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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
FARM AND RANCH RISK MANAGEMENT ACCOUNTS (FARRM): HOW WILL LEHIGH VALLEY 
                            FARMERS BENEFIT?

=======================================================================

                             FIELD HEARING

                               before the

                            SUBCOMMITTEE ON
                       TAX, FINANCE, AND EXPORTS

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                     PEN ARGYL, PA, AUGUST 9, 2001

                               __________

                           Serial No. 107-24

                               __________

         Printed for the use of the Committee on Small Business

                                

                      U.S. GOVERNMENT PRINTING OFFICE
 75-496                      WASHINGTON : 2001
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                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio                   DONNA M. CHRISTENSEN, Virgin 
PATRICK J. TOOMEY, Pennsylvania          Islands
JIM DeMINT, South Carolina           ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota          TOM UDALL, New Mexico
MICHAEL PENCE, Indiana               STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California          DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri                 GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia          BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York       MARK UDALL, Colorado
TODD W. AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia  MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania           BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico

                      Doug Thomas, Staff Director
                  Phil Eskeland, Deputy Staff Director
                  Michael Day, Minority Staff Director

                                 ------                                

               Subcommittee on Tax, Finance, and Exports

                   PAT TOOMEY, Pennsylvania, Chairman
STEVEN J. CHABOT, Ohio               JAMES LANGEVIN, Rhode Island
DARRELL ISSA, California             GRACE F. NAPOLITANO, California
EDWARD SCHROCK, Virginia             ANIBAL ACEVEDO-VILA, Puerto Rico
TODD AKIN, Missouri                  DANNY K. DAVIS, Illinois
FRANK LoBIONDO, New Jersey           ROBERT A. BRADY, Pennsylvania
JIM DeMINT, South Carolina           MIKE ROSS, Arizona
JOHN THUNE, South Dakota

                     Sean M. McGraw, Staff Director

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on August 9, 2001...................................     1

                               Witnesses

Wedde, Kenneth R., Bath, Pennsylvania............................     4
Dietrich, Brian, New Tripoli, Pennsylvania.......................     5
Schantz, Arland, Zionsville, Pennsylvania........................     6
Bennecoff, Cheryl, Kutztown, Pennsylvania........................     7

                                Appendix

Opening statement:
    Toomey, Hon. Patrick.........................................    20
Prepared statements:
    Wedde, Kenneth R.............................................    26
    Dietrich, Brian..............................................    28
    Schantz, Arland..............................................    33
    Bennecoff, Cheryl............................................    36

FARM AND RANCH RISK MANAGEMENT ACCOUNTS (FARRM): HOW WILL LEHIGH VALLEY 
                            FARMERS BENEFIT?

