S. Hrg. 110–126

PART III: CHALLENGES AND

OPPORTUNITIES FACING

AMERICAN AGRICULTURAL PRODUCERS

HEARING

øBEFORE THE¿

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

APRIL 25, 2007

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry

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35–052 PDF 2007

S. HRG. 110–126

PART III: CHALLENGES AND

OPPORTUNITIES FACING

AMERICAN AGRICULTURAL PRODUCERS

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

APRIL 25, 2007

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry

(

Available via the World Wide Web: http://www.agriculture.senate.gov 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

TOM HARKIN, Iowa, Chairman 

PATRICK J. LEAHY, Vermont 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

KEN SALAZAR, Colorado 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

SAXBY CHAMBLISS, Georgia 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

LINDSEY GRAHAM, South Carolina 

NORM COLEMAN, Minnesota 

MICHEAL D. CRAPO, Idaho 

JOHN THUNE, South Dakota 

CHARLES E. GRASSLEY, Iowa

MARK HALVERSON, Majority Staff Director 

ROBERT E. STURM, Chief Clerk 

MARTHA SCOTT POINDEXTER, Minority Staff Director 

VERNIE HUBERT, Minority General Counsel 

(II) 

(III)

C O N T E N T S 

Page

HEARING(S):

Part III: Challenges and Opportunities Facing American Agricultural Producers .................................................................................................................... 1

Wednesday, April 25, 2007

STATEMENTS PRESENTED BY SENATORS 

Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee on 

Agriculture, Nutrition, and Forestry .................................................................. 1

Chambliss, Hon. Saxby, a U.S. Senator from Georgia ......................................... 2

Panel I 

Beckmann, Reverend David, Bread For The World, Washington, DC ................ 8

Buis, Tom, National Farmers Union, Washington, DC ........................................ 3

Flory, Bill, American Farmland Trust, Winchester, Idaho .................................. 7

Stallman, Bob, American Farm Bureau Federation, Columbus, Texas .............. 5

Panel II 

Combs, Paul, USA Rice Federation, Kennett, Missouri ....................................... 42

Hoffman, John, American Soybean Association, Waterloo, Iowa ........................ 34

McCauley, Ken, National Corn Growers Association, White Cloud Kansas ....... 39

Mitchell, Larry, American Corn Growers Association, Washington, DC ............ 38

Pucheu, John, National Cotton Council, Tranquility, California ........................ 36

Tallman, Dusty, National Association of Wheat Growers, Brandon, Colorado .. 41

Panel III 

Evans, Jim, USA Dry Pea and Lentil Council, Genessee, Idaho ......................... 69

Hayes, Evan, National Barley Growers Association, American Falls, Idaho ..... 61

Morris, Armond, Southern Peanut Farmers Federation, Ocilla, Georgia ........... 64

Murden, Dale, National Sorghum Producers, Monte Alto, Texas ....................... 63

Rundle, Lynn, North American Millers Association, Manhattan, Kansas .......... 66

Swanson, John, National Sunflower Association, Mentor, Minnesota ................ 68

APPENDIX 

PREPARED STATEMENTS: 

Cochran, Hon. Thad ......................................................................................... 78

Grassley, Hon. Charles E. ................................................................................ 81

Beckmann, David ............................................................................................. 83

Buis, Tom .......................................................................................................... 89

Combs, Paul ...................................................................................................... 101

Evans, Jim ........................................................................................................ 115

Flory, Bill .......................................................................................................... 124

Hayes, Evan ...................................................................................................... 127

Hoffman, John .................................................................................................. 129

McCauley, Ken .................................................................................................. 134

Mitchell, Larry .................................................................................................. 139

Morris, Armond ................................................................................................ 149

Page

IV

PREPARED STATEMENTS—Continued

Murden, Dale .................................................................................................... 157

Pucheu, John ..................................................................................................... 168

Rundle, Lynn .................................................................................................... 178

Stallman, Bob ................................................................................................... 187

Swanson, John .................................................................................................. 243

Tallman, Dusty ................................................................................................. 246

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

American Cotton Shippers Association .................................................................. 258

‘‘Rethinking U.S. Agricultural Policy: Changing Course to Secure Farmer 

Livelihoods Worldwide’’ ....................................................................................... 281

QUESTION AND ANSWER: 

Grassley, Hon. Charles E.: 

Written questions for all panelists .................................................................. 348

Written questions for Bob Stallman and Tom Buis ....................................... 348

Beckmann, David: 

Written response to questions from Hon. Charles E. Grassley .................... 349

Rundle, Lynn: 

Written response to questions from Hon. Charles E. Grassley .................... 350

Stallman, Bob: 

Written response to questions from Hon. Charles E. Grassley .................... 351

(1)

PART III: CHALLENGES AND 

OPPORTUNITIES FACING 

AMERICAN AGRICULTURAL PRODUCERS 

Wednesday, April 25, 2007

U.S. SENATE, 

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY, 

Washington, DC 

The Committee met, pursuant to notice, at 9:30 a.m., in room 

SD–106, Dirksen Senate Office Building, Hon. Tom Harkin, Chairman of the Committee, presiding. 

Present: Senators Harkin, Conrad, Lincoln, Nelson, Salazar, 

Brown, Casey, Klobuchar, Chambliss, Lugar, Cochran, Roberts, 

Coleman, Crapo, Thune, and Grassley. 

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM 

IOWA, CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

Chairman HARKIN. Good morning. The Senate Agriculture, Nutrition, and Forestry Committee will come to order. This morning 

today we will hear testimony on farm programs and other topics 

from witnesses representing a diverse range of views on broader 

farm bill topics as well as the particular concerns of specific commodities and crops. 

Most of us commonly use the term ‘‘farm bill’’ when referring to 

the legislation we are considering today. Yet, by simply calling it 

the ‘‘farm bill,’’ we understate its far-reaching consequences for our 

entire Nation and beyond our borders, and we fail to give the full 

credit due to the vital contributions of American agriculture and 

rural communities. 

This legislation must fulfill a wide range of objectives covering 

agriculture, food, renewable energy, conservation, nutrition, trade, 

the rural economy, and a lot of other subjects. All of these needs 

and demands have to be balanced out in the bill that we write. 

A core mission in this legislation, as it long has been, is promoting profitability and income potential in agriculture. In doing 

so, we have to recognize that the food and agriculture sector is 

among the most rapidly changing of our economy. There are tremendous new challenges, but also unprecedented opportunities. 

With new technology, demographic shifts, the rapid expansion of 

biofuels, and the growth of global markets and competition, agriculture is at a crossroads. There is a good reason why we write 

farm bills for a limited period of time. 

2

As we review and rewrite the legislation, we must take the opportunity to update our food and agriculture policy so it is effective, 

efficient, and responsive to the needs of the rapidly changing agriculture sector. 

On the first panel, we have representatives of the two largest 

general farm organizations and two witnesses who will give our 

Committee additional and somewhat different perspectives on farm 

programs. The remaining two panels include witnesses representing wheat, feedgrains, upland cotton, rice, oilseeds, peanuts, 

and pulse crops. These commodities account for roughly one-half of 

the average U.S. farm cash receipts for crops. Three of these 

crops—corn, soybeans, and wheat—are grown on about 70 percent 

of the cultivated cropland in the United States. Of course, these 

crops are very important to the U.S. economy, as Federal farm policy has recognized over the years. By the same token, given their 

value and large acreage, the policy we write for these commodities 

has very substantial consequences for our Nation. 

When we wrote the Farm Security and Rural Investment Act of 

2002, we had the benefit of a significantly larger budget and the 

flexibility that goes with more money. It is true that commodity 

programs cost significantly less than was estimated 5 years ago, 

but under the strange logic of budget scoring rules, we do not get 

credit for that, and the prediction of stronger commodity prices reduces our budget for future years. That means we will have to 

scrutinize carefully every proposal as we put this farm bill together. 

So I look forward to hearing from today’s witnesses. We have a 

tremendous challenge ahead of us to craft a sound farm bill that 

will help improve income, profitability, and new opportunities for 

our Nation’s agricultural producers, while also meeting the variety 

of additional needs and objectives the legislation must address. 

With that, I will turn to my Ranking Member, Senator 

Chambliss, for his opening statement. 

STATEMENT OF HON. SAXBY CHAMBLISS, A U.S. SENATOR 

FROM GEORGIA 

Senator CHAMBLISS. Thank you very much, Mr. Chairman, and 

thank you for holding this hearing today on economic challenges 

and opportunities facing American agricultural producers. This 

hearing will provide agricultural producers and non-producer 

groups an opportunity to provide their views and concerns to the 

members of this Committee during an extremely critical time for 

American agriculture. 

Last year, in our Committee’s field hearings, I heard from most 

of the producer groups before us today about their experience with 

the commodity programs in the 2002 farm bill. Since that time, 

these producer groups who deal with farm programs on a daily 

basis have had time to further analyze their needs and desires for 

the 2007 farm bill. Today they will provide their specific proposals, 

and I look forward to their testimony that will help guide us in our 

work to construct a farm bill that meets the needs of all of the agriculture community. 

3

We also have before us today a couple of organizations who are 

not the traditional producer groups, and I am sure they will provide an interesting theoretical perspective also. 

I want to personally welcome my dear friend and fellow Georgian, Armond Morris, who is with us to testify on behalf of Southern Peanut Farmers Federation. Armond is a diversified family 

farmer from Irwin Count, Georgia, and currently serves as Chairman of the George Peanut Commission. I appreciate him joining 

us. 

Mr. Chairman, I just learned that those of us in the peanut family lost a young man yesterday. The son of Don Koehler, who is Executive Director of the Georgia Peanut Commission, was tragically 

killed in an automobile accident yesterday, so our prayers and our 

thoughts go out to Don and his family as they suffer through this 

tragedy. 

So, Mr. Chairman, I do thank you for holding this hearing and 

look forward to these witnesses today. 

Chairman HARKIN. Thank you very much. 

Now we will turn to our first panel, and we will just go down the 

line this way: Mr. Buis, Mr. Stallman, Mr. Flory, and Reverend 

Beckmann. 

First we will hear from Mr. Tom Buis, the National Farmers 

Union. NFU President Tom Buis has been a top advocate for family 

farms and rural America on Capitol Hill for nearly two decades. 

Before coming to Washington in 1987, Mr. Buis farmed in central 

Indiana and still owns his Indiana farm. Most recently, Mr. Buis 

served as NFU’s Vice President of Government Relations in the organization’s Washington, D.C., office. 

Mr. Buis, welcome to the Committee, and with you, as with all 

of the witnesses, all your statements will be made a part of the 

record in their entirety. Because we have a lot of witnesses to hear 

today, we are going to ask that you sum it up in 4 minutes, just 

the main points you want to make. I will not get nervous until we 

get over 5. 

[Laughter.] 

Chairman HARKIN. So welcome and please proceed, Mr. Buis. 

STATEMENT OF TOM BUIS, NATIONAL FARMERS UNION, 

WASHINGTON, DC 

Mr. BUIS. Thank you, Mr. Chairman, members of the Committee. 

If I do not use all my time, I promised Bob Stallman I would yield 

it to him in the interest of unity. 

In my written testimony, I have included the complete farm bill 

principles that were adopted by the NFU delegates, but in the interest of time today, I just want to focus on a couple of issues, what 

I see as a couple of exciting opportunities in rural America and two 

recent studies that we have commissioned, one on concentration in 

the marketplace and the other on an out-of-the-box, sort of new 

safety-net concept that I would like to outline. 

We conducted numerous farm bill listening sessions around the 

country to gather input from farmers, ranchers, and citizens in 

rural communities, and the level of optimism that I witnessed is 

greater than at any time in my lifetime, primarily because of two 

exciting economic opportunities: one is renewable energy—ethanol, 

4

biodiesel, wind, cellulosic—and the second is consumer-driven demand for fresh, source-verified, natural, direct-from-the-farm food. 

Both of those offer exciting opportunities for farmers to get a profit 

from the marketplace, which should be the No. 1 goal of this farm 

bill. 

One area of big concern is to enact a strong Competition Title 

that helps create, fair, and open competitive markets. According to 

our most recent study done by Drs. Heffernan and Hendrickson at 

the University of Missouri, the concentration and the processing 

and retailing sectors of agriculture continue to increase, except for 

one sector, and that is the production of ethanol where the market 

share of the top four firms has declined from 73 percent in 1987 

to 31.5 percent today; while the production by farmer-owned ethanol facilities has increased to 39 percent, making them the largest 

producers of ethanol. And I thank you, Mr. Chairman, and members of the Committee for the good public policy that helped drive 

that reversal of fortune, which basically defies those who have 

claimed that concentration is inevitable and it gives credibility to 

those of us who advocate that increased competition actually leads 

to higher prices to farmers and is good for rural communities. 

On the commodity safety net, we also commissioned a study—

once it became evident to us that we were going to be dealing with 

significantly diminished resources to write a new farm bill, and 

when this became apparent, we commissioned an economic study 

by Dr. Darryl Ray at the University of Tennessee that looked at 

a purely countercyclical safety net based on cost of production. The 

proposal would provide, according to Dr. Ray, the same level of the 

current safety net in the current farm bill, plus save an additional 

$2 to $3 billion per year. I think that is a really important development because we are all trying to figure out how we protect farmers in times of low prices, because any farm bill, as we know, works 

in a good year, when you have high prices, but it is the low years 

we have to worry about. 

This level of support at 95 percent of the cost of production would 

only provide Federal assistance if commodity prices are low and 

provide no assistance when prices are high. Our proposal would 

eliminate the direct decoupled guaranteed payments. The direct 

payments, as we are finding out, are difficult to defend when you 

have $4–a-bushel corn and are often amortized immediately into 

higher land prices and cash rents. 

The savings gained by eliminating the direct payments we feel 

should be used to fund a permanent disaster program. Emergency 

ad hoc disaster assistance is getting more difficult to enact, often 

leaving producers without assistance for several years after the 

weather disaster occurs. Permanent disaster assistance is a critical 

and inseparable part of an adequate safety net. Adopting a countercyclical safety net based on cost of production also addresses the 

problems we faced the past 2 years with skyrocketing input costs. 

It is the single biggest uncontrollable variable farmers face. A safety net based on prices or a direct payment do not address the volatility of higher energy prices, which farmers, as price takers, cannot pass on to others, as most businesses can and do. 

5

In summary, Mr. Chairman, I would hope you would look at both 

of those studies and our complete testimony. We would be glad to 

work with you and provide additional information about both. 

[The prepared statement of Mr. Buis can be found on page 89 in 

the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Buis. I can assure 

you we are looking at it even as we speak. 

And now we turn to Mr. Bob Stallman, American Farm Bureau 

Federation. Mr. Stallman is a rice and cattle producer from Columbus, Texas, serving his fourth term as President of the American 

Farm Bureau Federation. Prior to becoming the American Farm 

Bureau Federation President, Mr. Stallman was President of the 

Texas Farm Bureau, and I am told he is the first President to hail 

from the Lone Star State. 

Bob, welcome again to the Committee. Please proceed. 

STATEMENT OF BOB STALLMAN, AMERICAN FARM BUREAU 

FEDERATION, COLUMBUS, TEXAS 

Mr. STALLMAN. Chairman Harkin, Ranking Member Chambliss, 

and members of the Committee, thank you for the opportunity to 

discuss the economic challenges and opportunities facing American 

agricultural producers today and to present our recommendations 

for the 2007 farm bill which are designed to address those challenges. 

The farm bill encompasses much more than just issues that affect farmers and ranchers. It covers issues in which all Americans 

have a stake: alleviating hunger and poor nutrition, securing our 

Nation’s energy future, conserving our natural resources, producing 

food, fuel, and fiber, and promoting rural development. 

Our members have told us that the basic structure in the 2002 

farm bill should not be altered. The current farm bill is working 

and working well overall, not only for farmers and ranchers but 

also for the environment and consumers. The track record of success from the current farm program is very good. Ag exports continue to set new records, hitting $69 billion in 2006, accounting for 

one-fourth of farm cash receipts. Government outlays are considerably lower than what Congress said it was willing to provide as a 

farm safety net when the 2002 bill was signed. Farmers’ average 

debt-to-asset ratio is the lowest on record: about 11 percent in 

2006, and farmers have access to a dependable safety net. 

Following is a summary of the four key principles underlying our 

proposal. 

First, the proposal is fiscally responsible. Even though the goals 

for the farm bill continue to grow, we have structured our proposal 

to stay within the March CBO baseline and do not assume any additional budget dollars from reserve funds. We accomplish this by 

proposing offsets for all funding increases within a title. 

Second, the basic structure of the 2002 farm bill should not be 

altered. Farm Bureau’s proposal for the 2007 farm bill maintains 

the baseline balance between programs. Our proposal does not shift 

funding from title to title. 

Third, the proposal benefits all of the sectors. Farm Bureau is a 

general farm organization, with members who produce all commodities. It is easy for any one group to ask Congress to allocate more 

6

funding for programs that benefit its interests, without worrying 

about whether that will take funds away from others. Farm Bureau’s proposal seeks balance across the board. 

And, fourth, World Trade rulings are considered. The Farm Bureau proposal includes changes to comply with our existing agreement obligations and World Trade Organization litigation rulings, 

but it does not presuppose the outcome of the Doha Round of WTO 

negotiations, which are far from complete. 

We have nearly 60 recommendations and suggestions included in 

the report we have submitted for the record. I will highlight a few 

of the major proposals. 

One, we support continuation of the three-legged stool safety net 

structure of the Commodity Title, including maintaining direct payments and the loan support program. But we recommend that the 

current countercyclical payment program should be modified to be 

a countercyclical revenue program using State crop revenue as the 

trigger rather than the national average prices. 

Two, given the determination in the WTO Brazil cotton case, we 

support eliminating the fruit and vegetable planting restriction on 

direct payments. We support continuing the restriction for countercyclical payments. 

Three, we maintain our longstanding opposition to any further 

changes in the current farm bill payment limitations or means-testing provisions. 

Four, we support establishing a county-based catastrophic assistance program focused on the systemic risk in counties with sufficient adverse weather to be declared disaster areas. In conjunction 

with this, we support elimination of the Catastrophic Crop Insurance Program and the Noninsured Assistance Program. The Crop 

Insurance Program would then need to be re-rated to reflect the 

risk absorbed by the catastrophic program. 

Five, we support changing the Dairy Price Support Program to 

support the price of butter, nonfat powder, and cheese instead of 

only the price of milk. We support this only if total Federal spending does not increase under this approach. 

Six, we support haying but not grazing on CRP acreage with 

some reduction in the rental rate. Similarly, we support the use of 

selected CRP acres to harvest grasses raised for cellulosic feedstock 

with a reduction in the rental rate. In both cases, production practices that minimize environmental and wildlife impacts would have 

to be utilized. 

Seven, we support an additional $250 million annually to expand 

the EQIP program and to allocate 17 percent of all mandatory 

EQIP funding for fruit and vegetable producers. For the Nutrition 

Title, we support funding for additional purchases of fruits and 

vegetables. 

These are just some of the major recommendations. I will be glad 

to answer questions on the other recommendations I have not specifically covered. For clarification, any element of the current farm 

bill not directly addressed in our submission has our support to be 

continued. 

In closing, I want to emphasize that our recommendations are intended to more effectively use the limited dollars in the CBO baseline. There are still many unmet needs across all the titles of the 

7

farm bill, and our testimony would look somewhat different if additional budget funds were allocated for the farm bill. 

Thank you. 

[The prepared statement of Mr. Stallman can be found on page 

187 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Stallman. 

Now we turn to Mr. Bill Flory. Mr. Flory is a fourth-generation 

farmer from northern Idaho. He grows three classes of wheat, barley, bluegrass, timothy hay, garbanzo beans, and timber. In 1994, 

he was President of the Idaho Grand Producer, and in 1998, he 

was President of the National Wheat Growers. He currently sits on 

the Idaho Soil Conservation Commission and is here today to testify on behalf of the American Farmland Trust. 

Mr. Flory, welcome to the Committee and please proceed. 

STATEMENT OF BILL FLORY, AMERICAN FARMLAND TRUST, 

WINCHESTER, IDAHO 

Mr. FLORY. Mr. Chairman, thank you, Ranking Member 

Chambliss, and Committee members. Good morning. As you said, 

I am Bill Flory, a fourth-generation farmer. Currently I am on the 

Idaho Soil Conservation Commission and am working with American Farmland Trust. 

During the past several years, American Farmland Trust has 

conducted an extensive research and outreach campaign with hundreds of farmers, ranchers, policy experts, academics, environmentalists, nutritionists, and rural activists. What we have learned 

and observed during this process is a dynamic picture of agriculture. Mr. Chairman, agriculture has evolved dramatically, and 

the future holds out even greater change. The 2007 farm bill 

should, therefore, serve as a bridge for our Nation as we evolve and 

develop our thinking on how we support producers, help the environment, and ensure an adequate food, fiber, and now fuel supply 

for the Nation. 

Farm policy has always had an appropriate role in helping provide both a safety net of steady, reliable income assistance when 

disaster strikes and tools to manage risk. Unfortunately, though, 

existing commodity programs are narrowly focused on supporting 

prices, not revenues, and, consequently, large numbers of producers 

have fallen through the safety net. 

For example, in situations when yields are low but prices are 

high, the current countercyclical programs do not make payments 

even though they are needed. Thus, in years of drought or flood, 

a farmer may have a significant drop in yields and a drop in revenue. However, if prices remain high, a producer’s drop in revenue 

might not be covered by the current program. This has happened 

time and time again to wheat, barley—my main crops—and sorghum and other producers in the last 5 years. 

The 2007 farm bill is an opportunity to repair this hole in the 

safety net. In order to do so, the safety net should target revenue—

that is, price times yield—rather than just price, as existing programs do. Creating such a system will provide greater protection 

for producers. The Government would provide a per acre payment 

based on projected national revenue, which would be forecast every 

year before planting. Soon after harvest, Government payments 

8

would be made to farmers based on the difference between the actual revenue and the earlier projected revenue. Under such a system, the Government covers systemic risk due to weather, natural 

disasters and/or price risks during the course of the growing season 

based on actual market conditions. Such a system, therefore, could 

provide protection to producers for disasters, drought, weeks or 

months after harvest rather than waiting for any ad hoc disaster 

program. 

Just as importantly, such a system would be based on market 

prices rather than on Government-set targets and as such would 

eliminate the inequities created by a system that sets target prices 

higher for some than for others. 

Finally, by removing these market-wide or systemic risks, you 

also gain tremendous efficiencies in the crop insurance sector, the 

result of which will be lower taxpayer costs and reduced producer 

premiums on the individual insurance coverage. Producers can protect themselves from individual/local risk through crop insurance, 

and the Government will protect against global or national risk via 

a Government payment. This is an integration of a national difficult payment program with private insurance and is a key factor 

in the successful revenue-based safety net. 

Mr. Chairman, one more thought. Farmers and ranchers account 

for nearly half of all the land in America. These acres have a tremendous impact on our Nation’s human and natural environment. 

Most farmers are good stewards. No one I know wants to leave 

their land worse off for their children and grandchildren than the 

shape it was in when they were awarded it. AFT found strong support for rewarding stewardship, and I strongly believe in the concept of a rewards program. I believe this concept is alive and well 

out in the countryside, but the Conservation Security Program is 

in need of significant help and nurturing. 

I urge this Committee to recommit itself to finding a workable 

‘‘green payment’’ program as an additional stream of income to reward and inspire producers across the landscape for their stewardship of our Nation’s resources. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Flory can be found on page 124 

in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Flory. 

Now we turn to Reverend David Beckmann. The Reverend David 

Beckmann is one of the foremost U.S. advocates for hungry people. 

He has been President of Bread for the World for 15 years, leading 

large-scale and successful campaigns to strengthen U.S. political 

commitment to overcoming hunger and poverty. Before that, he 

served at the World Bank for 15 years overseeing large projects 

and driving innovations to make the Bank more effective in reducing poverty. 

Reverend Beckmann, please proceed. 

STATEMENT OF REVEREND DAVID BECKMANN, BREAD FOR 

THE WORLD, WASHINGTON, DC 

Rev. Beckmann. Thank you very much, Chairman Harkin, Ranking Member Chambliss, members of the Committee. Bread for the 

World is a Christian citizens movement against hunger. Our memVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
9

bers and churches across the country urge Congress to do things 

that are good for hungry and poor people. 

This Committee has done a lot for hungry people. I think everybody who is here this morning on the Committee has been a hero 

on one or another Bread for the World issues, so I am delighted 

to be here with you, and I want to say there is a deep connection 

between U.S. agriculture and hunger. So farm groups over decades 

have helped us achieve progress for hungry people in our own 

country and around the world. 

Bread for the World is focusing this year on asking you to modify 

the farm bill in ways that we think would make it better for hungry and poor people in our own country and around the world. 

In 2002, Bread for the World focused mainly on the Nutrition 

Title and the Food Aid Title. They are clearly important to hungry 

people. And in this farm bill, too, we think it is important to 

strengthen the Food Stamp Program. We think that you should 

both strengthen and reform the food aid program. 

