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HEARING TO REVIEW THE STATE OF 

AGRICULTURE IN KANSAS

HEARING

BEFORE THE

SUBCOMMITTEE ON 

GENERAL FARM COMMODITIES AND RISK 

MANAGEMENT

OF THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JUNE 5, 2007, SALINA, KS

Serial No. 110–24

(

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

COLLIN C. PETERSON, Minnesota, Chairman 

TIM HOLDEN, Pennsylvania, 

Vice Chairman 

MIKE MCINTYRE, North Carolina 

BOB ETHERIDGE, North Carolina 

LEONARD L. BOSWELL, Iowa 

JOE BACA, California 

DENNIS A. CARDOZA, California 

DAVID SCOTT, Georgia 

JIM MARSHALL, Georgia 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HENRY CUELLAR, Texas 

JIM COSTA, California 

JOHN T. SALAZAR, Colorado 

BRAD ELLSWORTH, Indiana 

NANCY E. BOYDA, Kansas 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

KIRSTEN E. GILLIBRAND, New York 

STEVE KAGEN, Wisconsin 

EARL POMEROY, North Dakota 

LINCOLN DAVIS, Tennessee 

JOHN BARROW, Georgia 

NICK LAMPSON, Texas 

JOE DONNELLY, Indiana 

TIM MAHONEY, Florida 

BOB GOODLATTE, Virginia, 

Ranking Minority Member 

TERRY EVERETT, Alabama 

FRANK D. LUCAS, Oklahoma 

JERRY MORAN, Kansas 

ROBIN HAYES, North Carolina 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

JO BONNER, Alabama 

MIKE ROGERS, Alabama 

STEVE KING, Iowa 

MARILYN N. MUSGRAVE, Colorado 

RANDY NEUGEBAUER, Texas 

CHARLES W. BOUSTANY, JR., Louisiana 

JOHN R. ‘‘RANDY’’ KUHL, JR., New York 

VIRGINIA FOXX, North Carolina 

K. MICHAEL CONAWAY, Texas 

JEFF FORTENBERRY, Nebraska 

JEAN SCHMIDT, Ohio 

ADRIAN SMITH, Nebraska 

KEVIN MCCARTHY, California 

TIM WALBERG, Michigan 

PROFESSIONAL STAFF

ROBERT L. LAREW, Chief of Staff 

ANDREW W. BAKER, Chief Counsel 

APRIL SLAYTON, Communications Director 

WILLIAM E. O’CONNER, JR., Minority Staff Director 

SUBCOMMITTEE ON GENERAL FARM COMMODITIES AND RISK MANAGEMENT

BOB ETHERIDGE, North Carolina, Chairman 

DAVID SCOTT, Georgia 

JIM MARSHALL, Georgia 

JOHN T. SALAZAR, Colorado 

NANCY E. BOYDA, Kansas 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

BRAD ELLSWORTH, Indiana 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

EARL POMEROY, North Dakota 

JERRY MORAN, Kansas, Ranking Minority 

Member 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

CHARLES W. BOUSTANY, JR., Louisiana 

K. MICHAEL CONAWAY, Texas 

FRANK D. LUCAS, Oklahoma 

RANDY NEUGEBAUER, Texas 

KEVIN MCCARTHY, California 

CLARK OGILVIE, Subcommittee Staff Director

(II) 

(III)

C O N T E N T S 

Page 

Boyda, Hon. Nancy E., a Representative in Congress from Kansas, opening 

statement .............................................................................................................. 5

Etheridge, Hon. Bob, a Representative in Congress from North Carolina, 

opening statement ................................................................................................ 1

King, Hon. Steve, a Representative in Congress From Iowa, opening statement ...................................................................................................................... 6

Moran, Hon. Jerry, a Representative in Congress from Kansas, opening statement ...................................................................................................................... 2

Prepared statement .......................................................................................... 4

Smith, Hon. Adrian, a Representative in Congress from Nebraska, opening 

statement .............................................................................................................. 7

WITNESSES

Dumler, Troy J., Agricultural Economist, Kansas State University, Garden 

City, KS ................................................................................................................. 8

Prepared statement .......................................................................................... 9

Submitted report .............................................................................................. 16

Miller, Ph.D., Bill, Cattle Producer, Princeton, KS; on behalf of Franklin 

County Farm Bureau Association ....................................................................... 29

Prepared statement .......................................................................................... 30

Rome, Steve, Farmer; President, Southwest Kansas Corn Growers Association; Board Member, Kansas Corn Growers Association, Hugoton, KS .......... 31

Prepared statement .......................................................................................... 32

Starck, Brian, Corn, Soybean, and Wheat Farmer; Swine Producer, Fairbury, 

NS; on behalf of Jefferson County, Nebraska Farm Bureau ............................ 34

Prepared statement .......................................................................................... 36

Pracht, John C., Corn, Wheat, and Soybean Farmer/Rancher, Westphalia, 

KS .......................................................................................................................... 46

Prepared statement .......................................................................................... 48

Childs, Barry K., Grain Farmer; Vice President and Fieldman, Farm Management Services, Inc.; Childs Farms Ptr., Belleville, KS ..................................... 49

Prepared statement .......................................................................................... 52

Parker, Gary, Soybean, Wheat, and Milo Farmer, Moran, KS ............................ 55

Prepared statement .......................................................................................... 57

Meisinger, Mark, Wheat Farmer and Cow/Calf Producer, Marion, KS .............. 60

Prepared statement .......................................................................................... 61

Robbins, Lee, Director, Kansas Cattlemen’s Association; Cow/Calf Producer, 

Yates Center, KS .................................................................................................. 61

Prepared statement .......................................................................................... 62

Polansky, Hon. Adrian J., Secretary of Agriculture, State of Kansas, Topeka, 

KS .......................................................................................................................... 70

Prepared statement .......................................................................................... 72

SUBMITTED STATEMENTS

Clanton, Steven, Commissioner, Kansas Wheat and Soybean Commissions; 

on behalf of Kansas Association of Wheat Growers; Kansas Wheat Commission, Minneapolis, KS, prepared statement ....................................................... 88

Dahlsten, Edie, Vice President, Kansas Farm Bureau, Manhattan, KS, prepared statement ................................................................................................... 84

Hanson, William V. ‘‘Bill’’, Chairman, Crop Insurance Professionals Association, Washington, D.C., prepared statement ..................................................... 77

Hineman, Don J., Farmer and Cow/Calf Producer, Dighton, KS, prepared 

statement .............................................................................................................. 87

Page

IV

Kaufman, Leslie, Executive Director, Kansas Cooperative Council, Topeka, 

KS, prepared statement ....................................................................................... 95

Kejr, Joe, President, Kansas Association of Wheat Growers, Brookville, KS, 

prepared statement .............................................................................................. 78

Kocher, Kurt, Cloud County Producer, Glasco, KS, prepared statement ........... 84

Larson, Daryl A., Farmer and Rancher, McPherson, KS, prepared statement .. 87

Letter to Hon. Collin C. Peterson from concerned Kansas agriculture groups .. 97

Melander, Gary, Assaria, KS, prepared statement ............................................... 87

Penner, Paul, Vice President, Kansas Association of Wheat Growers, Hillsboro, KS, prepared statement ............................................................................. 80

Tomlinson, Ralph and Barbara, Baldwin City, KS, submitted article ................ 99

Tunnell, Tom R., President, Kansas Grain and Feed Association, Kansas 

Agribusiness Retailers Association, Topeka, KS, prepared statement ............ 93

Winter, Ken, President of the Board, Kansas Cattlemen’s Association, Junction City, KS, prepared statement ...................................................................... 80

Zongker, Derek and Michelle, Farmers, Sylvia, KS, prepared statement .......... 101 

(1)

HEARING TO REVIEW THE STATE OF 

AGRICULTURE IN KANSAS 

TUESDAY, JUNE 5, 2007

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GENERAL FARM COMMODITIES AND

RISK MANAGEMENT, 

COMMITTEE ON AGRICULTURE, 

Salina, KS 

The Subcommittee met, pursuant to call, at 9 a.m., at the College 

Center at Kansas State University at Salina, 2310 Centennial 

Road, Salina, Kansas, Honorable Bob Etheridge [Chairman of the 

Subcommittee] presiding. 

Present: Representatives Etheridge, Moran, Boyda, King, and 

Smith. 

OPENING STATEMENT OF HON. BOB ETHERIDGE, A 

REPRESENTATIVE IN CONGRESS FROM NORTH CAROLINA 

Mr. ETHERIDGE. Good morning. This field hearing of the Subcommittee of the General Farm Commodities and Risk Management to review the state of agriculture in Kansas will come to 

order. As Jerry reminds me, this is his Subcommittee; he’s just 

loaned it to me this year. 

Mr. MORAN. Some of us do hope it’s temporary. 

Mr. ETHERIDGE. Keep dreaming, Jerry. We really are honored to 

be here and thank you. And we’re going to move into the program 

and I do, before I have opening remarks, want to thank Jerry and 

his staff and Nancy and hers for the hospitality. Last night we had 

dinner at just a fabulous restaurant. It was an old school building. 

Amazing what you can do with an old school building. I’m going 

to go back home to my folks in North Carolina and tell them we 

need a nice restaurant because it really was a good place. And it’s 

good to be here. 

It’s my pleasure to be here today in America’s Heartland in the 

great State of Kansas. It’s a distinct privilege to be in the district 

of my good friend, the Ranking Member of the Subcommittee, Jerry 

Moran. Last year, no matter what happened in the election, we 

were going to have a hearing in Kansas because we traveled all 

over the country and said we were going to talk about it later. During the previous Congress I participated in many of the field hearings held on this Subcommittee under Jerry’s leadership and others 

as we traveled the country. While I was unable to attend them all, 

I think Jerry made about every one of them. 

2

And Nancy is new to the Committee and she was very instrumental in helping make sure we got this back to Kansas between 

her and Jerry. So I thank both of them. 

During the hearings last year I met with producers in Arizona, 

from Arizona to the Rust Belt in Indiana, from the upper Midwest 

States of Minnesota, South Dakota to the peanut and cotton fields 

of Georgia and even in North Carolina. So I welcome the opportunity to be here meeting with producers in Kansas. 

Next week this Subcommittee intends to begin the hard work of 

putting together the bulk of one of the most important pieces of 

this or any farm bill and that’s Title I, the commodity title. Already, two other subcommittees have put forth and amended their 

respective pieces of the farm bill ranging from energy to conservation to dairy to research. Our turn is coming to consider the part 

of the farm bill that is the heart and soul of the safety net the 

farmers depend on when times really are tough. We’ve had some 

70 years out here where you’ve had drought. So while the topic of 

today’s hearing is to review the state of agriculture here in Kansas 

and neighboring states, the witnesses who will testify today have 

a unique chance to get the last word in before we begin the heavy 

lifting on the commodity title. 

Now I highly recommend that you all take advantage of that and 

I’m sure you will. I want to thank all the witnesses who are here 

today who will participate. I appreciate your commitment to agriculture because folks need to remember that without the people 

who till the soil, there wouldn’t be a whole lot in the dairy case or 

the fresh fruit and vegetable case in the grocery store. 

I am now pleased to recognize one of the co-hosts of our visit to 

Kansas and my good friend and a partner in our work on behalf 

of agriculture, the Subcommittee’s Ranking Member, Jerry Moran, 

for his opening statement. 

OPENING STATEMENT OF HON. JERRY MORAN, A 

REPRESENTATIVE IN CONGRESS FROM KANSAS 

Mr. MORAN. Mr. Etheridge, thank you very much. Thank you for 

joining us. My particular appreciation to Mr. King. Mr. King is a 

Member of Congress from Iowa and Mr. Smith is a new Member 

of Congress from Nebraska. We appreciate them both, very much, 

taking time out of their schedules to come to Kansas and hear from 

Kansas and Nebraska producers. And to Ms. Boyda, it’s been a real 

privilege to have another Kansan serve on the House Agriculture 

Committee. And we are working hard to develop a good, close, 

working relationship to see that good things happen for Kansas 

farmers and ranchers at a time in which Congress is truly focused 

on agriculture. So I appreciate very much the help that Mrs. Boyda 

provided us in having this hearing here today and glad that my colleagues would take the time to join us. 

And Mr. Etheridge, as he said, we are friends. We will have banter back and forth from time to time, but ultimately both of us are 

interested in seeing that this Subcommittee and really the full 

Committee on Agriculture moves forward in a bipartisan way designed to develop farm policy that is advantageous to the producers 

of this country. 

3

We have had—I’ve lost a bit of credibility by the arrival of these 

other Members because for most of the time I’ve been in Congress 

I’ve been advocating for drought assistance. 

Mr. ETHERIDGE. We won’t hear that again. 

Mr. MORAN. They flew over the state arriving here yesterday and 

the ponds were full and the fields are green. We’re now advocating 

for flood assistance. 

It is a sad thing in our state, all but 12 counties in the First Congressional District of Kansas, in fact 85 percent of the counties in 

Kansas have, in 2007, been declared disaster areas. So we have 

had significant challenges and just seen that the challenges have 

changed. 

We started with 5 and 6 years of drought in much of our state, 

followed by a December 31st winter storm which consisted of: 5 

inches of rain; followed by 6 inches of ice; followed by 2 feet of snow 

and 40 mile an hour winds resulting in 44 Kansas counties being 

declared natural disaster counties. Then it was just a few weeks 

ago in April we toured wheat losses here in Saline County and four 

other counties. We had 3 nights of temperatures in the teens, 

which, from my perspective, it appeared that 2007 was going to be 

the year in which we might have some recovery on Kansas farms. 

And our winter wheat crop was significantly damaged, particularly 

in this part of the state, and now we’ve had tornadoes, floods and 

hail. I’m now predicting locusts are next. Every array of disaster 

has beset our state. 

So our efforts on behalf of disaster assistance perhaps are not 

over, but my number one priority for 2007 in agriculture was passage of a disaster assistance plan which Congress did a week ago 

and the President has signed that bill. It’s a modest amount of assistance for farmers and I am pleased that we were successful in 

doing that. As I say, it’s my number one priority of 2007, despite 

the fact that I know this is the year in which we’re going to develop 

the farm bill and the process has begun. 

Mr. Etheridge is right. Our full Committee held 11 field hearings 

across the country. We were in California, New York State, Washington and Alabama and places in between, and the Subcommittee 

that Mr. Etheridge and I led last year held four more hearings. 

This will be our fifth and this is the final one, before the farm bill 

is written, out in the country. So I’m very pleased that we’ve been 

successful in having Members of this Subcommittee come here in 

advance of writing the farm bill for 2007. It is perhaps our last 

shot. 

Mrs. Boyda and I were involved in the selection of witnesses and 

much of our criteria was related to finding farmers who are earning a living in farming. We did not seek necessarily people who 

represented particular farm organizations or commodity groups. 

And I looked, in particular, for witnesses that would unlikely—it 

would be unlikely that they would have the opportunity to testify 

in our Nation’s Capital. 