                              ----------                              

                        THURSDAY, AUGUST 9, 2001

                  House of Representatives,
         Subcommittee on Tax, Finance, and Exports,
                               Committee on Small Business,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 9:30 a.m., at 
Pen Argyl Borough Hall, Ground Floor, 11 North Robinson Avenue, 
Pen Argyl, Pennsylvania 18072, Hon. Patrick J. Toomey [Chairman 
of the Subcommittee] presiding.
    Chairman Toomey. Well, good morning, everybody. The hearing 
will come to order now. I want to start by thanking everybody 
for being here, and particularly, the witnesses from across the 
Lehigh Valley who have come to share their expertise and the 
specific experiences that they have had in farming and how some 
tax risk management measures could be helpful. I also want to 
thank the Ranking Member of this Committee, Bill Pascrell, a 
Member of Congress from New Jersey, who I have come to know and 
respect a great deal. I appreciate his coming out here to be 
with us.
    And let me say briefly the purpose of the hearing. A 
hearing is a fundamental part of the legislative process in 
Congress. Congress conducts a whole series of hearings to get 
input from the people who would be affected by virtually every 
bill so that we can learn the strengths and weaknesses, improve 
the bill, and make sure that it really makes sense. We have 
these hearings in Washington, but we also have these hearings 
across America.
    Today, we are here in Northampton County in Pennsylvania to 
hear firsthand from farmers in this area who would be affected 
by farm accounts. And we will take the testimony that you 
provide, the written testimony, the oral testimony, and then 
the question and answer phase, and we will submit that to our 
colleagues back in Washington and use that to make sure that we 
develop this legislation properly and also to advance momentum 
behind this legislation. I think we all support the idea of 
farm accounts and we are looking for ways to promote it so that 
it becomes a high priority.
    This morning, the Subcommittee--and this is the Small 
Business Subcommittee on Tax, Finance, and Exports--will be 
examining this legislation which is aimed at providing a tax 
incentive to farmers to save for any future downturn in 
agricultural markets and also to even out the tax burden that 
farmers face. The Subcommittee will hear from four farmers from 
the Lehigh Valley who every day bear the effects of fluctuating 
market prices as well as fluctuations in weather.
    These weather and uncontrollable and unpredictable weather 
and market developments really determine whether or not farmers 
are able to harvest a crop and what price they receive for the 
commodities that they are able to bring to market. Farmers 
clearly face serious financial problems in poor years when they 
don't earn enough farm income to cover farm expenses. And 
consequently, farmers need new ways to manage risk to stabilize 
their net income.
    A new and innovative risk management tool for farmers, 
called FARRM accounts, which stands for Farm and Ranch Risk 
Management Accounts, would provide a tax deferment to help 
farmers save for years when prices are low or crops are poor. 
This type of self-insurance program will help agricultural 
producers to weather the ups and down of the farm economy.
    FARRM accounts have been introduced in both the House and 
the Senate. H.R. 662, the Farm and Ranch Risk Management 
Account, was introduced by Representatives Hulshof and Thurman, 
has 100 cosponsors, including myself. Senate Bill 313, the 
Farm, Fishing, and Ranch Risk Management Act, was introduced by 
Senators Grassley and Baucus. Additionally, the FARRM provision 
was included in both the President's initial tax package and a 
tax bill that I introduced earlier this year.
    Both versions of the Farm and Ranch Risk Management Act--
that is a bit of a tongue twister--if enacted, would allow 
farmers to put up to 20 percent of their annual income derived 
from farming into a tax-deferred trust account. Money would not 
be allowed to remain in the FARRM accounts for more than five 
years. However, at any time during that period, money could be 
withdrawn to help stabilize an individual's income during a bad 
year of either low crop prices or harsh weather or both.
    Let me give an example. If the taxable net farm income for 
a particular farmer is $100,000 in a particular year, say, this 
year, well, that level of income attracts a high marginal tax 
rate on that income. That farmer, with FARRM accounts, would be 
able to elect to contribute up to $20,000, or 20 percent, to 
his FARRM account, thus reducing the farmer's net taxable 
income to $80,000, and reducing his tax burden for that 
particular year.
    Now, the $20,000 that he puts in this account may be 
withdrawn at any time within the next five years in order to 
supplement the farmer's income when he experiences a 
particularly bad year. When withdrawn from the FARRM account, 
this deferred income is then counted as taxable income in the 
year in which it is withdrawn. The farmer would have the 
discretion to withdraw the money in a year when his income is 
low. And that money then withdrawn in that year, of course, 
would be taxable at a much lower rate than if it were taxable 
in the year in which his income was higher.
    The FARRM Act, which actually passed both the House and the 
Senate during the 106th Congress, has the continued support of 
agricultural groups, such as the American Farm Bureau 
Federation, the American Soybean Association, National Corn 
Growers Association, the National Pork Producers Council, 
National Cattlemen's Beef Association, and the National Council 
of Farmer Cooperatives. As a cosponsor of this legislation, I 
look forward to working with Representative Hulshof to move 
this legislation through the House during the 107th Congress.
    I look forward to the testimony of the witnesses who have 
joined us today. Again, I want to thank the Subcommittee's 
Ranking Member, Mr. Pascrell, who has joined us from his 
district in Northeastern New Jersey. Mr. Pascrell clearly 
understands the positive impact this legislation will have on 
farmers in the Lehigh Valley, and across America. And, at this 
time, I want to thank him and yield to him for his opening 
comments.
    [Mr. Toomey's statement may be found in appendix.]
    Mr. Pascrell. Thank you, Pat. Good morning, everyone. It is 
really an honor to be in Northampton County. When, as I drive 
through the towns, as I get over the river, it was a short 
drive. I thought what a great country this is that an urban 
Congressman will come to Pennsylvania and our problems may be 
different. I don't think there is any farms in my district, to 
be very honest with you. But I have always been interested in 
agriculture and understandingquite well the problems that you 
face.
    Isn't it interesting in America what democracy is all 
about, is that regardless of where we are from, we need to open 
up to problems that exist in other areas. And this is what 
makes us a United States of America. So no problem is too small 
or too large.
    I support this program 100 percent. I know in the past the 
House and the Senate in the 106th Congress--we not only want it 
to pass, but we want it to become a reality because I know of 
the problems that farmers, particularly small farmers, are 
facing.
    And I want to--I commend Pat Toomey for understanding and 
appreciating the fact. You know, we deal--we have dealt in the 
past 30 years in this country with large farm corporations and 
conglomerates, I think, many times to the detriment of the 
small farmer and rancher. I think that has changed. I think 
there is sympathy within the Congress. There must be. Because 
your survival is important to the Nation's survival. And unless 
we understand--if we don't understand that, we are not really 
going to fundamentally understand what agriculture is all about 
and what it has meant to the growth of this greatest democracy 
that man has ever known.
    So I come across the river into a beautiful county. And I 
want you to know I am very proud to be here as an American, 
more so than for as a Congressman. And I would really like to 
spend some time in the area. But, of course, these hearings, 
you move back into your district afterwards. But, Pat, you have 
my total support. Americans pay less for food per capita income 
than the rest of the industrialized world. Farmers and families 
that depend on them here and across the country face a variety 
of challenges that we are going to hear from you today--primary 
sources, primary resource for us, in order to make sure that we 
get this legislation law. So, Pat, thank you for inviting me.
    Chairman Toomey. Thanks for coming. I really appreciate it. 
At this time, let me just briefly explain the way our system 
will work. I will recognize each of the witnesses, one after 
another. We have got a clock here. It runs for five minutes. 
There is a green light. When there is one minute left, it goes 
to yellow. And then, when the five minutes are up, it goes to 
red. We don't have to stick to that right to the second, by any 
means, but it gives you a guide. So that we will just try to 
keep the opening statements to about five minutes. And then we 
will have a series of questions and we will go from there.
    At this point, I would like to recognize--and first, I 
would like to thank him for joining us and for all his input 
that he has given me over the years on agricultural issues, Ken 
Wedde, from Bath, Pennsylvania. Ken.

            STATEMENT OF KENNETH R. WEDDE, BATH, PA

    Mr. Wedde. Well, thank you. I would like to thank everybody 
that invited me here today. I live in Northampton County, Moore 
Township, and I farm 375 acres of corn, 250 acres of beans, and 
about 60 acres of wheat. And I have got five reasons why this 
FARRM account would help me out.
    First of all, like you guys said before, the 20 percent 
deduction off a good year. Now, I am up in age, but instead 
of--if I have a real good year, and I have a good year of 
income, either I have to spend that money on machinery or 
whatever, to go and--how should I say--to reduce my taxes. This 
way, I could put it into this FARRM account and maybe next year 
or the following year, I could take some of this money out and 
put it in when I don't have a good year. So this is one good 
reason that I think this would be good thing.
    The other thing is, up to five years. But the way I 
understand it, if you put money in the first year, first in, 
first out. And in the second year, if you put money in, that 
would be actually be going in the sixth year and so on, and so 
forth. So this is another good thing. This could go up to ten 
years as a reduction if you don't--you know, if you might have 
two or three good years and maybe you might have four or five 
bad years. You don't know. So this is another good reasons I 
think this FARRM account would be good.
    The withdrawal, like I mentioned before, would be very 
well. This account could be taken out at any time. And the 
other thing is, you have put this money in a bearing account, 
which will be drawing interest for you in good years and then 
taken out in the bad years.
    So I have got an example here. Last year, I contracted corn 
at 2.75 a bushel. And usually, my average--I don't have it 
figured out--perhaps I should have figured it out. But I 
usually have around 36,000 bushels, up to 40,000 bushels of 
corn a year. And this year, the best I could do was 2.33 a 
bushel, contracted price. So now, like last year, I had a good 
year and this year, the year wasn't that great, as far as I 
know. So that is an up and down situation with agriculture. And 
we can't help it. This is supply and demand. So this would be 
the other thing.
    The other thing I would like to talk about is foreign 
trade. I think it is very important that farmers are--would 
have this foreign trade. I don't know--do you want to get into 
that, Pat, or not or do you want to leave that out?
    Chairman Toomey. If you want to make a brief comment on 
trade, Ken, that is fine.
    Mr. Wedde. Yeah. I think we should. Thirty percent of the 
commodities raised in the United States are sent overseas. And 
I think it is very important, you know, especially the last 
couple of years, the farm income has been down. And with 
foreign trade, this could be brought up, I think, quite a bit. 
But it has to be an even thing. We don't hold sanctions against 
foreign countries, and I think that is the biggest problems 
there.
    So with that, I would like to thank everybody that invited 
me here and, thank you.
    [Mr. Wedde's statement may be found in appendix.]
    Chairman Toomey. Thank you very much for your testimony, 
Ken. At this time, I will recognize--and also, I want to thank 
him for his input on agricultural issues and for the good job 
he does representing the interests of local farmers, Brian 
Dietrich, from New Tripoli.