But after 2002, we started hearing from church leaders in Africa 

and other parts of the developing world that our farm programs 

were making problems for farm and rural families in their countries, very, very poor people. And as we have delved more deeply 

into the farm bill as a whole, we have come to the conclusion that 

it could be changed in ways that would be a lot better for rural 

America, too, especially for rural Americans of modest means. 

All of you know that there are a lot of people in rural America 

who are really struggling. Poverty and hunger are more widespread 

in rural America than in urban America. But most poor people in 

rural America are not farmers, so they do not get much help from 

the farm bill. And, of course, people who have small farms get less 

help from the farm bill than people who have large farms. 

My cousin in Nebraska, Senator Nelson, has 2,000 acres in Seward County. They have received a lot of help from the farm programs. But I have other friends in Nebraska, a couple that has a 

small operation. They are struggling to live, and they are not getting any help. 

I think you all know the statistics. Most of the help in the Commodity Title goes to relatively affluent families. Some of it goes to 

very wealthy families. People get used to any system that you create. But this system just does not strike us as right, and it seems 

to us that it gives you an opportunity to shift resources in ways 

that would do a better job for rural America, especially for people 

of modest means. 

The way that the U.S. and the other industrialized countries 

manage our agriculture is also tough on farm and rural people in 

developing countries. Many of them produce crops that they cannot 

sell in the industrialized countries, or they are competing against 

subsidized exports from our country. 

There are poor people in the developing countries who benefit 

from subsidized food, but 70 percent of the undernourished people 

in the world make their living from agriculture. So, on balance, the 

way we are organizing our agriculture here now is an obstacle to 

the progress that is underway against hunger and poverty in the 

world. 

10

The fact that corn and some other commodity prices are high 

right now gives you an opportunity to make some shifts. There are 

other ways that you can help farmers in this country, through 

rural development, conservation, risk management, savings 

schemes. If you would shift in those directions, you can help farmers here and not have these negative effects on poor and hungry 

people around the world. 

I am grateful for all that you are already doing for hungry people. I am asking you to make the farm bill even better for hungry 

people in our country and around the world, to make it better for 

rural Americans of modest means, and also to make it better for 

poor and hungry rural people in Africa and the other developing 

parts of the world. 

[The prepared statement of Rev. Beckmann can be found on page 

83 in the appendix.] 

Chairman HARKIN. Reverend Beckmann, thank you very much, 

and I personally want to thank you for so many years of speaking 

truth to power. You always have and I appreciate that. And I want 

to make it clear for the record that I serve as an honorary member 

of the board of Bread for the World, and I am very proud of that 

and very proud of the work that Bread for the World does. 

Now we will turn to questioning. We are going to do 5–minute 

rounds, and we will try to be strict because we have a lot of people 

here this morning. 

I will just start off with a general question. We have all talked 

about lower spending for commodity programs than was anticipated when we passed the farm bill 5 years ago. It is not all bad. 

I have repeatedly heard farmers tell me they want to get more income from the market than they do from the Government, anyway. 

I think it is appropriate for the Government to help producers 

withstand the vagaries of weather and markets. I am the first to 

offer a strong, effective safety net for ag producers. But I also know 

we have a tremendous capacity to produce agricultural products in 

this country and that producers will not prosper if we eliminate all 

the risk. 

Now, some of the witnesses referred to the three-legged stool of 

direct payments, countercyclical payments, and marketing loan 

benefits in the current farm program. We also provide significant 

risk management through the Federal Crop Insurance Program. So 

for many producers, we have a pretty solid safety net structure, 

while other producers repeatedly need disaster assistance. 

I guess my question is: From your perspective, where do Commodity Title programs overlap and duplicate coverage available 

through Federal crop insurance? What gaps leave producers most 

vulnerable to weather and price disruptions? 

I guess to sum up that question even more succinctly: What can 

we move away from and move into that will cost us less money but 

still support a viable safety net for farmers—a safety net that is 

a true safety net, just for low prices, weather, that kind of thing? 

Mr. Buis? 

Mr. BUIS. Thank you, Mr. Chairman. I think that moving—well, 

first of all, the biggest single gap that I see out there is when a 

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11

related disasters. So filling that gap is very important. Ad hoc assistance does not work much anymore. 

But the second thing is, So how do we do it? Our concept is to 

take the direct money to help fund a permanent disaster program 

and other farm bill priorities, and the reason I say that is because, 

as a corn farmer in Indiana getting $4 a bushel for my corn, I 

should not be getting a direct payment while someone in western 

Kansas or western Nebraska has lost their crop and is not getting 

sufficient resources to continue on in the future. I think that is a 

better use of Federal funds. 

Chairman HARKIN. Mr. Stallman? 

Mr. STALLMAN. Mr. Chairman, we tried to address your question 

very directly in our proposal by putting in place a county-based catastrophic assistance program. That is——

Chairman HARKIN. Based on revenue. 

Mr. STALLMAN. No, this is based on disaster losses of more than 

50 percent in counties that are declared disaster areas. This is the 

disaster portion of our safety net structure. Then that allows elimination of the CAT, elimination of the NAP program, which our producers say has not worked very well, and re-rating of the Crop Insurance Program then to provide cheaper buy-up coverage above 

that. When you——

Chairman HARKIN. Can I just interrupt? It seems that you both 

are for some kind of permanent disaster program. If we have a permanent disaster program, what is to prevent farmers from just 

planting knowing that they are going to get a disaster payment 

anyway? We have had that problem in the past. You know, we 

have been around this place a long time. We did away with that 

in 1981. 

Mr. STALLMAN. Absolutely, and that is a concern of ours, and 

that is why the catastrophic verbiage is in there, because that is 

for losses greater than 50 percent. That is catastrophic. And the 

scenario we have been going through trying to seek ad hoc disaster 

assistance with the political and budget hurdles that that entails 

every year is unsustainable, and it is not very predictable. And this 

provides a base level of support to replace the CAT program and 

then buy up coverage above that with a re-rated Crop Insurance 

Program, coupled with the countercyclical revenue-based safety net 

substituting for the countercyclical program. 

Chairman HARKIN. Got it. 

Do you have a view on this, Mr. Flory? 

Mr. FLORY. Mr. Chairman, we believe that a national-level program is a better option for providing the safety net and, again, not 

based just on price but based on revenue. 

We have commissioned an economic study to analyze the cost/

benefits of our program, and we believe that the integration of Government systemic coverage and private crop insurance will result 

in a cost savings of over $1 billion annually in the amount of Government subsidy we provide for crop insurance today. 

Chairman HARKIN. OK. Reverend Beckmann, this may be my 

last chance I get to ask a question. Food stamps do a great thing 

in this country, but we find out that people—we instituted food 

stamps to provide food for hungry people, to provide nutrition. Now 

we find out that some of the most obese people in the country are 

12

those on food stamps, they have the worst diets, and they have the 

highest rates of diabetes. 

What could we do in food stamps to provide more nutritional food 

for people on food stamps? 

Rev. Beckmann. Well, it is an odd thing that in our country, the 

kind of hunger we have in our country often contributes to obesity. 

Virtually all the food stamp families are running out of food the 

last week of the month. We know that now because we have EBT 

and we can see on the computer that nearly all the money for food 

is gone by the end of the third week. So those moms do not each 

much for a week. They protect their kids for a few days, then the 

kids do not eat much. Then when the food stamps come in or they 

get a wage check, then they are vulnerable to binge eating. So you 

eat crummy food, there is irregular eating, and this contributes to 

obesity. 

Just making the Food Stamp Program stronger, so that people 

could eat for the whole month, would be a powerful way to tackle 

obesity among low-income people. In addition, we favor incentive 

programs that would give people additional food stamps to buy 

quality food. 

Chairman HARKIN. Thank you very much. I went about a minute 

over. 

Senator Chambliss? 

Senator CHAMBLISS. Well, here we were looking for you guys to 

come in here and give us solutions to our problem. 

[Laughter.] 

Senator CHAMBLISS. Mr. Buis, I hear you saying no direct payments. Bob, I hear you saying keep them basically the same. Mr. 

Flory, you are saying increase direct payments. So here we go. 

Let me start with you, Mr. Stallman. On your flex acres issue, 

we had specialty crop folks in yesterday, and I told them what you 

were going to come in here and say today because I had already 

seen your proposal. And I asked all of them, I said, ‘‘What if we 

eliminate the flex acres provision and we replace that with $250 

million in funding for conservation programs to specialty crop farmers? What is your reaction to that?’’ And the general conclusion 

from all of them was that by the elimination of the flex acres issue 

in the farm bill, the specialty crop growers would suffer about $3 

billion in losses of revenue. And, obviously, $250 million would not 

come near replacing that. 

If you have any comment on that, I will give you an opportunity 

to respond to that. Plus, is it your position, Bob, that with your 

proposal on flex acres, that is a green box issue now for WTO concerns? 

Mr. STALLMAN. I will answer the last part of that first, Senator 

Chambliss. Yes, that is our concern, and that is why we are proposing the elimination of that. The Brazilian cotton case ruling was 

pretty clear. Although that was not a direct part related directly 

to the cotton, it did set the stage basically for those payments to 

be categorized as amber box as opposed to green. 

It does not surprise me that the fruit and vegetable sector says 

that that is not enough. We have had this discussion internally 

with our own fruit and vegetable producers. Our attempt was to 

recognize the level of support that has to be given up now, basiVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
13

cally, if you forego the direct payments to go in fruit and vegetable 

production, and so that was the basis for our calculation. 

There was an ERS study last year, Report No. 30, I think, in 

2006, that indicated that in the aggregate the shift would not—or 

the change in the provision would not create a $3 billion level, basically, of angst for the fruit and vegetable producers, and it is for 

a very simple reason. You have to have a lot different skill set. You 

have to have more capital. You have to have access to market 

channels, labor issues. There is a whole host of things that right 

now, if a producer wants to shift into fruit and vegetable production on acres that is currently receiving payments, it is not—the 

level of the payment is not an impediment for that to happen. And 

so we do not believe the impact would be $3 billion. We do believe 

there would be an impact that would be regional in nature and 

probably crop-specific crops. But in the aggregate, we do not believe 

that the impact would be as great as what has been projected by 

the industry itself. 

Senator CHAMBLISS. Mr. Flory, you raise an issue that is a constant issue in every farm bill that I have been involved in, this 

being my third one now, and that is that oftentimes, as hard as we 

try to make sure that payments go to those who need it, there is 

no way that we can ensure that in every part of the Commodity 

Title that only those farmers who are having a tough year are 

going to get a helping hand from the Federal Government. 

I am curious about your proposal to provide additional direct 

payments to those farmers like I talk to in Kansas who have suffered every year for the last 5 years, and you are right, the countercyclical program means nothing to them. They do need more in 

direct payments. 

Do you have some sort of trigger in mind to cause an increase 

in those direct payments, a trigger such as disaster of some sort? 

And if you can elaborate on that a little bit, I would appreciate it. 

Mr. FLORY. Mr. Chambliss, thank you. First of all, we are not advocating larger direct payments. I may have misspoken or that 

may have been misinterpreted. Our proposal is within the current 

budget numbers that are projected, and direct payments—we see 

direct payments as a potential transition tool long term. Direct 

payments we think should be transitioned to conservation over 

time. 

To address your issue of who gets payments when they need 

them and when they do not need them, our national revenue proposal allows payments—or provides payments on a systemic as well 

as on an individual base within individual crop insurance provides 

those when needed based on revenue and on price and will not distort planting intentions or particular actions of farmers that the 

market is not sending them already. 

Senator CHAMBLISS. I may want to ask you about that again 

later, but I will come back. 

Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Chambliss. 

Now Senator Conrad. 

Senator CONRAD. Thank you, Mr. Chairman. Thank you for this 

really very important hearing, and thank you very much for the 

speed with which you have turned to rewriting the farm bill. I 

14

think it is critically important that we move as expeditiously as 

possible, and you certainly are leading the way, and I thank you 

for it. 

I would like to ask the witnesses, I have been reading this series 

in the Washington Post about agriculture, and the Washington 

Post has been suggesting that there is widespread abuse and that 

almost all the farm program payments go to wealthy people. And 

while I would be ready to acknowledge there are areas that need 

reform in agriculture, I think most people on this Committee would 

recognize there is a need for reform. The basic message that there 

is no need for support for agriculture strikes me as completely off 

base. I would just like to know your reaction. 

Mr. Buis, how would suggest or for what reason is there a requirement for support for agriculture in your judgment? 

Mr. BUIS. Thank you, Senator. I, too, have been reading those 

stories, and I think it often paints an unfair picture of rural America. You know, they compare apples to oranges, and who gets the 

support and at what level. Oftentimes people use the 2 million 

total farmer number and then divide it by the payments. And we 

all know that a great many of those people are not real farmers. 

They do not count on their income. And I think you have sort of 

three classes of farmers: you have the very small, sometimes hobby 

farmers, sometimes for real; you have the people in the middle that 

are doing it full-time for their only source of income; and then you 

have some very wealthy farmers and farming operations that are 

probably more than just agriculture. 

Our concern is about that group in the middle, and the variability in prices that they cannot control, the variability in inputs 

that they cannot control I think compels us to have farm programs 

to help them out in these tough times. It is a matter of national 

security. 

If you look at what has made this country great, I think it is 

farmers producing ample supply and high-quality food and fiber 

throughout our Nation. That is threatened in the future, especially 

if we do not continue a very rural economy of family farmers. 

Senator CONRAD. Well, I thank you for that. You know, one of 

the things that struck me about these articles, you do not see much 

reference to the cost of food in this country, the lowest cost of food 

of any country in the history of mankind. You do not see much reference to a plentiful and healthy supply of food. You do not see 

much reference to that. You do not see much reference to the 

health of the agricultural sector in this country. You do not see 

much reference to the fact that we are a major exporter for this 

Nation. You do not see much reference to that. You do not see 

much reference to what is the true status of most farm families, 

at least as I know it in my State. 

I remember one of their articles indicated that—they were talk- ing about farmers who were earning $250,000 to $500,000 a year, 

made it sound as though that was their net. There was no reference to that was their gross. There was no reference that every 

input cost came out of that. There was no reference that the land 

cost came out of that. There was no reference to all their living 

costs came out of that. There was no reference to the feed cost, the 

fertilizer cost, the operating cost, that all of that came out of that. 

15

So it left a very serious misimpression about the earnings of family 

farmers. 

Mr. Stallman, what would you say in answer to the Washington 

Post series of articles? 

Mr. STALLMAN. Well, Senator, we have been just as disturbed as 

you by those articles. We have actually tried to respond, both in 

seeking editorial boards and also by submitting editorial opinions 

and letters—without a great deal of success, I might add. 

It is easy to take selective facts, distort them, and come up with 

a different picture than what reality suggests is the case, and that 

is how we view the Washington Post articles. Your fundamental 

question about why do we still need to maintain supports in this 

country for agriculture is really twofold: one is to level out the 

great variability that exists in terms of net farm income due to 

weather, due to rapid changes in input costs, all of the things that 

were just talked about; and the other reason is we are still in a 

very unlevel playing field with respect to the world. That is another issue. 

Senator CONRAD. I am just out of time. I would just like to rivet 

that point. The fact is our European friends provide 5 times as 

much support to their producers as we provide to ours, and they 

outdo us on export subsidy 87 to 1. So if people want to abandon 

our people to a total unlevel playing field, they will have to take 

the consequences. 

I thank the Chairman. 

Chairman HARKIN. Thank you very much, Senator Conrad, and 

I just want to for the record thank you for your comments on the 

expeditious moving of the farm bill. But we would not be halfway 

as far as we are now were it not for the foresight of Senator 

Chambliss in chairing this Committee last year and having the 

hearings around the country and establishing the record. So I just 

want to make it clear that we have worked together on this, and 

I thank Senator Chambliss for moving the ball forward beginning 

last year. 

Now we will recognize Senator Roberts. 

Senator ROBERTS. I left, but I came back. 

[Laughter.] 

Senator ROBERTS. But I would be delighted to yield to the distinguished former Chairman. 

Chairman HARKIN. Senator Lugar then. 

Senator LUGAR. I thank the distinguished Chairman, and I 

thank the current Chairman and the past Chairman for a great 

deal of the statesmanship that has brought us to this point. 

I am trying to explore this year in drafting legislation that tries 

to take a look at all farmers and everything they produce on the 

farm. It is not a new concept, but before this Committee we have 

heard people talk about whole farm income. And I think that is 

very important. 

We had testimony from the fruit and vegetable people who are 

disadvantaged currently or for others who are not among the five 

major crops, and the fact is that each one of us who are farmers 

obtain income in many ways from the farm. My hope would be we 

could think through a safety net for maintenance of farm income 

so that, regardless of whether you had livestock or fruits and vegeVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
16

tables or an orchard or whatever, you were considered a farmer 

and had at least the benefit of the same sorts of supports of trying 

to maintain income and maintain your farm. 

There could be debate, and there would be, as to what level of 

safety net provides that and whether it ought to be based upon 5 

years of experience or 3 years of experience, there being ups and 

downs in the process. But at least I would like consideration this 

year of something that is not crop specific, that does not have the 

vested interests of particular groups of people who come to us with 

one crop in mind or one section of the country from time to time. 

And to couple this with farmer savings accounts, once again not a 

totally new idea, but one that is increasingly among many farm 

groups and those interested in nutrition programs offer opportunities for farmers to put away some money in the event they have 

a reasonably good year under favorable circumstances in that savings account, as a rainy-day fund for the days that are not so good. 

Now, once we get into this type of a proposition, obviously it is 

so markedly different from our current system that any change of 

this magnitude creates many questions, and we are trying to study 

these before putting pen to paper finally and producing a bill, 

which we plan to do in the days ahead, so there can be honest debates on the language itself for Title I. 

My initial estimates are that this will have great savings, and, 

therefore, the debate then in the Committee will be on our objectives in conservation, our objectives in further nutrition support for 

people throughout the country, on a number of objectives that usually are covered by the farm bill, but by necessity cannot be covered quite so generously. 

At the end of the day, my guess is that we will probably still 

have savings of money which would be applauded by taxpayers 

who are not farmers or who are not advocates before us today, but 

at the same time, that is not my total objective. It is, rather, equity 

for farmers generally as well as for the American people in terms 

of nutrition. 

Now, this is not on paper and, therefore, it is unfair to ask each 

of you for any comment you might have about that general thrust. 

But, nevertheless, I will ask you anyway, and, Tom Buis, would 

you give us a judgment for a moment? 

Mr. BUIS. Well, you know, I think it is an interesting concept, 

Senator, that we would be glad to take a look at. I think given the 

budget climate and the other challenges we face, we need to look 

at a lot of options on what really accomplishes the goal of the farm 

bill and the farm programs. 

Senator LUGAR. Bob Stallman, do you have a comment? 

Mr. STALLMAN. With respect to farm savings accounts, we have 

supported that concept for a lot of years. We have always been just 

short of getting something implemented there. 

Our delegates have not explored whole farm revenue recently. I 

remember in the mid–1990’s, as we were moving to the 1996 farm 

bill, we looked at some of those proposals. And, rightly or wrongly, 

a lot—and this is just sort of anecdotal. A lot of our members were 

concerned about the level of private information that would have 

to be provided to document basically whole farm revenue and payments under such a program, i.e., tax returns and something like 

17

that. And they had a great concern about that, so I do not know 

if that can be resolved, but that was one of the concerns back then. 

Senator LUGAR. Mr. Flory? 

Mr. FLORY. Mr. Lugar, yes, we see the CSP and conservation 

type programs, the concept of rewarding stewardship, as being 

alive and well in one method. It also transcends all commodities. 

It is not commodity specific, and it should not be regional specific. 

And some thoughts on this would be: one, it needs to be funded; 

two, it needs to be—simple forms need to apply—as I sit on a State 

Conservation Commission, forms need to apply federally as well as 

across State lines, one application, allocation of time, people, and 

money, efforts more efficient. And it should not be—you know, conservation should not become an entitlement. There should be a 

strong oversight and requirement for reasonable and measurable 

benefits from it. Conservation could provide that solution, Senator. 

Senator LUGAR. Reverend Beckmann? 

Rev. Beckmann. What you are talking about sounds like almost 

precisely the sort of farm bill that Bread for the World would like 

to see. We will have to see it, but we would campaign to get those 

kinds of reforms enacted by Congress. Bread for the World is working with a working group that includes the Conference of Catholic 

Bishops, the Lutheran Church the Methodist Church, the Presbyterian Church, Evangelical Churches and Jewish groups. Each of 

them have their own decision making process, but I am pretty sure 

that the religious community would be really thrilled by this kind 

of reform. 

Senator Conrad is right that some of the abuses in the current 

system are giving farmers a bad name. It does not make any sense. 

Reform along these lines, it seems to me, would revivify broad 

American support for strong support for farmers. 

Senator LUGAR. Thank you. 

Chairman HARKIN. Thank you, Senator Lugar. 

Now Senator Roberts. 

Senator ROBERTS. Yes, thank you, Mr. Chairman and Mr. 

Chambliss, for calling this hearing today and providing the leadership as we move forward in the preparation of the always difficult 

task, like pushing a rope, of writing a new farm bill. 

Senator Conrad, thank you for your remarks. 

Is there anybody here on the Committee or anybody in the audience that does not recognize the fact that we have to have champions for production agriculture? I am talking about the people who 

actually produce the food and fiber for this country and the world, 

and that is not somebody that is a hobby farmer. People keep talking about a small family farmer versus a big farmer. That reminds 

me of the story of the 5–foot–3 farmer from Vermont who is a parttime farmer reading Gentleman’s Quarterly on his swing porch 

with his orchard, as opposed to the fellow that is 6–foot–2 that belongs in the Farm Bureau, out in my part of the country who farms 

10,000 acres, but somehow or other the Washington Post cannot 

get that—just cannot get that. 

I am happy that you said the remarks that you did, Senator 

Conrad, and I support you all the way, because I think these folks 

are taken for granted. 

18

I am happy to see we have two Kansans on the witness list 

today: on the second panel, Ken McCauley from White Cloud, Kansas, and President of the National Corner Growers Association; on 

the third panel representing the North American Millers Association is Lynn Rundle from Manhattan Kansas, home of the ever optimistic and fighting Wildcats. 

[Laughter.] 

Senator ROBERTS. John Thaemert is the President of our National Wheat Growers and Jerry McReynolds is the SecretaryTreasurer of that organization, so as you can see, Mr. Chairman, 

Kansas continues to play leading roles in our Nation’s farm policy 

debate. 

Well, after suffering from years of drought and subsequently low 

yields, this year Kansas producers finally—finally—will see optimal 

growing conditions with significant moisture. However, just before 

we got really excited about it, we had an April freeze, and it really 

blanketed our State and others, and it jeopardized the crop, shifting the mood from optimism to concern. 

Our producers also faced the challenges of ever expanding Government intervention and regulations, increasing production costs, 

large holes in the safety net, just to name a few. In fact, there has 

been no safety net in the Great Plains, on the High Plains, where 

we do produce a lot of the crops that we need to feed this country. 

In my time as a congressional staffer, a Congressman, and a Senator, I have worked on no less than seven major farm bills leading 

into this debate. Each one was unique, and this round is certainly 

no exception. I agree that new policy ideas are essential to the 

long-term success of agriculture. I am aware of all the work that 

has been done on the programs being based on revenue instead of 

price. I encourage that. I understand that. I especially want to 

thank Senator Lugar for mentioning farm savings accounts. We 

had that as a promise way back in 1996 when the Farm Bureau 

and the wheat growers and everybody else endorsed it. That is 

really a Finance Committee jurisdiction, and I know that Senator 

Conrad and I are going to work hard on that. 

But I do not think it is in the best interest of agriculture to take 

from one title of the farm bill at the expense of another, and I 

worry that some may want to travel down that road this year. Mr. 

Chairman, as you know, I voted against the current farm bill. At 

the time, I warned our wheat producers that had the bill been in 

place since 1982 previous to the passage of the farm bill, no countercyclical payments would have been made in 9 of those 17 years. 

Those were some of the toughest years that we had. That is why 

we offered the Cochran-Roberts substitute. 

Unfortunately, that trend worsened over the life of this farm bill, 

bringing the number to 14 out of 22 years. Since the bill’s passage, 

our wheat producers have received no countercyclical payments, little benefit from the Loan Deficiency Program. That is not right. 

That is discrimination. That is two-thirds of the years that a farm 

bill has been in place that the Great Plains really have not received 

any assistance. That is just not right, and we should not let that 

happen again. 

At the same time, while severe weather decimated yields, we reduced supply and thus increased the price of wheat well beyond the 

19

target price. Additionally, when producers have no crop to harvest, 

there is no use for an LDP program. 

Now, during these difficult times, our wheat producers had only 

two programs they could rely on. One was direct payments, and the 

other was crop insurance. Bob Kerrey, Dick Lugar, and I did not 

work for 18 months to improve the Crop Insurance Program so we 

could get 95 percent participation way out there in western Kansas, eastern Colorado, all throughout the Great Plains, to have the 

Crop Insurance Program in addition become a target for revenue 

for other programs. And if you do not want disaster payments, the 

best answer is a good Crop Insurance Program. And, by the way, 

when you lose a crop, then your crop history goes down, and you 

are in a world of trouble in that regard as well. 

