Transcription of Senator Grassley's Agriculture News Conference Call

Interview

GRASSLEY: You know, everybody around this town is talking about

green energy so, obviously, a person like me that hasn't known much

about it until just now because, until now, nobody referred to ethanol

as green energy -- I've known about ethanol for how long?

But, anyway, it seems to be a new word around here, and I'm glad

to use it, but I've been acquainted with it as the father of the wind

energy tax credit, as a person participating in ethanol for a long

time.

Whether it's ethanol, biodiesel, or wind energy, those of us

involved in agriculture have been leading the way on this subject for

years. Now, with much of Congress and President Obama happily on

board the renewable revolution, I hope that we see continued action to

promote renewable energies.

We heard a lot during the campaign about green energy. President

Obama's energy plan indicated a desire to work with Congress and the

auto companies to ensure that all new vehicles have flex fuel vehicle

capability and to do that by the end of his first term of office.

Last week during this address to Congress, the president was

quick to mention that his administration would not walk away from the

domestic auto industry. As American taxpayers are asked once again,

then, to help retool the domestic automakers, it appears to be an

opportune time to secure a commitment from the auto industry about

their production of flex fuel vehicles as well as the industry's

support for blends of ethanol and gasoline that are above 10 percent.

So today I'm sending a letter to ask the president to consider

these requirements for any future taxpayer bailouts. If U.S.

taxpayers are being called upon to bail out the auto industry, to

underwrite their retooling, it seems only reasonable that we can

expect them to manufacture vehicles that full utilize homegrown

biofuels and enable our efforts to eliminate our dependence upon

foreign oil.

Dan Looker?

QUESTION: Good morning, Senator Grassley.

Something else that President Obama mentioned in his speech was

the direct payments to what he called large agribusinesses. Do you

support his budget proposal to eliminate direct payments to any farm

with more than $500,000 in gross revenue?

GRASSLEY: The answer is no. But for those of you that have

followed me for the last several years, you know I am for great and

restrictive limits on how much one operation can get. That's best

expressed through the $250,000 hard cap that I've put in place. And,

of course, he does have that in his program.

So from that standpoint, he and I are on the same page. We're

not off the page. I'm not off the page with him on the $500,000, but

it can't be on gross income. It's got to be on net income for farmers

or let's say adjusted grow income for farmers because sales do not

make a determination of whether or not you're making a profit or not.

So it's got to be related to capability of paying. So that would

be one change I would make. Now, here's another consideration that

goes beyond just a cap. And that is direct payment or include all

payments. I would be one to include all payments. That's why my way

of $250,000 is a better way of doing it because it -- a direct payment

dollar, an LTP dollar, a countercyclical dollar, they all look the

same.

So you should have all of them included. And then you want to

remember that some of this eventually has to be taken into

consideration with our WTO and our negotiations. We want market

opening. We get market opening. We're willing to change our

subsidies that are trade distorting.

Direct payments and conservation and maybe some others are not

trade distorting. LDPs and countercyclicals are a trade distorting.

Maybe countercyclicals a little less trade distorting than LDPs.

So we've got to change those. So it's going to bring us for a

safety net for farmers back to something like direct payments and

conservation and some other things that aren't trade distorting.

So all of those things have to be taken into consideration, and I

don't think they have been taken into consideration by the $500,000

restriction on direct payments.

QUESTION: OK. Thank you.

GRASSLEY: Tom Rider?

QUESTION: Good morning, Senator.

Senator, I understand the president's expected to outline his

trade policy very soon. Are you concerned at all that it may be a

little bit too protectionist in scope?

GRASSLEY: Yes. I'm always afraid of that. And I think it is.

But I am happy to see that they're concerned about negotiation and

having authority. I'm glad to see that they're willing to move ahead

on Panama with some indication that they're going to move ahead on

Colombia and maybe, to a lesser extent, on South Korea.

All of these are movements that, considering the fact that the

president wanted to renegotiate NAFTA, which I hope he doesn't want to

do, but that sent a terrible protectionist signal around the world,

and we don't want to have such a signal sent.

In fact, at a time of recession that we are in -- and we think of

appropriating money from Washington as helping us get out of that

recession -- probably, the worst thing we could do is turn

protectionist. And if we want a real economic stimulus, promote

international trade.

And I think I got a bottom line view of what you asked me about

the president that this move does please me from the standpoint that

we're not seeing -- that they are seeing trade as a very important way

of improving the U.S. economy.

Let's see. That was Tom.