          STATEMENT OF BRIAN DIETRICH, NEW TRIPOLI, PA

    Mr. Dietrich. Okay. Thank you, Pat, and good morning. My 
name is Brian Dietrich and I am President of the 675-member 
Lehigh County Farm Bureau and I am also a dairy farmer. My 
family and I own and operate a 500-cow dairy and farm 1,200 
acres for the main purpose of feeding our dairy herd and 
replacements.
    We are a third-generation dairy farm. I appreciate the 
opportunity to testimony on behalf of not only myself, but also 
the Lehigh County Farm Bureau in support of Fish Farm and Ranch 
Risk Management Farm Account legislation. I and my fellow 
farmers have lobbied aggressively the past several years to 
have FFARRM account legislation passed by Congress to no avail. 
In the meantime, dairy farmers, including myself, have seen 
huge swings in the price we receive for our milk.
    In the past several years, I have received prices as low as 
$12.20 per hundredweight to prices as high as $18.80 per 
hundredweight. While costs of production are somewhat more 
predictable, uncontrollable factors, such as the weather 
conditions, can have a tremendous impact on costs. Developing 
and maintaining a solid business plan to manage the 
fluctuations of the market price and costs of production, is 
difficult, to say the least.
    The prices that farmers and ranchers receive for their 
commodities are determined by forces they can't control, 
commodity markets, and the weather. Farmers and ranchers do not 
know from one year to the next if their businesses will earn a 
profit, break even, or operate in the red. Few other industries 
must face such a challenge year after year after year.
    Risk management tools are badly needed in production 
agriculture. Congress seemingly recognized this fact when the 
1996 Farm Bill was passed to allow farmers to meet the market. 
Promises were made by the Congress, at that time, to provide 
more risk management tools for farmers because of their 
increased market risks. FFARRM accounts seem like a logical 
cornerstone to help farmers manage volatile markets, and yet we 
still are waiting for passage of this legislation to help 
fulfill promises made.
    It is probably difficult for people who have never operated 
a business to understand how important of a tool it would be 
for farmers to have the ability to save a portion of their 
earnings tax free during good years, for the use when the rainy 
days come. Ironically, for farmers, we are probably not so much 
saving for the rainy days as we are for the hot, dry sunny 
ones.
    People who own a business understand that when you show 
some good returns for your labor at the end of the year, you 
have two choices to make. One, you can pay a lot of income tax 
and watch your hard-earned money go to Washington, DC, or you 
can reinvest that money in your business to avoid sending some 
of that money to D.C. I doubt it will come as a surprise to 
some that most prefer to spend the money on their businesses. 
Either way, the money is gone, and when the lean times come 
there is no available cash to make up for the shortfalls 
farmers experience. This can be a viscous cycle that drives 
farmers deeper and deeper into debt.
    Passage of FFARRM accounts would provide farmers the 
opportunity to change their business practices in a way that we 
can better assist ourselves in planning for the inevitable 
cyclical nature of our businesses. This should help lessen the 
need for government assistance when market disasters occur.
    My position, as President of the Lehigh County Farm Bureau, 
gives me responsibility for the grassroots process that our 
organization uses to develop its policy positions. I listen to 
hours of debate on farm policy in the county and state and I 
can't think of another idea that makes--that has such 
enthusiastic support as Farm and Ranch Risk Management 
Accounts. Farmers like the idea that the government wants to 
make it easier for them to save for a rainy day.
    I ask each and every member of the Small Business Committee 
to get behind FFARRM accounts. Speak to your fellow 
representatives about the wisdom of doing something to improve 
the farm economy long term. The future of production 
agriculture is dependent on new and innovative tools, like 
FFARRM accounts, to help farmers and ranchers manage their 
financial risks. Thank you.
    [Mr. Dietrich's statement may be found in appendix.]
    Chairman Toomey. Thank you, Brian. Now, I would like to 
welcome and introduce another gentleman who has been a great 
advocate for small farmers, who is, I believe, the legislative 
representative from the Lehigh Country Farm Bureau, and maybe 
the only one of the witnesses who is a veteran at testifying 
before Congress, because Arland Schantz testified before the 
Agriculture Committee at my invitation in Kutztown a couple of 
years ago. Thanks for being here, Arland, and I recognize you 
now for your opening statement.

          STATEMENT OF ARLAND SCHANTZ, ZIONSVILLE, PA

    Mr. Schantz. I would like to thank Sean McGraw, the Staff 
Director of the Committee of Small Business, and, of course, 
Chairman Toomey, for inviting us farmers here today to express 
concern about such an important issue to the farm community. 
And also as a member of Lehigh County Farm Bureau, I want to 
thank Congressman Toomey for his continued support and effort 
to help solve the problems we encounter back on the farm, and 
also Ranking Member Pascrell. We thank you for your time and 
coming to the hearing and holding the hearing.
    We are here today to discuss Farm and Ranch Management 
Accounts. There are few occupations, if any, that are more 
uncertain than farming. As you can see, here in front of me, 
from these two Christmas tree seedlings that I brought along, 
sometimes you make it, and sometimes you don't.
    As a farm owner and operator of a general crop, hay, and 
Christmas tree farm in Lehigh County, I try to adhere to the 
best management practices according to modern scientific 
technology, as well as add many years of on-the-job training. 
As you can see, the results still are not completely 
satisfactory.
    For example, experience dictates that Christmas tree 
seedlings should be planted early in spring when conditions are 
normally cool and damp. But as we all know, this spring 
conditions were hot and dry, and many of the seedlings just did 
not survive like this one right here. A similar problem 
occurred in the hay fields. The new alfalfa seedlings did not 
survive this past spring because of the hotter, drier weather 
early in the spring and must now be replanted in fall. One 
year's production is lost, or was lost. Time and money must be 
put forth to replant these crops along with the potential loss 
of income because of the delayed planting and the lack of crop 
for this year.
    This might not be much of a problem if farming was a high-
income, high reserve type of occupation. But this definitely is 
not the case. In a time of depressed commodity prices and high 
input costs, farmers are barely hanging on financially the way 
it is. In general, there are no reserves available and local 
taxes never fail to come due. One can only borrow so much 
against the farm real estate, and that only incurs more expense 
through interest expense.
    Farm and Ranch Risk Management Accounts would allow us to 
take reserve monies from a good production year or a good price 
year and let it earn interest in a nontaxable account for up to 
five years. This money could then be used for assistance 
through the devastating conditions Mother Nature heaps upon us 
or the low market prices of which we have no control over.
    A strong agricultural industry nationwide means a strong 
and healthy country. That is why I urge the U.S. Congress to 
make FARRM accounts available to us in the very near future. 
Thank you.
    [Mr. Schantz's statement may be found in appendix.]
    Chairman Toomey. Thank you, Arland. And, at this time, I 
will recognize Cheryl Bennecoff. Cheryl has come to us from the 
far western reaches of Lehigh County, so it is a long trip for 
you and I appreciate your coming today.