Access to foreign markets is also very critical, as has been said 

by our witnesses, to our farmers and ranchers. You cannot write 

a farm bill for the EU or Brazil or Canada or potential agreements 

in the WTO, but we should be aware of our global commitments. 

In this regard, the direct payments are our least trade-distorting 

program in the Commodity Title. Since direct payments have been 

the only program in the Commodity Title that provide any safety 

net to the majority of producers in my home State, I do get concerned when I read that some want to cut funding to direct payments and reduce assistance for crop insurance. I will try very 

hard not to let that happen. 

Efforts to minimize cut, trim, or reduce these programs will not 

sit well in farm country, certainly not with this member, and that 

should be the case from Texas to North Dakota and the Great 

Plains as well. And I urge members who are representing those 

States to certainly take notice. 

Were it not for direct payments and crop insurance the last 4 or 

5 years, many Kansas producers would be out of business altogether. Just ask their bankers. Too many are not. 

Kansas does produce more wheat and sorghum than any other 

State. Both of these crops have indicated their No. 1 priority in this 

farm bill is to protect the direct payments. That being said, I think 

my decision is very clear. 

I look forward to working with my colleagues and producers in 

the fields to write a realistic and reasonable and predictable bill. 

I thank the witnesses for their attention and for coming and for 

their advice and their expertise and their leadership for production 

agriculture. 

Thank you very much, Mr. Chairman, Chairman Chambliss. 

Senator CHAMBLISS. [Presiding.] What would you like to do with 

direct payments? 

[Laughter.] 

Senator ROBERTS. I think we ought to stick them where they are 

needed, sir. 

[Laughter.] 

Senator CHAMBLISS. Thank you, Senator Roberts. 

Senator Salazar? 

Senator SALAZAR. Thank you very much, Senator Chambliss, and 

I also want to thank Chairman Harkin for the great work that he 

has done in this effort, picking up from where Chairman Chambliss 

had taken off last year. 

20

Let me just at the outset, as we move into these important titles 

of the farm bill, I want to echo what Senator Conrad said, that I 

think that Washington and the Washington Post and lots of our 

urban brethren and sisters are disconnected to what is happening 

in rural America. 

When Senator Pat Roberts travels through Kansas, when I travel 

through the eastern plains and I see communities like Otis and 

Pritchett and a number of other communities that essentially are 

withering on the vine, I see an America out there that has been 

forgotten, and, frankly, in many ways it has been both—not only 

a Republican administration has done that, in my view, in the last 

6 years, but even before that a Democratic administration, that we 

have not yet found the right policies and initiatives to make sure 

that rural America is having an opportunity to survive the way 

that urban America survives. My own State of Colorado was one 

of the fastest-growing States in the Nation in the 1990’s, yet in my 

view there were about 12 counties of the entire State, along the I–

25 corridor, that benefited from that growth, and the rest of the 

State, which is mostly agriculturally dependent, was declining both 

in terms of population and economic vitality. 

And so I think what we are doing here in this farm bill in trying 

to chart a course for agriculture as a national farm policy is very 

important in how we revitalize rural America. I very much look forward to working with both my Democratic and Republican colleagues to come up with the best farm bill possible. 

I want to ask a question about energy to both you, Mr. Buis, and 

Mr. Stallman. You say that as we look forward to the future that 

things are exciting out there in farm country. And I have seen a 

lot of that happen throughout my State as we embrace this clean 

energy future, which I think is going to bring an unprecedented 

21st century opportunity for rural America. 

Mr. Stallman, I noticed in your testimony, provided by an organization that has many members in my State, that you are OK, it 

seems, leaving the Energy Title of the farm bill with respect to the 

kind of funding that it got in 2002. I do not, frankly, know that 

that is going to be enough if we really are going to be part of this 

biofuels revolution that is going to help agriculture. 

So my question to both of you is: What is it that we can do to 

make sure that when we get into Title IX of the farm bill, we are 

doing the most to take advantage of that vision that you described, 

Mr. Buis? Mr. Stallman, why don’t I start with you, and then Mr. 

Buis. 

Mr. STALLMAN. Well, we certainly support the renewable energy 

dynamic that we are in now. There is no question about that. One 

of the issues we discussed internally was——

Senator SALAZAR. Let me push you a little bit. You support the 

energy dynamic. It is easy to talk about this thing in terms of rhetoric, but when we look at the fiscal constraints that we are in, 

there is only so much money for the farm bill. The position of your 

organization is we ought not to put any more money into the Energy Title of the farm bill. Is that correct? 

Mr. STALLMAN. That is not our position in total. With respect to 

the CBO baseline and the restrictions we are under now, we are 

saying we should not shift from other titles in the farm bill into 

21

energy. Part of the issue is that many of the support elements that 

are in place for renewable energies are outside the jurisdiction of 

the Ag Committee. There could always be more dollars, I suppose, 

put in grants for things to promote cellulosic feedstock and those 

kinds of things, and our proposal did actually address that to some 

extent with using CRP ground for cellulosic feedstock production. 

But once again, with limited dollars, we had to make a decision 

about, how those should be allocated, and we made the decision 

that there should not be shifting between the titles given the limited dollars in the CBO baseline. 

Senator SALAZAR. Mr. Buis? 

Mr. BUIS. I think we should be very aggressive. Without a doubt, 

this is the single most exciting thing that has come along in my 

lifetime in agriculture, and there is a lot of enthusiasm, not just 

about ethanol but biodiesel and cellulosic and wind energy. 

I think there are a couple of things you could do. One is step up 

the research and development. You know, ethanol just did not 

occur last year. It has been a 30–year effort, and it took a lot of 

hard work to get to where they were in a position to capitalize on 

higher energy prices. It took a lot of work to increase the efficiencies. 

When we called it ‘‘gasohol’’ back in the 1970’s, it was not energy 

efficient, it was not economically efficient. And, in fact, our real expertise probably came from people that made alcohol in their backyards. It was not very sophisticated. But people had a vision, and 

it took a while to get there, and I think the Federal resources that 

can be directed to help——

Senator SALAZAR. Would you support shifting some of the money 

from the other titles into Title IX for energy? Or do you have a different——

Mr. BUIS. I think I would. I think that safety net concept that we laid out today provides $3 billion in savings out of the Commodity Title and still provides the same level of protection. That 

could be used for not only a permanent disaster program to take 

care of those people that do not have a crop, but it could also be 

used for energy priorities or conservation priorities, Senator. 

Senator SALAZAR. Thank you very much. I look forward to working with you on these issues, the Commodity Title, the permanent 

disaster insurance, and lots of other things that we obviously have 

a discussion underway. I just would say one final thing in conclusion. When Senator Conrad made his statement about, I think, the 

insensitivity of the Washington Post, I often wonder what would 

have happened if in 2007 this Congress was even considering the 

creation of an Agriculture Committee. Given that we have so many 

people who frankly do not understand the importance of agriculture, especially, I think, in the other chamber, I do not know 

that we would have an Agriculture Committee today. So I am glad, 

Chairman Harkin, that you and the rest of the members of this 

Committee continue the tradition of being advocates for that part 

of America that needs a lot of advocates. 

Thank you. 

Chairman HARKIN. [Presiding.] Thank you very much, Senator 

Salazar. 

Now we turn to Senator Nelson. 

22

Senator NELSON. Thank you, Mr. Chairman, and thank you, gentlemen on the panel. I appreciate very much the comments. 

You know, the question that we really have as we look at a farm 

bill is to focus on what we really are pursuing here. I think we are 

pursuing food, fuel, and, yes, Senator Chambliss, fiber, and as long 

as we are going with the ‘‘F’’ words, feed for the livestock industry, 

because that is what we are really about here. I would like to have 

us think about the farm bill for 2007 as the Food and Fuel Security 

Act, recognizing that it is also about fiber and feed. 

In that regard, you are right, Tom. When you go back to the 

1970’s and 1980’s, even in 1991 when I was elected Governor of Nebraska—or 1990, taking over in 1991, we had one ethanol plant 

that produced 30 million gallons of ethanol. When I left, we had 

seven. I do not want to take full credit. I just want the record to 

reflect it happened during my watch. Now we are looking at 14 or 

15 plants. We are looking at $4 corn, and we recognize that this 

is the most exciting thing that we can recall. And I think we are 

at the beginning of it, not at the end of it. But what we have to 

also put in perspective is how we move from a corn-based product 

to a multi-cellulosic-based product. 

In that regard, we import ethanol right now, and there is a tariff 

on it, as there should be; otherwise, we would undermine our fledgling ethanol industry here in the United States. I have a bill—I 

hope you will take a look at it, S. 426, called the ‘‘Biofuels Investment Trust Fund Act’’—that will take the money from the tariff on 

ethanol, put it into this trust fund, maybe $30 million—we are not 

sure exactly what it is, but it is a fairly significant amount of 

money for specialized research, finding the ways to convert other 

cellulosic material into an ethanol product or other biofuels product, because we are not really facing the chicken or the egg. We 

have to have both. We have to have the technology as well as the 

source of that cellulosic material. 

I wonder, Tom, if you have any thoughts about how we might go 

about making sure we are doing both. 

Mr. BUIS. Well, I think your legislation sounds like a great start 

because if we do not do both, then we are probably just going to 

get to a ceiling on production. In the case of ethanol right now, 

with all the expansion that has occurred, if we just count on splash 

blending ethanol at the current level, we are soon going to be overproducing. So for those people who do not like high corn prices, you 

might wait a while because we are about to catch up with the market, what the market can endure. 

So we have to keep going, and removing those hurdles toward a 

higher level of ethanol, putting that research money and finding 

money—and, you know, it is not a question of do we have the 

money. It is do we have the priorities. You know, $5, $6 billion is 

a small amount to invest in our Nation’s energy security. 

Senator NELSON. For our energy security, absolutely. We grow 

our crops to grow our fuel these days. I also agree with you on a 

permanent fund for disasters in a farm bill. There is one thing 

about the budgeting here that has really bothered me is we do not 

have the equivalent of a rainy-day fund like we had in Nebraska. 

We taxed the people. We paid for the kinds of benefits and programs they needed. We put some in the rainy-day fund. We gave 

23

the rest back in tax cuts. We had a rainy-day fund. We do not have 

a rainy-day fund or a drought fund, which is probably a better description of what we are looking for. 

So I think that we can do that, and actuarially, with the exception of Katrina and a major disaster like that, we can look and see 

what our disasters are every year, and I agree that can take a look 

at what the disaster payment can be and then ensure a catastrophe 

above that level. We also have to find a way to deal with multiyear disasters in a single location because the Crop Insurance Program will not do that. As you mentioned, the base will shrink. It 

will shrink down to zero with about 8 years of drought as we have 

had in certain parts of Nebraska. 

So we have got to find a way to be able to overcome that. But 

it needs to be about production agriculture, it needs to be about the 

future. I appreciate your comments very much, and I know that the 

Chairman is going to work as hard on 2007 as he did on the 2002, 

and we will come up with a product that I think will serve the 

American agriculture and our needs very well. 

Thank you very much, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Nelson. 

Now Senator Lincoln. 

Senator LINCOLN. Thank you, Mr. Chairman, and thank you so 

much for the series of hearings that you are having here, and certainly your incredible leadership on this farm bill and in 2002. 

We have had great leadership from Senator Harkin and Senator 

Chambliss, and I think we have so many things here to be excited 

about. We talk about energy, we talk about opportunities ahead of 

us for this great Nation. And so I look forward to working with you 

to produce something that I think will be very, very productive for 

our entire Nation. 

We thank our panel for being here. I, too, would like to echo the 

concerns that Senator Conrad, the Chairman of our Budget Committee, brought forward today in terms of really misrepresenting 

many facts in a way that distorts some of the incredible jobs that 

are done by farm families all across this country. Whether they are 

big or small, as Senator Roberts pointed out, they work hard every 

day. 

I come from a seventh-generation Arkansas farm family, and, 

Mr. Buis, you mentioned the in-between, that middle farmer. And 

yet when I look at farmers in my State—I visited with one recently—and I look at my own family where my mother now, who 

is a widow, is able to rent her land, and that was the investment 

she and Dad made, was in their land, in their farm and in their 

land, with the idea that that would be their retirement. 

And I look at one of our larger farmers, which I visited with the 

other day, who had six tenants. He had to be a large farm in order 

to be able to survive growing the crops that he grows. But he also 

provides, as he rents from three widowed women and two absent 

landowners who want to keep their farms and believe very strongly 

in their heritage. 

So sometimes often big and small get intermixed or misrepresented in many ways for those of us in different regions of the Nation, and I think that is so important to keep in perspective. 

24

One of the things that Senator Conrad—he mentioned abundance, he mentioned affordability, he mentioned our ability to do 

a lot of things, and in doing so I think really reinforced to all of 

us that Government’s involvement in providing a safety net for agricultural production in this country is a blessing. And it is also an 

investment—an investment that we should never underestimate. 

And I have a problem when people really come and say what a 

waste of money when we are looking at half of 1 percent of the 

overall budget, to see an investment in not only abundant and affordable food, but safe. 

Safety was one of the issues that I think that we may have 

missed or he may have surpassed in his listing. A lot of people 

have talked about the Washington Post. You just have to go to that 

same publication today to recognize what is happening globally in 

terms of safety of food and where food is coming from. And if we 

put our producers out of business in this country, we are going to 

become dependent on a food source across the globe that is not so 

safe. 

I think today’s article about China and the safety of the food supply that has come there, we have looked at what is coming in pet 

foods, and we are recognizing that those could also be in human 

food products as well. 

We know that some of our trading partners have been particularly poor in meeting international standards, and we subject only 

a small fraction of the food that comes into this country to very, 

very close inspection. So I just hope that we will also keep in mind 

our ability to produce a safe food supply as well. I think that is important. 

Mr. Buis, I understand that the NFU would support the elimination of direct payments to allow for the changes in the countercyclical payment that you have mentioned, but also to fund that 

permanent disaster program that you talk about. 

Is your organization’s support for the reduction or the elimination of those direct payments contingent on the Committee’s ability to follow through on those priorities? It seems as if what I was 

hearing you say with Senator Nelson was that whether or not you 

would support moving those fundings away from the Commodity 

Titles toward other titles in the farm bill as well. 

Mr. BUIS. Well, I think what I was saying is the score that we had in the economic analysis provides about $3 billion extra money 

after you pay for the 95–percent cost of production, countercyclical 

safety net. Those ought to be used for other priorities. I do feel, 

however, that——

Senator LINCOLN. You do not prioritize where you send that——

Mr. BUIS. I do. 

Senator LINCOLN. Oh, OK. 

Mr. BUIS. Permanent disaster assistance has to be included. And, 

again, I think the direct payments, one of the strong supports for 

the direct payments is when a producer does not have a crop, but 

they at least have something. But putting it out there in a shotgun 

approach where people who do not need it are getting it, it looks 

like if we redirected part of those funds into people who actually 

suffer losses so we can avoid those Washington Post stories about 

the dairy cows down in Texas or Louisiana where the Space ShutVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
25

tle debris fell and they got a payment, and have a permanent disaster program that is really based on providing the assistance to 

those who suffered the loss, I think that is a fair, common-sense 

approach to all of this. 

Senator LINCOLN. Well, we appreciate your insight and certainly the work you have done there in looking at where that $3 billion 

might go. It goes quickly. We can certainly tell you that. We appreciate it. 

Mr. BUIS. But at least I am offering some extra money back. 

Senator LINCOLN. Thank you. 

Chairman HARKIN. Thank you, Senator Lincoln. 

Senator Brown? 

[No response.] 

Chairman HARKIN. He is not here right now. Senator Cochran? 

[No response.] 

Chairman HARKIN. Senator Crapo? 

Senator CRAPO. Thank you very much, Mr. Chairman, and I, too, 

want to join with those who thanked you for holding these hearings 

and the aggressive schedule you have set for us to move forward 

in developing our next farm bill. 

I wanted to take an opportunity in my first chance here to speak 

to point out that we have three Idahoans here to participate in our 

hearing today. We have Mr. Bill Flory, who has already testified, 

from the American Farmland Trust. We also have Mr. Evan Hayes 

from the National Barley Growers Association, and Mr. Jim Evans 

from the USA Dry Peas, Lentils, and Chickpeas Association. So we 

think you have made very wise choices in the witnesses you have 

selected to provide advice here today. 

I join with those who have raised concerns about the 

misperception that seems to be so broad as represented by the discussion today about the Washington Post. It truly is unfortunate, 

as we try to develop policy for the food and fiber of our country, 

that we have to deal with such significant levels of misperception 

and misinformation. So, again, that is another reason I appreciate 

your giving us a chance to hold these hearings. 

I want to use my time today with Mr. Flory. Mr. Flory, again, 

welcome to the Committee. I had a question with regard to your 

proposal that we move to a revenue-based system with regard to 

our disaster assistance. Can you explain to me if the approach that 

you have discussed were adopted, what kind of budget implications 

would it have for the farm bill as we are now operating? 

Mr. FLORY. Thank you, Senator. Like I indicated before, we have 

had Dr. Zuloff take a look at this and analyze the cost/benefits, and 

we believe the integration of crop insurance on a national systemic 

level as well as on an individual producer level will result in cost 

savings of over $1 billion annually to the Government in the subsidy of crop insurance. Part of that will happen because of less risk 

to the private crop insurance industry. When there is a large 

change in price based on international events or a large change in 

yield based on international events, that would be covered on a national program, and the balance would be picked up—the local risk, 

whether it is hail insurance, a drought, some local event, then 

would be covered by the individual’s own purchase of private crop 

insurance. 

26

Senator CRAPO. All right. Thank you very much. I would like to 

explore that a little further, but since I just have a couple minutes 

left, I want to move to one other issue very quickly; and that is 

your discussion of being good stewards of the land and your experience with the Conservation Security Program. As you know, that 

program has been well received in Idaho by those who have been 

able to participate in it in the watersheds that have been able to 

be covered. And yet some of the other producers who were concerned about the lack of availability of CSP in their areas feel that 

it puts them in a competitive disadvantage with those even in their 

own watersheds or in neighboring watersheds. 

I am just curious as to how we could work to improve and finetune this program to make it less complicated and more accessible. 

Do you think that changes to the program are needed? And if so, 

what would you suggest? 

Mr. FLORY. Senator, yes, I do think there are some great opportunities in conservation, CSP being one of them. And as a Tier III 

CSP holder, you know, I can address the environmental benefits 

that it has, when on my farm, in a fully direct seeded situation for 

over 6 years, when there is a 50–year storm, that there is 4 inches 

of rain in less than 5 hours on my freshly seeded fields, there are 

no rills, there is no sheep, my freshly seeded crop remained intact, 

and that was 2 years ago. 

That certainly is in the public benefit, and I am quite proud of 

that, and I think as an industry, we are all stewards of the land 

and chief environmentalists of our own immediate and long-term 

future. But CSP is underfunded. It is a great concept. I will look 

anybody in the eye and suggest that my stewardship in a Tier III 

contract is important to me short and long term and important to 

the public. 

But when it comes to funding it, we think that, intermediatewise, anyway, direct payments can be and should be considered to 

be converted toward conservation. Direct payments right now are 

very specific, commodity specific; conservation is not. There is a 

great opportunity there. Even though I am primarily a wheat and 

barley producer, those are program crops. I still support the concept of conservation across all watersheds, all crops, you know, and 

across the U.S. 

This also provides subtle but very effective risk management, 

too, but conservation should not become an entitlement where you 

just walk in, sign the papers, and wait. NRCS, as chief technician, 

and hopefully FSA, as administrator of this, I can envision a great 

opportunity there that our detractors, those who question funds 

coming to production agriculture, our detractors would sit quietly 

and say well done, you know, environmental benefit, you know, locally, nationally, and we do not mind infusing money over the long 

term into production agriculture for those results. 

Senator CRAPO. Thank you, Mr. Flory. I see my time has expired, 

but we can pursue this further together. 

Thank you. 

Chairman HARKIN. Thank you, Senator Crapo. 

Senator Casey? 

Senator CASEY. Mr. Chairman, thank you very much for this 

hearing and for the speed with which you are moving the farm bill, 

27

and we appreciate all the work you have put into it, as well as this 

Committee. 

I come from Pennsylvania, and a lot of what we are talking about 

here does not have a direct impact necessarily on our State on a 

large scale. So we are not a major grain-producing State, but we 

are a major grain-using State for our dairy farms and hog farms 

and other livestock operations. So the decisions that we make with 

regard to this farm bill in terms of commodity payments or supports are, in fact, in the long run important to the people of Pennsylvania, and especially those in need of reliable stock and supply 

of affordable feed for their livestock. 

So I think we have got a lot of work to do, and I know that if 

there is one thing that brings all of us together, it is that we have 

got to take a very close look at the recommendations made by all 

the organizations as we make determinations about the farm bill. 

But, first of all, Mr. Buis, I wanted to direct my first question 

to you, and I wanted to read from your testimony. I was struck by 

this statement and also heartened by it, the first page of your testimony, and I guess I cite this in the context of Pennsylvania and 

our dairy farmers, it being our largest agricultural sector, over 

8,500 dairy farms, but that number is ever shrinking. And they affect the real lives of some real families across our State, the basic 

problem being, as you know, and many people in this audience 

know today, the differential that they suffer from the cost of production versus the price they can obtain. 

But I was struck on the first page in a list of bullet points that 

you say, ‘‘We support a new farm bill that includes the following 

provisions,’’ and you have got about 10 or 12 listed on this one 

page, but you said, and I quote, ‘‘supporting dairy programs that 

include a strong safety net and a supply management system to 

protect producers from a market collapse,’’ and also, ‘‘dairy prices 

should reflect cost of production shifts for producers.’’

I just wanted to have you elaborate on that and provide some 

perspective on this challenge that I know families in our State face, 

but I think it is a national problem as well. 

Mr. BUIS. Sure, and I totally agree with you, and so do all of our 

delegates, on the importance of dairy and the tremendous changes 

going on in the dairy industry, and the challenges they face are 

probably greater than any other sector at this time: rising input 

costs, lower-than-normal milk and cheese costs. And how we move 

forward, you know, the 20 years I have been in Washington, we always seem to get sort of regionalized in dairy policy, and divided, 

and we do not end up moving forward, and a lot of things get 

shoehorned into dairy policy, and it makes it very complicated and 

the end of the day does not work very well for dairy producers. 

I think we need to take a big look at what is going on, both with 

the market orders and the safety net, and dairy producers deserve 

a safety net just as much as the corn or wheat or soybean farmers 

do. And we feel very strongly about that. 

Senator CASEY. Well, I appreciate that, and I appreciate you including that in your testimony. 

I have limited time, and I promised Senator Klobuchar I would 

stay on time, so I want to be cognizant of my time. But, Mr. 

Stallman, I wanted to direct my second question to you with regard 

28

to the specialty crop block grant program. We, of course, had a 

panel yesterday that had, I think, a difference of opinion with you 

on this, and I do as well. But let me just ask you something very 

specific, and I want to sure I am characterizing your position on 

this correctly, that your stated reason for ending this program is 

that State governments are using the block grants to offset budget 

shortfalls. Is that an accurate summation of your testimony with 

regard to this question? 

Mr. STALLMAN. In some States, we believe that is exactly what 

happened, that the funds basically were not used to benefit the 

producers, and that is our biggest concern with the block grant program. That probably is not true for all States because I have had 

reports that a couple of States did a good job of taking care of their 

producers. 

Senator CASEY. And is there any way that you—and I would ask 

you to do this and ask the indulgence of the Committee, of our 

Chairman, to get this information, a list of the States where you 

can identify that problem? 

Mr. STALLMAN. We can go through and provide some additional 

information that is more State-specific, yes, sir. 

Senator CASEY. That would help, I think, to amplify the record. 

What do you think are some of the ways—and I know I am actually over time now. If you can just very succinctly tell us ways to 

fix that problem. 

Mr. STALLMAN. Well, I think you have to put some restrictions 

and rules in place, which kind of undermines the initial theory 

about putting the funds out there and let the States use them however they wish. You are going to have to figure out a way to target 

it better directly to fruit and vegetable producers if that continues. 

Senator CASEY. Thank you. I am out of time. 

Chairman HARKIN. Thank you, Senator Casey. 

Senator Coleman? 

Senator COLEMAN. Thank you, Mr. Chairman. 

Mr. Chairman, let me start by thanking you for your leadership. 

You are working us hard. We had a long hearing yesterday and one 

today. 

One of the fascinating things about this issue is it really does afford the opportunity to work in a bipartisan way. Our battle I 

think is with those who wonder why we should have a farm bill 

in the first place, and I associate myself with the words of our 

Budget Chairman, my colleague from North Dakota, and my colleague from Arkansas, too, about safety. We have the safest, most 

affordable food supply in the world. We need to keep it that way. 

I would be remiss now—everyone is recognizing their folks from 

their State. We had our Minnesota dairy folks here yesterday, and 

we have got for sunflowers, John Swanson here today. We are all 

in this together, and I think that is a good thing. 

I want to focus on one issue, and I am going to actually turn to 

Mr. Stallman and Mr. Buis and talk about energy. Saying that we 

are in this together is obviously to work in a bipartisan way. I did 

not hear much difference as I listened to Mr. Buis and Mr. 