So who we will hear from today are people who are actively engaged in farming and ranching in Kansas who are trying to help 

figure out how their lives can succeed and how there can be another generation of young Kansans on family farms in our state. 

4

This Subcommittee will meet soon to mark up the farm bill. 

Those of you who listened in on the Conservation Subcommittee, 

Mr. Etheridge and I have, and we do not want to defer everything 

to the full Committee and we hope to take the amendments as 

they’re offered in our Subcommittee. 

Let me just close by saying that the Gypsum community, which 

is just south of Salina, lost a long time farm leader, Steve Roe, just 

on June 2nd. And we treat our—we hold our Kansas farm families 

in high regard here and I just want to express my condolences to 

his family and express my appreciation for he, who, like many others, tried to figure out how to make a living farming, but provide 

leadership in their communities and the farm organizations 

throughout their lives. 

So, Mr. Chairman, thank you very much for allowing us the opportunity to join you and for you to have the opportunity to be here 

among the Kansans gathered here today. 

[The prepared statement of Mr. Moran follows:]

PREPARED STATEMENT OF HON. JERRY MORAN, A REPRESENTATIVE IN CONGRESS

FROM KANSAS

Mr. Chairman, thank you for holding this hearing in my home State of Kansas. 

It is a pleasure for me to welcome you and the other Members of the Committee 

to Salina, Kansas. The Kansans I represent are grateful for the opportunity to have 

their voices heard during this critical time for the future of agriculture policy in the 

United States. In Kansas, not every Kansan is a farmer, but every Kansan is affected by agriculture. 

I would also like to acknowledge my colleague and fellow Kansan, Congresswoman Nancy Boyda. Thank you, Congresswoman, for traveling to the First District 

to participate in this hearing. Finally, thank you to Kansas State University at Salina for hosting today’s event. 

Today we will hear from seven Kansas producers, a Nebraska producer, and an 

agriculture extension economist from Kansas State University. Each witness was 

chosen because they are a leader in their respective community and have demonstrated the ability to conduct a successful farming or ranching operation. The witnesses were not chosen because they have an affiliation with a particular organization or cause, but because they represent their peers involved in production agriculture across the state and region. 

As the Committee undertakes drafting the next farm bill, it is important that we 

hear from those most heavily involved in production agriculture. In the end, it is 

these producers the farm bill will affect. In creating farm policy that will influence 

the direction of agriculture for the next 5 years, the Committee must know what 

works and what does not work on the ground level. It is one thing to sit in Washington, D.C. and listen to policy analysts, but it is quite another to hear directly 

from someone whose livelihood is directly affected by Congress’ actions. 

I hope that today’s witnesses will help the Committee better understand agriculture production on the High Plains. I look forward to hearing the witnesses discuss their farm operations and how their operations have been affected by the Commodity Title of the 2002 Farm Bill. I also hope that each producer will give the 

Committee recommendations about how Congress can improve, or perhaps not detrimentally change, existing farm policy as the Committee drafts the 2007 Farm Bill. 

As I have traveled across Kansas, I have heard many positive comments about 

the 2002 Farm Bill. I suspect that many of the witnesses today would agree that 

the basic structure of the 2002 Farm Bill should remain in place. However, this is 

not to say there are not certain aspects of the legislation that can be improved upon. 

If there are ways to improve on the structure of the 2002 Farm Bill, the Committee 

should listen to the advice of today’s witnesses and attempt to implement those suggestions that make sense. 

I believe most producers across Kansas and the United States would just as soon 

earn their living from the marketplace. Nevertheless, there are times when the marketplace may not be enough and Congress should craft policy that will deliver necessary assistance. This should be done in a reliable and consistent fashion that utiVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00008 Fmt 6633 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
5

lizes the least market distorting means possible. I believe today’s witnesses will help 

to identify how to meet the future needs of agriculture in the United States. 

I would like to take the opportunity to mention that Congress recently passed, 

and the President signed into law, disaster assistance for agricultural producers. 

This is something that many Kansas farmers and ranchers have expressed the need 

for and I have supported for the past few years. I am glad this assistance will now 

be available to producers and I will work along with my colleagues on the Committee to ensure that USDA delivers the aid in the most expeditious and efficient 

manner possible. Problems, such as declining yields in Kansas, are one of the reasons this legislation was needed. As we move forward with the 2007 Farm Bill, I 

hope the Committee can find a solution to problems like declining yields that necessitate ad hoc disaster assistance. 

Finally, as I conclude my opening statement, I would like to take this opportunity 

to extend my condolences to the Steve Roe family of Gypsum, Kansas. Steve recently 

passed away on Saturday, June 2, 2007. Although I did not know Steve personally, 

I have heard tremendous things about him from people who did. By all accounts 

Steve was a very good farmer and stockman. He was forward thinking and able to 

utilize new technologies in his farming practice. In light of his many efforts and 

achievements, his family came first. Steve and his wife Joyce raised two children, 

Jennifer and Kristi. Our thoughts and prayers go out to Steve’s family in this time 

of difficulty. Steve will be a greatly missed member of the Kansas agriculture community. 

Again, thank you, Mr. Chairman, for holding this hearing and I look forward to 

the testimony of today’s witnesses.

Mr. ETHERIDGE. Jerry, thank you. And I want to give my other 

colleagues here an opportunity to have opening statements. I think 

that’s important to have brief comments. And it’s my distinct pleasure now to recognize the other co-host of this endeavor. Although 

she is new to Congress, as to agriculture issues, she’s already distinguished herself as a voice on behalf of farm families. She serves 

on two other agriculture subcommittees besides this one. So she 

has an ample opportunity to really engage in what happens in agriculture, specifically here in Kansas’ agriculture. The first 5 months 

since she first took office Nancy Boyda is already making a difference. Nancy has quickly established herself as a leader in Congress, has earned a reputation as a tireless advocate for Kansas 

working families. I’m now pleased to recognize the Second District 

Congresswoman of Kansas, Congresswoman Nancy Boyda. 

OPENING STATEMENT OF HON. NANCY E. BOYDA, A 

REPRESENTATIVE IN CONGRESS FROM KANSAS 

Mrs. BOYDA. Thank you, Chairman. I really appreciate it. And I 

will make my remarks brief. We have 2 hours and I want to make 

sure that we hear from our producers and our witnesses. 

So thank you very much, Mr. Chairman, for coming and for our 

other Members from Nebraska and from Iowa. I really appreciate 

your coming here. The people of Kansas deeply appreciate having 

their voice heard. And I will say that timing is everything and I 

got to Congress in a very good time. Whether it’s the Ag Committee 

or Energy, even Health Care, real live conversations, even civil bipartisan conversations, maybe more than you think, are happening 

about how we find real solutions. So I get to go on the Agriculture 

Committee who—it’s one of the most bipartisan committees, if not 

the most, bipartisan Committee in Congress and have the honor to 

serve with Jerry Moran. And it has been very, very good. Jerry’s 

helped me certainly understand—I stopped saying the whole thing 

about I’m trying to understand completely the farm bill. ‘‘Don’t say 

6

that. Nobody will believe you.’’ But he’s certainly been helpful in 

helping me understand some of the more complex issues. 

One of the things that we’ve done is had some field, just roundtable discussions around the district. And clearly everyone is looking for some help with the safety net with disaster relief. How can 

we level out those ups and downs for our families so disaster relief, 

which is so appreciated and so needed, we don’t all have to sit on 

the edge of our chairs or worse waiting to see what’s going on happen. 

And, clearly, as we’ve talked about even this morning, each 

group sees the answers a little bit different. So having a chance to 

come here today, having a chance to go right from here back to 

D.C., on a plane and talk with these guys, and specifically with 

Jerry, about how do we translate that into the best farm bill for 

our country, but specifically the best farm bill for Kansas. 

So they say timing is everything. I will congratulate you. Democracy is not a spectator sport. It is very much a contact sport. And 

I feel like I’ve gotten to know so many of you one on one because 

you have been there from the day—probably before I was sworn 

in—saying, ‘‘Let me tell you about what’s going on in Kansas.’’

There’s one thing: We’re the producers. We produce what America eats and what I feed my family and the rest of you feed yours. 

And we want to make sure that the producer has a strong voice 

in Congress. Not the only voice, but, by God, we need to make sure 

that you have that voice and you know that it’s been heard. 

So we’ve been trying to get this hearing together for quite a little 

while and it’s come together. But, as I say, timing is everything. 

We’re going to be marking this up with amendments in the next 

few weeks, maybe in the next couple of weeks. 

So your voice will be the last field hearing that’s heard before the 

ink is put on that paper about what this farm bill’s going to look 

like. So thank you all for coming. It’s a tremendous response this 

morning. And I look forward to hearing what you have to say. 

Thank you for being here. 

Mr. ETHERIDGE. Thank you, Nancy. We have two other colleagues with us today. Even though they’re not on our Subcommittee, they’re on the full Committee. It’s great to have them 

come and join us. We were talking last night, we wondered whether or not we’d have many people show up this morning. And after 

looking around at how wet it was yesterday, I figured farmers 

would not be in the field. They may be getting equipment ready, 

but they wouldn’t be in the field. Jerry said, ‘‘Nah, they’ll be there. 

It’ll be too wet to plow and not dry enough to get everything 

ready.’’ So thank you for coming. 

Now let me turn to my colleagues for whatever opening statements they want to have. From the Fifth Congressional District of 

Iowa Congressman Steve King will be recognized for whatever 

opening comments you want to make. 

OPENING STATEMENT OF HON. STEVE KING, A 

REPRESENTATIVE IN CONGRESS FROM IOWA 

Mr. KING. Thank you, Mr. Chairman. I appreciate you holding 

this field hearing. I appreciate being here with my good friend, 

Jerry Moran, and my other colleagues that are here. 

7

We get a lot out of these field hearings. And when we have them 

in Washington our time is pulled. We’re like a wishbone for our 

time. But when we can come to the field then we can really focus 

on the witnesses and focus on listening and that’s what I came 

here to do. 

I do want to tell you that my Ag legislative assistant is Brent 

Boydson, a K-State grad, and he played football here. So he keeps 

me on top of what’s going on in Kansas and he really regrets that 

he is not able to be here today to show me the purple that’s around 

this town. So we have a great working relationship. 

I represent the western third of the State of Iowa and my background started out in soil conservation work. I bought a bulldozer 

in 1975 and began to build terraces, dams, waterways, clean out 

cattle yards and whatever else needed to be done. So from 1975 on 

up till I entered Congress and sold that business to my oldest son, 

my life has been the earth moving business. I see that as kind of 

the canary in the cage of agriculture economy. The dirt’s always 

been there, it can wait another year to be moved, and so when the 

economy goes up, they will see me last and when the economy 

starts to go down, they’ll strike me off their list first. And that’s 

the sense that I have. 

So I’ve been acclimated to, I’ll say, being sensitized towards the 

fluctuations in our ag economy. It’s great to see where it is overall 

in the country today. And I’ve seen all of these things that Jerry 

talked about and lived through them all with the exception of the 

pestilence. I haven’t had that come through. 

So I wanted to make those comments and then I just wanted to 

ask this question to the real Kansans: After you’ve been through 

all of that—the famine, the drought, the blizzards, the ice storms 

and the tornadoes and all that, are there any pansies that survive? 

I expect not. I think it’s all real hard working people here that put 

their roots down into the soil. And that’s the part that I care an 

awful lot about and it is the essence of America and that’s what 

gets me out here to Kansas to see that today. Thank you. 

Mr. ETHERIDGE. Thank you. And, finally, another new Member 

of Congress and a new Member to the Committee, we’re glad to 

have him join us today, Adrian Smith, from the Third Congressional District in Nebraska. 

OPENING STATEMENT OF HON. ADRIAN SMITH, A 

REPRESENTATIVE IN CONGRESS FROM NEBRASKA 

Mr. SMITH. Thank you, Mr. Chairman. It’s great to be here, despite the purple—the tie, the tape on the floor, I mean, that’s pretty rotten. 

I am grateful to be here and it’s an incredible experience as a 

new Member of Congress in the district immediately north of here. 

I’m glad that things are wet enough down here that we don’t have 

to worry about any Republican River water flow anymore. Maybe 

I struck a cord. 

Seriously, as we look at the issues important to our economies, 

I look at this Congressional district as being so very similar to my 

own where there’s flooding in one end of the district and still 

drought in the other. The challenges we face are immense and oftentimes we focus so many of our policies perhaps on protecting the 

8

family farm which, I think, is commendable. That is an objective 

I share. I would rather characterize it as strengthening the family 

farm to afford the tools necessary to farmers and those on the front 

lines to compete. 

And so many times policies stand in the way. Public policy 

stands in the way of innovation, of individuals pursuing new ways 

of doing things. 

And so I want to thank Brian Starck from my district, Fairbury, 

Nebraska, for coming down here today and for all of you for showing up here today because it’s vital that you give us your expertise, 

your insights on the issues because we’ve got big decisions to make 

and we certainly need your input. So go Big Red. Thank you. 

Mr. ETHERIDGE. Thank you. We’d like to welcome our first panel 

to the table. Our four panelists are Mr. Tony Dumler; he’s an Agricultural Economist from K-State in Garden City, Kansas. Dr. Bill 

Miller, cattle producer from Princeton, Kansas. Mr. Steve Rome. 

Mr. ROME. Rome. 

Mr. ETHERIDGE. Rome. He’s a farmer, a crop farmer in Hugoton, 

Kansas. 

Mr. ROME. Hugoton. 

Mr. ETHERIDGE. Hugoton. And Mr. Brian Starck, who we’ve just 

been introduced from Nebraska. Appreciate you coming down. 

Gentlemen, please know that your full statements will be entered 

into the record and if you would try to keep your comments as close 

to 5 minutes as possible to allow more time for questions from the 

panel if they’d like. 

STATEMENT OF TROY J. DUMLER, AGRICULTURAL 

ECONOMIST, KANSAS STATE UNIVERSITY, GARDEN CITY, KS 

Mr. DUMLER. Mr. Chairman, Members of the Subcommittee, 

thank you for inviting me to testify. I appear before the Subcommittee to discuss the challenges and opportunities facing agriculture producers in Kansas. 

Having spent nearly a decade assisting farmers and ranchers in 

managing their businesses and having grown up on the farm myself, I understand the challenges of Kansas producers are numerous and varied. The last 5 years have clearly demonstrated some 

of those challenges. 

According to data from the Kansas Farm Management Association, over this period of time average net farm income has ranged 

from $19,000 per farm in 2002 to more than $62,000 per farm in 

2004. Much of this variability can be explained by weather and 

fluctuating production costs. 

The crop and livestock producers have also experienced increased 

demand for their products which has led to higher market prices. 

I think the relevant question for Kansas producers is this: What 

is the most likely source of income variability over the next 5 

years? At this point continued demand for renewable fuels indicates that prices for grains and oil seeds will likely remain strong; 

however, those same prices will also put pressure on livestock producers. As the last couple months have demonstrated, weather continues to be an important production factor for Kansas farmers and 

ranchers. 