          STATEMENT OF CHERYL BENNECOFF, KUTZTOWN, PA

    Ms. Bennecoff. Thank you for inviting me to speak at 
today's hearing. My statement is made on behalf of not only 
myself, but over 28,000 rural and farm families of the 
Pennsylvania Farm Bureau. My name is Cheryl Bennecoff and we 
run a farm family operation that has been in the family for 
four generations and 100 years. We farrow to finish 80 sows, 
specializing inpurebreds. We farm 250 acres, raising corn, 
soybeans, wheat, barley, and oats.
    Farm Bureau is most appreciative of legislation passed in 
Congress in recent years to provide immediate relief for 
farmers and ranchers who have suffered from weather and market 
disasters. If similar emergencies are to be minimized in the 
future, farmers and ranchers must have new and innovative ways 
to deal with uncertain incomes caused by weather and markets. 
Congress must act to give producers the risk management tools 
they need to manage financial jeopardy caused by unpredictable 
weather and markets.
    The pig market provides no guarantees. It is always 
changing, never knowing what price we will receive. Two years 
ago, when times were bad with the drought, we also experienced 
low fat pig prices. They were down to 15 cents per pound. 
Prices increased to 38 to 39 cents the following year. To break 
even, we need 42 to 43 cents, and to make anything extra, 50 
cents. Prices have continued to improve since then. Right now, 
they stand around 49.5 cents per pound. I would like to believe 
that prices will continue to improve and remain at profitable 
levels in the future. However, history has taught us all too 
well that will likely not be the case.
    Fish, Farm and Ranch Risk Management Accounts, FFARRM 
accounts, are exactly the kind of risk management tools that 
farmers and ranchers are looking for. Using these accounts, 
producers will be encouraged to save up to 20 percent of their 
net farm income in higher income years by the benefit of 
deferring taxes on the income until the funds are withdrawn. 
The program is targeted at real farmers, contains guarantees 
that the funds will not be at risk, prevents abuse by limiting 
how long savings could be in an account for up to five years. 
FFARRM accounts are simple, and that is why they are so 
appealing to farmers. Farmers would decide when to save rather 
than spend and when to withdraw and pay taxes on the money.
    Legislation to create FFARRM accounts, H.R. 662, has been 
introduced by Representatives Kenny Hulshof and Karen Thurman. 
These are two smart representatives because they have written 
their bill so that producers of all commodities, from all sizes 
of operations, who come from all parts of the country, can take 
advantage of FFARRM accounts. That is the reason many 
agricultural organizations and over 100 Congressional 
representatives support the bill.
    We know that members of the Small Business Committee 
understand the need for FFARRM accounts. But I must tell you 
that many of my fellow farmers wonder why it is taking Congress 
so long to pass them into law. When agriculture agreed to 
support the phase-out programs in 1996, it was with the full 
expectation that Congress would make good on their promises to 
reduce regulations, expand markets, and provide risk management 
tools.
    I have been told that passage of H.R. 662 would cost $500 
million over five years and $900 million over ten years. Rather 
than talking about cost, I think we should all be talking about 
the benefits of the legislation. It would be better to say that 
FFARRM accounts will provide an important safety net for 
farmers and ranchers worth just short of a billion dollars.
    Many growers of perishable commodities, along with the 
producers of livestock, poultry, and other nonprogram groups, 
have had the benefits of a farm program--have never had the 
benefits of a farm program safety net. What all farmers hope 
for is that good years will outnumber the bad ones.
    Believing that better times are coming, farmers and 
ranchers get through their tough times by spending their 
retirement savings, borrowing money, refinancing debt, putting 
off capital improvements, and lowering their standard of 
living. All of these activities damage the financial health of 
a farm or ranch and the well-being of the family operating the 
business. We rely on management skills, marketing ability, and 
a little luck with the weather, to make our businesses turn a 
profit. We are always looking for new and innovative risk 
management tools to help us manage our businesses successfully.
    Pennsylvania Farm Bureau asks for you to support the FFARRM 
accounts. We urge Congress to pass them into law as soon as 
possible. Their creation will give farmers and ranchers a 
meaningful incentive to save for a rainy day and provide a 
valuable, very valuable, tool for managing financial risk.
    Thank you for your time and consideration of this most 
important issue to our Pennsylvania farmers.
    [Ms. Bennecoff's statement may be found in appendix.]
    Chairman Toomey. Thank you very much. I have got some 
questions I will begin with. But before I do, I want to take a 
moment to thank Jaymes Vettraino, who is the Borough Manager of 
Pen Argyl, and Pen Argyl Borough, for allowing us to use this 
facility for the hearing this morning.
    My question--and I will start off with you, Cheryl, if I 
could. In your testimony, you indicated that your break-even 
price is about 42 to 43 cents a pound. And if I understood 
correctly, you have had to sell as low as 15 cents a pound. 
Today, the price is close to 50 cents. Of course, its future is 
uncertain. Just to state the obvious for the record, so that we 
have got it clear, a year in which the majority of your output 
is sold at the lower end of that range, you finish that year in 
the red. I mean, you actually incur a cash loss----
    Ms. Bennecoff. Right.
    Chairman Toomey [continuing]. For your business. Is that 
correct?
    Ms. Bennecoff. Right. And on top of the drought, too, it 
doesn't help.
    Chairman Toomey. Right. The very next year, is it possible 
that the price could be back up in the high 40s or 50 cents 
where you could have a problem?
    Ms. Bennecoff. If the weather holds out with the crops on 
top, and, you know, we would need a couple of years to sort of 
recoup back to where we were.
    Chairman Toomey. To recover. Okay. It seems to me that that 
is exactly the kind of the circumstances in which this kind of 
farm account would be helpful.
    Ms. Bennecoff. Right.
    Chairman Toomey. Because if you have a particularly good 
year, there is no assurance that that is going to continue.
    Ms. Bennecoff. Right.
    Chairman Toomey. In the last five years, have you had both 
profitable years and money-losing years?
    Ms. Bennecoff. We mainly have just break-even or nonprofit 
years. We are--we just struggle to survive.
    Chairman Toomey. So if you had a good year, it would be all 
that more important----
