. To say that we do not have payment limits on these two programs is hogwash. The Milk Income Loss Contract Program has probably the strongest payment limits of any program. What came out of the Agriculture Committee includes caps on programs such as EQIP, the Conservation Reserve Program, and Conservation Security Program. Whether those caps are at appropriate levels is something that can legitimately be debated but should not detract from what we are doing on commodities through Dorgan-Grassley.

Now, our amendment produces some considerable savings. We think there is money needed in some programs that are not adequately funded to help small businesspeople, conservationists, and low-income people through commodity programs. We support beginning farmer and rancher programs and the rural microenterprise program. We also provide funds for organic cost share programs and the Farmers Market Promotion Program.

A large priority of mine has always been seeing justice is done for the Black farmer discrimination case against the U.S. Department of Agriculture. This will double the amount provided by the committee for late filers under the Pigford consent decree who have not gotten a chance to have their claims heard. It is time to make these farmers right who were discriminated against.

We support the Grassland Reserve Program, the Farmland Protection Program, and finally, while the Agriculture Committee makes significant contributions to the nutrition and food assistance programs, they were not able to go far enough in light of the tight budget constraints. So Dorgan-Grassley adds money in those areas.

The 2002 bill has cost less than expected. But this was not because of the payment limit reform in 2002. In actuality, we increased the nominal payment cap, and it continued the generic certificate loophole. Instead, what has happened is that we have had some good years in agriculture and prices have been high. That is why it cost us less to have a safety net over the last 5 or 6 years, not because reforms were put in, in 2002. I worked with Senator Dorgan on a similar measure in 2002, and it passed with bipartisan support, 66 to 31. Unfortunately, it was stripped out in conference. I voted against the farm bill because of that.

Let me remind this body that the Senate Agriculture Committee, out of conference, set up a commission called the Commission on the Application of Payment Limitations for Agriculture. That is this report right here. They did this during conference as a sop to Dorgan and me.

Is my 14 minutes up? I ask for 2 more minutes.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. GRASSLEY. This Commission was set up as a sop to Dorgan and myself. We didn't get what we wanted, and consequently, you know, let's have a commission study it.

The Commission ended up, in this report, recommending the very measures which we have included in this bill. So they want a study? The study says what we said in 2002 that the conferees didn't think we ought to do. And we have had all the eggheads and farmers in this country study the problem we presented in 2002, and they gave us the results we have here.

The report said also that the 2007 farm bill is the time for these reforms. You might remember the last time we had a vote on payment limits was in a budget bill a couple of years ago. Many of our colleagues said they agreed with what we were trying to do, but they said the budget was not the right time; it needs to be done on the farm bill. To all of our colleagues who said: Wait for the farm bill, we are waiting. You have your opportunity. It is 2007. We have the farm bill here.

By voting in favor of this amendment, we can allow young people to get into farming and lessen the dependence on Federal subsidies. This will help restore public respectability for the Federal farm program and keep urban support for the farm program so we can continue to have a stable supply of food for our consumers.

I call upon my colleagues to support this commonsense amendment, and I reserve the remainder of time for our side.

I yield the floor.

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Mr. GRASSLEY. Mr. President, I will do it for the sole purpose of commenting on a couple things the Senator from Arkansas brought up. One was the statement where if our amendment is adopted, Senator Dorgan and I would be working to eliminate farm program payments altogether. I wish to make clear I am a believer in a safety net for farmers. We are going to maintain that safety net. So I hope people will ignore that suggested goal.

I think it is important to understand that farm programs have been around since the 1930s. They have been around as a safety net because farmers are at the beginning of the food chain or, you might say, at the bottom of the food chain.