Gene, Iowa Farmer?

QUESTION: Yes, Senator. You mentioned, obviously, the

importance of ethanol. One of the things that industry is talking

about a lot right now is the issue of indirect land use and how that

might affect credits for ethanol. Is that something you see Congress

coming back and addressing sometime in the near future?

GRASSLEY: Oh, man. If they are going to proceed down that road

through EPA, I hope so. But I hope we don't have to do it.

You know, I want to put this in perspective, if I could, for you.

You know, hearing somebody talk about taking into consideration

whether land is cultivated down in Brazil or not, it kind of fits into

one of these things like some bureaucrat thinking we ought to tax

dairy cows $178 or that we can do something about the dust coming out

of our combine or the limestone dust that comes off of the road that

you've got to keep it inside of your fence line just like I make a

determination whether or not the wind blows.

Well, God makes that determination, and I'm not God. And so I

don't have any control over it. But you see all of these stupid ideas

coming out of the bureaucracy and you wonder what the planet these

bureaucrats come from. In fact, I'm going to go down there someplace and try to find these people and see if they got antennas sticking out of their head or

something. But anyway this falls into that category. So what's the policy

here? The policy is that somehow American farmers that produce corn

that, in turn, is made into ethanol, that somehow somebody's arguing

it's taking us away from food out of somebody's mouth and that ethanol

is -- and that our producing ethanol is going to cause farmers in

Brazil to plow up savannah -- well, what do I have to do with farmers

in Brazil? Absolutely nothing.

And why should we be penalized? Why should we be less energy

independent based upon what somebody's doing in Brazil?

I hope these bureaucrats in EPA know that farmers in Brazil have

a mind of their own and they're going to make determinations what to

do. And they were plowing up savannah a long time before we were ever

producing nine and a half billion gallons of ethanol every year.

So I hope you can tell that we're going to be fighting this all

the way.

Tom Steever?

QUESTION: Good morning, Senator.

I see, going back to trade momentarily there is a House spending

bill that contains a provision that might roll back Bush era

restrictions on ag trade with Cuba. How would you feel about that if

it made it to the Senate?

GRASSLEY: Except for what we're doing right now on food and

medicine which is kind of a humanitarian issue, not really a trade

issue, although it involves money in the pockets of some Americans,

I'm not for changing our policy which is this: That I will vote for

free trade with Cuba just as soon as they allow their people to have

political freedom.

And until that happens, I think we ought to keep things just the

way they are. So, obviously, I will not support the president's

effort to do that. In fact, you know, coming out of this

administration, so much concern about the human rights of terrorists

that are being held in Guantanamo and not being concerned about beyond

the border of Guantanamo is the rest of the island of Cuba where

people don't have any human rights and the president isn't talking

about those human rights and political freedoms.

It's quite an inconsistency as far as I'm concerned.

Ken Root?

QUESTION: Good morning, Senator.

I want to go back to this dust issue with EPA now coming forward

again very similar to what they did under Steven Johnson in the Bush

administration. Do you think that there's any prospect that there

will be regulation of dust in these rural areas based upon what you're

seeing right now?

GRASSLEY: I believe that, with that court decision, it's going

to give a great deal of encouragement to the EPA to move ahead on what

you call fugitive dust. And let me remind you, Ken, that this isn't

something new. But because it's such a stupid idea, it's never gotten

any place until three judges start determining that we -- that EPA

ought to do something about it or has a legal responsibility to do

something about it.

This was an issue my last two years in the state legislature, and

we laughed at it then and we're still laughing at it. And the trouble

is we got people coming up with these ideas that don't know -- that

don't know that God controls the weather.

So the only thing I can say to you is that I hope the industry

groups will appeal the ruling and we'll get a little common sense from

a higher court.

QUESTION: Thank you.

GRASSLEY: Chris Clayton?

QUESTION: Senator, what just -- real quickly, what is on the

agenda in terms of energy legislation? Anything -- is something going

to move here fairly quickly? And what do you expect to see in that?

GRASSLEY: Well, yes. I believe that the Energy Committee is

moving very quickly. And when they do, traditionally, the Finance

Committee has done that with a lot of tax incentives. But we kind of

have these tax incentives set ahead, in the case of wind, for another

three years; in the case of solar, probably for five or six years; in

the case of biodiesel and ethanol, just to the end of 2010.

So I don't know that we, in the Finance Committee, will be acting

at the same time as the Energy Committee, but I expect the Energy

Committee to move ahead. And then you want to remember that there's

some things in the stimulus package that already deal with energy, and

the money is out there.