    Ms. Bennecoff. Right.
    Chairman Toomey [continuing]. That you be able to take some 
of that income----
    Ms. Bennecoff. And put it away.
    Chairman Toomey [continuing]. And not have a very high tax 
rate on all of it----
    Ms. Bennecoff. Right.
    Chairman Toomey [continuing]. Save it for that rainy day 
when----
    Ms. Bennecoff. Right. Because usually what we try to do is 
put it back into the farm so it doesn't have to be taxed like 
other statements were said.
    Chairman Toomey. Right. Thank you.
    Ms. Bennecoff. Thank you.
    Chairman Toomey. Brian, you mentioned that the price 
fluctuations in recent years of your products, the dairy 
products, have ranged from $12.20 to $18.80. About what do you 
consider your break even to be in price terms?
    Mr. Dietrich. Our break-even is usually around $12.50 to 
$13.00--in there.
    Chairman Toomey. Okay. And is that pretty typical of dairy 
producers in the Lehigh Valley do you think?
    Mr. Dietrich. That is pretty typical of ones in the Lehigh 
Valley. Larger ones, when you get into different parts of the 
country, may be of lower cost of productions. But in the Lehigh 
Valley, I think that is pretty typical.
    Chairman Toomey. So, again, just for the record, so that 
people understand, because most businesses are a little 
different from agriculture, as you know. Most businesses, if it 
is a good year, you make a substantial amount of money, and a 
bad year, you don't make quite so much. But it is my 
understanding that if you go through a year when milk prices 
are at $12, you are going to lose money.
    Mr. Dietrich. Oh, absolutely.
    Chairman Toomey. And you are just going to finish the year 
in the red, out-of-pocket cash. And in a subsequent year, if 
prices are at 18, you are going to make a nice tidy profit.
    Mr. Dietrich. Right.
    Chairman Toomey. But if that all gets taxed at the highest 
possible tax rate, because it is a good income year for you, 
then you lose the opportunity to cushion the bad years. Is that 
the way you view this?
    Mr. Dietrich. Absolutely. Actually, since, well, the '96 
Farm Bill, the milk prices are fluctuating unbelievably. Right 
now, the prices are pretty decent. And I am just hoping that 
this legislation can get passed because it is going to mean a 
big difference for us because there is times when that--the 
bottom just drops out of the milk price. And in that year, it 
is like pathetic. And over the last five years now, we have had 
a couple of--well, we had the drought in there--but we had a 
couple of years that were, you know, not very good. And we had 
years that were pretty good.
    Chairman Toomey. Right.
    Mr. Dietrich. So in those pretty good years, we are sending 
all the money that--to Washington.
    Chairman Toomey. And this would effectively sort of even 
out the flow a little bit----
    Mr. Dietrich. Yes.
    Chairman Toomey [continuing]. And balance that off.
    Mr. Dietrich. Absolutely.
    Chairman Toomey. Okay. Ken, you had mentioned that you grow 
three different crops. Corn is your biggest----
    Mr. Wedde. Right.
    Chairman Toomey [continuing]. Soybean is next----
    Mr. Wedde. Right.
    Chairman Toomey [continuing]. And then some wheat. And you 
have also seen big fluctuations in those prices. Could you give 
us a general idea--take corn, for instance--approximately what 
is your break-even and what has been the high and what has been 
the low in the course of the last, say, five years?
    Mr. Wedde. My break-even is about 2.30.
    Chairman Toomey. Okay.
    Mr. Wedde. And the highest I have ever got for corn was 
3.45.
    Chairman Toomey. Okay.
    Mr. Wedde. That was back in 1998, I think. All right. But 
ever since that, the corn prices dropped. And then, of course, 
we had that bad year in '99 with that drought. That really was 
a bomber.
    Chairman Toomey. Right.
    Mr. Wedde. But overall, the last couple of years, there was 
no profit margin in farming grain.
    Chairman Toomey. Right.
    Mr. Wedde. The overall expenses--especially now this year, 
I contracted corn at 2.33. Now, I haven't figured out--we had a 
dry summer. The herbicides didn't work. I had to go back in the 
second time. Usually, the first time herbicides will cost you 
anywhere from $15 up to $20 an acre for the first time. The 
second time you go in it is going to cost you anywhere from $20 
up to $30 an acre----
    Chairman Toomey. Uh-huh.
    Mr. Wedde [continuing]. Because you have to use a special 
herbicide. Now, I haven't figured that out yet. And it still 
didn't work----
    Chairman Toomey. Uh-huh.
    Mr. Wedde [continuing]. On the dry weather. So this is what 
I say. With the FARRM account, you can even out your income 
more or less----
    Chairman Toomey. Right. Right.
    Mr. Wedde [continuing]. From year to year.
    Chairman Toomey. So it sounds like to me is you have a risk 
of not only weather conditions, and not only the commodity, 
price fluctuations, but also some years in which your inputs 
vary significantly.
    Mr. Wedde. Right. Right. Absolutely. Yes.
    Chairman Toomey. So all three of those variables are at 
play. If everything comes together, great, the price is strong 
and the weather is good, and the insects aren't a problem, you 
have a good year.
    Mr. Wedde. Right. Yes.
    Chairman Toomey. And when things--but most years, in recent 
years, you have been basically operating at about a break-even.
    Mr. Wedde. I know you--I am farmer, but as you drive along 
and you just look at the soybean fields right now, at the 
edges, they are turning brown----
    Chairman Toomey. Uh-huh.
    Mr. Wedde [continuing]. And that is from the spider mite.
    Chairman Toomey. Okay.
    Mr. Wedde. And, really, we should go in to spray that right 
now. But I am hoping for rain in the next couple of days. And 
if we have to go in for spraying for spider mites, it is going 
to cost $9 an acre just to go into spray with equipment, plus 
the spray material, which could be another $3 or $4 an acre. So 
there is another $13 there. And I did spray twice before with 
Roundup one time early and another time later on. So you have 
another cost of maybe $30 there. And the soybean prices are 
terrible--worse than corn prices.
    As a matter of fact, this year--last year I did the same 
thing. I took a loan out on the soybeans and I am going to turn 
the soybeans over to the government at the end of this year, at 
the end of the ninth month, because I can't sell the soybeans 
for what the market is. I can get more on a loan price than at 
the market price.
    Chairman Toomey. Thank you. One last quick question. 
Arland, your main products are Christmas trees and hay.
    Mr. Schantz. Yes.
    Chairman Toomey. And my understanding is that those prices 
don't tend to fluctuate quite as much as the grains, for 
instance, in terms of the commodity prices themselves. But you 
have all the same risks on weather and input costs. Do you 
still see the variability in income that would really justify 