9

There’s little question that commodity subsidies have reduced the 

income variability of Kansas farms. From 2002 to 2006 government 

payments averaged 60 percent of net farm income for Kansas Farm 

Management Association farms. 

As part of a recent nationwide survey on preferences for the 2007 

Farm Bill, Kansas producers indicated that they generally support 

the current three-part safety net. That same survey indicated that 

among existing program funding priorities, Kansas producers 

ranked disaster assistance over each of the three current commodity programs. These results suggest that the current safety net 

may have some holes. 

Primary support for Kansas producers has come in the form of 

direct payments. Being decoupled from price and production, the 

primary advantage of direct payment is that it has minimal distortions in global markets. For Kansas producers, the primary advantage of direct payments is they have been, at times, the only means 

of support in the low yield/high price environments that predominated since the passage of the 2002 Farm Bill. Direct payments are 

not without disadvantages, including the fact that payments get 

capitalized into land values. But the assertion that direct payments 

get capitalized into land values and payments from other commodity programs do not has no economic validity. 

Proposals have been made to convert the current price-based 

counter-cyclical program to a revenue-based program. When asked 

to prioritize new program funding, Kansas producers participating 

in the 2007 Farm Bill preference survey ranked a counter-cyclical 

revenue program behind only funding for bio-energy production incentives. 

An analysis of the USDA revenue proposal, for example, indicates over the last 5 years Kansas farmers would have received 

$230,000,000 more under a revenue-based counter-cyclical program 

versus the current price-based program. Most of that support would 

have come in 2002, a low income year for Kansas farmers. 

Because the revenue-based counter-cyclical program can provide 

support at times when yields are low and prices are high, it offers 

the potential to reduce ad hoc disaster assistance. 

Finally, Kansas farmers currently have a tremendous opportunity to earn an income from the market. If government support 

is deemed to be appropriate, it also seems appropriate that those 

policies encourage a continuation of that market return. Thank you 

very much. 

[The prepared statement of Mr. Dumler follows:]

PREPARED STATEMENT OF TROY J. DUMLER, AGRICULTURAL ECONOMIST, KANSAS

STATE UNIVERSITY, GARDEN CITY, KS 

Introduction 

The challenges of Kansas producers are numerous and varied. The last 5 years 

have seen sustained droughts, brutal winter storms, late spring freezes, widespread 

flooding, and massive tornados. These events by themselves make agricultural production in Kansas interesting. But those factors are not the only ones to make the 

last 5 years interesting. Rising energy costs and increasing demand for crop and 

livestock commodities have also had a significant impact on agricultural production 

in Kansas. Currently, a variety of forces are aligning to shape the future of agriculture in Kansas and the United States. The immediate future looks brighter for 

some, but perhaps dimmer for others. Following is a discussion of the challenges facing Kansas producers. 

10

Farm Income 

Data from the Kansas Farm Management Association (KFMA) indicates that net 

farm income in Kansas has mirrored U.S. net farm income (Table 1). After experiencing lows in 2002, net farm income, both nationwide and in Kansas, recovered to 

record levels in 2004 before dropping each of the last 2 years. Though Kansas farm 

income was barely a record in 2004, nevertheless it was three times higher than 

it was in 2002—the only year in the last 5 in which net farm income did not cover 

family living expenses.

Table 1. Net Farm Income in the U.S. and Kansas (2002–2006) 

Year U.S.

(Total $) 

Kansas *

($/Farm) 

2002 40.2 19,106

2003 60.4 51,051

2004 85.4 62,604

2005 73.8 56,982

2006 60.6 46,593

* Kansas Farm Management Association farms. 

Much of this variability in income can be explained by weather and fluctuating 

production costs. Figure 1 shows the annual average yields for wheat, corn, grain 

sorghum, and soybeans in Kansas. Widespread drought in 2002 resulted in low 

yields for all four crops. Wheat yields rebounded to near record highs in 2003, but 

dry conditions that summer produced low yields once again for the fall crops. While 

wheat yields were again below average in 2004, yields of fall crops were above average. Yields for all four crops were average or above in 2005, before dropping in 2006.

The variability of crop production was exacerbated by rising input costs during 

this period of time, putting additional pressure on income. As seen in Figure 2, diesel fuel and natural gas prices increased by 145 and 97 percent, respectively, from 

2002 to 2006. Current forecasts from the Energy Information Administration (EIA) 

point to slightly higher costs in 2007. The increasing energy costs have caused crop 

production costs to increase as well. Table 2 shows the energy intensive expenses 

for non-irrigated KFMA crop farms from 2002–2006. Each year from 2003 to 2005 

had double-digit percentage increases for fertilizer and fuel expenses. Fuel costs continued the double-digit increase in 2006, while fertilizer expenses increased by a 

modest 1.55%.


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Table 2. Energy Intensive Expenses for Non-Irrigated KFMA Crop Farms (2002–2006) 

Expense Category 2002 2003 2004 2005 2006

Fertilizer and Lime

Crop Expense $21,114 $24,710 $27,858 $36,797 $37,920

Expense/Crop Acre $16.55 $19.18 $21.13 $26.69 $27.11

Annual Change (%) 15.83% 10.20% 26.31% 1.55%

Gas, Fuel, and Oil

Crop Expense $11,584 $13,257 $15,806 $20,901 $24,127

Expense/Crop Acre $9.08 $10.29 $11.99 $15.16 $17.25

Annual Change (%) 13.27% 16.55% 26.45% 13.75%

Total Energy Expense

Crop Expense $32,698 $37,967 $43,664 $57,698 $62,047

Expense/Crop Acre $25.64 $29.46 $33.12 $41.85 $45.01

Annual Change (%) 14.92% 12.42% 26.36% 7.54%

Source: Kansas Farm Management Association 2006 Databank. 

The past 5 years have not been all negative though. Even after declining somewhat in 2006, beef cattle prices have remained strong. In addition, crop prices have 

increased significantly due to rising demand for ethanol. At this point, continued demand for renewable fuels indicates that prices for grains and oilseeds will likely remain strong. However, those same strong prices will also put pressure on livestock 

producers. Evidence of this occurring may already be evident in the 2006 KFMA 

data. While income on crop farms in 2006 was generally equal to or greater than 

income in 2005, beef cattle operations saw declines in income (Table 3). This drop 

in income can partially be explained by lower cattle prices in 2006 and higher forage 

costs caused by drought. But it is also likely that the increase in feed grain prices 

in the fall of 2006 had a negative impact on cattle returns.

Table 3. KFMA Net Income per Operator by Farm Type (2002–2006) 

Type of Farm 

No. of 

Farms 

(2006) 

Net Income per Operator 

2002 2003 2004 2005 2006

All Farms 1,554 $19,343 $52,410 $63,491 $57,584 $46,804

Cash Crop Dryland 1,065 20,229 51,424 57,087 49,422 49,366

Cash Crop Irrigated 73 9,743 57,580 62,729 64,955 92,335

Stock-Ranch Cowherd 33 9,291 34,148 51,366 45,396 35,986

Cowherd 21 6,595 22,458 32,088 24,914 13,344

Dairy 38 22,426 24,484 71,192 52,658 25,663

Backgrounding 14 29,220 63,035 82,252 63,279 – 5,823

Cash Crop-Cowherd 155 17,544 33,879 49,613 50,149 31,132

Cash Crop-Dairy 11 34,201 49,643 81,068 72,799 55,538


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Table 3. KFMA Net Income per Operator by Farm Type (2002–2006)—Continued

Type of Farm 

No. of 

Farms 

(2006) 

Net Income per Operator 

2002 2003 2004 2005 2006

Cash Crop-Backgrounding 33 3,197 87,728 79,308 83,820 1,203

Source: Executive Summary, 2006 Profitlink Analysis, Kansas Farm Management Assoc. 

Government Payments 

There is little doubt that commodity subsidies have reduced the income variability 

of Kansas farms. As shown in Figure 3, from 2002–2006, government payments 

averaged 60% of net farm income for KFMA farms. In spite of the seemingly high 

dependence on government payments, some care needs to be exercised in interpreting these numbers. Namely, KFMA government payment data includes all government payments (i.e., commodity, conservation, and disaster assistance.) Because 

conservation payments (mainly from the Conservation Reserve Program) are included, the importance of government payments may be overstated. For example, 

according to the 2002 Census of Agriculture, in 2002 nearly 29% of government payments were CRP or WRP (Wetland Reserve Program) payments. However, commodity program payments in 2002 were lower than previous or subsequent years, 

thereby making CRP/WRP payments a higher percentage of total government payments. Nevertheless, CRP/WRP payments are a significant source of government 

payments in Kansas.

Concerning the relative importance of government payments, a study by Dumler 

in 2005 determined that, from 1995–2004, farm program payments have been a significant factor in farm profitability. However, the study also determined that other 

factors, such as cost management and production have larger effects on profitability 

than government payments. Nevertheless, if government payments were reduced or 

eliminated, farm profitability would be diminished. Obviously, those farms that specialize in the production of farm program commodities would suffer larger losses 

than those who do not specialize in those commodities. In addition, larger farms 

would be able to absorb the loss of government payments better than small farms, 

and in many cases even remain profitable. On the other hand small farms were not 

profitable, on average, even with government payments. 

Although government payments have contributed a significant portion of net farm 

income in recent years, not all the benefits of government payments go to farmers, 

as a portion of those benefits gets capitalized into land values. This reality has two 

ramifications. First, it demonstrates that family farms are not the only beneficiaries 

of farm subsidies. Second, it indicates that as farm income would decline from a reduction or elimination of government payments, farm asset and equity values would 

also decline. 


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13

A 2006 study by Kastens and Dhuyvetter estimated that average cropland values 

by state would fall by 2.3% to 40.8% if government payments were eliminated. Land 

values in Kansas would be estimated to fall by 30.2% if government payments were 

eliminated. Certainly, a reduction in land values of that magnitude could have a 

devastating effect on the financial viability of many farms. The estimated decline 

in land values, however, assumes that 100% of government payments are capitalized into land. In reality, government payments are not likely to be fully capitalized 

into land values. Moreover, the study was conducted prior to the rapid rise in commodity prices in the fall of 2006. Consequently, the reduction in land values would 

likely be significantly less. This point is illustrated by a recent survey on farmland 

values. The survey by the Federal Reserve Bank of Kansas City indicates that in 

spite of decreasing commodity program payments, non-irrigated farmland values in 

Kansas have increased by 7.6% from 2006 while irrigated values have increased by 

10.4%. 

Because of the relative importance of government payments in enhancing farm income, it is not surprising that Kansas producers would generally support the current three-part commodity safety net. As part of a recent nationwide survey on preferences for the 2007 Farm Bill, Kansas producers were asked to prioritize which of 

several existing programs are most important to maintain in light of potential funding constraints or trade-offs. The results for 10 separate programs or program categories are shown in Figure 4.

Kansas producers placed the highest priority on maintaining funding for disaster 

assistance programs. That corresponds with producer preferences nationwide. The 

next highest priority was for direct payments, followed by commodity loans, and 

counter-cyclical payments. Conservation programs, including land retirement programs such as the Conservation Reserve Program (CRP), and working land programs such as the Environmental Quality Incentives Program (EQIP) and Conservation Security Program (CSP) ranked lower. Supporting livestock commodities 

ranked last in Kansas and nationwide. Given that the primary commodities grown 

in Kansas are farm program commodities, it is not surprising that Kansas producers 

would rank commodity programs higher than other programs. It is also not surprising that Kansas producers ranked disaster assistance over each of the three current commodity programs, or that direct payments would rank much higher in Kansas than on a nationwide basis. Overall, the results suggest that Kansas producers 

may believe the current safety net may have some significant holes. 

Primary support for Kansas producers since 2002 has come in the form of direct 

payments. Being decoupled from price and production, the primary advantage of direct payments is that they result in minimal market distortion in the global trade 

arena. For Kansas producers, the primary advantage of direct payments is that they 

have, at times, been the only means of support in the low yield/high price environments which have predominated since the passage of the 2002 Farm Bill. As previously mentioned, direct payments get capitalized into land values. But the assertion that direct payments get capitalized into land values, and payments from other 


11024004
14

commodity programs do not, has no economic validity. The capitalization process 

may be more transparent with direct payments, but it is not exclusive to direct payments. 

Counter-Cyclical Revenue Proposals 

Leading up to the 2002 Farm Bill, much debate centered on the need to provide 

an enhanced safety net for crop producers when prices decreased. Crop producers 

received direct payments and marketing loan program payments averaging nearly 

$10 billion per year from 1999–2001, but that was deemed insufficient, and Congress intervened to provide a total of $19.5 billion in market loss assistance (MLA) 

payments over those 3 years. In the 2002 Farm Bill the counter-cyclical payment 

(CCP) program was created, formalizing the MLA payments into a permanent program. 

With two of the three commodity safety net programs tied to price, it is fair to 

say that producers of commodity program crops should be well covered in low price 

environments. But does that imply that the safety net is now sufficient? Given the 

fact that an average of $1.3 billion in crop disaster aid has been paid out annually 

from 1999–2006 suggests that the current combination of safety net programs is not 

sufficient. The primary problem with safety net programs that are tied to price is 

that they are not very effective in high price/low yield environments. 

Economically, there is a strong argument for a redesigned safety net that more 

effectively focuses on a bottom line revenue or net farm income goal instead of the 

current multitude of safety net tools that variously focus on price, production, or 

some mix of the two. Kansas producers participating in the 2007 Farm Bill preference survey ranked a counter-cyclical revenue program behind only bioenergy incentives when asked to prioritize potential new program funding (Figure 5).

Several proposals have been made to convert the current price-based counter-cycle 

program to one in which payments are made when revenue falls below a predetermined target. These include, but are not limited to proposals from USDA, American 

Farm Bureau Federation (AFBF), the National Corn Growers Association (NCGA), 

and American Farmland Trust (AFT). All four of the revenue-based proposals are 

designed to achieve the same goal, but use different means to do so. Two of the proposals (USDA and AFT) trigger payments when national revenue falls below the 

target level. The AFBF proposal triggers payments when state revenue falls below 

the target level, while the NCGA proposal triggers payments when county revenue 

falls below the target level. Since the proposals use different methods to calculate 

the revenue target and payment when revenue falls below that target, they will 

vary in how much money will be distributed through them and to whom it will be 

distributed. 

Following are the results of a simple analysis comparing counter-cyclical revenue 

proposals from USDA and the AFBF to the current price-based CCP program. Table 

4 shows the net advantage of the USDA proposal over the current CCP from 2002–

2006 for wheat, corn, soybeans, and sorghum in Kansas, while Table 5 shows the 


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net advantage of the AFBF proposal for those same crop years. For the primary 

Kansas crops, the USDA proposal had a $231.5 million advantage over the current 

CCP program and a $79.6 million advantage over the AFBF proposal from 2002–

2006. The USDA proposal resulted in higher payments for all crops except grain sorghum. When compared to the current CCP program, corn was the only crop that 

received lower payments under the AFBF proposal. Most of the support under both 

proposals would have come in 2002, a low income year for Kansas farmers, while 

fewer payments would have been made in 2004 and 2005.