Stallman. I take it, Mr. Stallman, you are for all the advancement, 

innovation, and everything that Mr. Buis wants. But what you are 

saying is if we are stuck with the CBO baseline, let’s not steal it 

29

from direct nutrition payments, let’s not steal it from commodities. 

The fact is that in the energy bill we can do some things with energy, but we are not going to be dealing with disaster assistance, 

that there are some other opportunities, and I think that is why 

we have to look beyond this Committee. I think it is important beyond this Committee to look at some of the things going on in the 

energy bill to accomplish what we are both talking about. 

The one area of concern, as we have seen this great avenue of 

sense of opportunity and hope, with the importance of getting rid 

of our dependence on foreign oil, stopping the addiction that we 

have that fuels thugs and tyrants like Ahmadinejad and Chavez. 

And we see it in our farm fields. In Minnesota, we pride ourselves 

on being the Saudi Arabia of wind. It used to be a boutique energy 

resource. Not anymore. We are doing about 500 million gallons of 

ethanol a year. I think we are projected to reach 1 billion by 2008. 

But here is the concern I have, and in the time I have, I will turn 

to Mr. Stallman and Mr. Buis. Wall Street is coming in. I am all 

for bringing investment. I am all for getting capital out there and 

generating more capacity. Obviously, we have got to deal with distribution, which is a big issue. But there is this question about the 

profits coming back to those in the community. There is no question that there is a greater return on investment if it is spent in 

the local area, if it is distributed in the local area. 

So the question is: How do we continue to encourage investment, 

national investment, and at the same time make sure that we are 

doing some things to ensure that money is kept in the local community? And I would invite your input into this beyond this hearing, but I would be interested in the time we have, Mr. Buis and 

Mr. Stallman, if you have some suggestions about how we do that. 

Mr. BUIS. Well, I think it is the biggest concern in rural America 

about renewable energy, is how do we keep control of this hot new 

economic opportunity. One thing that we have had and kicked 

around is targeting the Federal programs that encourage production, including tax breaks to locally owned or farmer-owned entities, or controlled. You could still have investment coming in, but 

the control stays in the local community. And, you know, that has 

really been the biggest surprise of ethanol production and biodiesel, 

is what it has done to those rural communities. The only place is 

in rural America where you are seeing the boards come off the 

storefront instead of going up, and you are seeing the spin-off economic activity. And I would say it is because they are locally owned 

and the profits stay in that community and get reinvested in that 

community. And we should do everything we can to make sure that 

we do not lose that opportunity. 

Senator COLEMAN. Thank you. 

Mr. Stallman? 

Mr. STALLMAN. Well, in an ideal world, farmers coming together 

to add value to their products through whatever business structure 

they like and producing ethanol and biodiesel, that is ideal. And 

targeting grants, targeting some startup funds, those kind of 

things, as Tom has indicated, are ways of doing that. But obviously 

you cannot stop—at least I do not think we want to stop capital 

flows because those capital flows are still important to creating 

production of a product that adds additional demand at the proVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
30

ducer level. So, ideally, whatever we can do in terms of cooperative 

business structures for farmers and targeting some startup costs 

will help that, although some farmers are now talking about cashing out and selling to those same investors. So it is a choice that 

they have to make one way or the other. 

Senator COLEMAN. I would like, again, continued input as we 

continue this discussion. 

My time is up. Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you very much. We have a 15–minute 

vote that just started right now, so I will be glad to run over and 

vote and come back. Senator Klobuchar is next, if you would like 

to go ahead and continue to question. And then when the second 

bells ring, then if you will just recess the Committee—I hope to be 

back by that time. So Senator Klobuchar. 

Senator KLOBUCHAR. [Presiding.] I would be glad to take the 

gavel, Senator Harkin. Thank you for your leadership, Mr. Chair. 

[Laughter.] 

Senator KLOBUCHAR. Thank you, all of you, and I just wanted to 

mention, first of all, like Senator Coleman, I am from Minnesota, 

and, Mr. Buis, one of the Farmers Union alums, national alums, 

Dave Frederickson, who is a former national Chair, national president, is my ag guy. He came out of Minnesota. Hilary is the one 

here, and he came out of retirement to join our staff and is having 

fun learning the BlackBerry and e-mail, so you can report that 

back, and is doing a very good job. 

Like a lot of the other Senators, I just wanted to put out there 

the fact that I just came back from a tour in the Red River Valley, 

and our farmers are fans of the 2002 farm bill. They want to keep 

that safety net in place. They know that we saved $23 billion and 

we came in under projection, and we think it is very important. I 

have heard this from Farm Bureau people as well, Mr. Stallman, 

how important it is to keep that safety net as well as look at permanent disaster relief and have a strong Energy Title. 

Like Senator Casey, we have a lot of dairy farmers, and we 

would like to continue the milk and sugar programs. 

I wanted to follow up on some of the questions about energy, and 

I noticed, Mr. Buis, that you were talking in your testimony, your 

written testimony, about the work that the National Farmers 

Union is doing with carbon trading, where you basically are serving as a middleman or an aggregator to get farmers in the Chicago 

Climate Exchange. I am also on the Environment and Public 

Works Committee and have met with those folks. 

Could you talk a little bit about that? And what are the obstacles 

you see to farmers enrolling in that? 

Mr. BUIS. Absolutely. I think the biggest obstacle is one of education and getting people informed that the farming practices that 

they adopt that they can get compensated for helping capture carbon out of the air. 

You know, I see farmers as playing a key role in helping clean 

up our environment, not just providing food and feed and fiber and 

fuel, but we also have this tremendous opportunity to help our Nation with the environmental program. 

The Carbon Credit Program has worked extremely well. In the 

first few months that we were up and running last year, we signed 

31

up 1.1 million acres into the program. They have expanded it now 

to a greater number of States. It was originally only in 14 Midwestern States. They are going further west. They have got rangeland programs, grassland, and I think you heard testimony yesterday from some folks at the University of Minnesota that one of the 

best carbon-capturing commodities is actually prairie grass, and 

that can be grown all over the world. 

Senator KLOBUCHAR. Thank you for mentioning that. With many 

other members on this Committee, we are pursuing how we can 

move toward the next step in ethanol, building on our successful 

corn ethanol as well as the biodiesel work that we are doing. 

Mr. Stallman, I noticed in your testimony, your written testimony, you talked about the need to look at power generation using 

manure, and when I was visiting one of our dairy farmers who is 

interested in this, who operates, actually, a methane digester, he 

had the line, ‘‘It is only waste if you waste it.’’ I thought you might 

want to use that. But could you comment more about some of the 

work that we can do to encourage farmers to produce electricity 

from this renewable resource? 

Mr. STALLMAN. Well, two main areas. One is continued research 

to make those processes more economic, and the other is grants to 

help producers put in place those kinds of production systems. 

Those are fundamentally the two areas. And I guess a third point 

would be information about what the potential and opportunities 

are to maybe a lot of producers who have not really thought about 

it a whole lot yet. 

Senator KLOBUCHAR. Just to change the topic a little, Mr. Buis, 

I notice you mentioned country-of-origin labeling and the frustration with the fact that this was supposed to be implemented. I always say that we should be talking more not ‘‘Where is the beef?’’ 

but ‘‘Where is the beef from?’’ Could you elaborate a little more on 

how you think this would help American farmers if we got this into 

place and, you know, any ideas you have for us to get it moving? 

Mr. BUIS. Well, I think it is imperative that we finally get the 

law that was passed in 2002 implemented. You know, the only reason it is not is those people that have a vested interest in bringing 

in less expensive and often lower quality products make a ton of 

money off of it. From a producer’s standpoint, we are proud of what 

we produce in the United States and proud to put our name on it. 

And we will compete with anyone, anytime, anyplace, but let’s 

identify that product. 

For those who want to continue to delay and delay and delay, I 

just think it is hurting our competitiveness. We now import 20 percent of the food that is consumed in the United States. Most Americans do not know that. Most Americans poll after poll would choose 

American food and American food products. It is not only an economic issue, but I think a public safety issue as well. 

Senator KLOBUCHAR. Well, thank you. As you can see, I better 

go vote so the Committee stands in recess to reconvene after the 

conclusion of the vote, which will most likely be 10 to 15 minutes. 

I guess I will use this for my gavel. 

[Laughter.] 

Senator KLOBUCHAR. Thank you. 

[Recess.] 

32

Chairman HARKIN. [Presiding.] The Committee will resume its 

hearing, and I thank John Thune for being—boy, that must have 

been a real spring. 

Senator THUNE. I was just trying to keep up with you, Mr. Chairman. 

Chairman HARKIN. I recognize Senator Thune. 

Senator THUNE. Thank you, Mr. Chairman, and I appreciate your 

efforts in putting together a good, strong record as we prepare to 

write a farm bill, and I credit you for inviting all the groups that 

have been in in the past several weeks and yesterday and today. 

Obviously, the backbone of U.S. farm policy has been and will continue to be an effective and reliable Commodity Title. I was involved with that process as a member of the House Ag Committee 

back during the 2002 farm bill, and since that time, I think the 

current Commodity Title has been providing fundamental economic 

support for U.S. commodity crop producers, while encouraging sustainable crop production. And it has benefited, I think, agriculture 

in a couple of ways: one, through the direct and countercyclical 

payments, and then through the loan deficiency payments and CCC 

marketing loans. And, combined, I think those two programs have 

successfully served their purpose by providing a dependable revenue stream and market-based financial support during marketing 

periods with low commodity prices. 

The one thing in spite of those accomplishments, though, that I 

think is important to point out is that the 2002 farm bill did not 

eliminate the need or demand for ad hoc disaster assistance. And 

over the life of the 2002 farm bill, Congress has authorized approximately $8 billion for nationwide emergency agricultural disaster assistance, not including hurricane-related spending. 

So it seems to me, at least, that as part of the 2007 farm bill, 

it would be really important to try and come up with a way that 

we can eliminate the need for some of these ad hoc disaster programs once and for all. We had for too many years farmers and 

ranchers who had suffered losses due to natural disasters and wondered whether they were going to receive the assistance they needed to survive financially until the next year. And this year is a 

good example. We are still trying to pass disaster assistance for 

crop production year 2005, and a couple of years later. 

So it at lot of times unfortunately around here ends up becoming 

a political football, and so my hope would be that as we formulate 

the 2007 farm bill that we could come up with some sort of a Disaster Title that authorized timely, comprehensive assistance whenever losses occur as a result of natural disasters. 

I have got a couple of questions, and I know you are trying to 

keep this thing moving along, Mr. Chairman, and you have a lot 

of panels, but having to do, a couple things, one, with an Energy 

Title, and I would like to direct this question, if I might, to Mr. 

Buis. But the question has to do with should a program, an energy 

dedicated crop program use acreage enrolled in existing conservation easement programs, or should energy crops be grown on acreage enrolled in a new and separate program such as an Energy Reserve Program? 

Mr. BUIS. Thank you, Senator. I think that is a really good question. It has been debated a lot within our organization, but the feelVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
33

ing is that if we allow energy production on the CRP acreage, that 

is going to basically compete with the crops that are going into energy production out of the private sector. And one of the real benefits of this program is finally farmers are getting a price from the 

marketplace, which is where everyone wants to get it. Bringing in 

additional Government-supported acres just to provide subsidized 

energy feedstock for big power companies or big ethanol manufacturers does not make a lot of sense from the farmers’ perspective. 

It is OK to run some pilot projects, and I know as we move into 

some cellulosic energy with switchgrass and stuff, maybe we can 

experiment with some on a limited basis. But we should not look 

at that as approximately 40 million acres of increased feedstock 

just to depress the prices in the private sector. 

Senator THUNE. Mr. Stallman, in your testimony you detailed a 

farm bill proposal for a permanent disaster program, which I just 

referenced earlier, and when coupled with re-rated crop insurance, 

how much is this program expected to cost the taxpayer? And do 

you believe that that type of a program would once and for all 

eliminate the need for ad hoc disaster payments? 

Mr. STALLMAN. Well, we have structured our proposal for the 

Catastrophic Assistance Plan to capture the dollars from the elimination of the CAT program and the NAP program, and basically 

fund the program that way. And then because that takes the lower 

level of risk away from the current Crop Insurance Program, you 

re-rate crop insurance and, thus, have the opportunity for the same 

premium for producers to buy up at a higher coverage level than 

what they can now. 

So our proposal basically is to do it within the confines of the 

current farm bill and with dollars coming out of the current CAT 

and NAP program. 

Senator THUNE. Is that a better proposal or a better solution 

than simply modifying the existing Crop Insurance Program to adequately provide for disaster loss assistance? 

Mr. STALLMAN. We think it probably is. I think we have 63 different recommendations as to how to improve crop insurance, and 

it has become very difficult to tinker with the program, if you will. 

So we think this is a fundamental shift in providing that catastrophic disaster assistance. But coupled with a re-rated program 

and coupled with a countercyclical revenue-based safety net, we believe within the dollars that we have to work with, it provides an 

overall better safety net than what we have now. 

Senator THUNE. Just a general question that you can answer 

quickly, because my time is already gone. But is a permanent comprehensive disaster program authorized under the Disaster Title 

needed in the 2007 farm bill? 

Mr. BUIS. Yes. 

Senator THUNE. And given the budgetary constraints that we are 

going to be working with—and that is the problem I visited with 

the Chairman about, because I think we need to do this. But we 

have got some interesting budgetary constraints that we are dealing with this time around. 

Mr. STALLMAN. Our goal is that as long as it is within the budget 

that we have to work with, yes, we should have a standing Catastrophic Assistance Program. If we have to start capturing monies 

34

from other areas of the farm bill, then we would not be supportive 

of that. 

Senator THUNE. Mr. Buis? 

Mr. BUIS. Yes, we do support it, and the farm bill safety net con- cept that we have roughly saves $3 billion, and about half of that 

we would anticipate needs to go into a permanent disaster program. 

Senator THUNE. Mr. Chairman, thank you. I appreciate your answers. 

Chairman HARKIN. Thank you, Senator Thune. 

I want to thank this panel for your excellent testimony and for 

your patience, and we will dismiss this panel. 

We will call up our second panel at this time: Mr. John Hoffman, 

Mr. John Pucheu, Mr. Larry Mitchell, Mr. Ken McCauley, Mr. 

Dusty Tallman, and Mr. Paul Combs. 

We want to welcome the second panel. Again, thank you for your 

patience. We still have one more panel to go yet today, and we will 

get to them as soon as we get through this panel. 

As I said with the first panel, your statements will be made a 

part of the record in their entirety. I am going to ask 4 minutes, 

correcting my time there, 4 minutes. If you could just sum up the 

major point that you want to get across to us so that we can have 

more time for questions and answers, I would appreciate that, and 

we will work down the same way. 

We will start with Mr. John Hoffman, American Soybean Association. Mr. Hoffman is a soybean farmer from Waterloo, Iowa and 

First Vice President of the American Soybean Association. A member of the Iowa Soybean Association since 1989, Mr. Hoffman farms 

about 600 acres of soybeans annually on his corn and soybean 

farm. 

Mr. Hoffman, welcome again to the Committee. Welcome back, 

and please proceed. 

STATEMENT OF JOHN HOFFMAN, AMERICAN SOYBEAN 

ASSOCIATION, WATERLOO, IOWA 

Mr. HOFFMAN. Well, good morning, Mr. Chairman and other 

members of the Committee. I am John Hoffman, a soybean farmer 

from Waterloo, Iowa, and First Vice President of the American Soybean Association. 

My Dad is 80 years old today, Senator, and I grew up and the 

rule of thumb was you should start planting corn if the ground is 

fit on the 25th of April. So I want to thank you for scheduling this 

hearing when the ground was not fit on the 25th. It rained. 

Chairman HARKIN. I guess it is raining in Iowa today. I called 

back and they said it was raining pretty hard. 

Mr. HOFFMAN. Yes. But I certainly do appreciate the opportunity 

to present the ASA views on economic opportunities and challenges 

facing U.S. soybean producers and how they might be addressed in 

the 2007 farm bill. 

Mr. Chairman, one of the biggest opportunities facing U.S. agriculture is the uncertainty about commodity prices and production 

caused by increased volatility in energy markets. While farm prices 

today are high by historical standards, they could drop suddenly if 

world petroleum production were to rise and prices fall. AdditionVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
35

ally, we should not underestimate the ability of producers worldwide to increase production in response to higher energy prices, 

thereby causing prices to fall. In this environment, it is critical for 

our producers to have an adequate safety net to protect farm income. 

U.S. soybean farmers support the basic structure of the 2002 

farm bill, with some minor adjustments. We believe the ‘‘threelegged stool’’ that includes the marketing loan, the countercyclical 

program, and direct payments, combined with crop insurance and 

disaster assistance, can provide an adequate safety net for farmers 

in years of low prices and reduced production. 

I say ‘‘can’’ because the 2002 farm bill established target prices 

and marketing loan rates at levels that did not provide an adequate safety net for producers of oilseed crops. The soybean target 

price of $5.80 per bushel triggers countercyclical payments only 

when season average soybean prices fall below $5.36 a bushel. 

Prices have not fallen below $5.36 during the past 4 years under 

the current farm bill. And even if they had, the countercyclical payments are made on only 85 percent of the production formula that 

uses outdated payment yields established in the early 1980’s. This 

safety net is too low to be meaningful to soybean producers. 

Our proposal for the Commodities Title of the 2007 farm bill 

would adjust target prices for all program crops to a minimum of 

130 percent of the Olympic average of season average prices in 

2000 through 2004. At 130 percent, the soybean target price would 

be increased from $5.80 to $6.85 a bushel. Subtracting the 44–cent 

direct payment, the effective target price would therefore be $6.41. 

Considering the target prices for other commodity crops, we consider this to be an adequate and reasonable level of income support 

for soybean producers. 

Our proposal would also adjust marketing loan rates to a minimum of 95 percent of the same 5–year Olympic price average. 

These adjustments would only marginally affect soybeans. However, some current loan rates do not reflect recent market price relationships between crops, and they need to be adjusted. 

Mr. Chairman, attached to my written statement is a table showing current and our proposed marketing loan rates and target 

prices for all program crops. Also attached are tables showing the 

cost of these adjustments for individual commodities, and a table 

showing the overall cost for all target price and loan rate adjustments of about $900 million year. 

We understand the Committee has limited resources to accommodate these or any other proposed changes in the current Commodity Title. We strongly support funding these adjustments in 

farm support levels through the reserve account for the 2007 farm 

bill, expected to be included in the fiscal year 2008 budget resolution. However, to the extent new funding is not available, we encourage you to consider making these adjustments using resources 

from within the Commodities Title. 

A second economic opportunity facing U.S. soybean farmers is 

the development of a domestic biodiesel industry. Biodiesel is a key 

new market for U.S. soybean oil, which has historically been in 

surplus, resulting in lower soybean prices. Efforts to establish biodiesel as a viable renewable fuel received a major boost when ConVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
36

gress enacted the biodiesel tax incentive in the JOBS bill and extended the incentive in the Energy Act of 2005. We strongly encourage extension of that incentive by the 110th Congress. 

While domestic biodiesel production has expanded in response to 

the tax incentive, so too has the likelihood of significant biodiesel 

imports. Unlike ethanol, biodiesel imports do not face an offsetting 

tariff equal to the tax incentive. Moreover, foreign biodiesel is often 

produced and exported through the benefit of Government subsidies. These imports can enter the U.S. at less than the cost of domestically produced biodiesel, endangering the growth. 

Finally, ASA supports authorizing the funding of the permanent 

disaster program assistance 2007 farm bill. We also strongly support increased MAP and Foreign Market Development. 

Thank you for the opportunity this morning. 

[The prepared statement of Mr. Hoffman can be found on page 

129 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Hoffman. 

Now we turn to Mr. John Pucheu, National Cotton Council. As 

Chairman of the National Cotton Council, Mr. Pucheu and his 

brother own and operate a diversified farming operation in Tranquility, California. Wouldn’t you like to live in Tranquility? 

[Laughter.] 

Chairman HARKIN. It is in the San Joaquin Valley. Welcome, Mr. 

Pucheu, and please proceed. 

STATEMENT OF JOHN PUCHEU, NATIONAL COTTON COUNCIL, 

TRANQUILITY, CALIFORNIA 

Mr. PUCHEU. Thank you, Mr. Chairman, for holding this hearing 

today. My name is John Pucheu, and I serve as Chairman of the 

National Cotton Council. 

The cotton industry believes farm legislation that preserves the 

structure of the current law is critical to our ability to meet current 

and future challenges. Our program recommendations meet the primary challenges facing the cotton industry: preserving what remains of our domestic customer base while adjusting to meet the 

challenge of growing export markets. An effective cotton program 

should contain a marketing assistance loan available without limitation and an accurate world price discovery mechanism, a direct 

payment feature to provide predictability for growers and lenders, 

a countercyclical feature that provides assistance in times of low 

prices, and planting flexibility. We oppose reductions in payment 

limitations, changes in eligibility requirements, and modification in 

the existing adjusted gross income test. Existing limits are punitive 

and inequitable for efficient producers of high-value crops. 

We also support continuation of the extra-long staple cotton program. We will recommend adjustments to the administration of the 

marketing assistance loan to reflect changing market conditions. 

Last year, we worked with USDA to implement significant 

changes to improve the flow to markets. An industry working 

group is developing proposals to further enhance the flow to market wile preserving an effective safety net. 

We support inclusion of a provision in the new farm bill to assist 

our struggling domestic textile industry. Even though U.S. consumers are buying more cotton products at retail, raw cotton conVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
37

sumption by U.S. mills has decline 50 percent due to a flood of subsidized imports. Like the renewable fuels industry, downstream 

users of cotton need assistance to preserve a viable production 

base. We are recommending a low-cost program for domestic mills 

that will be paid for by modifications to the cotton program. 

Our position on payment limits may be controversial, but limits 

expressed in fixed dollar amounts adversely affect our most productive operators and are highly inequitable. Because they are applied 

on a cumulative basis to all crops, limits disrupt sound marketing 

decisions and cause cropping decisions based on program benefits 

rather than market signals. 

Cotton farmers are not waiting for others to solve their problems. 

They have invested in a highly successful, self-financed market development program and a user-funded classing system which 

serves as a model for the world. U.S. producers continually adopt 

new technologies to maintain competitiveness and quality and to 

employ sustainable production practices. 

China is our most important market, but her purchases of U.S. 

cotton are down 62 percent compared to last year. China rations 

access to its fiber markets to protect its domestic cotton producers 

and manmade-fiber manufacturers. China must provide a more 

predictable access to its markets in return for being the beneficiary 

of access to the robust U.S. consumer market. China and India 

must be more active participants in the ongoing WTO negotiations. 

Cotton farmers are deeply concerned by efforts in the WTO Doha 

negotiations to isolate cotton and squeeze unfair and inequitable 

concessions from the U.S. The U.S. should not make additional concessions on domestic support until our market access objectives are 

met and exceeded. The U.S. should not make further inequitable 

concessions on cotton. We sincerely appreciate the recent letter to 

USTR that reinforced these views and that was signed by 58 Senators. 

U.S. exports of cotton have fallen short of expectations this year. 

The termination of step two hurt U.S. competitiveness, and subsidies and trade restrictions by other countries are harming our exports, and export commitments to China are low. 

U.S. cotton remains in the loan primarily because of China’s limitations on access to their market, yet U.S. markets are open to 

Chinese textile products. We are concerned by the Department’s 

imposition of additional financial penalties on farmers should they 

forfeit their loan if demand does not rebound. Imposing new penalties on producers in mid-season is not a solution. We are working 

to develop positive steps to make U.S. cotton competitive. 

Mr. Chairman, the cotton industry is a critical component of the 

U.S. economy, especially in the 17 States where it is produced and 

its products are manufactured. We look forward to working with 

you and your colleagues to ensure that it remains viable. 

Thank you for the opportunity to testify today. 

[The prepared statement of Mr. Pucheu can be found on page 168 

in the appendix.] 

Chairman HARKIN. Thank you, Mr. Pucheu. 

Now we turn to Mr. Larry Mitchell. As CEO of the American 

Corn Growers Association from—what State are you from, Larry? 

38

Mr. MITCHELL. I used to farm between two little towns in Texas 

called Dallas and Fort Worth. 

Chairman HARKIN. Oh, I see. A couple of small burgs down 

there. Welcome back to the Committee, Mr. Mitchell. 

STATEMENT OF LARRY MITCHELL, AMERICAN CORN 

GROWERS ASSOCIATION, WASHINGTON, DC 

Mr. MITCHELL. Thank you, Chairman, and I appreciate you holding this meeting today, and on behalf of ACGA and our President, 

Keith Bolin, who is hoping to plant his corn crop soon, we bring 

our suggestions for Title I today of the farm bill. Our suggestions 

come from the Food from Family Farm Act, which is also supported 

and been worked on by the National Family Farm Coalition and is 

signed off on by over 60 organizations to this point. I will cut to 

the chase and tell you what we are looking for in Title I. 

We are looking to re-establish a floor price for commodities from 

the marketplace using the nonrecourse loan program and setting 

those loan rates as close as possible to the cost of production for 

those commodities. We are looking for the re-establishment of a reserve program or a system of reserves—reserves for national security, reserves for national energy security, as well as international 

famine relief. And we are also looking at a way of dealing with 

overproduction when those problems do exist. Of course, right now 

we are looking at—everything is pretty close to what we need. We 

are raising about what we are using on corn, but this is a fairly 

recent phenomenon. 