your using farm accounts?
    Mr. Schantz. Yes. Because we still have the problem with 
the weather. Will we get a hay crop? Won't we get a hay crop? 
Some years get more. Some years get less. And the same thing 
with the Christmas trees. Will you have trees or not? You know, 
will--not only drought, as you can see here, affects the trees, 
but, like Kenny was saying, there are certain insect problems, 
certain fungus problems, that can hit depending on the 
conditions. And that could not necessarily wipe out your crop, 
but could reduce the marketable availability of the crop. So it 
very much is a variable type income also, even though price-
wise I do have maybe a little better control over it than just 
the commodity market price.
    Chairman Toomey. Okay. Thanks. Bill?
    Mr. Pascrell. Yeah. Thank you. Ms. Bennecoff, I am 
interested in your testimony on the fourth page. I think you 
have kind of hit the nail on the head. When you said rather 
than talking about cost, I think we should all be talking about 
the benefits of the legislation. It would be better to say that 
FARRM accounts will provide an important safety net for farmers 
and ranchers worth just short of a billion dollars. What--how 
do we get people to understand that this is an investment that 
we are making here? I mean, that is critical. We have got to 
get this thing signed and passed into law. I mean, that is the 
objective here. We could get caught up in the minutiae and, you 
know, pat ourselves on the back and have no law by the time we 
finish this session--this Congress. How do we get people to 
understand that this is an investment?
    Ms. Bennecoff. Well, they are investing in the future of 
the small farmer, which, like was said in the beginning of the 
session, which is what--you know, what agriculture is, is if 
there is no small farmers coming up, if there is no incentive, 
like for our children, which will be the fifth generation 
coming up, which my son shows a lot of interest in--but if 
there is no incentive, that--not necessary to make profit. We 
are not in it for that. It is the whole--how do I want to say 
it--it is my husband's--not a hobby either. It is his 
lifestyle. It is what he believes in. You know, the country 
needs food. If there is no farms, there is no food.
    And they got to realize that if we are not helped, the 
small farmer--there is no incentive for the families, like 
Brian's generation also, to take over that business--and where 
are the farmers going to come from? They can't be taught in a 
school. They have to have that hands-on. And I think to save 
the small farmer, to help the--you know, maybe one time he will 
get a chance to go work for a larger farmer. But if he doesn't 
have that hands-on experience, it is not going to be there. So 
they have to realize that we have to save the small farms, and 
this program will help save the small farms.
    Mr. Pascrell. We talk about investment--that is one of the 
arguments I use in talking about investment on a state level 
and federal level in education. It is an investment in our 
future----
    Ms. Bennecoff. Right.
    Mr. Pascrell [continuing]. For children. I see this the 
same way. And this, to me, is no different than investing in 
research and development in many areas.
    Ms. Bennecoff. Exactly.
    Mr. Pascrell. We have spent a heck of a lot of money. And 
wondering sometimes where the money goes to----
    Ms. Bennecoff. Uh-huh.
    Mr. Pascrell [continuing]. In certain areas. Will you put 
off capital improvements if you don't have the money? This is 
for everyone. If you don't have the money to invest in capital 
improvements, you become less competitive.
    Ms. Bennecoff. Exactly.
    Mr. Pascrell. You become less able to deal with that 
present market at that time. Can anybody give me any specific 
examples of that? That because you had a couple of bad years, 
you didn't have the money--you were trying to put food on the 
table. Brian?
    Mr. Dietrich. Yeah. I would like to address that. I have a 
perfect example. The last couple of years, the milk prices were 
stagnant to low. Our barn was--our new dairy barn, what we call 
our new dairy barn, was built in 1981. Okay. It is 20 years 
old. So there is a lot of updates that we should be doing to 
that barn over the last number of years. As far as doing more 
of the modern things, as far as keeping it cool in this hot 
weather, keeping the cows cool, maybe putting more fans in or 
putting a sprinkler system in, or putting curtains up on the 
sides instead of mounted steel. Now, since the milk prices are 
up this year, we are taking that money and putting it into that 
barn. I said to my brother and my sister, I said, this is the 
year to do it because who knows where this milk price goes. 
Next year it may not have the chance. So we better put some 
capital improvements into that barn to stay competitive, keep 
our production up, keep it more even, rather than, in this hot 
weather, see it plummet.
    Mr. Pascrell. When you are looking at a large federal 
budget, the amount of money that we are talking about here, 
that is really insignificant, and yet it could help a heck of a 
lot of people. I would like to ask anybody in the Panel, how do 
we stop this money to get to--getting to the large 
conglomerates and that the small farmer can't take advantage? 
Because that is who we want to help. We want to help the small 
farmer. I think that is important and I think it is critical.
    And I want you to know that even though I may be across the 
river and in an urban district, I feel that this is critical--
as critical as cleaning up the streets in my cities. And I want 
you to understand and believe me, I am sincere about that. I 
see this as critical in bringing us, you know, together. This 
still is one Nation, and I think that this is important. But 
how do we keep this money targeted and focused to the small 
farm and not to the large conglomerates? Ken?
    Mr. Wedde. What do you consider a small farmer, to start 
out with?
    Mr. Pascrell. Well, you are a small farmer.
    Mr. Wedde. You are absolutely right.
    Mr. Pascrell. I guessed right.
    Mr. Wedde. Compared to everybody else.
    Mr. Pascrell. What do you got, 250 acres or----
    Mr. Wedde. Yeah.
    Mr. Pascrell [continuing]. How many acres?
    Mr. Wedde. But how big must you be to stay in agriculture?
    Mr. Pascrell. No. I am asking you.
    Mr. Wedde. The way it is going, we are going to force out 
the small farmers. And that is the way it is going right now.
    Mr. Pascrell. Is that good or bad?
    Mr. Wedde. That is bad.
    Mr. Pascrell. I think it is bad. You tell me why you think 
it is bad.
    Mr. Wedde. Well, you don't have the competition. We are 
seeing it already. We have less and less farm equipment dealers 
around.
    Mr. Pascrell. Uh-huh.
    Mr. Wedde. We have less and less fertilizer dealers around. 
And this way, the farmers are supporting a lot of people. You 
have the tire industry. You have the fuel industry. You would 