Table 4. Net Advantage of USDA Proposal Over Current CCP From 2002–2006 in Kansas 

Year Wheat Corn Sorghum Soybeans Total 

Million Dollars

2002 164.6 103.4 51.0 13.0 332.0

2003 0.0 0.0 19.2 0.0 19.2

2004 0.0 – 36.7 – 56.4 0.0 – 93.1

2005 0.0 29.8 – 56.4 0.0 – 26.6

2006 0.0 0.0 0.0 0.0 0.0

Total 164.6 96.5 – 42.6 13.0 231.5

Table 5. Net Advantage of AFBF Proposal Over Current CCP From 2002–2006 in Kansas 

Year Wheat Corn Sorghum Soybeans Total 

Million Dollars

2002 76.0 51.0 99.8 51.9 278.7

2003 0.0 0.7 88.3 0.0 89.0

2004 0.0 – 68.7 – 56.4 0.0 – 125.1

2005 0.0 – 34.3 – 56.4 0.0 – 90.7

2006 0.0 0.0 0.0 0.0 0.0

Total 76.0 – 51.3 75.3 51.9 151.9

Tables 6, 7, and 8 show how the current CCP program compares to the USDA 

and AFBF revenue proposals using data from the Kansas Farm Management Association from 2002–2005. As expected, results correspond with state totals. Both the 

USDA and AFBF programs would have provided more income to Kansas farms than 

the current CCP program. In addition, the USDA proposal, on average, resulted in 

larger payments per farm than the AFBF proposal. Also, the AFBF proposal performs better for sorghum, but worse for wheat and corn.

Table 6. Estimated Payments for KFMA Farms With 2002 Price-Based CCP Program 

Wheat Corn Sorghum Soybeans Total 

$/Farm

2002 0 0 0 0 0

2003 0 0 0 0 0

2004 0 3,744 2,701 0 6,445

2005 0 5,231 2,759 0 7,990

Average 0 2,244 1,365 0 3,609

Table 7. Estimated Payments for KFMA Farms With USDA Revenue-Based CCP Program 

Wheat Corn Sorghum Soybeans Total 

$/Farm

2002 7,679 4,898 2,355 521 15,453

2003 0 0 900 0 900

2004 0 1,539 0 0 1,539

16

Table 7. Estimated Payments for KFMA Farms With USDA Revenue-Based CCP Program—

Continued

Wheat Corn Sorghum Soybeans Total 

$/Farm

2005 0 5,497 0 0 5,497

Average 1,920 2,984 814 130 5,847

Table 8. Estimated Payments for KFMA Farms With AFBF Revenue-Based CCP Program 

Wheat Corn Sorghum Soybeans Total 

$/Farm

2002 3,594 2,546 4,790 2,999 13,929

2003 0 36 4,255 0 4,291

2004 0 0 0 0 0

2005 0 2,519 0 0 2,519

Average 899 1,275 2,261 750 5,185

The revenue proposals considered in the analysis offer the opportunity to provide 

assistance to producers over a broader array of economic scenarios. That does not 

imply that the programs will always be superior to the current CCP program, but 

because the proposals are tied to revenue instead of price, they offer the possibility 

to provide assistance when producers need it most and therefore reduce the need 

for ad hoc disaster assistance. 

References 

Dumler, T.J. 2005. Impact of U.S. Farm Programs on Kansas Farms. Agricultural 

Lenders Conference. Garden City and Abilene, KS. 

Dumler, T.J. 2007. The 2007 Farm Bill: Kansas Producer Preferences for Agricultural, Food, and Public Policy. www.agmanager.info. May 2007. 

Henderson, J. and M. Akers. 2007. Survey of Tenth District Agricultural Conditions. Federal Reserve Bank of Kansas City. 1st Quarter 2007. 

Kastens, T. and K. Dhuyvetter. Government Program Payments and Non-agricultural Returns Affect Land Values. www.agmanager.info. September 2006. 

USDA–NASS. (2004) 2002 Census of Agriculture. Vol. 1, Part 16. Washington, 

D.C., USDA–NASS. 

IMPACT OF U.S. FARM PROGRAMS ON KANSAS FARMS

Troy J. Dumler, Extension Agricultural Economist, Southwest, K-State Research and Extension, Garden City, 

KS 67846

Impact of U.S. Farm Programs on Kansas Farms 

U.S. farm subsidies have faced increased scrutiny in recent years. Groups representing consumer, environmental, and international competitor interests have 

stepped up efforts to persuade developed countries to reduce or eliminate farm subsidies. The increased coverage of these interest groups in the media coupled with 

successful challenges of farm subsidies in the WTO and record domestic budget deficits result in a negative outlook for the future of U.S. farm subsidies. The President’s 2006 Budget Proposal provided a possible glimpse into the future of U.S. farm 

subsidies. However, the reaction to that proposal also demonstrated that support for 

these programs remains strong in production agriculture. 

Whether U.S. farm subsidies should be reduced or eliminated can be debated extensively from an economic and social standpoint. That is not the purpose of this 

paper, however. Rather, this paper will determine the relative impact that U.S. 

farm program payments have on Kansas farms, and evaluate the economic consequences of reducing or eliminating government payments. 

Who Receives Farm Subsidies? 

Before any changes to farm payments are evaluated, it is important to develop 

a baseline regarding who receives farm subsidies and how large those subsidies are. 

17

It is also important to understand the different types and sizes of farms in the U.S. 

and how government payments are dispersed to those farms. In the 2004 Family 

Farm Report from the Economic Research Service (ERS) of USDA, farms were split 

into three primary categories: small family farms, other family farms, and nonfamily farms. The definition of small family farms in this categorization would be 

those farms with annual gross sales of less than $250,000. Other family farms are 

those with annual gross sales of $250,000 or more, and nonfamily farms are those 

that are ‘‘organized as nonfamily corporations or cooperatives, as well as farms operated by hired managers’’ (Banker and MacDonald 2005). 

In the 2004 Family Farm Report, small farms are further separated into five different categories. These small family farm categories are (1) limited-resource farms, 

(2) retirement farms, (3) residential/lifestyle farms, (4) low-sales farming occupation 

farms, and (5) high-sales farming occupation farms. Limited resource farms are 

those with sales less than $100,000, farm assets less than $150,000, and total operator household income less than $20,000. Retirement farms are small farms whose 

operators report they are retired. Residential/lifestyle farms are small farms whose 

operators report a major occupation other than farming. Low-sales farming-occupation farms are small farms whose operators report farming as their major occupation and have sales less than $100,000. High-sales farming-occupation farms are 

small farms whose operators report farming as their major occupation and have 

sales between $100,000 and $249,999. Other family farms are further separated into 

large family farms, and very large family farms. Large family farms are those farms 

that have sales between $250,000 and $499,999. Very large family farms are the 

farms that have sales of $500,000 or more. 

Small farms (all those with sales under $250,000) comprise 91% of the farms in 

the U.S., but only 28% of the value of production. Conversely, large and very large 

family farms constitute nearly 7% of U.S. farms, but are responsible for 58% of the 

value of production. The remaining 14% of agricultural production comes from nonfamily farms (Banker and MacDonald 2005). 

Broken down further, limited-resource, retirement, and residential/lifestyle farms 

account for nearly 60% of the farms, yet provide only 6% of the value of production. 

Moreover, 55% of small farms had sales under $10,000. However, small farms held 

68% of farm assets, including 60% of the land. Furthermore, small farms produce 

a large percentage of the major commodities, including 60% of the value of production for hay, 45% for soybeans, 47% for wheat, 39% for corn, and 38% for beef 

(Banker and MacDonald 2005). Based on this information, it can be argued that 

both small and large farms have an important role in production agriculture in the 

United States. 

Focusing on government payments, from 1996–2003 commodity program payments (production flexibility contracts, direct payments, counter-cyclical payments, 

loan deficiency payments, and marketing loan gains) accounted for nearly 59% of 

the average annual farm program payments of $14.9 billion. Commodity payments 

were followed by ad hoc and emergency payments which accounted for over 27% of 

average farm payments, and conservation payments at 12% of total payments 

(USDA–ERS 2004). 

High-sales small farms, large family farms, and very large family farms receive 

approximately 75% of commodity program payments. However, that percentage is 

roughly equivalent to the percentage of program commodities that they produce. 

Conversely, over 50% of Conservation Reserve Program (CRP) payments, which 

make up the majority of conservation payments, are received by retirement and residential/lifestyle farms. In fact 25% of retirement farms receive CRP or Wetland Reserve Program (WRP) payments. Only 10% of residential/lifestyle farms receive CRP 

or WRP payments, but they comprise 44% of all farms, and enroll an average of 44% 

of their land in the program—compared to 25% for all participating farms (Banker 

and MacDonald 2005). 

Farms and Government Payments in Kansas 

In Kansas, small farms in 2002 (i.e., those with sales less than $100,000) comprised nearly 82% of all farms (table 1). However, they accounted for less than 10% 

of all sales, but received over 42% of all government payments (table 2). By contrast, 

large farms (i.e., those with sales over $250,000) made up only 7.5% of all farms, 

but provided nearly 79% of all sales and received 34% of all government payments 

(USDA–NASS 2004). In 2002, nearly 29% of government payments were CRP or 

WRP payments. However, commodity program payments in 2002 were lower than 

previous or subsequent years, thereby making CRP/WRP payments a higher percentage of total government payments. Nevertheless, CRP/WRP payments are a significant source of government payments in Kansas. Although CRP/WRP payments 

are significant, they vary across farm types and locations in Kansas. Since farm tyVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
18

pology data is not available on a state-level basis, this paper will not discuss, indepth, the differences in government payments (including CRP/WRP) across typology groups. Rather, specific attention will be given to the relative importance of government payments on a county and farm-level basis in Kansas.

Table 1. Number of Farms and Total Sales By Market Value of Ag Products Sold 

Ag Market Value of Sales No. of Farms % of Total 

Farms 

Total Sales

($1,000) 

% of Total 

Sales 

Less than $1,000 7,214 11.2 1,061 0.0

$1,000 to $2,499 6,647 10.3 5,826 0.1

$2,500 to $4,999 6,764 10.5 14,754 0.2

$5,000 to $9,999 7,961 12.4 39,504 0.5

$10,000 to $24,999 10,464 16.2 138,201 1.6

$25,000 to $49,999 7,159 11.1 222,946 2.5

$50,000 to $99,999 6,513 10.1 425,723 4.9

$100,000 to $249,999 6,858 10.6 1,015,924 11.6

$250,000 to $499,999 2,896 4.5 942,898 10.8

$500,000 to $999,999 1,214 1.9 794,074 9.1

$1,000,000 to $2,499,999 473 0.7 689,078 7.9

$2,500,000 to $4,999,999 97 0.2 325,124 3.7

$5,000,000 or more 154 0.2 4,131,131 47.2

Total 64,414 — 8,746,244 —

Source: 2002 Census of Agriculture: Kansas. 

Table 2. Number of Farms Receiving Government Payments and Total Government Payments By 

Market Value of Ag Products Sold 

Ag Market Value of Sales 

No. of Farms 

Receiving 

Govt. Pmts. 

Total Govt. 

Payments 

($1,000) 

% of Total 

Government 

Payments 

Govt. Pmts. 

as a % of 

Total Sales 

Less than $1,000 1,333 642 0.2 60.5

$1,000 to $2,499 3,690 5,313 1.6 91.2

$2,500 to $4,999 3,703 9,811 3.0 66.5

$5,000 to $9,999 4,541 17,375 5.3 44.0

$10,000 to $24,999 6,376 31,654 9.6 22.9

$25,000 to $49,999 5,043 32,660 9.9 14.6

$50,000 to $99,999 4,991 41,418 12.6 9.7

$100,000 to $249,999 5,579 77,698 23.7 7.6

$250,000 to $499,999 2,421 56,828 17.3 6.0

$500,000 to $999,999 1,009 32,655 9.9 4.1

$1,000,000 to $2,499,999 379 17,796 5.4 2.6

$2,500,000 to $4,999,999 56 2,405 0.7 0.7

$5,000,000 or more 70 1,988 0.6 0.0

Total 39,191 328,243 — —

Source: 2002 Census of Agriculture: Kansas. 

Without question, farms in Kansas differ due to climate, typography, and proximity to population centers. Average annual precipitation varies from over 42 inches 

in the southeast corner of the state to under 16 inches on the western border. Much 

of eastern Kansas is dominated by rolling grasslands, small, irregular-shaped fields, 

and woodland areas. In contrast, a large portion of western Kansas is dominated 

by flat cropland with deep soils. These differences are critical in understanding agriculture in Kansas, and understanding how policy changes may affect farms in the 

state. 

Since commodity programs constitute the majority of government payments in 

both the U.S. and Kansas, farms specializing in crop production obviously will be 

impacted more by potential reductions in government payments than predominately 

livestock and non-program commodity farms. Therefore, counties in Kansas that 

have a higher percentage of land in crops will likely be affected more than those 

counties with larger amounts of grassland. Tables 3 and 4 show how the counties 

differ across Kansas by crop reporting district.

19

Table 3. Average Number of Farms, Crop Farms, and Percentage of Crop Farms per County by 

Crop Reporting District 

Crop Reporting District Avg. No. of Farms per 

County 

Avg. No. of Crop Farms 

per County 

Avg. % of Crop Farms per 

County 

Northwest 429 398 92.8

West Central 360 331 91.9

Southwest 388 346 89.2

North Central 554 507 91.5

Central 725 660 91.0

South Central 709 645 91.0

Northeast 762 666 87.4

East Central 745 641 86.0

Southeast 729 585 80.2

Source: 2002 Census of Agriculture: Kansas. 

Table 4. Average Land in Farms and Cropland per County by Crop Reporting District 

Crop Reporting District Avg. Land in Farms 

per County 

Avg. Cropland in 

Farms per County 

Avg. % of Cropland 

from Total Farm 

Land by County 

Avg. Cropland per 

Crop Farm 

Northwest 567,372 384,497 67.8 967

West Central 512,178 357,399 69.8 1,080

Southwest 497,894 362,517 72.8 1,047

North Central 479,105 295,323 61.6 582

Central 505,047 326,647 64.7 495

South Central 528,565 349,276 66.1 542

Northeast 297,276 181,715 61.1 273

East Central 321,691 161,545 50.2 252

Southeast 402,723 180,820 44.9 309

Source: 2002 Census of Agriculture. 

These tables show that while there is not much difference in terms of the average 

number of crop farms to total farms per county from east to west, there is a noticeable difference in average amount of cropland to farmland per county across regions 

in Kansas. For example, 72.8% of the average land in farms per county in southwest 

Kansas is cropland, compared to only 44.9% in southeast Kansas. Since counties in 

southwest Kansas have more land in farms, a higher percentage of cropland, and 

fewer farms, the average crop farm in western Kansas farms over three times the 

acreage of the average farm in eastern Kansas. 

