Hearing of the Senate Agriculture, Nutrition and Forestry Committee - Risk Management and Commodities in the 2012 Farm Bill

Statement

Thank you, Madam Chairman. As both a Hoosier farmer and a United States Senator, I know firsthand the challenges that face our producers each and every day. But, like farmers in Indiana and across the country, I also know that the national debt crisis endangers the prosperity of everyone in the United States and that unnecessary farm program spending has been a contributor over the decades.

That is one reason why I introduced the Rural Economic Farm and Ranch Sustainability and Hunger (REFRESH) Act, S. 1658, on October 5, 2011. The REFRESH Act creates real reforms to U.S. farm and food support programs. These reforms create a true producer safety net that will serve more farmers more fairly, while being responsive to regional and national crises that endanger the continuing success of America's farmers. The reforms also improve accuracy and efficiency in federal nutrition programs, while protecting America's hungry. The REFRESH Act accomplishes all of this while saving $40 billion in taxpayer dollars over the next ten years.

The producer safety net title of the REFRESH Act is expected to save taxpayers $16 billion over the next 10 years, accounting for 40 percent of the REFRESH Act savings and a 25 percent reduction in overall commodity spending. A producer safety net should provide farmers with a genuine safety net that enables them to produce more food for consumption at home and for export. America's farmers are the envy of the world; they do not need government to tell them what to do or to pay them to do what they do best. Rather, farmers need access to affordable insurance options to manage weather and market risks.

Specifically, the REFRESH Act would eliminate the practice of writing checks every year to farmers regardless of need, which causes significant inflation of land rents and other input costs. It would do this by scrapping the $5 billion annual direct payment system that manipulates markets and restricts farmers' freedom by barring them from planting certain crops on their land.

To provide a genuine safety net for our nation's food producers, without dictating what a producer can grow, the REFRESH Act proposes an aggregate risk and revenue management program that protects farmers against "shallow-losses." Unlike direct payments currently in place, this program would not blindly send money out the door, but rather only when farm revenues actually fall and farmers are truly in need. This program would be based on a producer's actual plantings, rather than their historical base acres. And, this program would complement the proven private-public crop insurance market for catastrophic loss that covered 260 million acres last year.

The REFRESH Act also tackles other specific programs that hurt America's economy. For instance, thanks to technocratic price-fixing, U.S. consumers today pay nearly double for their sugar. Government manipulation of the sugar market levies an indirect tax of an extra $4 billion each year in food prices. Such stringent controls and artificial barriers should be the antiquated relics of the Eastern bloc, not mainstays of U.S. farm policy. This legislation would end the current system of trade quotas and tariff barriers, promoting competition and increased quality for domestic sugar users.

American dairy farmers face their own labyrinth of regulations and controls. The REFRESH Act would give dairymen simple, voluntary risk management tools. By eliminating the complicated dairy price support program and milk income loss contract program, it offers producers the option to participate in a simpler insurance system. While not perfect, these reforms would move the future of dairy toward a freer market.

I appreciate the challenges that face the Agriculture Committee as we take up commodity and risk management policies in this hearing today. I thank Senator John Thune, Senator Sherrod Brown, and Senator Dick Durbin for their cooperation in drafting the Aggregate Risk and Revenue Management Act. And I look forward to working with the rest of my colleagues on a Farm Bill commodity title that will provide an effective, fiscally-responsible safety net to America's farmers. I offer the REFRESH Act to begin those discussions and ask that it be entered into the record.

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