be surprised how many industries that farmers are supporting. 
And my son can't start farming. The cost is too expensive.
    Mr. Pascrell. Uh-huh.
    Mr. Wedde. How are you going to keep them on the farm? If 
there would be a half-decent income, you would have a lot of 
young farmers coming in here.
    Mr. Pascrell. You think so.
    Mr. Wedde. I would think so. Yes. And maybe I am getting 
off the subject here----
    Mr. Pascrell. No. You are not. I think you are right on 
target.
    Mr. Wedde [continuing]. But let us go take farm land 
preservation. What has farm land preservation done for a farm? 
I would say 95 percent of those farmers in farm land 
preservation, the only reason they went in there, to pay their 
expenses. What have they got left? Nothing. Now, you sell the 
farm.
    Mr. Pascrell. That is right. And we don't--we want--and 
that is why I think it is imperative that there be, in this 
program, accountability. Part of the accountability is that the 
money be directed to the small farmers like yourself and folks 
that are being represented today. I think that is essential. I 
think it is important. That is how we sell--part of how we sell 
this--become law.
    Mr. Wedde. And the other thing is, you ask any young 
generation, where does the food come from? Out of the store.
    Mr. Pascrell. You are right.
    Mr. Wedde. They don't know where it is coming from.
    Mr. Pascrell. Yes.
    Mr. Wedde. One day they will find out where it is coming 
from.
    Mr. Pascrell. Or Mexico.
    Mr. Wedde. Yeah.
    Mr. Pascrell. You don't want me to start talking about 
that.
    Mr. Wedde. And they won't have the quality of what they 
have today. Sorry that I got a little heated up.
    Mr. Pascrell. No. Good. That is good. That is good. I like 
your style. I like it. Very good. Anybody else want to jump in 
on the capital thing? Arland?
    Mr. Schantz. Yeah. I think you asked about what must be 
done. I think what must be done is educate the nonfarm public. 
I mean, we, the farmers, know what are problems are and what we 
need. But we have to educate the nonfarm public, first of all, 
where their food comes from. Second of all, that farmers are 
the backbone of the country, of the economy. In Pennsylvania, 
farming--agriculture is the number one industry. We have to 
educate the public that if they would like to see the open 
spaces, the corn fields, the soybean fields, they are going to 
have to support the farmer. They are going to have to--the 
farmer is their friend. The farmer is not their foe. When the 
farmer is out there driving down the road with his slow 
tractor, they shouldn't get mad at them. They should be happy 
he is there.
    And I think you guys can go about that. I am not quite sure 
how. But you guys have the--maybe the access to the media and 
somehow have it support the farmer program--I mean, for the 
general public, not for the farmers, for the public, so----
    Mr. Pascrell. Are we losing farms in this area--small 
farmers going out of business--Lehigh Valley?
    Mr. Wedde. Oh, yes. Definitely.
    Mr. Schantz. Oh, yeah.
    Mr. Dietrich. Yes.
    Mr. Schantz. Oh, yeah.
    Mr. Pascrell. Is that a major, major problem or a problem 
in the future?
    Mr. Schantz. It is a problem now. Yeah.
    Mr. Wedde. It is an ongoing problem.
    Mr. Pascrell. And what is the main reason?
    Mr. Wedde. There--are you going to answer?
    Mr. Pascrell. Anybody. Yeah.
    Mr. Wedde. There--I think the biggest problem is, for one 
thing, they are at retirement age and they have nobody else to 
take over. And the price that they can get for their farm, that 
is part of their retirement.
    Mr. Pascrell. There has got to be some incentive to keep 
the farm within the family or to sustain it.
    Mr. Wedde. I would think there are a lot of young farmers--
I have got grandchildren. One is nine years old and the other 
is 11 years old. And this is all what they talk about, farming. 
But, you know, you never know what they are going to do until 
they get older. But I would think if the income would be 
supportive, they go into farming.
    Mr. Pascrell. Uh-huh.
    Mr. Wedde. And I would support that idea. But right now, I 
can't support that idea.
    Mr. Pascrell. It is part--Pat, I don't know if you agree 
with me on this--it is part of a mentality in America, growing 
mentality, of looking down at working with your hands. This is 
incredible what has happened in this country. Whether we are 
talking about producing food and vegetables and stock, whether 
we are talking about making candles or machinery or textiles, 
we have lost--and this is how people got their identity in this 
country, which made it such a great country--people worked with 
their hands. And why do we look down at that? Why do we think 
that sitting in a room and dealing with a computer is a more 
holy way to deal with your life in the 21st century is beyond 
me.
    Mr. Wedde. Do you get the Morning Call, the Sunday Morning 
Call? Probably you didn't.
    Mr. Pascrell. No, sir.
    Mr. Wedde. But there is a very good article in the Sunday 
Morning Call, ``The Man Behind the Plow.'' Pat, did you see 
that--Leon Turner.
    Chairman Toomey. I did not see that. This past week?
    Mr. Wedde. He started as an orphan boy. And he worked his 
way up worth a million dollars.
    Mr. Dietrich. When he retired. Yeah.
    Mr. Wedde. What young farmer can do that today?
    Mr. Pascrell. Uh-huh.
    Mr. Dietrich. Well, that is the whole problem. That is why 
young farmers aren't coming in or taking over. I mean, I have 
got children too. I was fortunate. I consider myself still 
young. I mean, I am 37 years old. But I had parents that worked 
their butt off and provided an opportunity for us children to 
take over their operation. And my dad had a plan over a period 
of so many years to have us work into the business and take 
over the business, eventually buy his portionout. But there is 
a lot of young farmers that don't have that opportunity.
    Mr. Pascrell. Uh-huh.
    Mr. Wedde. Absolutely.
    Mr. Dietrich. And why don't they have that opportunity? 
Because you have got $2 corn. You have got $10 or $11 or $12 
milk. You have got low hay prices. You have got low, 15-cent 
pork prices. And that is the major reason.
    Mr. Pascrell. Well, we are--Pat and I are going to go back 
in September and make sure we have a lot more names, including 
my own--I think I am on some of the bills, but not this one 
specifically--want to get on this bill. And we can get names 
and we can build the pressure. We have done this in the past in 
order to bring this--see, it is not on everybody's radar 
screen. But this is a very critical time. And unfortunately 
some good will come out of disaster. The Lord knows what he is 
doing, whether we are dealing with heat or water problems. This 
is the time to move on this.
    Chairman Toomey. Right.
    Mr. Wedde. Well, the other thing is, we are on a worldwide 
market. This is why I brought up exports. I think the only 