Average county and farm level net income and government payments from 1994–

2003 are shown in table 5. Most notably, both on a county and farm basis, government payments exceed net income in all districts except west central and southwest 

Kansas. Also, net income and government payments are substantially higher in 

western Kansas than in the eastern districts of the state. The higher government 

payments on a county basis can be explained by the fact that farms in the west tend 

to be more crop oriented (see tables 3 and 4), and, on average, have higher levels 

of production through irrigation. Higher production, both historically (when direct 

payment yields were frozen), and currently (for marketing loan benefits), will result 

in higher payments for farms and counties that grow program commodities. Because 

farms in the west are also significantly larger in terms of acreage, it is also expected 

that income and government payments would be higher on a farm basis.

Table 5. Average Net Farm Income * and Government Payments by Crop Reporting District 

(1994–2003) 

Crop Reporting

District 

Avg. NFI/County 

($1,000) 

Avg. Govt.

Pmts/County 

($1,000) 

Avg. NFI/Farm ($) Avg. Govt.

Pmts/Farm ($) 

Northwest 8,123 10,931 18,935 25,481

West Central 9,120 8,998 25,324 24,988

Southwest 15,062 11,569 38,784 29,789

North Central 7,057 8,466 12,731 15,274

Central 6,209 7,688 8,561 10,600

South Central 5,934 9,769 8,366 13,772

20

Table 5. Average Net Farm Income * and Government Payments by Crop Reporting District 

(1994–2003)—Continued

Crop Reporting

District 

Avg. NFI/County 

($1,000) 

Avg. Govt.

Pmts/County 

($1,000) 

Avg. NFI/Farm ($) Avg. Govt.

Pmts/Farm ($) 

Northeast 4,838 5,144 6,348 6,750

East Central 2,182 3,108 2,929 4,173

Southeast 2,038 3,322 2,797 4,560

* Net Farm Income equals Total Net Farm Proprietors’ Income. According to the Bureau of Economic Analysis this number consists of the net income that is received by sole proprietorships and partnerships that operate farms. It excludes the income that is received by non-family farm corporations. 

While it is not unexpected that net income and government payments would be 

higher in the west, it may be surprising to some that portions of western Kansas 

may be less dependent on government payments (i.e., have net income greater than 

government payments) than eastern Kansas. After all, western Kansas is more crop 

intensive than eastern Kansas. However, there may be several explanations regarding why portions of western Kansas are less dependent on government payments. 

First, a larger portion of small farms tend to reside in the east. Although farm 

typology data is not currently available regarding those small farms, it is likely that 

there are more residential/lifestyle farms in the east than the west. These farms are 

often not as concerned about earning a living from farming as simply enjoying the 

farm lifestyle. 

Second, since direct payment yields and acreage bases were largely frozen in the 

mid-1980s, farms in the west intensified cropping rotations and shifted the overall 

crop mix. Consequently, these farms may actually be moving toward receiving a 

larger percentage of revenue from the market rather than government payments. 

In contrast, eastern Kansas may have already been farming at a higher cropping 

intensity, which would thus be reflected in their direct payment yield and acreage 

base. (Of course, benefits from the marketing loan program are based on current 

production which would lessen this overall effect.) 

Third, CRP payments could distort the relative importance of government payments as a contributor to net income. For example, some counties enrolled larger 

percentages of cropland into the program than other counties. Those counties that 

have a large percentage of cropland in CRP would then appear to be receiving a 

larger portion of net income on a county and farm basis from government payments 

than is actually occurring. In other words, counties and farms are not as dependent 

on government payments as the numbers indicate. 

Finally, various events such as droughts and fluctuations in livestock prices affect 

the relative relationship between government payments and net income. For example, northwest Kansas was especially hit hard by drought from 2000–2003. To help 

those who were affected by those conditions, disaster legislation was passed and 

emergency disaster payments were distributed to farmers. Obviously, in circumstances such as these, government payments could increase in importance in 

terms of contributing to net farm income on a county basis. Also, if overall net income is depressed because of poor cattle prices for instance, then government payments will again appear to contribute a greater portion of net income. 

While it is interesting to evaluate the importance of government payments for 

farms in Kansas on an aggregate basis, care must be taken when drawing conclusions. Aggregating income and payment data may end up masking important trends 

and relationships. Furthermore, little can be said in terms of how changes in farm 

programs may impact individual farms. Therefore, the remainder of this paper will 

focus on the impact of government payments on farms in the Kansas Farm Management Association (KFMA). Using KFMA data, more precise analysis can be performed. 

Impact of Government Payments Using KFMA Data 

Data from farms that were continuously enrolled in the KFMA from 1995–2004 

were used to study the relationship between government payments and farm financial performance. The entire data set contained 9,630 farm-year observations. In determining these relationships, a 2001 study by Dumler that determined the relationship between farm size and profitability was used as a foundation for this study. 

Following the 2001 study, farms were separated into three regions: east, central, 

and west. Since farm size issues have become mainstay topics for farm policy debates, in this study, farms were also divided into four size categories. These size categories basically follow the major categories of 2004 Family Farm Report. Thus, the 

four farm size categories based on gross farm income (GFI) are: small farms under 

21

$100,000 GFI, medium farms with GFI from $100,000 to $249,999, large farms with 

GFI from $250,000 to $499,999, and very large farms with GFI over $500,000. 

Farms by Area 

Following is a brief description of how farms compared in the three regions of the 

state. As previously mentioned, farms in Kansas differ across the state in climate 

and typography. However, the average farms in the KFMA data set are quite similar across regions (table 6). In terms of total government payments, the average 

farm in the west had payments that were nearly 82% higher than the average farm 

in the east, and almost 49% greater than the average farm in central Kansas. Likewise, as a percentage of gross farm income (GFI), government payments in western 

Kansas (18.9%) were nearly double that of the east (10.7%). The central region fell 

in between this range at 14.5%. On a total crop acre basis, however, government 

payments in each region are within $2.65/acre.

Table 6. Financial and Production Measures for KFMA Farms in Kansas, 1995–2004

Measure Units East Central West 

Total Govt. Payments $ 23,151 28,231 41,972

Govt. Payments/Acre $ 26.30 24.00 26.65

Govt. Payments/GFI % 10.7 14.5 18.9

Gross Farm Income (GFI) $ 247,453 212,942 254,004

Net Farm Income * (NFI) $ 19,834 10,130 11,503

Total Expense Ratio % 105.1 105.2 105.0

Total Assets $ 725,440 607,938 781,818

Total Capital Managed $ 1,380,247 1,288,509 1,486,091

Rate of Return to Capital Managed (RRCM) % 1.6 1.1 1.7

Avg. Debt/Equity Ratio % 83.8 102.8 86.4

Crop Income/GFI % 48.1 57.9 57.9

Livestock Income/GFI % 35.0 22.4 16.6

Non-farm Wages $ 11,114 8,168 8,429

Total Crop Acres No. 915 1,182 1,730

Acres Harvested No. 958 1,132 1,189

* Net Farm Income equals gross farm income minus operating expenses, depreciation, unpaid operator labor, 

and unpaid family labor. 

Table 6 shows several other interesting financial and production measures as 

well. For instance, as expected, eastern farms earn a higher percentage of GFI from 

livestock than crops. Moreover, as expected, farms in the west were larger, in terms 

of total acreage, but had a lower cropping intensity (acres harvested/total crop 

acres). Nevertheless, the financial measures across regions were similar. 

In the 2001 farm size study by Dumler, the primary profitability ratio used was 

rate of return to capital managed (RRCM). Capital managed equals total farm assets plus the value of rented land. Thus, the RRCM formula, shown below in equation 1, is:

RRCM = (Net Farm Income + Interest Expense)/Total Capital Managed, (1)

where net farm income equals gross farm income minus operating expenses, depreciation, and unpaid labor charges. Although RRCM is not one of the 16 standard 

farm financial ratios, it is very similar to rate of return on assets. The only difference is that RRCM includes the value of rented land in addition to total assets. 

Capital managed was used instead of total assets because it gives a broader indication of farm size. The average RRCM per region ranged from 1.1% in central Kansas 

to 1.7% in western Kansas. 

Another important financial measure in table 6 is the total expense ratio. The 

total expense ratio, shown in equation 2, indicates how much it costs to produce 

each dollar of gross income.

Total Expense Ratio = Total Expenses/Gross Farm Income. (2)

The lower the total expense ratio—the greater cost efficiency (and potentially 

higher net returns). Like RRCM, the total expense ratio was nearly identical for all 

three regions. In fact all three areas were within 0.2% of each other. Obviously, a 

ratio above 100% is a concern, but it should be noted that unpaid operator and family labor are included in total expenses, resulting in a ratio that is higher than 

would typically be expected. 

22

Farms by Size 

Although the average farm in the KFMA is similar across regions, significant differences exist between farms when separated into size categories according to gross 

farm income. Table 7 shows selected financial and production measures for KFMA 

farms by farm size.Notably, government payments for very large farms are over six 

times as large as those for small farms. However, government payments per acre 

for very large farms are less than 50% greater than those for small farms. In addition, very large farms earn a smaller percentage of gross farm income from government payments than do their smaller counterparts. The differences between farms, 

in terms of government payments, are not surprising. Certainly, it is expected that 

large farms would receive greater amounts of payments since they farm larger acreages. It is also expected that payments per acre may be greater since the size of 

farms in this study are determined by gross income. Thus, farms producing high 

yielding program commodities (i.e., irrigated corn) would likely earn a higher income, and potentially higher government payments on a per acre basis. Finally, 

larger farms have demonstrated the ability to achieve lower costs and higher yields, 

thereby making government payments a smaller portion of gross farm income.

Table 7. Financial and Production Measures for KFMA Farms by Size, 1995–2004

Measure Units Small Medium Large Very Large 

Total Govt. Payments $ 10,194 22,674 40,576 66,942

Govt. Payments/Acre $ 22.56 24.90 27.72 31.49

Govt. Payments/GFI % 15.6 13.6 11.7 9.3

Gross Farm Income (GFI) $ 66,469 166,315 348,371 755,987

Net Farm Income * (NFI) $ – 20,022 1,032 37,222 123,917

Total Expense Ratio % 136.1 100.8 89.6 84.5

Total Assets $ 382,596 569,797 914,160 1,584,294

Total Capital Managed $ 644,087 1,152,746 1,867,243 3,039,967

Rate of Return to Capital Managed 

(RRCM) % – 2.5 1.4 3.8 6.1

Avg. Debt/Equity Ratio % 67.6 90.7 106.8 106.6

Crop Income/GFI % 49.3 54.3 55.4 48.4

Livestock Income/GFI % 28.8 26.6 26.7 35.3

Non-farm Wages $ 13,770 10,196 7,016 3,628

Total Crop Acres No. 506 1,005 1,577 2,272

Acres Harvested No. 440 906 1,492 2,246

* Net Farm Income equals gross farm income minus operating expenses, depreciation, unpaid operator labor, 

and unpaid family labor. 

While the government payment information by farm size is interesting, it does not 

tell the whole story in terms of the relative importance of government payments for 

farms in Kansas. It is also important to understand the financial characteristics of 

the different size farms. The most telling financial differences between farm sizes 

are profitability and expense management. As shown in table 7, profitability, as 

measured by RRCM, varies from – 2.5% for small farms to 6.1% for very large 

farms. While, in terms of percentage points the difference seems small, the difference in profitability between farm sizes is actually quite large. For example, very 

large farms earn over four times the return on capital than medium size farms. In 

another major difference between farms, the total expense ratio drops from 136.1% 

for small farms to 84.5% for very large farms. This suggests that cost management 

is a significant factor in farm profitability. It also suggests that large farms have 

some cost advantages over small farms, or that large farms were able to grow over 

time because they were efficient cost managers. Otherwise, many of the remaining 

financial measures are not very dissimilar, or generally follow expectations based 

on how the farms were classified. Of the remaining variables, the most interesting 

is the debt/equity ratio. Unlike what many would expect, small farms actually have 

the lowest debt/equity ratio, meaning they have lower debt loads than larger farms. 

Farm by Type 

When discussing government payments by area and farm size, it was hypothesized that government payments in the west were higher than those in the east 

because of irrigation. Likewise, since irrigation usually results in greater production 

than non-irrigation, it would be expected that government payments would be higher as well. As table 8 shows, total government payments and payments per acre 

were larger for irrigated farms.

23

Table 8. Financial and Production Measures for Irrigated and Non-irrigated KFMA Farms in 

Kansas, 1995–2004

Measure Units Irrigated Non-irrigated 

Total Govt. Payments $ 49,340 30,831

Govt. Payments/Acre $ 36.72 23.99

Govt. Payments/GFI % 15.4 15.5

Gross Farm Income (GFI) $ 340,594 222,114

Net Farm Income * (NFI) $ 30,008 15,009

Total Expense Ratio % 97.0 105.0

Total Assets $ 808,074 671,815

Total Capital Managed $ 1,583,416 1,382,611

Rate of Return to Capital Managed (RRCM) % 3.1 1.4

Avg. Debt/Equity Ratio % 106.3 91.6

Crop Income/GFI % 71.5 64.5

Livestock Income/GFI % 6.3 13.7

Non-farm Wages $ 8,453 9,874

Total Crop Acres No. 1,456 1,298

Acres Harvested No. 1,224 1,215

* Net Farm Income equals gross farm income minus operating expenses, depreciation, unpaid operator labor, 

and unpaid family labor. 

Statistical Model 

A statistical model was developed from the KFMA data set to quantify the relationship between profitability and several other explanatory variables, including 

government payments. The profitability measure used in the statistical models was 

rate of return to capital managed. The purpose of this extensive model was to quantify the effect that these variables had on RRCM. The model can be expressed as:

RRCM = B0 + B1YEAR + B2 GOVTPP + B3CINCP + B4 TEXPR + B5AVGDE + 

B6AVGDE2 + B7GFI + B8GFI2,

where YEAR is a binary, or ‘‘dummy’’ variable that allows for changes in RRCM 

over time (year is defined as 1995 = 95, etc.), GOVTPP is the percentage of gross 

income earned from government payments, CINCP is the percentage of gross income 

earned from crops, TEXPR is the total expense ratio, AVGDE is the average debt/

equity ratio, and GFI is gross farm income. Squared terms on AVGDE and GFI 

allow for non-linear relationships with RRCM.

The results of this model are shown in table 9. The R2 value, at 71.2%, indicates 

the amount of variability in RRCM that is explained by the other variables. Thus, 

71.2% of the variability in RRCM can be explained by the six independent variables 

in the model. Two of the most important things to consider when interpreting the 

results of the regression model are the sign of the coefficient and whether or not 

the variable is statistically different from zero. Beginning with the YEAR variable, 

we can see from table 9 that RRCM was statistically different from the base year 

(2004) in 7 of the 9 years from1995 through 2004.