One of the ways we would like to see a movement toward dealing 

with overproduction is to give farmers an incentive to plant dedicated energy crops on acres that they are currently planting crops 

in excess, a program that has been introduced, I know, but Ms. 

Klobuchar and Mr. Peterson on the other side of the Hill to establish an energy reserve, separate and apart from the CRP, to give 

those producers an opportunity and an incentive to plant some of 

those other crops. We look at this somewhat like we looked at soybeans over the last four decades where four decades or so ago we 

did not really raise too many soybeans. Today what are we raising? 

Seventy million acres or more on a pretty constant basis. You 

know, it was not even a program crop until 1996. 

We are looking at a portfolio of dedicated energy crops to help 

us over the next four decades, such as soybeans have in the past, 

because I cannot imagine what the price of corn, wheat, and cotton 

would have been over the last decade if we were not planting any 

soybeans. 

We feel that these provisions would best serve farmers, consumers, taxpayers, the environment, and our rural communities. It 

may not be the best farm bill for integrate livestock factory farms. 

It may not be the best one for our food processors who are currently reaping record profits. And it may not be the best program 

for international grain traders. But we represent farmers, and we 

represent our rural communities, and we feel that we have got the 

best plan at hand to deal with the budget situation that this Committee finds itself in, because I think we can save a significant 

amount of money if our farmers were to get their price from the 

39

marketplace as opposed to getting that price from taxpayer subsidies. 

We have also looked at some of the problems that this might 

present for the WTO, and I think if we were to take this plan to 

the WTO as a serious proposal, I think we might be surprised at 

who would support it, because we have already got some feelers out 

there, and it looks pretty good. 

I think there are those in this country that are less afraid that 

they would not accept it and more afraid that they would accept 

this sort of a program. 

One other point, as my 240 seconds are beginning to wane here, 

I would ask you and others on this Committee to consider a legislative initiative such as that proposed on the other side of the Hill 

by Ms. Herseth to halt the closing of our county FSA offices. Until 

we get this farm bill written and find out what is going to be in 

this farm bill, it seems a bit shortsighted to be closing FSA offices 

right now before we have even gotten this farm bill written to find 

out how it is going to be implemented. 

One thing we do know is that every farm bill that we write gets 

more and more and more complicated, and I do not suspect this 

farm bill is going to be any better in that line. 

Thank you, sir. 

[The prepared statement of Mr. Mitchell can be found on page 

139 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Mitchell, and, 

again, in looking over your testimony last night, I liked the ten 

questions you put in your written statement. 

Mr. MITCHELL. We got a pretty good response from that. We 

thought it was similar to what Secretary Johanns had asked, just 

a little different set of questions to bring forward. 

Chairman HARKIN. They are pretty interesting. 

Now we turn to Mr. Ken McCauley, President of the National 

Corn Growers Association. He is from White Cloud, Kansas, where 

he farms corn and soybeans with his wife and son. 

Mr. McCauley, welcome to the Committee. 

STATEMENT OF KEN McCAULEY, NATIONAL CORN GROWERS 

ASSOCIATION, WHITE CLOUD KANSAS 

Mr. MCCAULEY. Thank you, Mr. Chairman, members of the Committee, Senator Roberts. On behalf of the National Corn Growers 

Association, I appreciate this opportunity to present our views of 

U.S. ag policy and the challenges that lie ahead for our industry. 

My name is Ken McCauley. I am President of National Corn 

Growers Association, and I am from White Cloud, Kansas, as you 

said, where I farm with my wife and son. 

The National Corn Growers Association represents more than 

32,000 dues-paying corn growers from 48 States. We also represent 

more than 300,000 farmers who contribute to the corn check-off 

programs and 26 affiliated organizations. 

NCGA’s 2007 farm bill Commodity Title proposal reflects our 

view that the time has arrived to adopt fundamental policy 

changes. This Congress has a rare opportunity to consider major 

reforms at a time when prices are strong for most crops and exports are expected to reach a record $77 billion in 2007. And 

40

thanks to your continued support, renewable energy from homegrown crops are now playing a much larger role in enhancing the 

country’s energy security. 

First, it is important to note that NCGA supported the 2002 farm 

bill for the improvements it made to our agricultural policy. Looking forward, though, today’s farm safety net is simply not designed 

to meet producers’ long-term risk management needs given the dynamic changes underway in U.S. agriculture. 

Our rapidly changing corn industry has created many new opportunities for producers. Projected price trends for corn and other 

commodities indicate that the current marketing loan assistance 

and countercyclical programs will provide, at best, minimal support 

over the next 5 years. 

NCGA is proposing reforms to the farm bill that would ensure 

better protection against volatile markets and significant crop 

losses. In early March, our delegates voted in strong support of a 

‘‘county-based revenue countercyclical program integrated with 

Federal crop insurance for corn, and potentially other commodities.’’

Rather than target low prices, the new Revenue Counter Cyclical 

Program would compensate producers when a county’s actual crop 

revenue falls below its target level. In most recent years, RCCP 

payments would be triggered by the same losses that lead to the 

great majority of the crop insurance indemnity payments. The 

RCCP is then integrated with Federal crop insurance to ensure a 

more targeted and cost-effective farm safety net. 

Integration of these core programs would reduce the price risk 

and widespread production risk now borne by private insurance 

companies. With private insurance companies only paying for 

losses not covered by the RCCP, the lower indemnities paid to 

farmers would significantly lower program costs. Analysis provided 

to us indicate farmer-paid premiums or buy-up revenue insurance 

would drop significantly. 

Another key advantage is the built-in standard disaster aid that 

automatically delivers payments in counties that suffer low crop 

revenue, saving almost $1.8 billion spent annually on ad hoc disaster assistance. 

The final component of NCGA’s proposal is to change the nonrecourse loan program to a recourse loan program, a step that 

would significantly increase the market orientation of U.S. farm 

policy. A recourse loan would continue to give producers harvest 

time liquidity which increases their ability to market their crop at 

a more profitable time. 

NCGA believes the time is right for these reforms and urges the 

Congress to provide the necessary resources to take advantage of 

this opportunity. The integration of a county revenue countercyclical program with Federal crop insurance secures substantial 

budget savings from a more efficient delivery of individual revenue 

insurance as well as spending offsets from replacing the nonrecourse marketing loan and price-based countercyclical program. 

Based on 95 percent county target revenue coverage and a 2–

year transition period, the annual cost of this new safety net is projected at approximately $500 million above the CBO’s March baseline. At this level of protection, we are confident in our proposal’s 

41

potential for long-term savings and promise as a superior farm 

safety net. 

Mr. Chairman, NCGA stands ready to work with you and your 

colleagues in the months ahead as you begin crafting this new farm 

bill. I thank you again for this opportunity and look forward to answering any questions that any of you might have. Thank you. 

[The prepared statement of Mr. McCauley can be found on page 

134 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. McCauley. 

Now we turn to Mr. Dusty Tallman, a wheat grower from Brandon, Colorado, currently serving as Chairman of the National Association of Wheat Growers Domestic and Trade Policy Committee, 

here on behalf of the National Association of Wheat Growers. 

Mr. Tallman, welcome to the Committee. Please proceed. 

STATEMENT OF DUSTY TALLMAN, NATIONAL ASSOCIATION OF 

WHEAT GROWERS, BRANDON, COLORADO 

Mr. TALLMAN. Thank you, Mr. Chairman, members of the Committee. I appreciate the opportunity today. We would like to talk 

about a few of the challenges facing the wheat industry and then 

make our recommendations for the 2007 farm bill. 

Wheat growers across the U.S. have realized that our industry 

is suffering from several challenges, and we are trying to address 

those. We have had some wheat summits here lately and are trying 

to get the industry together with us to decide what positions we 

need to take to address those challenges. The challenges range 

from lower net returns per acre than some of the other program 

crops, lower levels of support than other program crops. Wheat has 

a very limited access to advanced genetic technologies than some 

of the other crops do. And we have kind of got a flat demand and 

have for several years worldwide. An awful lot of our wheat gets 

exported, but there are other places in the world that do a better 

job of subsidizing their production and selling their wheat cheaper 

than we do. 

We have spent the last couple of years looking at various farm 

bill proposals, and we have kind of decided what we have heard 

from a lot of the panel today, it is not broken, let’s not try to fix 

it. We do think there needs to be some adjustments made because 

wheat has been on the short end of the stick for the last 5 years. 

We support the current farm bill, even though we have received 

little or no support from two of the key commodity programs: the 

countercyclical program and the loan deficiency payment. We have 

had severe weather across much of the wheat-growing region. In 

Colorado, we have had 6 of the last 7 years with below average 

crops, which has led to significantly lower yields and, in places, no 

yield at all, and an LDP does not do us much good when you do 

not grow a bushel of wheat. 

In addition, in 2002, our target price was set lower than market 

conditions indicated it should be, and there has been no countercyclical payment for wheat for the entire life of the farm bill so far. 

That safety net failure has hurt many of our growers. The only 

benefit we have seen from the 2002 farm bill has been the direct 

payment. 

42

We have got a chart in the testimony which shows the inequities 

of how the payments have gone to the different crops. 

We understand the need of the producers of the other crops. We 

do not think that their safety nets ought to change, but we do need 

to work on creating a more equitable situation for wheat. In that 

light, we are recommending that the direct payment be continued 

and for wheat be set at $1.19 and a target price of $5.29 and maintain the current loan program. We arrived at those figures based 

on using cost of production. We have heard that from a lot of 

groups, that it is not so much what you can sell something for. It 

is most important what your cost of production is. That gives wheat an effective price of $4.10, and when you look 

forward in the projections for the next 5 years of a new farm bill, 

we still probably would not have a countercyclical, but we do deliver a lot higher level of support. 

We have heard that many organizations think the direct payment has a direct increase on rental rates and land prices, and yes, 

they do, but so do countercyclical, so do conservation payments, so 

does the high price of commodities across the country. I do not 

think we want to do away with any of those. 

We took into serious consideration our negotiations and obligations looking at farm policy. The direct payment is still the closest 

to a green box thing we have, and if you can get the fruit and vegetable problem solved, it is green box. 

Last, we would support an increase in payment limits commensurate with the increase in the direct payment. We understand it 

has been a very heated issue in the past, but we believe that you 

cannot use means testing to decide who does and does not get payment, especially since payment limit proposals in the past have always targeted direct payment more than they have the others. And 

wheat producers have relied simply on the direct payment. 

We thank you for having the meeting here today, and we look 

forward to working with you and the rest of the Committee on the 

farm bill. Thank you very much. 

[The prepared statement of Mr. Tallman can be found on page 

246 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Tallman. 

And now we will end up this panel with Mr. Paul Combs, USA 

Rice Federation and U.S. Rice Producers Association. Mr. Combs of 

Kennett, Missouri, is a rice, cotton, soybean, and wheat farmer, 

currently serving as Vice Chairman of the USA Rice Federation, 

and is Chairman of the Federation’s USA Rice Producers Group. 

I understand you are testifying on behalf of both groups this 

morning. Welcome, Mr. Combs. Please proceed. 

STATEMENT OF PAUL COMBS, USA RICE FEDERATION, 

KENNETT, MISSOURI 

Mr. COMBS. Good morning, Chairman Harkin, Senator Roberts, 

and Senator Lincoln. I am pleased to appear today on behalf of 

both rice organizations. 

The rice industry strongly supports continuation of the current 

farm programs within the Commodity Title of the farm bill. We believe the structure of three-pronged safety net of a nonrecourse 

marketing loan, direct payment program, and countercyclical proVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
43

gram, along with planting flexibility are working as designed to ensure a safety net for producers. 

We strongly oppose any further reduction in the payment limit 

levels provided under the farm bill and oppose attempts to apply 

means test. Payment limits have the negative effect of penalizing 

viable family farms the most when crop prices are the lowest and 

support is the most critical. 

We were very disappointed that the recently announced Free 

Trade Agreement with South Korea singled out U.S. rice as the 

only commodity for which no new access will be granted. The failure or refusal of our Government to further open markets like 

Cuba and South Korea underscores very clearly the importance of 

a strong domestic farm program safety net for rice producers. 

While we support the overall structure of the commodity programs, there are some specific legislative adjustments within the 

programs that are needed. First, the statutory loan rate for rice is 

set at a national average of $6.50 per hundredweight, and it has 

remained unchanged since 1989. Since the enactment of the 2002 

bill, the support provided by the rice loan compared to variable 

costs of production has fallen by 33 percent. As such, to the extent 

that additional funds become available above the baseline, we are 

seeking a modest increase in our rice loan rate from the current 

rate of $6.50 to $7 per hundredweight. 

Second, while the statutory loan rate for rice is set at $6.50, 

there are currently three distinct loan rates by class that are set 

by USDA. USDA has recently undertaken efforts to rebalance these 

loan rates, and we have concerns with the approach used by USDA 

in the process. After analyzing the issue, we believe the most appropriate course is to set the loan rate at the same level for all 

classes of rise, and we urge this Committee, as you draft the farm 

bill, to include statutory language directing USDA to set the national loan rate for each class of rice at the same level as established in the farm bill. 

Third, we are concerned with the current methodology used by 

USDA in calculating the adjusted world price. The current process 

employed by USDA is essentially a black box approach and provides little transparency. We believe by putting in place a transparent, verifiable formula for calculating the adjusted world price, 

the industry could have greater confidence in the process, and we 

look forward to working with you and the Committee on this issue. 

In reviewing the USDA farm bill proposal, it is disappointing 

that many of the changes, particularly in the Commodity Title, 

would have the damaging effect of weakening and in some cases 

practically eliminating the farm safety net that the farm bill is intended to provide. The proposed $200,000 adjusted gross income 

rule would injure U.S. farmers as they fight to compete on a very 

lopsided global playing field. It would make our farm policy unpredictable, inequitable, and punitive to farmers and those in rural 

America who rely on a strong farm policy. 

The provision would also have serious consequences as it relates 

to rental arrangements between landowners and producers, and we 

urge you and the Committee to oppose this provision of the USDA 

farm bill proposal. 

44

We support maintaining a strong Conservation Title in the farm 

bill that emphasizes working lands programs, such as the Conservation Security Program, but not at the expense of current commodity programs. Conservation programs alone cannot function as 

a replacement for the current commodity program safety net. 

Overall, we support a continuation of the basic commodity program structures with the changes we referenced earlier. We continue to believe that our current farm programs are a fiscally responsible approach to farm policy and provide a safety net when 

needed. 

Thank you again for the opportunity to testify, and I would be 

pleased to respond to questions at the appropriate time. 

[The prepared statement of Mr. Combs can be found on page 101 

in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Combs, and I 

thank the entire panel for your excellent testimonies. 

I have two thrusts. One, this has to do with the planting of fruits 

and vegetables on program acres. A dispute panel of the World 

Trade Organization has determined that the current restrictions 

here of planting fruits, vegetables, and wild rice on base acres affects whether the United States can categorize direct payments as 

green box. Now, if we eliminate the planting restriction, we would 

anticipate some increase in production of fruits and vegetables. It 

is not clear whether this would be good and that the consequences 

would be—how dramatic those consequences would be. 

I just want to know, each of your organizations, do you have any 

position on the planting flexibility issue? Mr. Hoffman. 

Mr. HOFFMAN. Yes. The jury is really out with the corn consultations on whether fruits and vegetables should be planted on program acres. So I think for the next 3 to 5 years, we do not really 

know. The cotton case set a precedent, of course. 

Chairman HARKIN. Yes. 

Mr. HOFFMAN. But there will be further rulings, and in light of 

the high prices and low outlays that are projected over the next few 

years, ASA’s position is that we should not remove the planting restriction. 

Chairman HARKIN. OK. Mr. Pucheu? 

Mr. PUCHEU. We support the current restrictions, and I am a 

specialty crop producer in California, and you just do not jump in 

and out of specialty crops. So I do not think—if the restriction was 

removed, I do not think you would see a huge surge in the production of specialty crops. 

Chairman HARKIN. Mr. Mitchell? 

Mr. MITCHELL. If a farm bill were passed similar to what we proposed here today, there would not be payments anyway. So I do not 

think there would be a problem with elimination. But contingent 

on passage of something similar to what we are talking about, 

under the current bill I think that is a protection that should be 

afforded to that sector of production agriculture. 

It also goes back to the issue of, Are we going to write our farm 

bills at Geneva or within the WTO, or are we going to write them 

here? I know we have got to interact with the thing, but, you know, 

we have, I guess, been out of compliance on this by WTO ruling 

45

for some time now. So, you know, it is not that we are a strict adherent to all of the rulings of the WTO. 

Chairman HARKIN. Although I would say I must give a rejoinder 

on that, there is a clause in the Constitution of the United States, 

which we are sworn to uphold and defend, that says that treaties 

are the supreme law of the land. So we do have to be cognizant of 

that in terms of any legislation we pass here. 

Mr. McCauley, what do you think about that? How about your 

organization? 

Mr. MCCAULEY. We recognize the issue, and we really think that 

it is probably a little bit deeper than just a WTO issue, because you 

do have these groups wanting to be part of the farm bill, wanting 

to share the money. I think it is an issue of how much and where 

does it come from, what is the issue that farmers today that get 

Government support have a lot of strings. Are we talking about 

how this—does this go as research? You know, we are hearing a 

lot about food safety this week here, the marketing issue. 

I think as everyone said here, it is important to recognize just 

how it gets done, but I think it is probably a little bit more than 

just a WTO issue. So we do recognize that our policy says that we 

are for free trade. We want to make sure we do not want to do it 

just because somebody says we have to, but we do recognize that. 

Chairman HARKIN. Got it. 

Mr. Tallman, on the planting flexibility. 

Mr. TALLMAN. Sure. The National Association does not have a 

policy. We have addressed it several times, and really have not 

been able to decide which side of the issue we are going to come 

down on until we get a little more formal acknowledgment of where 

the cotton case is going. 

Chairman HARKIN. Mr. Combs? 

Mr. COMBS. Mr. Chairman, the rice industry supports maintaining the restrictions. I am not a lawyer, but we understand it is not 

settled completely in the WTO, and to the extent that our administration would fight for our programs in the WTO instead of apologizing for them, that would be helpful. 

Chairman HARKIN. Well, I think it is an important issue for us 

to consider because I am hopeful that this Committee and the Committee in the House as we hammer out this farm bill will do all 

we can to promote more consumption of fruits and vegetables in 

this country, in our schools and in the general public, food stamps, 

WIC program, things like that, whatever we can do, to follow the 

new dietary guidelines published by the USDA. At the same time, 

if we are going to do that, then we are going to have to promote 

more production. How we do that I am not quite certain right now, 

and that is why I asked that question on the program crops and 

whether we—because we do face a problem in WTO. 

Now, you may say it is not clear cut, but it is close. I mean, I 

do not think it is a close call. I think they are going to come after 

us on it when we look to the cotton case. 

My time is up, and now I would turn to Senator Roberts. 

Senator ROBERTS. Well, thank you, Mr. Chairman. I have often 

wondered if the specialty crop folks would like to have an approved 

conservation plan and go into the FSA office and fill out all the regulations and have to buy crop insurance like all the other program 

46

crops. I think they should be welcome to do that if they would like 

to get in the program. 

Let me say, Mr. Pucheu, do you understand that Stephen Foster, 

when he wrote that song, ‘‘Those old cotton fields back home,’’ he 

was talking about Kansas? 

Mr. PUCHEU. I know there is a lot of new cotton in Kansas. 

Senator ROBERTS. We had about 160,000 acres, 180,000 acres, 

headed for 200,000, and then this business some called ethanol, 

and we are seeing some acres going to corn for some reason. But 

I just wanted your understanding of that. I am trying to wake up 

John McGuire back here, you know, to make sure he understands 

the close relationship I have with the National Cotton Council. 

Mr. McCauley, Ken, it is always a pleasure to have a good Kansas producer seated on the panel. I applaud your organization for 

coming up with some innovative ideas to move agriculture forward. 

I am going to ask a question that I wanted to ask Bob Stallman 

of the Farm Bureau on the previous panel. 

Several organizations, including yours, have suggested moving 

the countercyclical program to one based on revenue rather than 

price. That was always No. 3 in my farm speech, saying we had 

to study it. And basically you come up with a county-by-county 

basis. Other proposals look at a national plan, a statewide plan. We 

even heard about a township plan. I am not sure we could do that. 

But, at any rate, can you explain why you all settled on a countywide basis and then your proposal does not cut any direct payments either, as I understand? 

Mr. MCCAULEY. That is right, Senator Roberts. We do not propose cutting the direct payment at all. We think that provides a 

lot of security and stability for the farmer 1 year to the next. We 

have heard all about what we should do with that this morning, 

but that is where we stand on the direct payment. 

We chose county yield because that would get you as close as we 

think we need to be to what that farmer is actually producing on 

his farm. There are a lot of individuals that would like to get it 

down to the township because of the variability within a county. 

But we think that is close enough. 

The other thing that is really important here is that, with our 

proposal, a producer could still buy up production with the traditional crop insurance policies that they have today at the level of 

risk they feel they need. So we think that is really one of the important aspects of this, that the farm safety net from the FSA office 

would be at this level with what we are proposing with the RCCP, 

but your crop insurance would still be in effect. 

Senator ROBERTS. I appreciate that, and thank you for your work 

on it. 

Mr. Tallman, it is good to see you again, Dusty. I have known 

you for a long time. The only difference between where you are 

from and western Kansas is the State line. Are you going to let any 

water out of the John Martin Dam so I can float on an inner tube 

in Dodge City in the Arkansas? Or are you going to keep all that 

water for yourself? 

Mr. TALLMAN. We are going to try to keep it all. 

Senator ROBERTS. That is what I figured. 

[Laughter.] 

47

Senator ROBERTS. Your organization is advocating for an increase in the direct payment. As you are aware, there are some 

groups who do not like the direct payment because they say it is 

completely absorbed in the increased rental rates and land values. 

Can you explain why this is not an issue or why you do not believe 

this to be true? 

Mr. TALLMAN. Well, I do think that—and, by the way, instead of 

reading my statement, I was just going to ask that yours be reread 

again from earlier this morning. You did a lot better job of presenting your ideas than I did. 

Senator ROBERTS. Well, but you would have to get permission 

from the Chairman, and he is a tough fellow. 

Mr. TALLMAN. We just do not think they are. Any income stream 

you can attach to a piece of property is going to increase the value 

of that property. You know, if I lived 20 miles east of Denver, my 

property would be worth an awful lot more than it is in eastern 

Colorado or western Kansas. The direct payments, yes, I would say 

they probably do increase the rental rates, but so do CRP payments, CSP, any kind of an income stream that comes to that piece 

of property that they can feel fairly sure is going to be there, and 

probably the prime example is my friends here with corn, $4 corn. 

I am sure that has had a lot more effect in the Midwest than the 

direct payment has on corn ground. 

Senator ROBERTS. I appreciate your answer. 

Mr. Chairman, I yield back. 

Chairman HARKIN. Senator Lincoln? 

Senator LINCOLN. Thank you, Mr. Chairman, and I apologize not 

getting back in time for the first panel. I may have a few questions 

I would like to submit for the record. We are on a tight schedule 

around here, kind of damned if we do and damned if we do not. 

We miss the votes on the floor, or we miss the Committee. So we 

are back and forth. 

But we are grateful to this panel of witnesses. We appreciate 

very much you being here. We also really appreciate the men and 

women, the farmers that you represent, the producers across this 

country who do continue to provide a safe and abundant and affordable food supply for the world. And I think that, you know, as 

we look at that and realize what a blessing that is for this country 

and for the globe, whether it is dealing with the economy in rural 

America or whether it is feeding the hungry, Americans do it really 

well, and the American farmers are really those that we have to 

thank. So we thank you for that. 

I just wanted to pose a question to all of you in terms of support 

in moving funding out of the Commodity Title and into other titles 

of the farm bill. We all support so many of the good things that 

are in the farm bill, but we also know that conservation and nutrition and a host of other things are really not possible if we cannot 

keep production agriculture in production. But I am just interested 

whether you do support cutting the existing safety net for farmers 

in favor of funding other initiatives that are out there. And I do 

not know, in terms of seeking improvements to the current safety 

net rather than cuts, I guess the bottom line really is—do you feel 

like that there is less of a need for a safety net now than there was 

48

in 2002 when we put together a bill that I felt like was very strong 

and supportive of producers? 

Mr. HOFFMAN. I guess I will start. You know, we do have some 

pretty good prices right now, particularly in soybeans and corn. But 

if you look at our input costs from 2002, my costs at home on a 

farm in Iowa are probably double. You know, we are highly dependent on energy, so our costs have doubled. So, in effect, our 

safety net has been effectively reduced at this particular time, too, 

because of the cost structure. 

So I think it would be pretty shortsighted to write a farm bill to 

reduce the Commodity Title, the safety net support. I think we 

need to look forward to a time that we are in right now with increasing demand around the world, not just feed and fuel, but demand for our products is going up. 

So the farm bill needs to be crafted in such a way that 

incentivizes production in times of low prices, and I think that is 

exactly what the current structure of the farm bill is doing, with 

a few minor improvements. 

Senator LINCOLN. Thank you. 