QUESTION: But, I mean, you expect a bill that will be -- arrive

to the floor here before the end of March? Or...

GRASSLEY: No. Probably in April or May.

QUESTION: All right. Thank you.

GRASSLEY: Yes.

Stacia, National Farm Broadcasters?

Jean Simmet?

I've gone through everybody that I think is on there. Does

anybody...

QUESTION: Senator, this is Philip Brasher.

GRASSLEY: Yes?

QUESTION: Can I ask you to follow up on the direct payments

issue? A couple of questions. This is, obviously, how you do put the

issue of direct payments in play in order to pay for child nutrition

or increasing child nutrition spending in the reauthorization.

Are you comfortable with that? Do you have a problem with

cutting direct payments, number one? Number two, what's your

assessment so far of Secretary Vilsack and the direction he is taking

the department? Do you have any concern he's taking it away from a

focus on production agriculture, or are you comfortable with it?

GRASSLEY: Oh, I'm comfortable with what he's doing because I

don't see anything he says is a threat to anything with production

agriculture except maybe this issue of the 500,000. And I wouldn't

attribute that to him; I would attribute that to people in OMB.

And, of course, he's part of this administration and he's going

to have to back this. So, obviously, he would follow along and speak

in favor of it.

But I know that he knows the difference as a country lawyer there

in Mount Pleasant that there's a big difference between what farmers

get for gross income and what they get for adjusted gross income. And

I'm sure he appreciates that.

Your first question to me I would answer this way. That money is

fungible and the direct payment -- the only thing I would say that --

a direct payment dollar isn't any different than an LDP dollar, isn't

any different than a counter cyclical dollar, and that when you're --

when you want to put restrictions on income coming from the federal

Treasury to farmers, you ought to throw all of them in.

Now, he does that on the $250,000 cap, but -- and I applaud that

effort. But for two reasons, we have to be careful about direct

payments. Anything we do on direct payments has to be based upon net.

And anything we do on direct payments has to take into consideration

that it's one of only two, maybe three payments in the safety net that

would be WTO compliant according to the way we have been negotiating

WTO on agriculture for the last three or four years.

QUESTION: Just if I could ask a follow up. You don't get

anywhere near the savings from the $250,000 cap, obviously, than you

do this kind of direct payments which way it's there.

GRASSLEY: Well, whatever -- let's put it this way. I would -- I

might raise some question about the amount of money they want to raise

from it, but I -- whether that's $1 or whether that's billions of

dollars, the principle still holds that it ought to be based upon

adjusted gross income and not gross income because gross income isn't

a measure of whether or not a farmer needs to participate in the

safety net.

QUESTION: So just one last -- so you wouldn't object to the --

you don't necessarily object to cutting direct payments? It's making

the means test of gross sales, not...

GRASSLEY: No. I think I -- I want to make sure that a direct

payment dollar isn't treated differently from an LDP dollar and a

countercyclical dollar when it comes to helping farmers and,

particularly, I want to keep direct payments strong for possible use

after WTO negotiations forces us to change countercyclical and to

change LDP because they're trade distorting. And direct payments are

not trade distorting.

Neither are conservation payments trade distorting. So I

suppose, if you wanted to argue with me, Philip, that while -- if you

-- if we have a WTO agreement, we can reduce direct payments, but are

you going to have a safety net for farmers, then you're going to have

to put more eggs in the basket of conservation.

QUESTION: Sir, this is Dan Looker. Just to follow up, you would

prefer to keep direct payments? To have them as something of a

bargaining chip in WTO negotiations?

GRASSLEY: No. Bargaining chips are LDPs and countercyclicals.

QUESTION: Oh, OK. OK.

GRASSLEY: But they are trade distorting.

QUESTION: Right.

GRASSLEY: So I would -- I would keep direct payments as just the

one thing left over that is on the trade distorting. Well, one of two

things left over that's not trade distorting along with conservation.

QUESTION: OK. And just to clarify, in your comments earlier,

the -- would you support a $500,000 cap based on adjusted gross farm

income? In other words, lowering the current Farm Bill limit from

$750,000 to $500,000 on direct payments?

GRASSLEY: I'm reluctant to do too much to direct payments until

we get done with our trade negotiations.

QUESTION: OK. Thank you very much.

GRASSLEY: You bet.

I've gone through the entire list. Anybody have a follow-up?

OK. Thank you all very much.

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