Table 9. Regression Results for KFMA Profitability Model 

Variable Coefficient t-statistic 

Intercept 0.1099 62.13

1995 * 0.0050 3.86

1996 * 0.0148 11.72

1997 * 0.0113 9.00

1998 * – 0.0030 – 2.33

1999 – 0.0011 – 0.78

2000 * – 0.0044 – 3.27

2001 * – 0.0046 – 3.50

2002 * – 0.0027 – 2.13

2003 * – 0.0038 – 2.98

GVTPP * 0.0154 4.44

CINCP * – 0.0025 – 2.27

TEXPR * – 0.1055 – 102.37

AVGDE * 0.0036 10.21

AVGDE2 * – 0.0002 – 6.27

GFI * 0.0001 16.45

24

Table 9. Regression Results for KFMA Profitability Model—Continued

Variable Coefficient t-statistic 

GFI2 * – 0.0000 – 2.63

* Indicates significantly different from zero at 0.05 level. 

* 2004 is the base year. 

The general purpose of government payments is to provide a safety net for farmers in an economic environment where many forces are out of their control. Because 

these payments are designed to boost farm income, it would be reasonable to expect 

that government payments would be an important variable in determining RRCM. 

The percent of gross farm income from government payments (GVTPP) was used instead of total government payments because it also gives an indication of the crop/

livestock mix of the farm. GVTPP is statistically significant and positive, meaning 

that as the percentage of GFI earned from government payments increases, RRCM 

increases as well. However, for every 1% increase in GVTPP, RRCM increases by 

only 0.015%. 

The CINCP variable was included in the model to determine whether the crop/

livestock mix of a farm had any impact on RRCM. According to this model, as the 

percentage of gross income earned from crops increases, RRCM decreases. Although, 

this variable is statistically significant, like GVTPP, the effect is small. 

The total expense ratio (TEXPR), defined on page eight, gives an indication of how 

well a farm manages costs, which in turn will affect profitability. The TEXPR variable in the model is highly significant and negative, meaning that for every 1% increase in TEXPR, RRCM will decrease by about 0.1%. For example, assume that a 

farm had a total expense ratio of 90% and a corresponding RRCM of 5%. If the total 

expense ratio increased to 91%, and everything else was held constant, RRCM 

would fall to 4.9%. 

An average debt/equity ratio (AVGDE and AVGDE2) was included in this model 

to determine the impact debt may have on profitability. According to the regression 

results, as the average debt/equity increases (i.e., a farm is more highly leveraged), 

RRCM increases as well, but at a decreasing rate. Again, this variable is statistically significant, but its impact is minor. This indicates that, on average, farms 

in the KFMA are using their borrowed funds to earn positive returns on their operations. Of course, caution should be used in increasing leverage as cash flow problems can develop. 

The final variable is gross farm income (GFI and GFI2). As previously mentioned, 

a squared term for GFI was included in the model to allow for a non-linear relationship between GFI and RRCM. In the model both variables are statistically significant, with GFI positive and GFI2 negative, indicating that as farms get bigger—in 

terms of GFI, RRCM increases, but at a decreasing rate. By holding all other variables constant and varying GFI and GFI2, we can determine the point at which 

RRCM levels off with continued increases in GFI. Figure 1 shows that RRCM increases until GFI reaches $4.3 million. At that point GFI plateaus and then starts 

to decrease. This result would suggest that profitability is maximized with GFI of 

$4.3 million. However, extreme care must be taken in making that assertion. First, 

data on large farms is limited in the KFMA, making projections at higher levels of 

GFI more problematic. For example, the maximum GFI for a farm in the data set 

used to derive this model was $2.8 million. Second, in order to predict RRCM as 

GFI increases, all other variables were held constant. However, as previous data 

showed, as farm size increased, TEXPR decreased. Since this variable was held constant to illustrate the relationship between RRCM and GFI, the advantage most 

large farms have in terms of costs are eliminated, making it appear that economies 

of size are maximized at $4.3 million in GFI.

25

The preceding statistical model indicates that government payments are a significant factor in the overall financial performance of a farm. However, the same model 

also shows that increasing the percentage of GFI that comes from government payments has less of an impact on profitability than other variables. Expenses and total 

revenue have a greater impact on profitability than government payments do. It is 

important to understand this when evaluating farm policy alternatives. In today’s 

farm policy environment there are government officials and interest groups who are 

advocating reductions in payments or even the complete elimination of farm subsidies. Some of the information previously presented would seem to suggest that, 

on average, farms may be able to absorb a reduction in government payments without a catastrophic reduction in profitability. This may be especially true with larger 

farms. At the same time there is the realization that in some years, government 

payments were a vital contributor to gross income (figure 2).

Loss of Government Payments 

To further determine the impact of government payments on farm profitability, 

additional analysis was performed with the KFMA data set. In this analysis, scenarios in which government payments were reduced by 10%, and completely eliminated were developed. Without question, it would be expected that both gross and 

net income would fall if government payments were reduced or eliminated immeVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA

11024006 11024007
26

diately, and everything else remained constant. However, reducing or eliminating 

government payments will likely have consequences outside of simply reducing income. Most notably, land values would likely fall as government payments dropped. 

A study by Kastens and Dhuyvetter estimated that cropland values in Kansas 

would fall by 33.3% if government payments were eliminated. A reduction in land 

values of that magnitude could have a devastating effect on the financial viability 

of many Kansas farms. The estimated decline in land values, however, assumes that 

100% of government payments are capitalized into land. In reality, government payments are not likely to be fully capitalized into land values. 

Nevertheless, using the assumption that government payments are fully capitalized into land values provides a ‘‘worst case scenario’’ in terms of the impact of a 

reduction in government payments. This could also be considered a ‘‘worst case scenario’’ because cash rent for cropland was not reduced in conjunction with land values. This was necessary because the KFMA data does not distinguish between crop, 

pasture, and other cash rent. 

To account for the fact that government payments get capitalized into land values, 

in this analysis, land values were reduced by 3.3% in the scenario in which government payments were reduced by 10%, and by 33.3% in the scenario in which government payments were completely eliminated. For farms that own land, the reduction 

in land values will negatively effect the solvency position of those farms, and may 

reduce the profitability of those farms as well. Table 10 shows the changes in net 

farm income, rate of return on assets, and rate of return on equity as government 

payments are reduced. As government payments are reduced, net farm income is 

reduced by the same amount. Since larger farms receive larger payments, total income losses are greater for larger farms. On a percentage basis, however, smaller 

farms are more adversely affected.

Table 10. Net Farm Income, Rate of Return on Assets, and Rate of Return on Equity for KFMA 

Farms by Farm Size, 1995–2004

Measure Small Medium Large Very Large 

Net Farm Income (NFI) – $20,467 $1,226 $37,579 $124,484

NFI w/ Govt. Pmts Reduced by 10% – $21,475 – $1,045 $33,502 $117,739

NFI w/o Govt. Pmts – $30,549 – $21,480 – $3,186 $57,037

Rate of Return on Assets (ROA) – 5.22% 3.22% 8.20% 12.31%

ROA w/ Govt. Pmts Reduced by 10% – 5.70% 2.76% 7.75% 11.90%

ROA w/o Govt. Pmts – 10.67% – 2.02% 3.21% 7.90%

Rate of Return on Equity (ROE) – 15.51% – 1.00% 8.37% 17.63%

ROE w/ Govt. Pmts Reduced by 10% – 17.13% – 2.86% 7.33% 16.95%

ROE w/o Govt. Pmts – 27.53% – 13.01% – 1.17% 8.66%

Because income levels differ dramatically between farm sizes, better measures of 

changes in profitability include the rate of return on assets (ROA) and equity (ROE). 

ROA and ROE were used instead of RRCM because they provide a better indication 

of how changes in government payments affect profitability in terms of a producer’s 

investment and not a landlord’s. According to the data shown in table 10, ROA decreases by less than 0.5 percentage points for all farm sizes if government payments 

are reduced by 10 percent. Declines in ROE range from 1.86 percentage points for 

medium farms to 0.68 percentage points for very large farms. 

If government payments are eliminated altogether, rate of return on assets decreases by over five percentage points for the two smallest farm sizes, and by 4.4 

percentage points for very large farms. Rate of return on equity drops by approximately 12 percentage points for small and medium farms, but only by 9.5 and nine 

percentage points for large and very large farms, respectively. In spite of the declines, rate of return on assets and equity remains positive for very large farms.

Table 11. Average Total Assets, Liabilities, and Equity for KFMA Farms by Farm Size, 1995–2004

Measure Small Medium Large Very Large 

Total Assets $359,808 $550,677 $907,746 $1,577,664

Total Assets w/ Govt. Pmts Reduced by 10% $353,206 $542,006 $894,685 $1,557,077

Total Assets w/o Govt. Pmts $293,182 $463,175 $775,944 $1,369,923

Total Liabilities $75,448 $155,888 $282,464 $551,111

Equity (Net Worth) $284,360 $394,790 $625,282 $1,026,553

Equity w/ Govt. Pmts Reduced by 10% $277,758 $386,118 $612,220 $1,005,966

27

Table 11. Average Total Assets, Liabilities, and Equity for KFMA Farms by Farm Size, 1995–

2004—Continued

Measure Small Medium Large Very Large 

Equity w/o Govt. Pmts $217,734 $307,287 $493,480 $818,812

Based on the values in table 11, average total assets fell 18.5%, 15.9%, 14.5%, and 

13.2% for small, medium, large, and very large farms, respectively. The difference 

in asset values is due to small farms having a greater portion of assets in land. 

Larger farms tend to rent a higher percentage of land versus owning, making long 

term assets such as land a smaller percentage of total assets than small farms. As 

liabilities remained constant, the average debt/asset ratio for each size of farm increased by about six percentage points, with small farms having the lowest ratio 

at 32.0%, and with very large farms having the highest ratio at 42.6%. Average declines in equity ranged from 23.4% for small farms to 20.2% for very large farms. 

Although the average financial position declined for KFMA farms when government 

payments were eliminated, the number of farms that become insolvent during the 

1995–2004 timeframe increased by only 2 percent (0.7% to 2.7%). 

While the preceding discussion simply illustrates the impact of government payments through mean values, it is also important to understand that there is a tremendous amount of variability between farms as well. For example, figure 3 shows 

the mean ROA without government payments by farm size. Looking exclusively at 

small farms, the average ROA without government payments was – 10.7%. However, 

at one standard deviation above and below the mean, ROA would be 2.8% and 

– 24.1%, respectively. This indicates that many, but not all farms will become unprofitable if government payments are eliminated.

There are many potential reasons why the loss of government payments may have 

different effects on farms in Kansas. First and foremost, since most government payments are targeted toward specific commodities, those farms that have historically 

produced those commodities will receive the bulk of farm program payments. Therefore, if farm programs are reduced or eliminated, those farms will likely be affected 

more than farms that do not produce those commodities. For example, figure 4

shows ROA and ROA without government payments for four types of farms in the 

KFMA data set. These farms include non-irrigated crop, irrigated crop, cow herd, 

and beef backgrounding. As one would expect, ROA suffers larger declines for both 

non-irrigated and irrigated farms than cow herd or beef backgrounding operations. 

Irrigated farms suffer the largest decline in returns, and cow herd operations the 

smallest. Beef backgrounding operations are the only ones who earn a positive return.


11024008
28

A second reason for the variability of impact of farm program payments is that 

farms vary significantly in terms of their ability to consistently earn positive returns. It was demonstrated earlier that larger farms have shown the ability to 

produce at lower cost than their smaller counterparts. That ability has allowed larger farms to earn higher profits and be less dependent on government payments. In 

addition, some farms within a particular size class have demonstrated the ability 

to earn higher returns than comparably sized farms without the benefit of additional government payments. 

Finally, as previously mentioned farms in the data set may have experienced different conditions over the last 10 years, such as drought and highs and lows in cattle prices that have increased or decreased the amount of government payments 

they received relative to average and to other farms. 

Discussion and Summary 

The fact that profitability varies so much between farms with and without government payments has some major implications for farms in Kansas and the forthcoming debate over the 2007 Farm Bill. In recent farm bill debates, support for farm 

subsidies has been broad and bipartisan. Recently, however, that support has splintered to some degree and become increasingly contentious as Federal budget pressures developed and advocacy groups have protested against farm program payments being inefficient and detrimental to poor, developing countries. As a result, 

proposals have been made to reduce farm program payments. 

This paper has shown that, over the last 10 years, farm program payments have 

been a significant factor in farm profitability. However, it has also shown that other 

factors, such as cost management and production have larger effects on profitability 

than government payments. Nevertheless, if government payments were reduced or 

eliminated, farm profitability would be diminished. Obviously, those farms that specialize in the production of farm program commodities would suffer larger losses 

than those who do not specialize in those commodities. In addition, larger farms 

would be able to absorb the loss of government payments better than small farms, 

and in many cases even remain profitable. On the other hand small farms were not 

profitable, on average, even with government payments. Because farm profitability 

varies significantly between farms, some difficult questions arise regarding future 

farm policy. 

For instance, since large farms are typically more profitable than small farms, 

and receive a smaller portion of gross income from government payments, it could 

be construed by some that payment limitations could be imposed on large farms 

with minimal effect on profitability. To do so, however, requires a means to impose 

those limits. In other words, should payment limitations be based on a strict ceiling 

of total payments, number of acres farmed, gross income, or some other measure? 

This leads to the issue of equity. The problem with using one of the above measures 

to define an ‘‘equitable’’ distribution of government payments is that one’s particular 

definition of ‘‘equitable’’ may not meet another’s definition. This can already be seen 

in the reaction of various commodity groups to proposed stricter payment limitaVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA

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29

tions. One commodity group’s definition of an equitable distribution of payments 

does not agree with another’s. 

Then there is the issue of the variability of profits and motives between similar 

farms (i.e., size and type). As a group, small farms have difficulty competing with 

large farms. But in terms of profitability, some can compare favorably with large 

farms. Other small farms are not profit oriented. They have other primary occupations, but enjoy and value the agricultural lifestyle. The remaining group of small 

farms faces challenges such as limited resources and production or management inefficiencies. (Large farms can face these challenges as well). Even if people would 

agree to target farm payments to small farms, the question exists as to whether 

those payments should be targeted to all three of those groups. These circumstances 

make forming farm policy difficult. That is why it is important to understand the 

structure of agricultural and understand how changes in policy may impact farms. 

When the process of understanding the relationship between government payments 

and farm profitability begins, often more questions arise then are answered. Consequently, this study is just one step in a broader effort to provide information to 

a complex issue. 

References 

Banker, D.E. and J.M. MacDonald, Eds. (2005) Structural and Financial Characteristics of U.S. Farms: 2004 Family Farm Report. Agriculture Information Bulletin 

No. 797. Washington, D.C., USDA–ERS. 

Dumler, Troy J. Farm Size in Kansas: Is Bigger Better? 2002 Kansas State University Agricultural Lenders Conference. January 2002. 