answer is that we do more exporting. We have to. But, you know, 
the dollar is strong. How can we do that there? It is not a 
simple answer.
    Mr. Pascrell. That is right.
    Chairman Toomey. If I could just briefly get back to one 
specific technical question, I want to be able to be confident 
that we have got right in this bill. And this goes back to 
something, Ken, you mentioned in your testimony. The bill has a 
five-year window where you can put income into an account and 
you have got up to five years to take it out. And Ken is 
exactly right--it becomes a rolling five years----
    Mr. Wedde. Right. Right.
    Chairman Toomey [continuing]. Because in 2001, you have got 
through 2006, but in 2002, you could put money aside and then 
you have got that until through 2007. Does that give enough of 
a window? In other words, is it--over a five-year period, is 
that likely to be a long enough period of time to see the 
fluctuations, to see the ups and downs, so that you can take 
some income out in a good year, and you probably will have a 
bad year to even it out? Is that a good window that we have 
got?
    Mr. Wedde. I would think so. Because you can just keep on 
rolling that along.
    Chairman Toomey. Right.
    Mr. Wedde. I mean, I don't think you have a period of five 
or ten years. I mean, you get up to the fifth year, you can 
start rolling over again. Right?
    Mr. Pascrell. Yes.
    Chairman Toomey. With the income from that year.
    Mr. Wedde. So, I mean, this just keeps on rolling along.
    Chairman Toomey. Right.
    Mr. Wedde. So I think the window is great--an open window.
    Chairman Toomey. Anybody else have any comments about that? 
I think that----
    Mr. Schantz. Yeah. I could see that maybe a longer period 
would be beneficial in a longer-term crop, like Christmas 
trees, where you have a--you know, a crop year--not a crop 
year, but a crop life of from seven to ten years. And like this 
tree, I am going to miss this tree seven years from now.
    Chairman Toomey. Right.
    Mr. Schantz. Even though I am going to replant it next 
year, seven years from now there is going to be that gap of 
less marketable trees.
    Chairman Toomey. Right.
    Mr. Pascrell. That is good point. We sort of assume that 
every crop comes in, in the year you plant it----
    Mr. Schantz. Right.
    Mr. Pascrell [continuing]. But that is not the case at all. 
It is not the case with livestock, obviously, either.
    Ms. Bennecoff. Right.
    Chairman Toomey. So do you think that there is a case to be 
made that maybe the period of time should be related to the 
period of developing a product or the crop?
    Mr. Schantz. It would be beneficial. I mean, the five-year 
is great compared to nothing.
    Chairman Toomey. Yeah. Sure.
    Mr. Schantz. I mean, if----
    Chairman Toomey. Well, I think it is just something we want 
to keep in mind--as this thing moves through the legislative 
process, it is likely to change along the way.
    Mr. Wedde. Right.
    Chairman Toomey. And this is something that, you know, 
maybe five years might work better for a grain farmer than it 
works for a pig farmer or a Christmas tree farmer.
    Mr. Pascrell. I want to ask Ken another question. Ken, you 
gave the example of a--because of this season, your soybean 
crop starting to degenerate on the borders.
    Mr. Wedde. Right.
    Mr. Pascrell. And if you want to spray again, it is going 
to cost you probably----
    Mr. Wedde. $13 an acre.
    Mr. Pascrell [continuing]. 23, 2,400 bucks.
    Mr. Wedde. Well, there is--oh, more than that. It is going 
to cost me--well, let us see, 200----
    Mr. Pascrell. It is $9 an acre. Right?
    Mr. Wedde. No. $13 an acre.
    Mr. Pascrell. It is $13 an acre.
    Mr. Wedde. $9 just for the rake. All right.
    Mr. Pascrell. So and that is--right. Go ahead.
    Mr. Wedde. And then, plus your spraying material.
    Mr. Pascrell. And what is that, $4 more?
    Mr. Wedde. Yeah. About $13 an acre. Yeah.
    Mr. Pascrell. So it is going to cost us close to 4,500 
bucks.
    Mr. Wedde. Yeah. Yeah.
    Mr. Pascrell. And that is--you know, unless you have that 
money handy, you can't do that--unless you go--where are you 
going to borrow it? Where are you going to loan that money?
    Mr. Wedde. But can you leave the crop go?
    Mr. Pascrell. That is correct. Because they will eat it all 
up pretty soon.
    Mr. Wedde. Right. That is----
    Mr. Pascrell. And then what do you do?
    Mr. Wedde. Borrow money.
    Mr. Pascrell. Just chalk it off.
    Mr. Wedde. Yeah. You have to either borrow money or just 
leave it go.
    Mr. Pascrell. What do you do on your income tax in that 
case? What do the farmers--small farmers--is this depreciation? 
I mean, how do you work that out on your tax that if you have 
lost a crop?
    Mr. Wedde. Well, you have your cost and whatever your 
soybeans are, you just deduct that from your cost, so you are 
in the red.
    Mr. Pascrell. Right. Well, we have got to get this bill 
passed. Right, Pat?
    Chairman Toomey. Yeah. Absolutely.
    Mr. Dietrich. Retroactive 2001.
    Chairman Toomey. It would be all right with me.
    Mr. Pascrell. Where did I hear that yesterday?
    Chairman Toomey. And we had some folks yesterday that 
wanted a retroactive--tax cut retroactive to, I think, 1981 or 
something like that.
    Mr. Pascrell. Smart people.
    Chairman Toomey. Did you have anything else?
    Mr. Pascrell. No. I--no questions.
    Chairman Toomey. Did any of you have any last comment you 
wanted to make?
    Mr. Wedde. No. I don't. I just thank you for inviting me. I 
appreciate that you invited me to give you my thoughts on it. 
Good or bad, but you got it.
    Mr. Pascrell. Okay. Thank you.
    Chairman Toomey. We all--Brian?
    Mr. Dietrich. I would like to just add one final comment. 
And when I told my uncle, who helps us part time on our farm, 
that I was going to a hearing today, and I told him the content 
of what I was testifying on, he is there, oh, my God, Brian, 
you must get to that. He is not in business anymore. He 
retired. And his son is not there farming that farm anymore. 
And he said, boy, if that would have been around when I was 
still farming back in '92, '94, is when he sold out then, you 
know, there is definitely a possibility that his son may have 
taken over.
    Chairman Toomey. Yeah. Well, I want to thank you all very 
much for your testimony. Your input helps us to promote this. 
And, as Bill was saying, we go back to Congress and we get more 
Members of Congress to cosponsor the bill, more names on the 
bill. And when we get enough, that is when the bill starts to 
move. And we will do our best to get that support so that we 
can enact this sooner rather than later. Thank you very much 
and the hearing is adjourned.
    Mr. Dietrich. Thank you.
    Ms. Bennecoff. Thank you.
    Mr. Schantz. Thank you.
    Mr. Wedde. Thank you very much.
    [Whereupon, at 10:28 a.m., the Subcommittee was adjourned.]

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