Mr. PUCHEU. I think the safety net is very important to the cotton industry at the present time because we are going through a 

period of low prices, and this is mainly because of our transition 

in our markets from supplying primarily a domestic textile industry to now we export probably 75 percent or more of our crop. 

Mr. MITCHELL. I think part of the answer to your question, Senator, is the definition of ‘‘safety net,’’ and that is why we proposed 

the farm bill that we did, because our definition of a ‘‘safety net’’ 

is a minimum price floor for our commodities so that we are not 

dependent on taxpayers. And under the current circumstances that 

you face in writing a farm bill, the current budget, we feel that we 

have got the best option. That way you do have a way of moving 

additional funds into the Energy Title, into CSP, into Nutrition. 

I would have to say that contingent on passing something like we 

are talking about, we would be reluctant on moving a whole lot of 

money to those other areas, with the exception of probably the Energy Title. I think that a few dollars go a long ways in that title 

in helping build rural economies and helping our country move toward energy independence. 

Mr. MCCAULEY. We do not feel that we should move the Commodity Title money to any other title, for one big reason: that it 

does provide a lot of stability for agriculture as a whole, but for 

that farmer who has an opportunity to invest in a rural development project close to him, that stability will let him go to the bank, 

borrow the money, do the things. And I can tell you personally that 

has been a real benefit to me. It has allowed—it will allow farmers 

and bankers the stability to keep that there. So we think the Commodity Title money should stay where it is. 

Mr. TALLMAN. We would have to agree with that, I guess with 

the direct payment and our crop insurance in at least the areas affected by the drought, that has kind of been all the income that has 

kept us going over the last few years. And if you were to reduce 

that amount, I think it would hit quite a few producers that would 

be in more trouble than they are. We have been using our equity 

as it was in those drought States. 

49

Mr. COMBS. Senator Lincoln, we do not support moving money 

out of the Commodity Title. Assuming that crop prices will remain 

high forever is one that history tends to disprove. 

Senator LINCOLN. Well, and it is so interesting, too, because we 

are all very interested in alternative fuels and alternative energy 

sources, and that being a relatively new title in the bill does not 

seem like it would necessitate us moving money or resources from 

one of the long-term titles of our bill, but maybe looking for new 

dollars to be able to support new endeavors and new opportunities 

for our producers to yet grow into another industry side or certainly another value added to their production and their crops. 

Mr. COMBS AND MR. Pucheu, some use varying statistics that cite 

the majority of farm program payments are going to fewer than 20 

percent of the farmers as a reason to place further payment limits 

and eligibility requirements on farm programs. And yet we know 

that per pound or per bushel support is consistent across producers, regardless of their size. 

Given the risk and the investment that many of your producers 

have in their operations in order to compete in a very uncertain 

global marketplace—you mentioned China and our ability not to be 

able to address that market, Korea, not being able to, again, have 

market access in those places. Can you describe the impacts of the 

proposal to change the existing payment limitations and eligibility 

requirements and what type of production shifts are likely to 

occur? I personally do not think we are going to grow cotton or rice 

in other parts of this country. It is going to probably go somewhere 

else. But we would love to hear your——

Mr. PUCHEU. Well, the shifts would be out of cotton and rice into 

something else, probably. You are seeing the shift out of cotton this 

year into soybeans and corn. 

I think when you are talking about 20 percent of the farmers getting a significant portion of the money, I think, again, as was 

raised with the first panel this morning, you have to look at how 

you define a farm, too, and what is a full-time commercial farm. 

And if you look at it that way and take people that are not fulltime farmers out of it, I think your statistics would look at little 

differently. And then——

Senator LINCOLN. Well, there is also statistics that say that 

about 90 percent of the production comes from 10 percent of the 

producers. 

Mr. PUCHEU. Right, your commercial farms. You have to have a 

certain scale of operation to be able to afford the equipment you 

need. You know what a cotton harvester costs or a rice combine. 

You need a significant amount of acreage to spread that over. 

Senator LINCOLN. That risk. 

Mr. Combs? 

Mr. COMBS. I agree with what Mr. Pucheu says. The land that 

is getting the payment is the land that is producing the crop. We 

also happen to be in the farm machinery business, and with cotton 

pickers costing and combines costing over $400,000, the economy of 

scale that is needed to be efficient in a global marketplace is not 

there when you artificially limit the access to the safety net by imposing payment limitations. 

50

Senator LINCOLN. Well, and when your world market price is at 

a pretty low price. 

Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you. 

I have one follow-up question. There has been some reference 

this morning to Washington Post articles. There were several of 

them last year and a whole series of them in December. A Washington Post article last summer made the case that a significant 

portion of our farm program payments go to individuals who do not 

even farm. The Post article claimed that the farm programs have 

paid $1.3 billion to such individuals just since 2000. 

The lead paragraph references an asphalt contractor who built 

his dream house on rice base and receives about $1,300 a year. 

Now, let me read that. It says here, ‘‘Even though Donald R. Matthews put his sprawling new residence in the heart of rice country, 

he is no farmer. He is a 67–year-old asphalt contractor who wanted 

to build a dream house for his wife of 40 years. Yet under a Federal agricultural program approved by Congress, his 18–acre suburban lot receives about $1,300 in annual ‘direct payments’ because 

years ago the land was used to grow rice. Matthews is not alone,’’ 

and then it goes on to say that there is about $1.3 billion in subsidies. ‘‘Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks 

neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was 

$490,709. ‘I don’t agree with the Government’s policy,’ said Matthews, who wanted to give the money back but was told it would 

just go to other landowners. ‘They gave all this money to landowners who don’t even farm, while real farmers can’t afford to get 

started. It is wrong.’’’

‘‘A few hundred yards up a gravel and dirt road, oilman Rene 

Hammond purchased 20 acres in May of 2003. His two-story house 

and garage sit on part of the land and are appraised at $338,140, 

records show. His payments have been about $4,500, according to 

USDA records. ‘The money is free,’ Hammond, 48, said, adding that 

he thought the money should go to real farmers. ‘You don’t have 

to do anything but keep the ground.’’’

‘‘When Donald Matthews bought his 18–acre tract from Petty in 

2002, he never expected to receive farm subsidies. ‘I was informed 

by Mr. Petty there was a rice base and I was entitled, and I said, 

’’What do you mean I am entitled? I am not going to farm rice.‘‘’ 

But nine of Matthews’ acres are classified as agricultural land for 

which he has received more than $5,000, records show.’’

‘‘Diana Morton Hudson is a corporate securities lawyer whose 

87–year-old mother, Mary Anna Hudson, owns an interest in two 

tracts of land in nearby Matagorda County. USDA records show 

that Mary Anna Hudson has received $191,000 since 1997 on land 

she doesn’t farm. ‘We just pay someone to mow it, and it just sits 

there,’ Diana Hudson said.’’

‘‘Later, she added: ‘I’m a corporate securities lawyer. I couldn’t 

even locate these two parcels in Matagorda.’’’

Well, how can we justify these payments to the taxpayers of this 

country, Mr. Hoffman? How do we justify this? 

51

Mr. HOFFMAN. Well, I am not familiar with any of those cases 

you cited. You know, they probably are real cases——

Chairman HARKIN. Well, I have never had—no one has ever 

come to dispute these articles in the Post. No one has ever said 

these are not real people and these are not happening. I want to 

know how we are supposed to—and I am not picking on—I am 

going to go down the aisle. Mr. Pucheu, how do we justify this to 

the taxpayers of this country? 

Mr. PUCHEU. I do not know how we justify it. I do not know what 

the answer is. But the vast majority of payments are going to commercial farmers like the panel. 

Chairman HARKIN. But the $1.3 billion to individuals who do no 

farming at all? We could use that in our baseline. 

Mr. Mitchell, how do we justify this? 

Mr. MITCHELL. I do not think we can justify it, and I commend 

you for trying to fix this in 1996 in the final deliberation of the bill. 

It was your amendment that was going to require people to plant 

a crop before they could get those payments. 

Chairman HARKIN. That was my amendment. 

Mr. MITCHELL. If I am not mistaken, it failed by 1 or 2 votes. 

Chairman HARKIN. That is exactly right. 

Mr. MITCHELL. You and I and a lot of other people saw the problem at that time. But I think it is a lot larger problem than just 

some urbanites or suburbanites that are getting these payments. 

We saw issues in Texas where very large rice acreage is still drawing the payments, but they have gone into the cow-calf business. 

Now, I would think that the cattlemen would be as concerned 

about this as the fruit and vegetable growers are about their restriction. In other words, that acreage is getting a subsidy, and 

they are in the cow-calf operation, and I think that would put them 

on unequal footing. 

But to come back to our proposal, you have got to raise the crop 

to get the benefits under our plan. 

Chairman HARKIN. This article went on to point out about how 

some cattle farmers in Texas continue to receive these payments, 

even though they are raising cattle on what was formerly riceland. 

Mr. McCauley, how do we justify these payments? 

Mr. MCCAULEY. Well, I do not think we can justify it to a person 

who has built a house on it and is sitting there in his yard. I think 

some of the reasons that went around freedom to farm, our ability 

to move from one crop to another, was the reason for it as a farmer. But a person not farming, not doing anything with the land except being non-ag use, you had the right idea. 

Chairman HARKIN. I had that amendment. 

Mr. MCCAULEY. Yes. I agree with you. 

Chairman HARKIN. Mr. Tallman, how do we justify these payments? 

Mr. TALLMAN. I agree. I do not think there is any way you can 

justify them. I would assume some of that also comes about by—

in our country when people put ground in CRP, quite a little of it 

was sold fairly soon, it was—we actually sold some to—I think it 

was a group of doctors out of Iowa, and I do not even know who 

owns the ground anymore. It has never been farmed. It has put in 

grass, and it stayed there. They receive the check every year. 

52

Chairman HARKIN. Mr. Combs, how do we justify it? 

Mr. COMBS. Mr. Harkin, I do not think you can justify it on that 

handful of examples that the Washington Post has or the New 

York Times can dig up or the Wall Street Journal. But that was 

part of the direct payment program to make it decoupled and green 

box. And to the extent that there is more rice base in Texas and 

we could move that to Missouri where we are planting more than 

our base, that would be beneficial, but that costs money in the program. So there is a tradeoff on all of it. I am not trying to justify 

that handful of examples. 

Chairman HARKIN. Well, I am just saying it comes to $1.3 billion. 

I have asked people to dispute this, if that is right or wrong, and 

I have never seen any disputation of that figure at all. I mean, that 

is a lot of money going to people who do not even farm. And these 

are things that we are going to have to answer. This is not the last 

of those articles—well, I do not know. I assume they are not the 

last of those articles that we are going to see. 

Did any other Senators have anything to add? I will thank the 

panel very much—Senator Chambliss, go ahead. 

Senator CHAMBLISS. Sorry, Mr. Chairman. I have had a wrath of 

folks in town today that I had to go visit with. 

Mr. Pucheu, let me start with you. Some believe that marketing 

certificates are simply a way to get around our payment limits. 

From a practical standpoint, what happens to the cotton marketing 

system if we eliminate payment certificates in the next farm bill? 

Mr. PUCHEU. Well, we have got a real problem because I belong 

to a large cooperative that markets Western cotton, and to try and 

separate cotton that is eligible and not eligible would be a major 

problem. If you did not have certificates, you would have a lot more 

cotton forfeited in the loan, which would greatly add to the Government cost. So in the long run, the government is better off by having certificates than not having them. 

Senator CHAMBLISS. Is it a way to evade payment limits? 

Mr. PUCHEU. It is a way to efficiently market the commodity and 

not build stocks. 

Senator CHAMBLISS. Mr. Tallman, in your testimony you note 

that you have examined the various revenue proposals and found 

that they do not work well for wheat. Have you looked at the Farm 

Bureau’s State-level revenue proposal? And if so, what are your 

thoughts about that? 

Mr. TALLMAN. We have. We have looked at the Farm Bureau’s. 

I think we have looked at all of them except a couple that we have 

just gotten in the last night or two. 

Wheat grows in kind of a different part of the country. Our yields 

range from 15 bushel to 100 bushel, depending on where it is 

grown in the country. On a State level, it looks like it was very difficult. It looks like you are still going to have producers out there 

that are going to need disaster—even if you have a revenue program. We have not looked at the county, I guess. 

Our thoughts were that we have got 70 percent RA insurance, 

70 percent CRC insurance. In our opinion, that is what these programs do, is they insure you against a 70–percent—or up to a 70–

percent level. Let’s write the farm bill right now and fix the insurVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
53

ance in a year or two and try to make it better to where we do not 

have to work. 

The other problem with wheat was that if you base wheat on a 

historical basis, Colorado, we have ranged from a State average 

from 24 to 34 bushel the last 6 years under this drought. We are 

going to start out at a very low target revenue on the State level. 

And it is just not going to be good for us, at least in that State, 

and I know that there are a few other States that have similar 

problems. 

Senator CHAMBLISS. So is it a fair statement to say that the 

Wheat Commodity Title in the 2002 farm bill has worked for wheat 

growers in some parts of the country, but it has not worked for 

wheat growers in other parts of the country? 

Mr. TALLMAN. The direct payments work very well for us. We do 

not have anybody that has gotten benefits from the countercyclical 

or the loan programs, and it is because our target price was set too 

low. 

Senator CHAMBLISS. Mr. Combs, there has been discussion by 

some to reduce direct payments and to use the savings to pay for 

higher loan rates, target prices, disaster assistance. How would rice 

producers feel about a proposal like that? 

Mr. TALLMAN. We would oppose that. We think that the current 

program is balanced and fair with the three-legged approach. 

Senator CHAMBLISS. Let me ask you the same question about 

marketing certificates. From a rice grower’s standpoint, is that a 

way to evade payment limits or does it help you from a market——

Mr. COMBS. It is a way to orderly market the crop. Over half the 

crop is marketed by three rice cooperatives in the South and California, and it would just add tremendous burden, both on those cooperatives and on the FSA offices in those counties to take away 

their ability to use generic certificates. 

Senator CHAMBLISS. All right. Mr. Pucheu, last, what we do not 

want to do—and I will address this really to the whole panel, but 

what we do not want to do, gentlemen, is to draft a farm bill this 

year that is going to run into WTO problems. We do not want to 

have something to come up from a litigation standpoint in the middle of the stream that is going to all of a sudden throw each of your 

programs into an uproar. And if it happens to one, it would happen 

to all of them. 

So as we go through this, let me just say, John, you obviously 

know what has happened in the cotton industry and how it has affected us, and now not only have we lost step two, but they are 

looking at whether or not that was adequate to really provide a solution to the Brazil case. 

We want to make sure that with respect to all of our WTO obligations, with respect to all of our bilateral agreements that are out 

there, that we are not going to violate something in the middle of 

the stream here. So as we go through this, please give us your 

thoughts and your input in that vein as well as in what you think 

is going to be in the best interest of your growers, because certainly 

an interruption in the program, whatever it may turn out to be, is 

going to be a lot more catastrophic than what we may do relative 

to a penny or two here or there. 

54

So thank you very much for your input to this point. We look forward to staying in touch with all of you. 

Thanks. 

Chairman HARKIN. Thank you, Senator Chambliss. I think that 

is an excellent point. We do have to be cautious about that as we 

proceed. 

Senator Grassley? 

Senator GRASSLEY. Mr. Chairman, first of all, I want to compliment you for bringing up—as I was coming into this meeting 

late, since this panel took over—the issue about the abuse of the 

farm program, and that brings emphasis to something you and I 

have talked about and I am working with Senator Dorgan on, and 

that is, to have a hard cap payment limitation. That will save 

money, but it will also give us the ability to spend money elsewhere 

where it is needed where the benchmark is $15 billion below where 

we are now. 

But also I say that because, as a member of the Senate Finance 

Committee, it is our responsibility not only for your Committee but 

other committees as well to find some revenue to make up for some 

of the shortfall we have in the budget this year. So for all those 

reasons, it is very good that you brought that up. 

I am going to put a statement in the record. 

[The prepared statement of Hon. Charles E. Grassley can be 

found on page 81 in the appendix.] 

How would the revenue program that your organization suggests 

interact with crop insurance? Would adoption of the program improve delivery of insurance to farmers? And how do you judge the 

current state of the Crop Insurance Program if that is part of your 

reason for the revenue assurance aspect? Does it provide adequate 

revenue coverage for farmers? Would you tackle those questions? 

They are all kind of related. I see them as related, at least. 

Mr. MCCAULEY. I sure could, Senator Grassley. We believe that 

when you integrate the crop insurance and the Government program together, our proposal looks very well that you are saving a 

lot of money that is overlap. And I do not think it is—you know, 

I do not know exactly where it goes, but I think it is probably just 

maybe waste, maybe just the fact that it just churns around in the 

system. But I do not think it is anybody’s desire to hurt the crop 

insurance industry, at least from the National Corn Growers. 

We also think that the crop insurance industry could benefit 

from this and see it as an opportunity, because all of a sudden you 

have got 100 percent of the farmers involved in this level, which 

is the farm program, and you have got the rest of the farmers out 

there that have not been participating that should have cheaper 

premium policies to buy up coverage if they need it or just buy 

more if they want to feel more secure. 

So we feel the integration is a benefit to not only the taxpayer, 

which you will have less money spent on both those areas, the 

farmer who can actually buy up the coverage, and maybe even the 

Government FSA office having a simpler program to work with. 

Senator GRASSLEY. Also, on a second question to you, I had 15 

town meetings in the last break in parts of my State on the farm 

program and got opinions from the grass roots. And I think I had 

representatives—and I do not know whether they are—I do not 

55

think they are in the leadership position right now of the association that were suggesting that we spend a lot less on direct payment. And it was my view that the Corn Growers Association—so 

I am asking you at the national level—was in support of the direct 

payments because it was one way of avoiding the trade-distorting 

aspects of other safety net programs. 

Mr. MCCAULEY. The direct payments do fit into the green box 

very well, and that is why they are there. We think the direct payments do a lot more than that. They create stability for the farmers, for the bankers, for the system as a whole, from 1 year to the 

next because, as we all know, there is always a time when you do 

not fit into one of the areas of a loss or market or wherever these 

programs seem to go. 

We think that the direct payment fits into that. We have talked 

about direct payments all day, and we have a position that we 

want to keep them. 

Senator GRASSLEY. As is. 

Mr. MCCAULEY. As is. 

Senator GRASSLEY. OK. Thank you, Mr. Chairman. 

Chairman HARKIN. Senator Lincoln? 

Senator LINCOLN. Thank you, Mr. Chairman. 

I would just like to echo the words of my friend, Senator Grassley. I know. 

[Laughter.] 

Chairman HARKIN. Is this a new relationship? 

Senator LINCOLN. That is right. But to simply say we do appreciate you bringing up the egregious abuses that exist there in those 

that do not use the safety net programs for their intent. You know, 

clearly that is not the intent of the safety net programs, and I 

think that it is all of our jobs to look for a way where we can eliminate those types of circumstances, but not do so at the sake or the 

mercy of those good-faith producers who are working hard to 

produce a crop but simply get caught in the circumstances of growing different crops in different circumstances. 

And so I certainly hope that we can work together to realize that 

nobody wants to defend those types of circumstances or those types 

of causes. And we recognize that they were never the intent of 

what safety net programs were designed to do. And I would imagine, as you heard from the panel, every grower out there wants to 

eliminate those types of abuses in order to make sure that we can 

keep the good work that our producers across this country are 

doing. And I hope that we can work together to come up with that 

because I think there is a solution to be had where, again, we are 

eliminating abuses and going back to the original intent of what a 

safety net program is designed to do. 

I just had one last question for Mr. Combs, and we have talked—

I know that Mr. Tallman has talked a little bit about it, and Mr. 

Hoffman mentioned about your input cost and the increase of input 

cost, whether it is fuels or other things that you have seen on your 

operations. But there are numerous plans to provide the countercyclical revenue insurance to producers. I wanted to know if you all 

had looked at those plans similar to what has been described or 

others have answered to and how they would impact rice producers 

56

and maybe even perhaps, you know, how productive any of the 

Crop Insurance Programs have been or could be to rice growers? 

Mr. COMBS. With regard to rice, both the administration proposal 

and the Farm Bureau proposal and the National Corn Growers proposal are not as good as the current countercyclical program. We 

tend to have a price loss rather than a yield loss. We spend up to 

$1,000 an acre precision leveling and putting irrigation on farms to 

ensure pretty well that we do not have a yield loss, and, therefore, 

the Crop Insurance Program tends not to work for us, and we tend 

not to have the yield losses and we tend to have more price losses 

with the possible exception of Hurricane Katrina. So the revenuebased approaches to countercyclical did not work as well for the 

rice industry. 

Senator LINCOLN. Does anybody else want to comment on that? 

Mr. PUCHEU. They also do not work as well for the cotton industry. I know Dr. Bruce Babcock at Iowa State looked into the corn 

program, and I am not sure if it was the final corn program that 

Ken presented today. But it showed that the current countercyclical program worked better for cotton than these revenue programs did. 

Senator LINCOLN. Thank you. 

Mr. HOFFMAN. I would echo that for soybeans, too. 

Senator LINCOLN. Yes. Great. 

Thank you, Mr. Chairman. 

Chairman HARKIN. Senator Chambliss? 

Senator CHAMBLISS. Just two questions. First of all, to each of 

you, and I will start with you, Mr. Combs. You are all familiar, I 

know, with the administration’s proposal that no one qualifies for 

any payments if you exceed $200,000 adjusted gross income. Give 

me a quick comment, starting with you, Paul, and going right down 

the row. 

Mr. COMBS. You are going to shift the burden to the tenant farmer. You got people in our part of the country right now that are operating on 50–50 rent, where the landowner is taking 50 percent 

of the risk and receiving 50 percent of the payment. If that landowner is locked out of the ability to market that crop through the 

marketing loan or access to payments, they are going to shift the 

crop rent, and what you are going to do is put the burden on the 

guy that is the beginning tenant farmer who is trying to rent a 

farm and farm rice to make a living, and you are not going to hurt 

the landowner. 

So the very people that the administration is trying to target are 

the people that are going to get slammed on this deal in rice country. 

Senator CHAMBLISS. Mr. Tallman? 

Mr. TALLMAN. Our producers do not like it just because it is kind 

of a means test, and we do not think that is the way that it ought 

to work. I do not know how you come up with the $200,000 or 

$300,000 or what it is, but you could—wheat is kind of a different 

crop. We will a lot of times sell right at the end of a year. So you 

are going to have producers that stay under a certain level, can sell 

December 31st instead of January 2nd or vice versa, sell January 

2nd. I think you will end up with people playing more games just 

to try and stay under that level. 

57

Mr. MCCAULEY. Paul is correct. If you do that, you are going to 

be making a law that will just give people reasons to try to figure 

out how to get around it. We do not have policy on a means test, 

and that is basically what it is. So we think the current payment 

limit that is in effect today is where we are. That is where our policy is. 

Mr. MITCHELL. There is always the challenge of one size fits all, 

different parts of the country, different crops. It is the same with 

housing or anything else we deal with, but in agriculture it is even 

more prominent. And the means test is so much different than payment limitation, and I am not sure that we would stick by that. 

One of the main reasons is with a means test and you eliminate 

somebody out of the program, you have just eliminated the environmental incentives that are inherent in the farm program to some 

of your largest producers. And I think that there is a benefit for 

the Nation as a whole for those environmental incentives to be in 

place for everyone. 

Mr. PUCHEU. We support the current limitations. The chances of 

having a death penalty and the consequences of that, you go into 

a period of low prices and you are out of the program, you are 

going to have a serious, serious problem surviving with your farm, 

even if you are a large farm. 

Senator CHAMBLISS. Mr. Hoffman? 

Mr. HOFFMAN. ASA supports the current payment limitations. 

We are opposed to means testing. One possible way that could 

harm potentially young farmers, particularly, would be if someone 

was on that bubble, they would bid up cash rents in an area to stay 

under that at AGI. So that would hurt not only—that would harm 

indirectly neighboring producers. 

Senator CHAMBLISS. Mr. McCauley, I have concerns about your 

recourse loan proposal, especially as I look at the situation that cotton is currently in. China is currently buying much less cotton than 

they were this time last year, and so the options that our cotton 

farmers have are limited, particularly with our domestic textile industry struggling. The loan is in most cases the best option producers have at the moment, not because it is lucrative but because 

there are not other good marketing options right now. 

So I am curious if you have thought through these types of situations that the market might take a sudden downturn in proposing 

the recourse loan for your commodity and potentially for other commodities. How would USDA recover loan proceeds if the commodity 

had been sold? And would USDA have a lien on land or other assets of the producer? And how would this affect existing financing? 

Mr. MCCAULEY. Well, as far as cotton goes, it is definitely different than corn. There is probably not an answer from a corn 

grower to tell a cotton grower how good this would be because the 

cotton price is definitely in the opposite end of where corn is 

today.21We think that the corn price for the future looks like it 

would be above the loan road, and that would—and should—tell 

our growers to concentrate on the market. And I think that would 

be a good step toward actually showing producers that the market 

is there and take advantage of it. 

There is a problem with the way agriculture thinks and farm 

programs have worked that that nonrecourse loan has always been 

58

there just in case. And there are a lot of farmers that depend on 

that, so they do not really make the discussion. 