Kastens, T. and K. Dhuyvetter. Government Program Payments and Non-agricultural Returns Affect Land Values. www.agmanager.info. September 2005. 

USDA–NASS. (2004) 2002 Census of Agriculture. Vol. 1, Part 16. Washington, 

D.C., USDA–NASS. 

USDA–ERS. (2004) Direct Government Payments by Program 1996–2003. Washington, D.C., USDA–ERS. http://www.ers.usda.gov/data/FarmIncome/

finfidmu.htm#payments.

Mr. ETHERIDGE. Dr. Miller. 

STATEMENT OF BILL MILLER, PH.D., CATTLE PRODUCER, 

PRINCETON, KS; ON BEHALF OF FRANKLIN COUNTY FARM 

BUREAU ASSOCIATION 

Dr. MILLER. I wasn’t quite sure about what to talk about, so I 

finally decided that maybe I could just sit here and complain for 

5 minutes and see how it goes. 

Ag producers in Kansas face many challenges that affect their 

operation. Among those are ever increasing costs of fuel and fertilizer. When most other businesses are faced with increases in cost 

for production, those costs are passed on to the consumer. Farmers 

pay high prices for necessary inputs to grow food and fiber and 

usually have to sell their produce at whatever price is offered. They 

do not have the luxury of passing increased costs associated with 

production on to anyone. As a result, their operation is always operating between a rock and a hard place. 

Within the last year, farmers have had a significant increase in 

the price of grain that they sell, but when you consider the increase 

in production costs, the bottom line doesn’t change much. When environmental conditions are such that production is high, then the 

supply and demand equation takes effect and market prices are 

low. And when environmental conditions are such that crops are 

not good, the price increases, but the problem with that is he 

doesn’t have anything to sell. 

Most farmers operate a business that barely hangs on from 1 

year to the next and they exist in that manner from year in, year 

out, year after year. And when he or she gets too old to farm and 

decides to pass it on to the next generation, then the next generaVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00033 Fmt 6633 Sfmt 6601 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
30

tion starts out by trying to dig themselves out of a hole that was 

inherited when they inherited the farm. 

The lack of rural development results in young people growing 

up and moving away, never to return to the community which they 

grew up in, unless it’s as a visitor. Agriculture is a key component 

of rural communities, but if rural communities are to survive, they 

must be strengthened. They need better access to education, health 

care and improved infrastructure. In western Kansas a man might 

bleed to death before he can get to a physician for medical help. 

In east Kansas the worst thing associated with the same injury 

might be the headache and boredom that his wife suffers while he 

lays around the house 5–6 days recuperating. 

Farmers are among the most productive and most creative entrepreneurs in this country, but farming is a never-ending battle. It’s 

a battle that you can fight for a while, but there comes a time 

when you get tired of fighting or you just can’t afford to fight anymore. 

I admit that today the things that I’ve said have barely etched 

a mark when it comes to identifying challenges faced by agriculture 

in Kansas, but you’ve heard from others and you’ll hear from 

more—more from those that follow. 

If Kansas agriculture is to remain viable and survive, then these 

issues must be addressed. 

In closing I must say that it is a privilege and an honor to be 

able to sit here and address such a distinguished group of people. 

I thank you for requesting my presence here today and I thank you 

for listening. 

[The prepared statement of Dr. Miller follows:]

PREPARED STATEMENT OF BILL MILLER, PH.D., CATTLE PRODUCER, PRINCETON, KS; 

ON BEHALF OF FRANKLIN COUNTY FARM BUREAU ASSOCIATION

Agricultural producers in Kansas face many challenges that effect their operation. 

Among those are the ever increasing costs of fuel and fertilizer. When most other 

businesses are faced with increases in production costs, those costs are passed on 

to the consumer. Farmers pay high prices for necessary inputs to grow food and 

fiber and usually have to sell their produce at whatever price is offered. They do 

not have the luxury of passing increased costs associated with production on to the 

consumer. As a result, their operation is always between a rock and a hard place. 

Within the last year, farmers have had a significant increase in the price of grain 

that they sell but when you consider the increase in production costs, net income 

doesn’t change very much. When environmental conditions are such that production 

is high, then the supply and demand equation takes effect and market prices are 

low. When environmental conditions are not good and production is low, then grain 

prices are high but the problem with that is that there isn’t much to sell. 

Most farmers operate a business that barely hangs on from 1 year to the next 

and they exist in that manner year in and year out. And when he or she gets too 

old to farm and decides to pass the operation on to the next generation, then the 

next generation starts out by trying to dig their way out of a hole that was created 

when they inherited the farm. 

Farmers are among the most creative and most productive entrepreneurs in the 

country. But farming is a never-ending battle, it’s a battle that you can fight for 

a while but there comes a time when you do get tired of fighting. 

I admit that today, I have barely etched a mark when it comes to identifying the 

challenges faced by agriculture producers in Kansas but you have already heard 

from others and you will hear more from those that follow. 

In closing, let me say that your being here today as Representatives of the Agriculture Subcommittee attests to your good will and your good intentions and for 

that, I thank you.

BILL MILLER, PH.D.

31

Mr. ETHERIDGE. Thank you. Mr. Rome. 

STATEMENT OF STEVE ROME, CROP FARMER; PRESIDENT, 

SOUTHWEST KANSAS CORN GROWERS ASSOCIATION; BOARD 

MEMBER, KANSAS CORN GROWERS ASSOCIATION, 

HUGOTON, KS 

Mr. ROME. Mr. Chairman and Members of the Committee, my 

name is Steve Rome and I’m honored and humbled by the opportunity to testify before you this morning. I’m also a bit puzzled as 

to why I deserved whatever, whether this is an honor or punishment, for being in front of this group. But, nevertheless, I appreciate the time that you have all spent to come to Kansas and to 

hear the situations that we deal with. 

I’m involved in an irrigated farming operation in southwest Kansas with two of my brothers and we’re actually third generation 

citizens of the United States. So I’ve started out with saying that 

immigration is one of the issues that, I think, we have to somehow 

deal with. The labor force in western Kansas relies heavily on our 

neighbors to the west, not only Hispanic population, but the German Mennonites, and some type of a solution to allow those people 

to become citizens, I think, is important. I don’t particularly, in my 

opinion, think a guest worker program is a solution. We need these 

folks for a year-round job. We do have jobs for them. They’re hard 

workers. And so I challenge Congress to look for solutions there. 

That’s a real need. We’ve had an ad in the paper for 2 weeks for 

two employees and we have not had an answer. It’s not because we 

don’t pay. We feel like we pay decent wages, benefits, paid vacation, so on, so forth. So that’s one of the issues that, I think, we 

struggle with. 

Our operation we took over from the folks in 1982 and it’s grown 

about 10 fold in that time. And I’ve made the joke that we’ve figured out at least part of Sam Walton’s business plan: We’ve 

learned how to sell more for less. We don’t always know how to influence the people we buy products for on the inputs and we don’t 

know how to pass along the costs that are part of our production 

and that’s frustrating. 

I was talking to a neighbor the other day that had some welding 

that was going on on some farm equipment a mile away from a machine shop and he had a $10 surcharge that he added onto his bill 

for a mile drive. No doubt that fuel charge is part of that business’s 

expense and he needs a way to recoup that. We are no different. 

We have reduced our fuel usage in our operation tremendously 

through the use of no-till, strip-till, a lot of less tillage. We, in our 

part of the world, have served on lots of K-State committees as my 

bio says and I appreciate the purple. I didn’t go to school there, but 

it’s a soothing color. 

We see as much variance from the western side of Kansas to the 

eastern side of Kansas as we do from the eastern side of Kansas 

to the East Coast. So there’s a lot of variability in our state on 

rainfall and soil types and the challenges. When I looked at the letter that I received inviting me to the hearing, it said describe the 

challenges facing Kansas. And I thought about that a little bit and 

tried to figure out exactly what to say; and I decided that if you 

didn’t live close to a town that was hit by a tornado that spread 

32

the entire town throughout all your fields, or you weren’t in an 

area where all your wheat was frozen and it was smelling like sewage, or it was hailed out, or the fields were so wet that you couldn’t 

get a planter across it, times are relatively good. 

In our part of the world we had a little bit of moisture this winter. Some of it was in ice and it did a lot of damage to our trees. 

REA poles: we spent a lot of time without electricity this winter. 

Fortunately we’re back up and running and so we’ve decided energy and the ability to flip on a light when you need it is important, although we’ve learned how to use candles and other things. 

The thing that I struggle with when we look at this is most of 

the time when you read a farm magazine article it talks about the 

price of production or, excuse me, it talks about not being afraid 

to sell at a profit. That’s an interesting statement for those of us 

who have spent many winters—which farmers supposedly aren’t 

working during the winter—but spent many winters buying feed or 

trying to identify what is a profit and how do you identify that. 

In our part of the world that’s always a two part equation, and 

in most articles it’s talked about as just being a price. The costs 

very seldom run into that. We’re always, even though we see some 

pretty decent prices, and we see an opportunity for this year to be 

profitable. 

I’m a little bit concerned about what the inputs are going to do 

and I would say that the people that are in the livestock industry 

would maybe not agree with me on how good of a benefit ethanol 

is. To us it’s one of the bright spots of the economy and I hope our 

government continues to see the value of that into the future. It’s 

a—we talked about cellulosic and I think Stevens County is one of 

the two counties that’s in the final running for a cellulosic plant, 

but yet I have heard no presentations on economics of switch grass 

production. I’ve also not heard anything from NRCS as to how 

much they’re going to scream when we remove all the residue that 

we’ve spent lots of years trying to accumulate on our soils. So there 

are some questions I have about that, but I think it makes lots of 

sense to continue that process. 

Anyway, there’s lots of stuff to cover today and I appreciate the 

opportunity to be here and look forward to any questions that you 

might have later on. Thank you. 

[The prepared statement of Mr. Rome follows:]

PREPARED STATEMENT OF STEVE ROME, CROP FARMER; PRESIDENT, SOUTHWEST

KANSAS CORN GROWERS ASSOCIATION; BOARD MEMBER, KANSAS CORN GROWERS

ASSOCIATION, HUGOTON, KS 

Mr. Chairman and Members of the Committee: My name is Steve Rome and I am 

honored by the opportunity to testify before you this morning. I am involved in an 

irrigated farming operation with my two brothers in southwest Kansas near 

Hugoton. We are third generation United States citizens. I think our family has an 

appreciation for the immigration situation which is very important to the economy 

of western Kansas. My grandfather immigrated to the United States from Germany 

through Russia in the late 1800’s. My father had to learn English when he started 

school, and as Dad would tell us, if the nuns caught you speaking German, you 

would be reminded to speak English by a ruler on your knuckles. 

When we took over the farm in 1982, we farmed about 1,200 acres. Today we farm 

approximately 12,000 acres with about 75% being irrigated by center pivots. Some 

would say this is a large business and I suppose it is, and I’m not sure if the risk 

is always worth the return. Nevertheless, this is a family farm. I hear so many people say we need to save the family farm but I never hear anyone say we need to 

33

save the family grocer, hardware store, pharmacy, lumber yard etc. We have figured 

out the ‘‘how to sell more for less’’ part of Sam Walton’s business plan, but we are 

unable to figure out to exert the influence on our suppliers or pass on our increased 

cost to our customers. Without farm subsidies and an understanding lending institution our farm would probably not exist today and according to our insurance agent 

we have one of the highest APHs of all of his customers. Most of the writers whose 

articles I read in farm publications always talk about not being afraid to sell at a 

profit. I wonder how they possibly know what that is when they very seldom discuss 

the cost of production in the articles only the price of the commodity. Last year, I 

would have bet right up until we put the combine in the field that we had an average to above average crop. I was fooled along with our crop consultant, county agent 

and the rest of the industries that try to guess how good of a job of production we 

did for the year. Our yields were off 20% which nobody anticipated. Success or profit 

is always a two part equation ‘‘price × yield’’. Unfortunately this type of loss usually 

puts us at a level with crop insurance where all we lose is the profit! I keep telling 

my brothers we need to put a sign along the highway that reads ‘‘We are giving 

you the opportunity to second guess us at least 1 more year.’’

We use crop insurance to help manage our risk and give us the opportunity to 

pre-market our planned production. With crops like wheat that we have not been 

able to maintain yields on, the insurance program becomes less effective in risk 

management. This is because we have suffered several years with below average 

yields caused by drought, diseases and freeze damage. It would seem that crop insurance could be designed to insure anticipated revenue, and not have coverage to 

cover less and cost more when we have a crop loss. 

I serve on the Kansas Corn Growers Board and have heard Ken McCauley explain 

NCGA’s plan for some type of a revenue plan that would limit or do away with direct payments and create something that would be a safety net when yield or prices 

were low. I have not studied this enough to have an opinion whether this is a good 

solution. We do think the programs could be made simpler and easier to explain to 

an out of state landowner. Surely there is a better word than counter cyclical. We 

have a landowner that was a college professor and then a consulting geologist. He 

is a very intelligent and detailed person but he drives the poor ladies in our local 

FSA office insane trying to figure out how his payments were determined and if 

they are correct. 

Agriculture is the life blood of western Kansas. Our farm is located on top of two 

finite and depleting resources, the Ogallala Aquifer and the Hugoton Natural Gas 

Field. The recent increase in grain prices has farmers apprehensively excited about 

the future of our industry. We have not even completed one growing season with 

the increased grain prices we have seen from the growth in the ethanol industry 

and we are already concerned about what the higher prices will do to our long time 

customers in the livestock industry. 

I have served on several committees to discuss how to maintain the water supply 

that has made our economy what it is. We killed lots of trees creating reports but 

have done little to stop the decline. Most farmers have implemented practices (strip 

till, no-till, raising cotton, center pivots) to make their business more efficient and 

hopefully save water, but the reality in my mind is that it is no different than the 

natural gas industry. They are both finite resources but one we are attempting to 

remove as rapidly and completely as possible but with water our goal is to maintain 

the resource infinitely. For those of us who are investing in production agriculture, 

it almost seems to be a hypocrisy. It is difficult to make long term investments with 

this uncertainty and it varies from state to state which also makes it difficult to 

attract new industry to our area when they see the differences in water law. I have 

told the people on the committees that it is my goal to run out of water the day 

before the second coming of Christ. Even though I say that with tongue in cheek, 

I believe anything beyond drinking water should be treated as a resource not unlike 

natural gas, oil etc. I serve on our county economic development board and we think 

Stevens County is one of the final two choices for a cellulosic ethanol plant but I 

have not heard one presentation on the economics of switch grass production. I also 

have not heard from NRCS on what concerns they might have about the removal 

of the entire above ground residue as it would apply to conservation plans. 

The letter I received inviting me to testify asked about the challenges facing Kansas farmers. If you are a grain producer and don’t happen to live close to one of 

the communities that was hit with a tornado that spread the town through out your 

fields, or your wheat was not frozen earlier this spring, or your fields are not so 

wet that you can’t get a planter across them, then this a better year compared to 

the last several. We have had a little moisture and the grain prices look decent. If 

you are a livestock producer and had to put up with all the snow and ice this winter 

34

and are now looking at record high grain prices you might not think times look so 

good. 