We have a situation where farmers for input, for producing a crop--producing the food our consumers eat--pay what is charged for those imports. They might bargain a little bit, but they don't have control; they have to buy the imports or they aren't in farming. When they sell their products, they have to sell what the market bears for the day they choose to sell. They might choose a different day to sell, but eventually, whatever they sell for is what the market is there; a farmer is not bargaining for that market. So smaller farmers don't have the ability to withstand things beyond their control, such as a natural disaster or domestic policy such as, let's say, Nixon freezing beef prices, ruining the beef farmers, or stopping the exports of soybeans so that they fall from $13 a bushel to $3 a bushel. Those are things a farmer doesn't have anything to do with. So we have a safety net to help medium- and small-sized farmers get over humps and things they don't control, whereas larger farmers, the farmers whom we are putting a $250,000 cap on--the larger the farmer, the more staying power they have. Now, I admit they are affected by the same policies I have referred to, but they have the ability to withstand that to a greater extent than smaller farmers. Also, as I stated in my opening remarks, when you subsidize big farmers, it helps them to get bigger, and it makes it more difficult for people to stay in farming.

A second thing I wish to give a retort to is the use of quotes from an article that says the largest farms in America produce 78 percent of the commodities, but only get 56 percent of the farm program payments. Well, the safety net wasn't set up to match the food source. It wasn't developed to follow the crowd. It was set up to protect small- and medium-sized farmers from things beyond their control, and to maintain the institution of the family farm because it is the most efficient food-producing unit in the entire world. I would compare it to corporate farms on the one hand; I would compare it to the political State farms of the old Soviet Union as an example. The family farm has a record of being the most productive. That is to the benefit of the farmer and the entire economy. It is to the benefit of the consumer.

I am not advocating that there is anything wrong with large farms or large farms expanding; we just shouldn't subsidize them to do it.

I yield the floor.

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Mr. GRASSLEY. I yield myself 5 minutes.

Madam President, one of the things I think we have to remember is there is reform in the bill that the committee has presented to the Senate--reform that probably should have been done a long time ago.

I pointed it out in my opening remarks and in closing I want to kind of emphasize that there are limits put on in the bill that sound very reasonable. But I have to tell you there is one gigantic loophole you have to consider, and out of the three forms of payments--direct payment, loan deficiency payment, and countercyclical payment--the caps that are in the bill, adding up to $200,000, are for countercyclical and direct payments.

So if you don't have a cap on loan deficiency payments, that means the payments farmers can receive are unlimited and, from that standpoint, when loan deficiency payments are considered, there is not a hard cap. Now, the adjective, ``hard,'' is applicable to Dorgan-Grassley, and it is very important because we have had caps on farm programs for, I will bet, three or four decades. They have been ineffective caps because there has been legal subterfuge to get around it.

The underlying bill, as well as our amendment, takes care of some of that legal subterfuge. But we maintain one for loan deficiency payments within this bill. So you, consequently, don't have a hard cap. Some people would say you don't have a cap at all. I will not go that far. But it is one gigantic opportunity for people to get payments that are really not limited. And it is particularly important for big farmers because the loan deficiency payment is paid out so much per bushel for what the market price is under the target price. So the more bushels you produce, the larger the farm, the more deficiency payments you are going to get. Consequently, we are trying to stop subsidizing farmers from getting bigger.

But when the loan deficiency payment is left out, you are going to give these farmers the same opportunity they have under existing law to use a legal subterfuge that basically makes the limits less meaningful. So I hope you will consider whether you think, when we have a cap, it ought to be an effective cap and, in the words of Dorgan-Grassley, a hard cap. It is very important that we do that.

Remember the background for the farm safety net. It is to help medium- and small-sized farmers, to protect them against things beyond their own control. And natural disaster is a natural one to speak about because floods and hail and windstorms and inability because of a wet spring to get the crop in, et cetera, et cetera, are all natural disasters that a farmer cannot do anything about. Only God can do something about natural disasters.

Then there are political decisions. I keep mentioning them because they ruined so many farmers in the 1970s. Nixon put a freeze on beef prices, and the President also put a limit on exports of soybeans so the price would plummet when it was very high in the early 1970s. And there is international politics: the cost of energy, what OPEC does--all of that is beyond the control of the small- and medium-sized farmers.

But the larger you get, the more staying power you have in it, and we don't need to have a safety net so strong that it subsidizes big farmers to get bigger, and 10 percent of the biggest farmers are getting 73 percent of the benefits out of the farm program.

I yield the floor.

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