So we feel that the floor that we have put in this proposal replicates the marketing loan, that at the loan rate times your county 

yield you would not lose any more money than that. So it would 

not be exactly like the marketing loan, but it would look very close 

to it. 

Senator CHAMBLISS. Thank you, Mr. Chairman. 

Chairman HARKIN. I want to revisit this question about the adjusted gross income. The administration’s proposal is that if you 

have an adjusted gross income—now, that is bottom line, that is 

what you make, that is what you get—of $200,000 or more, you do 

not qualify. 

I want to ask that question again in this context. First of all, 

keep in mind, Mr. Combs, we can apply it to landlords. That takes 

care of your problem. We just apply it to landlords as well as tenants. Apply it to landlords, that they would have to show that they 

have an adjusted gross income also. 

Think about it this way: We means-test food stamps. For anyone to get food stamps, they cannot have more than $2,000 of assets. 

They have to fall below a certain income line. Now, are they producers? A lot of them work very hard. A lot of them work darn 

hard every day to feed their families. They are producing for this 

country. Yet we means-test that. So if we means-test that, why 

shouldn’t we means-test those who are making 200,000 bucks a 

year? That is more than we make. That is a pretty darn good income. 

So if we are going to means-test one end, a big end of our bill, 

nutrition, why don’t we means-test the other end? So I want to revisit that question again. Let’s go over it again. 

Mr. Combs, why shouldn’t we say to the taxpayers of this country, you know, if you need it, yes, if you need this, if you are a 

struggling farmer, but if you have got $200,000, if you are a landlord and you have got over $200,000, you just don’t qualify? Tell 

me again. 

Mr. COMBS. In my example, the landowner did not qualify for the 

payments, and the 50 percent—the landowner was furnishing 50 

percent of the seed, 50 percent of the fertilizer, 50 percent of the 

fuel, and was entitled by crop rent to 50 percent of the crop. 

Chairman HARKIN. Right. 

Mr. COMBS. When they cannot access the Government loan to 

put the rice in the loan and market it that way, they switch to cash 

rent. So all of the risk of all the—the tenant is then paying for 100 

percent of the seed, 100 percent of the fuel, and 100 percent of the 

fertilizer, and trying to go to a bank and borrow the money to make 

100 percent of the crop instead of 50 percent of the crop. He is taking on more risk, and the bank may or may not go along with that. 

And so I am suggesting that the tenant farmer is the one that 

gets hurt in that scenario. I would further suggest that the real 

beneficiaries of our farm policy are the American consumers who 

have the safest and most abundant food supply in the world, and 

if the benefit is accruing to the consumer, it is kind of like Medicare. I have got some friends that are doctors that, you know, 

maybe 75 percent of their income comes from Medicare, and I guarVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00064 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
59

antee you, they are not means tested. And so if the benefit of Medicare accrues to the patient and the benefit of the farm program accrues to the consumer, then we should not be limiting the farm 

programs. 

Chairman HARKIN. Well, Medicare is a trust fund, and surely 

you do not want farmers to be put into a trust fund, do you? 

Mr. COMBS. I am not suggesting they are in the trust fund. I am 

just suggesting that other programs—tax incentives, research and 

development credits—are not means tested. And if the benefit of 

the farm program applies to the consumer, then we——

Chairman HARKIN. Would you be in favor of lifting means testing 

on food stamps? 

Mr. COMBS. I would not be in favor of lifting means testing——

Chairman HARKIN. There you go. 

Mr. Tallman, again, let’s revisit this $200,000 AGI if you apply 

it to landlords and tenants. 

Mr. TALLMAN. In my part of the country, we have not had a problem with this. It did not seem to matter how big a farm you were 

over the last 6, 8 years. Any kind of a profit has been difficult. 

One of the things that has always bothered—and I guess that is 

one of the things that has always bothered me about a limit, is just 

because you farm, as Mr. Roberts said, 10,000 acres or 1,000 acres, 

that farmer, if he is in a drought and he is farming 10,000 acres, 

he has probably lost more money—well, he has definitely lost more 

money. He is probably going to have a harder time recovering than 

the small farmer. I think it is a little easier for the small farmer 

to recover. 

One of the questions I always had with the $200,000, or whatever figure it is, is if you are under it and you qualify and they 

make a payment to you and it puts you over it, does it disqualify 

you for the payment that puts you over it? And I do not know the 

answer to that one. 

But I have always been of the opinion that it should be more of 

a dollar-per-acre figure rather than pick a figure out of the air, and 

say if your net income is at this level, you are not going to qualify. 

I think that the payments should be tied to the land, and hopefully 

we can get away from the problems you have in the Wall Street 

Journal. 

Chairman HARKIN. Well, you are not going to get away from 

them, especially with the budget limitations we have got right now 

and trying to figure out how we do these budget—we have had a 

philosophy in this Committee—I do not mean just this Committee; 

I mean the Ag Committee of the Senate and the House—since 

World War II that every bushel of program crops that were covered 

by programs, every bushel should be supported the same. Every 

bushel should be supported the same. That philosophy has held 

until now, until recent times. But you see where that gets you. The 

bigger you are, the more you get. And the more you get, you get 

land around you and you get bigger. And the bigger you get, the 

more you get, and it is like a black hole. So the bigger you get, the 

more you get; the more you get, the bigger you get; the bigger you 

get, the more you get. It just keeps going on, and questions are 

being raised. Is this the time to re-examine that philosophy that we 

have had ever since World War II, that every bushel of every proVerDate 0ct 09 2002 11:54 Aug 24, 2007 Jkt 000000 PO 00000 Frm 00065 Fmt 6633 Sfmt 6633 C:\DOCS\35052.TXT SAG2 PsN: SAG2
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gram crop is paid the same no matter how big, no matter how 

small you are, and that we ought to be re-examining that philosophy, and that is why I ask about the administration’s proposal 

and the $200,000 AGI. 

I have got to tell you, I have had the same town meetings that 

Senator Grassley has had in Iowa—I did not go to the same ones, 

but similar kinds, and this question comes up every time among 

farmers. I have had farmers in my State come up to me and say, 

‘‘Look, I am getting these payments and stuff. I am making good 

money.’’ They say, ‘‘I get it, but I know it is not right.’’ And my 

State has been No. 1 in the Nation getting direct payments, I 

might add. 

So, again, you know, if we have got a lot of money, good baselines, maybe we do not have to worry about it. But I think now we 

are going to have to be concerned about it, and it is going to keep 

coming out. So I just wanted—any other thoughts on the $200,000, you know, 

if you would cover landlords and tenants, because that was the 

issue that was brought up earlier. 

Mr. MCCAULEY. I really should just be quiet, but since you offered, if you have to do a means test, I think it is very hard to justify $200,000 as being needed. I think this adjusted gross income 

proposal that the administration put out has some unique qualities 

that we have not looked at before. When you look at net farm income or your adjusted gross on your taxes, the number, you could 

argue with where it should be. I think, you know, if you are just 

talking about a means test for qualifying, you know, we probably—

that is the first step. But when you start talking about variable 

rate income—Paul brought it up before. If you are sitting on a high 

income this year and have a low, does that get you into the next 

year? 

I think we have got such variable incomes and you throw cattle 

and ethanol investments, things like that, you could be coming off 

of a—if you had a 3–year or 4–year average, there are a lot of 

things that could work, you know, to make that better. But there 

is going to be a lot of studying that has to be done before I think 

we could go there. 

Chairman HARKIN. Mr. Mitchell? 

Mr. MITCHELL. Well, a couple of issues. You are right in that the 

bigger get bigger and they buy—but that is limited with the payment limitations if they are properly drafted and enforced. In other 

words, that stops that spiral. 

I still do not know how we deal with the environmental impact 

when we put our biggest producers completely out of the program. 

I do not see this Committee having a lot of enthusiasm on passing 

some sort of environmental police that would go out on farms that 

are not in the program to enforce environmental requirements. So, 

you know, there is a bit of a carrot issue there, and I do not think 

you want to enforce a stick. 

Chairman HARKIN. Good point. 

Mr. PUCHEU. Well, I think it is the same point Ken was thinking about, the variability—a farmer with a $200,000 AGI 1 year is a 

whole lot different than someone on salary that has a $200,000 

AGI that might go on year after year. We go up, we go down, we 

61

are all over the place. We have to make payments on land and 

equipment out of what is left over. It is not just to live on. And 

then your lenders, you know, they like certainty, and they do not 

want the risk of you in and out of the program each year because 

that greatly increases their risk. 

Chairman HARKIN. Mr. Hoffman? 

Mr. HOFFMAN. Variability was going to be my point. I remember 

in 1996 we had a pretty good year, and you are able to get ahead 

for—that 1 year carries you over 5, 6 years. Hopefully this is going 

to be another one of them. It looks pretty good coming up here. But 

that variability could really come back to bite a production farmer. 

So, you know, we are looking at expensive equipment, and I 

think it would be hard to set that figure, wherever it be, and how 

would you police it? You take your Schedule F into the FSA office 

or, you know, what is the mechanism to control that? 

Chairman HARKIN. Good responses. I was just told by staff that 

actually the administration proposal was a 3–year average. 

Good responses. Thank you all very much. 

Let’s turn to our third panel: Mr. Evan Hayes, Mr. Dale Murden, 

Mr. Armond Morris, Mr. Lynn Rundle, Mr. John Swanson, and Mr. 

Jim Evans. 

Again, welcome. I thank you for your patience, very much so. 

And as for the previous panels, your statements will be made a 

part of the record in their entirety. We will have 4–minute statements by each of you, and we will just go down the line as before. 

First will be Mr. Evan Hayes, National Barley Growers Association. He is President of the National Barley Growers Association. 

Mr. Hayes raises barley and wheat—at 6,000 feet elevation? That 

is pretty high up there—near Soda Springs, Idaho. 

Welcome, Mr. Hayes, and please proceed. 

STATEMENT OF EVAN HAYES, NATIONAL BARLEY GROWERS 

ASSOCIATION, AMERICAN FALLS, IDAHO 

Mr. HAYES. Thank you very much, Mr. Chairman 

Mr. Chairman and members of the Committee, Senator Crapo 

stepped out, but, of course, I would like to recognize Senator Crapo 

as being from the great State of Idaho and how much we appreciate his services on this Committee. 

U.S. agriculture’s biggest challenge is the increasing cost of production, fueled by rising energy costs, which affect everything from 

our inputs to transportation costs. While many farmers have had 

record-breaking gross incomes this year, I can assure you that we 

had record-breaking expenses as well. And while commodity prices 

are currently high, we must not lose sight of the fact that production agriculture has always had the ability to overproduce and 

cause prices to collapse. That is why U.S. farmers continue to need 

a farm bill with an adequate safety net. 

NBGA has serious concerns regarding the level of support barley 

receives relative to other crops in the current farm program. We 

believe barley has lost significant competitiveness in its traditional 

growing regions due, in part, to distortions in Federal farm program support levels. 

62

In 2006, barley acreage in the United States was only 3.5 million 

acres, a 10–percent decline from 2005, and the lowest planted acreage since 1926. 

Last year, Senator Crapo and Senator Conrad—and I want to 

thank them for this request—had the Senate Ag Committee ask 

FAPRI to look at the root cause of the barley acreage decline. We 

wanted to know if the farm bill might be contributing to it. According to their findings, marketing loan benefits have clearly favored 

traditional row crops over cereal grains. In the Northern Plains, 

the average annual marketing loan benefits the last 5 years were 

$4 per acre for wheat, $8 for barley, $12 for soybeans, and $21 for 

corn. At the national level, the combination of marketing loan benefits and market returns can help explain the increase in national 

row crop acreage since the early 1990’s and the decline in small 

grain production. 

However, National Barley does support the structure of the current farm bill, but we do urge the Committee to adopt support levels to make them more equitable among the program crops, using 

an objective method to determine the supports, mainly price history. 

Specifically, NBGA supports adjusting barley and other crop 

marketing loan levels upward to 95 percent of the crop’s 2000–2004 

Olympic Average of Prices. If this change were adopted, barley’s 

loan rate would be set at $2.35 per bushel, and farmers would be 

less likely to have their planting decisions influenced by loan rates 

during periods of low crop prices. This would be a marked improvement over barley’s current marketing loan of $1.85, which is 75 

percent of the historical base. 

NBGA supports adjusting barley and other crop target prices to 

130 percent of the crop’s 2000–2004 Olympic price. Once again, 

barley’s price at 91 percent of this price history is one of the lowest 

program costs. Barley’s suggested price would be set at $3.21 if the 

adjustments were made. 

NBGA also supports adjusting barley’s direct payment level to 42 

cents per bushel, or 17 percent of the 2000–2004 Olympic Average 

of Prices. Again, the current 24 cents per bushel direct payment 

that barley receives is among the lowest percentage-wise—that is, 

10 percent—when compared to price history. 

NBGA supports the current level of payment limits and structures, including the continuation of the three-entity rule. NBGA 

supports the creation of a permanent disaster program, but does 

not support funding such a program from within the Commodity 

Title. 

I want to once more thank you for the opportunity to testify on 

behalf of National Barley Growers and would respond to questions 

if you would like to ask. 

[The prepared statement of Mr. Hayes can be found on page 127 

in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Hayes. 

Now we turn to Mr. Dale Murden. Mr. Murden manages an irrigated farm in Willacy and Hidalgo Counties in Deep South Texas, 

where he raises grain sorghum, cotton, corn, citrus, sugar, and 

vegetables. He is testifying today on behalf of the National Sorghum Producers. 

63

You are what we might call a ‘‘diversified farmer,’’ Mr. Murden. 

Welcome. Please proceed. 

STATEMENT OF DALE MURDEN, NATIONAL SORGHUM 

PRODUCERS, MONTE ALTO, TEXAS 

Mr. MURDEN. Thank you, and on behalf of the National Sorghum 

Producers, I would like to thank the Chairman and the Senate Ag 

Committee for the opportunity to discuss the farm bill and its impact on the sorghum industry. 

As you said, my name is Dale Murden, and I manage and farm 

on irrigated farmland in Willacy and Hidalgo Counties in South 

Texas. We raise grain sorghum, cotton, corn, citrus, sugar, and 

vegetables. 

Last year was a devastating year for producers in the Sorghum 

Belt. Lack of moisture in South Texas prevented me from growing 

grain or cotton. This year we have received more moisture, and 

producers are increasing their grain sorghum acreage and are optimistic we will make the crop. Sorghum acreages are increasing in 

the semiarid Sorghum Belt as ethanol plants build to access the 

reasonably priced starch that is located in most of the Sorghum 

Belt. I myself am involved in building an ethanol plant with our 

local cooperative, and the starch feedstock would be 95–percent sorghum. The ethanol industry is rapidly changing how sorghum is 

priced by increasing the local cash price. 

Sorghum producers are strong supporters of the 2002 farm bill 

because it significantly improves the equitable treatment given sorghum producers relative to other feed grains. Priorities for the 

2007 farm bill are: to maintain guaranteed direct payments because they are important in the semiarid Sorghum Belt when we 

do not have a crop; to equalize the sorghum loan rate on the county 

level with other feed grains; and to preserve a safety net of LDPs 

and countercyclical payments for commodities, as we all understand the cyclical nature of agriculture. 

Our other major priorities are adding water quantity as a priority to the Conservation Title. More work needs to be done to conserve water in the semiarid Sorghum Belt and having a robust Energy Title as the ethanol industry is dramatically changing the sorghum industry. We believe that forward sorghum makes a great 

feedstock for the cellulosic industry, as it has the capability to 

produce in every State. 

While we are hoping that commodity prices do not drop to loan 

rate levels again soon, the reality of the farm economy is that 

prices will drop. We need a safety net to help us through low 

prices. Direct payments are very important to growers in States 

that receive less than 21 inches of rain, which is almost all of the 

Sorghum Belt, as we are in the fourth year of a drought. If sorghum had to rank farm support payments today, direct payments 

would be most important, as it is a guarantee to our credit institutions. Direct payments are the most important part of the three 

legs of the farm safety net tool. In the two counties I farm, my cash 

price is 40 cents above corn, yet my sorghum loan rate is below 

corn. Even with WASDI and NAS supporting sorghum prices above 

corn, my loan rate for sorghum dropped and the loan rate for corn 

increased in 2007 compared to the 2006 levels. 

64

Related to the county loan rate issue, 95 percent of the U.S. 

grain sorghum crop loan rate is less than the loan rate of corn. As 

I mentioned, my cash price is sometimes as much as 40 cents above 

corn, yet our loan rates are lower than corn. Not having an equal 

loan rate is costing my fellow board members in Kansas $15 to $20 

an acre, $10 an acre in Nebraska, and $15 to $20 an acre in Colorado. 

In the counties that produce 95 percent of the sorghum crop, the 

average sorghum loan rate was 15 cents per bushel under corn. In 

a loan rate situation, this difference costs a producer $10 an acre 

based on a 70–bushel yield. This makes a difference in which crop 

a producer chooses to plant in a loan rate environment. 

As you write a new Commodity Title, maintaining equitable direct payments, loan rates, and countercyclical rates between all 

crops should be a high priority. 

Once again, I appreciate the Committee’s interest in sorghum 

and look forward to working with you and would be happy to answer any questions you may have. 

[The prepared statement of Mr. Murden can be found on page 

157 in the appendix.] 

Chairman HARKIN. Mr. Murden, thank you very much. 

Now we turn to Mr. Armond Morris. Mr. Armond Morris is a 

peanut producer from Irwin County, Georgia. He is Chairman of 

the Georgia Peanut Commission and is here today representing the 

Southern Peanut Farmers Federation. 

Mr. Morris, welcome to the Committee. 

STATEMENT OF ARMOND MORRIS, SOUTHERN PEANUT 

FARMERS FEDERATION, OCILLA, GEORGIA 

Mr. MORRIS. Thank you, Mr. Chairman, and thank you to our 

Honorable Senator from Georgia, Mr. Chambliss. We appreciate 

you all having this hearing and us being invited to testify, and to 

the rest of the Committee that might not be with us today, and 

those that are, and we very much appreciate you all. 

I am a peanut producer from Irwin County, Georgia. I am Chairman of the Georgia Peanut Commission. I am here today representing the Southern Peanut Farmers Federation. The Federation is comprised of the Alabama Peanut Producers Association, the 

Georgia Peanut Commission, the Florida Peanut Producers Association, and the Mississippi Peanut Growers Association. Our grower organizations represent about 80 percent of the peanuts grown 

in the United States. 

As you will recall, our program changed significantly in the 2002 

farm bill. Peanut growers went from a supply management program to a more market-oriented program. The support price for 

peanuts, prior to the 2002 farm bill, was $610 per ton. The new 

marketing loan, established in the 2002 bill, was $355 per ton, but 

the effective amount for growers was approximately $405 per ton. 

This was due to a storage and handling fee provision paid by the 

U.S. Department of Agriculture through the 2006 crop year. 

Our industry saw incremental growth in the first few years of 

this farm bill, but with the increase in energy costs came dramatic 

changes to the U.S. peanut industry. We saw a 20–percent national 

65

reduction in acres in 2006, and we anticipate another 14 percent 

drop in the 2007 crop year in my home State. 

The University of Georgia’s National Center for Peanut Competitiveness has determined that our variable costs have increased 

$91.15 per acre for dryland peanuts and $118.52 for irrigated peanuts since the writing of the 2002 farm bill. I have included two 

charts from the center that are farm studies illustrating the impact 

of costs on peanut farmers by comparing the 2004 crop year to the 

2006 crop year. 

I also did my own analysis on my farm and determined that costs 

had risen significantly for me. For example, fertilizer increased 

from $180 per ton in 2002 to $406 per ton in 2007. And since this 

was written a week ago, it has already gone up $21 more on fertilizer. 

Diesel fuel rose from 94 cents per gallon to $2.34 per gallon. Nitrogen more than doubled in cost during the same time period, likewise for ammonium nitrate. I have included these cost comparisons 

as part of my testimony. 

What do American peanut farmers need in this farm bill to assure that we maintain a viable peanut industry in the United 

States? Our peanut States held meetings throughout each of our 

States asking a series of related questions. What was evident in 

the surveys was that our price for peanuts was too low for growers 

to continue to plant. What we have seen in 2006 and 2007 is a 

trend that will continue without changes in the program. We know 

the marketing loan program can work for American peanut producers, but the price has to be a true safety net. Growers will not plant peanuts for $355. We would like to see an increase in the marketing loan rate to $450 per ton, increase 

the target price to $550 per ton, increase the direct payment to $40 

per ton, establish a loan deadline of June 30th with all peanuts forfeited at that point going to non-edible use with supervision. 

The current Federal inspection program for peanuts has been 

very successful in protecting consumers and the industry. Since 

peanuts are generally a food ingredient, we support expanding the 

USDA Federal inspection to include peanut manufacturing facilities. We also support maintaining payment limits as established in 

the 2002 farm bill. 

The Committee is aware of the difficulty that the peanut industry has had with USDA setting the loan repayment rate. We encourage the Committee to adopt language using the International 

Trade Commission’s formula for establishing the posted price of 

peanuts versus the current USDA methodology. 

We recognize the significant budget constraints this Congress 

must face. We struggled a great deal in trying to determine what 

peanut producers should present to Congress for the next farm bill. 

What was evident from the beginning was a rapidly shrinking industry. We could not come here today and ask for a program that 

would ensure the demise of the U.S. peanut industry. The prices 

we have today do not work for a viable industry. Without changes, 

the U.S. peanut industry will continue to decline. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Morris can be found on page 149 

in the appendix.] 

66

Chairman HARKIN. Thank you very much, Mr. Morris, and especially for all the charts you provided us. They are very informative, 

especially the one on the input costs. 

Mr. MORRIS. Thank you. 

Chairman HARKIN. Now we turn to Mr. Lynn Rundle, the CEO 

of 21st Century Grain Processing Cooperative, a grower-owned cooperative with 410 farmer members in Manhattan, Kansas. Mr. 

Rundle will be testifying today on behalf of the North American 

Millers Association. 

Mr. Rundle, welcome. Please proceed. 

STATEMENT OF LYNN RUNDLE, NORTH AMERICAN MILLERS 

ASSOCIATION, MANHATTAN, KANSAS 

Mr. RUNDLE. Thank you, Senator Harkin. I appreciate the opportunity to speak to you today. 

I represent the North American Millers’ Association, which represents about 95 percent of all the milling capacity in the United 

States. We mill wheat, corn, and oats in our operation at 21st Century Grain Processing. 

I would be here today on behalf of the Iowa Association of Oat 

Growers or the Kansas Association of Oat Growers, but just like 

Jed Clampett, they loaded up the truck and moved to Saskatoon 

since the 1996 farm bill. And that is really the unique problem of 

what I want to talk about. We have got a true food security issue 

in the United States as related to oat production, particularly—and 

also to wheat production to some degree. We have seen acres decline dramatically over the last 20 years. 

We planted 18 million acres of oats in 1987 in this country. Last 

year we planted 4 million and only harvested 1.6 million acres. 

That puts at risk our ability to provide this basic food commodity. 

The U.S. harvested fewer wheat acres in 2006 than it did in 

1898. We have the smallest oat production since President Lincoln 

started the USDA in 1866, and oat acreage continues to decline. 

We have a real issue, and we take kind of a unique approach to 

maybe some of the other commodity groups because while I am not 

an oat producer, I am here on behalf of them as well as on behalf 

of the processing industry, both of have moved north of the border 

to Canada. And that is what puts us at risk. 

To put this in perspective, Mr. Harkin, if you took the two major 

corn-producing counties, Sioux County and Kossuth County, together they produce about 90 million bushels of corn. And that is 

the same number of bushels we are projected to produce in the entire United States this year in oats. 

If you put the corn production in the hands of two counties in 

Kansas, you can imagine what kind of an ethanol issue we would 

have in the future in guaranteeing a ready supply of ethanol as 

well feed to the livestock industry. The bottom line is, we have to 

reduce our reliance on foreign oats. 

In South Sioux City, Nebraska, where we own a mill, we import 

85 percent of the oats we process there from Canada today. My 

written testimony shows the schematic of what oat production has 

looked like since 1986 and how it has moved across the border into 

Canada. Next year we will produce 94 million bushels, as I said before, and we are putting the oat production and that security risk 

67

in the hands of three dryland Canadian provinces, just as much as 

Iowa is a dryland State on the corn side. It is not an irrigated crop. 

It is a dryland crop, and so it is really in danger. 

We believe that this has caused a movement of the oat milling 

assets across the border as well. One exception would be the plant 

in St. Ansgar, Iowa, where you are familiar with, a new $20 million 

expansion this year. But we think that has been caused primarily 

by the Federal farm programs. Through the yield guarantee and 

the loan guarantee, we are guaranteeing $7.30 returns, net returns 

on oats, and $90 on corn. So it just makes sense. It is basic Farm 

Economics 101 why farmers are not growing oats. 

So we feel like we must change to compete, and it really starts 

with farm programs because those programs do change planted 

acres and production dramatically. A couple cases in point. I think 

the Federal fuel mandate for 2015 is going to bring 8.5 million new 

acres of corn into production to meet that demand. That is one. 

With the stroke of a pen, we totally changed the corn production 

in the United States. 

Another example would be back in 2002, with the stroke of a pen 

we created a new lentil and pea program that has brought in a million new acres in the last 5 years. Those million acres, if they were 

devoted to oats, would be 60 million bushels, almost the production 

we had this year on the oats side. 

So what is the solution? And we think it has to do with farm programs, and that is, again, we want to reduce reliance on foreign 

oats in this country. We feel we need that to stabilize the industry. 

And so we would suggest, with the creative thoughts of your staff 

and others on the Senate Ag Committee, that we create a mixeduse conservation approach where you could take some conservation 

acres today that are in the CRP—something like 10 million acres 

are supposed to come out in the next 5 years—that are in Class 

I to IV land, and with those States that have those acres coming 

out are primarily in the northern tier States where oats are a viable commodity, have been in the past. So we would suggest that 

we create some kind of a combination program that really incented 

producers to plant some oats in those CRP acres maybe coming out 

and leave those oats—leave 25 percent of them for habitat, for 

recreation and environmental use. 

So those are some solutions, and I appreciate the opportunity to 

visit with you today. Thank you. 

[The prepared statement of Mr. Rundle can be found on page 178 

in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Rundle. 

Now we turn to Mr. John Swanson, National Sunflower Association. Mr. Swanson has grown sunflowers on his farm near Mentor, 

Minnesota, since 1972. He currently serves on the Board of Directors of the National Sunflower Association as the representative of 

the sunflower seed industry and has also served on the U.S. Canola 

Association Board of Directors. He is representing both organizations today. 

Mr. Swanson, welcome to the Committee. Please proceed. 

68

STATEMENT OF JOHN SWANSON, NATIONAL SUNFLOWER 

ASSOCIATION, MENTOR, MINNESOTA 

Mr. SWANSON. Thank you for this opportunity to share our concerns and views with you. 

The sunflower and canola industries have a bright future if equity can be put back into our farm policy. Both oils are low in saturated fats—one of the ‘‘bad’’ fats—and high in unsaturated fats—

the ‘‘good’’ fats. Both have high oleic varieties that are stable 

enough to not require hydrogenation to increase shelf life, so they 

do not contain trans fats—the other ‘‘bad’’ fat. 

In early 1990’s, the sunflower industry decided to develop superior oil characteristics—a challenging and very expensive process. 

The industry transformed entirely to NuSun varieties this year, 

which have a balanced fatty acid profile. They are ideal for use in 

applications that require healthier oils with higher stability and 

longer shelf life, and the NuSun varieties do not require partial hydrogenation, so they will contain no trans fats. 

The FDA trans fat labeling requirement on food products has 

spurred efforts to eliminate trans fats in our diet, and demand for 

NuSun has exploded. A number of major food companies have 

switched their product formulas to include NuSun to avoid trans 

fat. You can walk down the aisle in your grocery store today and 

see the attractive blooming sunflower faces on many of the potato 

chips in the aisle, and they have really supported sunflower by the 

labeling that they have done on this bag. 

The canola industry as well has decided to highlight the healthy 

qualities of canola oil when it successfully petitioned the FDA for 

a Qualified Health Claim, which they got approved last fall. The 

claim is based on the ability of canola oil to reduce the risk of coronary heart disease due to its unsaturated fat content, and the demand has increased as a result. The canola industry is also increasing the number of high oleic varieties available in response to 

the food service industry’s desire for zero trans fats as city and 

State governments move to ban the use of trans fat in restaurants. 

Canola oil is also an excellent candidate for biodiesel production 

because it has the highest cetane rating and also the lowest gel 

point of any of the biodiesel feedstock. Finally, canola and sunflowers are the highest-yielding oil crops on a per-acre basis. We 

could actually show a net energy gain of over 100 gallons per acre 

of net energy on these crops. Pretty significant. 

Consumer demand for higher healthy oil promises to increase 

further in the coming years, and an adequate, stable supply of sunflower and canola must be provided. However, the increasing demand for sunflower and canola oil has not been met with increased 

production of these acres. A major reason is that support levels for 

minor oilseeds under the current farm program are discouraging 

producers from responding to market demand. The minor oilseed 

marketing loan rate of $9.30 per hundredweight is only 82 percent 

of the 2000–2004 Olympic price average. Loan rates for competing 

crops are much higher: the soybean loan rate is 95 percent; the 

corn rate is 92 percent; wheat is 86 percent; and the dry edible pea 

loan rate is 120 percent. These inequities have contributed to the 

47 and 43 percent respective fall in sunflower and canola acres in 

recent years. 

69

Sunflower and canola also have anemic target prices. The minor 

oilseed target price of $10.10 per hundredweight is only 80 cents 

higher than the $9.30 loan rate. But the direct payment is also 80 

cents, making the effective target price $9.30—identical to the loan 

rate. This makes it impossible for countercyclical payments to be 

triggered for minor oilseeds. 

Minor oilseeds also have trouble receiving equitable crop insurance coverage. Producers are telling us that they are unwilling to 

plant sunflowers or canola, even as prices soar, because insurance 

coverage for competing crops provides a more lucrative safety net. 

Together with the Soybean Association, we strongly support adjusting loan rates to a minimum of 95 percent of the 2000–2004 

Olympic average of prices or $10.71 per hundred weight for minor 

oilseeds, and a target price to a minimum of 130 percent of the 

same price average, or $14.66 per hundredweight for minor oilseeds. It is absolutely critical that these adjustments be made to 

the 2007 farm bill if our industries are going to survive and be able 

to supply the healthy oils the food industry and consumers demand. 

Thank you for your consideration of our views. 

[The prepared statement of Mr. Swanson can be found on page 

243 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Swanson. 

Now we will turn to our final witness, who has really had a lot 

of patience today. Mr. Jim Evans, a farmer of dry peas, lentils, 

chickpeas, wheat, and barley near Genessee, Idaho. He is Chairman of the USA Dry Pea and Lentil Council. 

Welcome to the Committee, Mr. Evans. Please proceed. 

STATEMENT OF JIM EVANS, USA DRY PEA AND LENTIL 

COUNCIL, GENESSEE, IDAHO 

Mr. EVANS. Thank you, Mr. Chairman and members of the Committee. I am a fourth-generation farmer of dry peas, lentils, chickpeas, and wheat and barley near Genessee, Idaho. Today I am testifying on behalf of the USA Dry Pea and Lentil Council, a national 

organization representing producers, processors, and exporters of 

dry peas, lentils, and chickpeas across the northern tier of the 

United States. 

Today agriculture is enjoying some of the highest commodity 

prices we have seen in years. The market opportunities to whatever commodity I grow make me feel like a farmer in heaven. Then 

I open my fuel, fertilizer, and machinery repair bills, and I realize 

the gap between heaven and hell is getting real close. 

Right now I am in the middle of trying to plant my chickpeas. 

I left my tractor today because I believe the biggest challenge facing U.S. commodity producers is securing an adequate safety net 

to protect farmers during periods of low prices and natural disaster. Right now commodity prices are up, but someday prices will 

drop, and when they do, our farm policy must protect our producers 

from continued subsidized competition, high tariffs, phytosanitary 

barriers, and exchange rate manipulation. 

As Congress writes the new farm bill, we ask that it include an 

adequate safety net in the following programs: 

70

Pulse crops entered the farm program family in 2002. Our organization would like to thank the Senate Ag Committee for creating 

the Pulse Marketing and LDP Programs. The program has provided a needed safety net for the producers of dry peas, lentils, and 

chickpeas across the northern tier. In the 2007 farm bill, we would 

like to be included and treated equally with other farm commodities. 

The Marketing Loan/LDP program provides the best safety net 

for U.S. pulse farmers facing dips in the market prices. The table 

below shows the pulse rates set by the law in the 2002 farm bill. 

We request to continue the program at the same levels in the 2007 

farm bill. 

The 2002 farm bill created a marketing loan for small chickpeas, 

but not for large chickpeas. Our organization supports the creation 

of marketing loan assistance for large chickpeas in the 2007 farm 

bill. 

To reduce our dependence on foreign oil, we support a strong energy component in the 2007 farm bill. The most effective way to reduce our dependence on foreign oil is to encourage U.S. farmers to 

implement a sound energy conservation strategy. To encourage energy conservation, we propose the creation of a Pulse Energy Conservation Incentive Payment—PECIP. Dry peas, lentils, and chickpeas are legumes that do not require the use of nitrogen fertilizer 

in their production cycle. In fact, university research shows that 

the production of dry peas and lentils and chickpeas provides a 40–

pound-per-acre nitrogen credit for the next crop. 

In addition to conserving energy, pulse crops also fix nitrogen in 

the soil which provides a significant offset to greenhouse gas emissions. The program would be delivered as a direct payment to producers who plant energy-conserving crops like dry peas, lentils, and 

chickpeas. The payment would be based on multiplying the nitrogen credit saved by planting a pulse crop, 40 pounds an acre, times 

the current cost of nitrogen—and this was in February—of 38 cents 

a pound. The payment would roughly be $15 for pulse crops with 

current nitrogen prices. 

As Congress works on providing new incentives for the creation 

of biofuels, we ask that equal weight be given to providing incentives to producers of produced pulse crops that conserve our energy 

resources. 

Pulse crops are grown in a rotation with wheat and barley and 

minor oilseeds across the northern tier of the United States. Each 

crop in the rotation has a direct payment except for our pulse 

crops. We support the creation of direct payments for dry peas, lentils, and chickpeas equal to the direct payment of wheat. That current direct payment of wheat is 52 cents per bushel. 

Our organization supports the creation of a USDA FSA base for 

dry peas and lentils in the 2007 farm bill and in order to receive 

our direct payment. Producers should be allowed to sign up at their 

current vegetable base for their pulse direct payments. 

We are also in favor of being included in the countercyclical payment. We support the creation of a pulse countercyclical program 

for dry peas and lentils and chickpeas equal to 130 percent of loan 

rates established in the 2002 farm bill. Producers need flexibility 

to respond to market signals. Over 90 percent of the chickpeas in 

71

the United States are grown in Washington, Idaho, Montana, 

North Dakota, and South Dakota. Currently chickpeas are classified as a vegetable crop and are not eligible to be planted on program acres. The growers producing chickpeas in the northern tier 

primarily produce program crops that are eligible to be planted on 

farm program base crops. The council supports the inclusion of 

chickpeas, large and small, as an eligible crop to be planted on 

farm program base acres in the 2007 farm bill. 

Thank you for your time and allowing me to testify. I will be 

happy to answer any questions—well, maybe not happy. 

[Laughter.] 

[The prepared statement of Mr. Evans can be found on page 115 

in the appendix.] 

Chairman HARKIN. Mr. Evans, thank you very much. I thank all 

of you for your testimony. 

Mr. Rundle, I was interested in the figures you had on what has 

happened to oat production in this country. I have kind of a twopart question. Obviously, oats is not only a food grain. It can be 

a feedgrain also for livestock. But also oat straw is high in cellulose, so if we are looking at cellulose conversion for ethanol, it 

could be a feedstock for ethanol also. I wonder if you have thought 

about that and if you have looked at that as an aspect of production of oats. 

The second part of my question is, as I looked at your charts—

when I was a kid, we grew a lot of oats in Iowa. We do not have 

any oats now. Of course, a lot of that is just because of price and 

corn, that kind of thing; soybeans have come in the last 20 years 

or so. But I wonder how much of that is due to climate change. A 

lot of this is moving north into Canada, and I am just wondering 

if you have any thoughts on that, both on the ethanol and then on 

is it moving north more or less because of climate change and they 

are able to grow more in Canada. 

Mr. RUNDLE. The first thing is on the ethanol. We have not 

looked at the cellulosic properties of oat straw compared to, let’s 

say, wheat straw or switchgrass to figure out which one of those 

would be the better. My guess is switchgrass is probably the most 

ideal, but, you know, you have to marry some things sometimes to 

get things done. And there are two products. We also produce oat 

hulls in the oat milling industry, and that is another product that 

maybe could be used somehow in the production of bioenergy. 

The other thing I would say is when you look at the movement 

across the border, we believe that has primarily been driven by the 

farm program payments, the loan rate. It just does not make sense 

in the United States to grow oats or wheat if you can grow corn. 

And that is why production is moving to the Canadian border. The 

climate in the northern tier States is ideal also for growing oats. 

Chairman HARKIN. Well, if your association has any information 

on using oat straw for ethanol, cellulose, that type of thing, I would 

be interested in seeing it, because, again, you get a lot of other 

things out of oats other than just the oat straw, obviously, as food 

and fee. 

Mr. RUNDLE. Sure. 

72

Chairman HARKIN. Mr. Swanson, I was interested in your chart. 

It looked like the sunflower acreage is down, but canola acreage is 

up. 

Mr. SWANSON. Slightly, yes. 

Chairman HARKIN. What is that all——

Mr. SWANSON. That is based on the projections this year, or are 

you looking at last year? 

Chairman HARKIN. Well, I just looked at your chart. 

Mr. SWANSON. The chart from last year, the acres were down last 

year on——

Chairman HARKIN. Well, if you go from, let’s say, the high point 

of 1999 or 2001, it looks like sunflower acreage has steadily almost 

declined, and canola declined but has bounced back up again. 

Mr. SWANSON. Yes, it has come back, and part of that has been 

driven by the better oil quality and biofuels interest. There is a 

huge new plant in North Dakota looking at biofuels, biodiesel from 

canola, and that is really spurring some interest in canola. 

Chairman HARKIN. And you say canola and sunflower are our 

highest-yielding oil crops on a per acre basis, even more than soybeans. 

Mr. SWANSON. Yes, because of the oil percentage. You will 

produce about the same amount of grain per acre with either of 

those three crops. Sunflower will have between 45 and 50 percent 

oil; canola will have 38 to 42 percent oil; soybean will have from 

18 to 22 percent oil. So it is just a matter of a percentage based 

on the total production. 

Chairman HARKIN. One final question that I have—and that I 

have asked other panels this—has to deal with the dispute within 

the World Trade Organization saying that our current restriction 

on planting of fruits, vegetables, et cetera, on base acres affects 

whether or not we can categorize direct payments as green box. So, 

again, I am just wondering, does your organization have a position 

on the planting flexibility issue at all, on whether you should be 

able to plant vegetables or other specialty crops, whatever you 

want on program acres? 

Mr. HAYES. Senator, we do not have a policy at this point. However, I would say, you know, that we would be supportive but not 

at the cost of funding for the current farm programs. In other 

words, what I am saying is that we feel it is necessary to generate 

new monies. 

Chairman HARKIN. OK. Mr. Murden? 

Mr. MURDEN. NSP does not have a policy per se in regards to 

that, but I believe we believe in fair and equitable for all. We 

would not presume to tell them what to do any more than they 

would presume to tell us what to do. 

Chairman HARKIN. I did not hear that. Say that again, Mr. 

Murden? 

Mr. MURDEN. We would not presume to tell them what to do any 

more than they would tell us what to do. We believe in a fair and 

equitable playing field. We do not have a policy per se. And as you 

referred to a while ago, I kind of wear both hats, anyway. 

Chairman HARKIN. Right. Mr. Morris? r. Morris. The Georgia 

Peanut Commission or the Federation does not have a position on 

the fruits and vegetables there, but we do have a lot of fruits and 

73

vegetables grown in Georgia, Florida, and Alabama, and Mississippi. So definitely we would want to work with them as far as 

being flexible on working with those commodities. 

Chairman HARKIN. Mr. Rundle, do you have any position on 

that? 

Mr. RUNDLE. No. We do not have a position on that. Thanks. 

Chairman HARKIN. Mr. Swanson? 

Mr. SWANSON. Neither does the sunflower nor canola. 

Chairman HARKIN. Mr. Evans? You probably do. 

Mr. EVANS. Mr. Chairman, we have opposed the vegetable clause 

since the 1996 farm bill when we got peas and lentils excluded 

from the Fruit and Vegetable Act, and we also tried to get chickpeas out in the 2002 farm bill. 

Now, I do realize that, as you go through the farm bill process, 

I understand there is a difference between growing fresh vegetables 

and fresh fruit. But as far as large chickpeas are concerned and 

small chickpeas, we would like to have those included in the 2007 

farm bill as non-program crops. 

Chairman HARKIN. I understand that. 

Senator Chambliss? 

Senator CHAMBLISS. Thank you, Mr. Chairman. 

Let me start with you, Mr. Hayes, and go right down the row. 

We have had some conversation today, some proposals made relative to revenue proposals replacing particularly countercyclical 

payments. If you would just tell me what the position of your respective commodity is, I would appreciate it. 

Mr. HAYES. Mr. Chairman, Mr. Chambliss, we support the current countercyclical program that we have under the existing farm 

bill. 

Senator CHAMBLISS. Dale? 

Mr. MURDEN. In regards to revenue assurance, the devil is in the 

details, and our region has been severely affected by drought. You 

know, regardless of what percentage and level you pick, 70 percent 

of zero is still zero. And so we would just look at it very cautiously. 

Mr. MORRIS. Senator, the revenue payment is you would look 

at—you know, if we had some kind of guaranteed assurance, but 

the countercyclical has worked very well. I think with peanuts, if 

we could get the loan rate to fall to the market, and for peanuts, 

countercyclical is working very well to make up that gap there between the target price and whatever the price would be there, as 

peanuts sales out of loans. I would—for peanuts, we would like to 

stick with the countercyclical. 

Senator CHAMBLISS. Mr. Rundle? 

Mr. RUNDLE. We do not have a position specifically on that just 

because, again, it is a producer issue. What we do say is that anything that distorts planting decisions is something congress really 

needs to address. 

Senator CHAMBLISS. Mr. Swanson? 

Mr. SWANSON. Well, we have thought the loan rate distorts some 

of the planting decision, and it has been driven by bankers for sunflower and canola, and so that has been a negative impact to our 

crops. 

Senator CHAMBLISS. Mr. Evans? 

74

Mr. EVANS. The pulse industry only gets a marketing loan. We 

would like to have the other two legs of the stool because our industries kind of get tired of standing on one foot. 

As far as the crop revenue programs, our industry, mandated 

from the 2002 farm bill, is supposed to have a pilot program for 

crop revenue insurance for pulse crops. And to this time, they have 

a pilot program ready to go for five counties in the Pacific Northwest, but because we are not traded on a futures market, they are 

having a problem coming up with numbers on how to give us some 

revenue. 

So I would worry about a revenue-based thing if small commodities like ours are going to be in a pickle because we are not trade 

on a futures market or something like that. 

Senator CHAMBLISS. Mr. Morris, the peanut program, of course, 

was dramatically reformed in the 2002 farm bill. The quota system 

was eliminated and replaced with a more market-oriented program, 

as you addressed. How has the peanut industry adjusted to this 

change? And in hindsight, was it a positive move? 

Mr. MORRIS. Senator, I think it has all been positive. There are 

just some things that needed to be, I would reckon you would say, 

tweaked or particularly loan repayment in the new farm bill, it 

needs to be dictated to the USDA as to how that might work as 

far as resetting the repayment loan, because we could—we have 

lost our exports, we have lost over 200,000 tons of export market 

because the loan repayment rate has not been set on peanuts like 

it should have been or like the Congress implemented, so to speak, 

but I think they misinterpreted it. 

So we need to kind of follow the world market on peanuts, but 

the program itself has worked very well, and we appreciate what 

Congress did in implementing a new farm bill in the 2002 farm 

bill. 

Senator CHAMBLISS. The latest USDA planting projection indicates that peanut acres are going to be down a few percentage 

points nationwide. It looks like we are going to have a significant 

decrease in Georgia. 

In your opinion, what will be the effect of the acreage decrease 

in peanuts? And will a significant price increase that would most 

likely result from the decrease in supply allow the peanut industry 

to prosper without adjusting the market loan rate target price and 

direct payment? 

Mr. MORRIS. Well, I think what is predicted for this year, if we 

make a good crop, then we might have enough to supply the needs. 

But we could very easily have a shortage of peanuts because of the 

fact that peanuts have been—the loan rate has been set too high 

and has not allowed the peanuts to flow into the market and allowed the farmers to be able to produce the peanuts as needed for 

the demand. 

So we are concerned, the high cost of production and the low 

price of peanuts is what has driven so that the numbers of acres 

being planted down. 

Senator CHAMBLISS. Mr. Swanson, I cannot let you be here without making a comment. I love barbecue and I love sunflower seeds, 

but barbecued sunflower seeds are awful. 

[Laughter.] 

75

Senator CHAMBLISS. Gentlemen, thank you all very much. we 

look forward to staying in touch and working with you as we go 

through this farm bill. 

Chairman HARKIN. Thank you. I just have one other thing I 

would like to cover before you leave, and that was the testimony 

of Mr. Evans. It might apply also to some others. You talked about 

a Pulse Energy Conservation Incentive Payment. It is in your testimony. I took it out because I want to follow up on that. 

You just talked about how dry peas, lentils, chickpeas, or legumes do not require use of nitrogen fertilizer. They fix nitrogen. 

And you talked about a payment based on the fact that it offsets 

greenhouse gases. This is something that has intrigued me for a 

long time, and this applies not just to you but it applies to soybeans, peanuts, alfalfa, that fix nitrogen in the soil. 

Mr. EVANS. Yes. Dry beans, too. 

Chairman HARKIN. Soybeans 

Mr. EVANS. Soybeans and dry beans. 

Chairman HARKIN. Dry beans? 

Mr. EVANS. Yes. 

Chairman HARKIN. So they all fix nitrogen. So it seems to me 

that this ought to be part of our effort, again, environmentally to 

fix nitrogen in the soil, cut down on greenhouse gas emissions, that 

this ought to be, again, something that society would benefit from. 

So our consumers and the others who look at what we are doing 

in the farm bill and wonder where their tax dollars are going might 

be supportive of that and, again, provide some kind of an income 

source to peanut farmers and chickpea farmers and a lot of other 

people that plant things that fix nitrogen. It seems to me that it 

would be a benefit. I do not know if you have any thoughts on that, 

any of you. 

Mr. MORRIS. Peanuts put nitrogen back into the soil also. 

Chairman HARKIN. I know. 

Mr. MORRIS. We put about 50 pounds of nitrogen per acre back 

into the soil each year, and then we rotate that with cotton or corn, 

or whatever we can get the benefits from that nitrogen the next 

year. 

Mr. EVANS. Chairman Harkin, I would just like to comment just 

a little bit more. We are talking maybe—I now the farm bill is 

going to be expensive, and we are having to go to different avenues. 

One of the things that we have is rather than actually getting a 

cash payment would be get a tax incentive, is what I was thinking. 

So, I mean, we are trying to think a little bit outside the box on 

how we can—I mean, if I do not have to pay taxes, that is money 

back in my pocket, and it is the same as getting a check. 

Chairman HARKIN. I like that idea. I like that a lot. We have a 

number of members of the Finance Chairman on our Committee, 

and——

Mr. EVANS. Can I make one more point? 

Chairman HARKIN. Sure. 

Mr. EVANS. One other thing is that we are with the peanut guys, 

the dry bean guys, alfalfa, in a genomics pulse—or I should say legume genomics initiative with the National Research Foundation. 

And we have a $5 million grant to study the genomics of pulse 

crops. And what I would want to do is—it would be imperative that 

76

we keep this project going because maybe someday there is a possibility that we can take this gene that allows legumes to fix nitrogen, to maybe put it into corn or put it into wheat or put it into 

other commodities. Think of the drastic savings that we could have 

if that would happen. 

Chairman HARKIN. OK. And you say we are funding that 

through ag research? 

Mr. EVANS. National Research. It is the National Research funding. 

Chairman HARKIN. I am told by my staff that is the National Research Initiative. 

Mr. EVANS. OK. Excuse me. 

Chairman HARKIN. There you go. We will get the proper words 

there. All right. That is worth looking at, worth funding. 

Any other things before we dismiss you all? 

Mr. MORRIS. Mr. Chairman, I would like to make one comment 

on payment limitations. It bothers us, the peanut farmers from the 

State of Georgia, because of the fact if I lease my equipment, I 

lease my land, all these type things come out prior to my adjusted 

income. But if I buy—if I am trying to buy my farm, buy my equipment, and not under the leasing program, so to speak, then my 

payments have to come out of my adjusted gross income. And if you 

have a wife, say, that works as a nurse or with a good income level 

or in some type administration with education or whatever, then 

we feel that we would not have enough monies to sustain our farming operations falling under the $200,000 level. 

So we propose to you all that if you would consider leaving it like 

it is, or we need to have some changes in that. 

Chairman HARKIN. I appreciate that. 

Mr. Rundle? 

Mr. RUNDLE. I wish Mr. Roberts would have been here. I know 

he had something to get to this afternoon. But I just wanted to 

make a point to Mr. Roberts for the record we know that as he is 

getting a little bit older, he is eating a lot more oatmeal in his diet 

to keep him healthy. We want to make sure that oat producers do 

not end up on the endangered species list, like the piping plover 

and the black-tailed prairie dog in Kansas. And I know he would 

appreciate that if he was here. 

[Laughter.] 

Chairman HARKIN. All right. Enough said. 

Thank you very much, all of you. Thanks for your patience. 

Thanks for your testimony. The Committee will be adjourned until 

2 p.m. on May 1st. Thank you all very much. Safe travels home. 

[Whereupon, at 1:48 p.m., the Committee was adjourned.] 

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