In closing I would like to say that with current economics, most farmers have less 

concern about a subsidy program than they have in the last few years. The main 

concern most of us have is with the investment it takes to run a farming operation, 

changes in policy can have a devastating effect on the profitability our industry. 

Most of us would be more than happy to get our profit from the marketplace but 

with the risk of inputs, rent, and land costs increasing, most of us are still skeptical 

that can be done. I would like to have some of the magazine and newspaper writers 

tells us exactly what it is to compete in a fair world market. I’m not sure that exists. 

I have heard many K-State economists say ‘‘on average we drive the profits on 

most businesses to zero.’’ It appears it will continue to be more difficult to be above 

average in the future. I still remember the comment our banker made when we 

brought in one of our first farm payment checks. He said ‘‘I see you received your 

welfare check.’’ I said I thought we worked way too hard for this to be called welfare. It appeared to me those payments were as much of a benefit to his business 

as they were to mine. I read many articles in the newspapers that make me think 

the non-farming just consider this a form of welfare. We think the subsidy program 

should not be based on what a person’s income is, but should be a tool to help make 

sure we have a viable food production system in this country. 

In my opinion, we as a country cannot afford to have a national policy that relies 

on other countries for our food or energy supplies. 

In reflecting back on the past 25 years, I sometimes wonder if we would have 

made the same decision to get involved in this business. We are against payment 

limitations. It sometimes appears my brothers and I are being penalized by trying 

to run an efficient operation. By running our business as a partnership, we can 

spread the cost of expensive equipment over more acres. But we would not make 

the list of operations that receive a large amount of government payments if we 

each had our own operation. I am not sure it is wise or good business to have part 

of the farm program that helps ‘‘beginning farmers’’ get into a business that is so 

capital intensive and has such huge risks involved with it. With most of our retirement tied up in the value of land, and the State of Kansas having so much influence 

on that value with where they try to take water law, it makes for many sleepless 

nights. 

I thank you for the opportunity to address you today.

Mr. ETHERIDGE. Mr. Starck. 

STATEMENT OF BRIAN STARCK, CORN, SOYBEAN, AND WHEAT 

FARMER; SWINE PRODUCER, FAIRBURY, NE; ON BEHALF OF 

JEFFERSON COUNTY, NEBRASKA FARM BUREAU 

Mr. STARCK. Good morning. My name is Brian Starck, a farmer 

in Jefferson County in the southeast part of Nebraska. My family 

and I own and operate a corn, soybean and wheat farm which includes a 100 sow farrow to finish swine operation. 

Mr. Chairman and Members of the Committee, I want to thank 

you for holding this field hearing on the 2007 Farm Bill and for 

taking time to listen to those who have the most at stake in this 

debate—our nation’s farmers and ranchers. 

The landscape that my family farm faces has changed considerably since the enactment of the 2002 Farm Bill. Unpredictable 

weather conditions, market opportunities involving the development of the ethanol industry, uncertainties involved with international trade and significantly higher input costs are creating 

many challenges for my operation. 

While we are experiencing some great opportunities in the corn 

and soybean market at the present time, now is no time to abandon the basics of the safety net created in the 2002 Farm Bill. 

What should be done in the 2007 Farm Bill is to make some modifications to the existing safety net to help farmers like me deal 

with the growing risks inherent to agriculture. 

35

We in agriculture are unique in many ways. We are very vulnerable to weather related crop disasters each and every year, which 

constantly puts my production levels at risk. In 2001 we experienced dryland corn yields of 10 to 30 bushels per acre, and again 

in 2003 we experienced similar yields. 

We are price takers when we sell our commodities. To develop a 

farm policy on the notion that crop prices will remain high for a 

long time would be a mistake. Farm commodity markets are no different than other markets in that they will cycle and there will be 

both good and bad years to come. We have to keep a safety net in 

place to deal with the risk of lower prices. 

When it comes to the input side, I am also a price taker. When 

I purchase fertilizer, fuel and other inputs vital to my operation, 

some of these costs have almost doubled in the last 3 to 4 years 

which makes my operation even more vulnerable to production and 

price risks that I face. 

Therefore, I support a safety net structure that incorporates direct payments, counter-cyclical support and LDP’s; however, I believe that consideration should be given to modify the counter-cyclical program to have payments triggered by a shortfall in crop revenue rather than a trigger based solely on price. 

I have faced a couple years of drought during the last 5 years 

and it seemed that the years I needed the most assistance from a 

safety net, I received the least help from current safety net structure because you had to grow the crop in order to receive assistance. In those dry years the direct payments were very beneficial 

because they provided some cash assistance at a time when there 

was a short crop to sell. 

I also believe that crop insurance continues to play a larger and 

larger role in providing a safety net for my individual risk in agriculture. I usually participate in a 70 to 75 percent level of CRC coverage policy, and though I hope to never receive the guarantee, I 

know it is there to recoup most inputs at a near break-even level. 

It is my opinion that future farm policy should strive for more 

improvement in our current crop insurance program while taking 

the uncertainties out of annual disaster bills that seem to come up 

every year in Congress. 

As a farmer from a state that relies on a great deal of farm exports, I think it is imperative that the next farm bill be compliant 

with current WTO rules. WTO violations could have a huge negative impact on many sectors in agriculture—particularly the livestock industry. By the same token, the 2007 Farm Bill should not 

be written to comply with what someone assumes will be the outcome of the current WTO negotiations taking place. 

Many producers in Jefferson County are participants in the Conservation Security Program. I support the CSP program and I 

think we should look for ways for more funding to provide room for 

steady and efficient expansion of the program. The CRP program 

has, in some cases, turned out to have some negative economic factors in rural counties. The rent paid on CRP acres used to stay in 

the local economy, but with the rise in outdoor enthusiasm some 

urban landowners have purchased land for hunting and the majority of the rent paid is being exported to Lincoln, Omaha or Kansas 

36

City, and only the property tax money is staying in our local economy. 

In terms of bio-fuel development, I believe it is imperative that 

Congress prioritize research on modifications of dried distiller 

grains and other byproducts to expand their use, especially in nonruminant animals. Projections are by the end of 2009 we will process the equivalent of 65 percent of total production of corn in Nebraska to ethanol and we will increase the production of DDG’s 

threefold. 

In order to take advantage of this exciting phenomenon in Nebraska of corn to ethanol to DDG’s to livestock, we must have the 

research to improve ways distiller grains can be used for cow/calf 

operations, non-ruminant animals, and to enhance the consistency 

of the DDG’s to increase their levels in cattle rations. 

Finally, one last issue is the 1031 tax-free exchanges. This has 

forced land values in my area to a point where I and other young 

producers are unable to compete in purchasing land for further expansion without seriously diving into debt with little chance of success in servicing that debt. 

Mr. Chairman and Members of the Committee, thank you for the 

opportunity to share our thoughts with you and I look forward to 

any questions you may have. 

[The prepared statement of Mr. Starck follows:]

PREPARED STATEMENT OF BRIAN STARCK, CORN, SOYBEAN, AND WHEAT FARMER; 

SWINE PRODUCER, FAIRBURY, NE; ON BEHALF OF JEFFERSON COUNTY, NEBRASKA

FARM BUREAU

Good morning. My name is Brian Starck, a farmer in Jefferson County in the 

southeast part of Nebraska. My family and I own and operate a corn, soybean and 

wheat farm which includes a 100 sow farrow to finish swine operation. 

Mr. Chairman and Members of the Committee, I want to thank you for holding 

this field hearing on the 2007 Farm Bill and for taking time to listen to those who 

have the most at stake in this debate—our nation’s farmers and ranchers. 

The landscape that my family farm faces has changed considerably since the enactment of the 2002 Farm Bill. Unpredictable weather conditions, marketing opportunities involving the development of the ethanol industry, uncertainties involved 

with international trade and significantly higher input costs are creating many challenges for my operation. 

While we are experiencing some great opportunities in the corn and soybean markets at the present time, now is no time to abandon the basics of the safety net 

created in the 2002 Farm Bill. What should be done in the 2007 Farm Bill is to 

make some modifications to the existing safety net to help farmers like me deal with 

the growing risks inherent to agriculture. 

We in agriculture are unique in many ways. We are very vulnerable to weatherrelated crop disasters each and every year which constantly puts my production levels at risk. In 2001 we experienced dryland corn yield of 10 to 30 bu/acre and again 

in 2003 we experienced similar yields. 

We are price takers when we sell our commodities. To develop a farm policy on 

the notion that crop prices will remain high for a long-time would be a mistake. 

Farm commodity markets are no different than other markets in that they will cycle 

and there will be both good and bad years to come. We have to keep a safety net 

in place to deal with the risk of lower prices. 

When it comes to the input side, I am also a price taker when I purchase fertilizer, fuel and other inputs vital to my operation. Some of these costs have almost 

doubled in the last 3 or 4 years which makes my operation even more vulnerable 

to production and price risks I face. 

Therefore, I support a safety net structure that incorporates direct payments, 

counter-cyclical support and loan deficiency payments. However, I believe that consideration should be given to modify the counter-cyclical program to have payments 

triggered by a shortfall in crop revenue rather than a trigger based solely on price. 

37

I have faced a couple years of drought during the last 5 years and it seemed that 

the years that I needed the most assistance from a safety net, I received the least 

help from current safety net structure because you had to grow the crop in order 

to receive assistance. In those dry years, the direct payments were very beneficial 

because they provided some cash assistance at a time when there was a short crop 

to sell. 

I also believe that crop insurance continues to play a larger and larger role in providing a safety net for my individual risk in agriculture. I usually participate in a 

70% or 75% level Crop Revenue Coverage policy and though I hope to never use 

the guarantee I know it is there to recoup most inputs at a near break-even level. 

It is my opinion that future farm policy should strive for more improvements in 

our current crop insurance programs while taking the uncertainties out of annual 

disaster bills that seem to come up every year in Congress. 

As a farmer from a state that relies a great deal on farm exports, I think it is 

imperative that the next farm bill be compliant with current WTO rules. WTO violations could have huge, negative impacts on many sectors in agriculture—particularly the livestock industry. By the same token, the 2007 Farm Bill should not be 

written to comply with what someone assumes will be the ‘‘outcome’’ of the current 

WTO negotiations taking place. 

Many producers in Jefferson County are participants in the Conservation Security 

Program. I support the CSP program and I think we should look for ways for more 

funding to provide room for steady and efficient expansion of the program. The CRP 

program has in some cases turned out to have some negative economic factors in 

rural counties. The rent paid on CRP acres use to stay in the local economy but 

with the rise in outdoor enthusiasm some urban landowners have purchased land 

for hunting and the majority of the rent paid is being exported to Lincoln, Omaha 

or Kansas City and only the property tax money is staying in the local economy. 

In terms of biofuel development, I believe it is imperative that Congress prioritize 

research on modifications of Dried Distiller Grains (DDGs) and other byproducts to 

expand their use, especially in non-ruminant animals. Projections are by the end of 

2009, we will process the equivalent of 65 percent of total production of corn in Nebraska to ethanol and we will increase the production of DDGs threefold. 

In order to take advantage of this exciting phenomenon in Nebraska of corn to 

ethanol to DDGs to livestock, we must have more research to improve ways distiller 

grains can be used for cow/calf operations, non-ruminant animals, and to enhance 

the consistency of the DDGs to increase their levels in cattle rations. 

Finally, I like to mention some of the conditions that I have had to face because 

of the unintended consequences of the current and past farm bill and how that impacts the next generation of farmers. Clearly, government support has had an impact on land costs and cash rents which is often cited as a factor limiting opportunities for young farmers entering agriculture. It is my opinion that the payment limitation is too high and the big farmer that hits the limitation just starts another entity and then can go and offer in some cases $20 to $30 an acre more in cash rent 

than I or another small younger producer can compete with. 

Another policy issue affecting land values and cash rents relates to the 1031 taxfree exchanges. This has forced land values to the point were I and other young producers are unable to compete in purchasing land for further expansion without seriously diving into debt with little chance of success in servicing that debt. 

Mr. Chairman and Members of the Committee, thank you for the opportunity to 

share our thoughts with you and I look forward to any questions you may have.

Mr. ETHERIDGE. Thank you. Let me thank each of the witnesses 

and now we’ll recognize each Member of Congress for 5 minutes of 

questioning. And I will begin by yielding myself 5 minutes. 

Mr. Dumler, I want to follow-up on your comments regarding 

higher crop prices and beef cattle prices. The topic of food versus

fuel has been an underlying theme as we have moved forward toward this next farm bill. We’ve heard it here, but we also heard 

it in other places and many of the witnesses today have touched 

on the grain and livestock issues and many of you in this audience 

today probably have both. 

So my question is this: Can you give us a snapshot of producers 

here in Kansas? How common is it for a farmer here to have large 

grain and cattle production together? And for those producing both, 

38

is the rise in crop prices helping them make up for the increased 

cost in their livestock production? 

Mr. DUMLER. I’d say a very high portion of Kansas producers 

have both grain and livestock in their operations. 

For example, the increase in production costs has had an impact 

on livestock producers in 2006 already. When you look at net farm 

income from our Farm Management Association, it was down in 

2006 from 2005 and most of that was from livestock producers. 

Cash grain producers actually had—were either equal or had higher net farm income in 2006. So it does have an impact and it’s impacting livestock producers right now as far as the increase in 

grain prices. 

Mr. ETHERIDGE. So you’re saying if you have both, though, you 

don’t pick it up in the cattle production because the actual cost of 

the grain inputs are going to negate——

Mr. DUMLER. Potentially, yes. 

Mr. ETHERIDGE. Your testimony mentioned one problem that 

we’ve been hearing about; that is the high cost of land values. 

Mr. DUMLER. Yes. 

Mr. ETHERIDGE. As you stated, farm program payments are often 

cited as one of those sources of rising land values. I have two questions on that because we’ve sort of got a three-legged stool that we 

talk about in the farm bill: A direct payment, marketing loan programs and counter-cyclical payments. Which of these has the greatest risk of seeing its benefit captured in the land values? And Second, before you answer that, let me give you a hypothetical: If this 

Subcommittee had additional resources to put in place which we 

don’t right now, but if we did, if we did put it in the programs and 

we wanted to make sure that these dollars got to the farmer rather 

than to the landowner, which are separate in some cases, which 

program would be the best one to add those additional resources 

to. 

Mr. DUMLER. I would argue first that all three programs—direct 

payments, counter-cyclical payment and marketing loan will get 

capitalized into land values. The direct payments will be capitalized probably faster. It’s more transparent certainly. If the landowner is cash renting land, they may just increase the amount of 

the cash rent that they’re asking by that much that the farmer’s 

receiving. 

Mr. ETHERIDGE. So your basic premise is that government payments add to the cost of land values. 

Mr. DUMLER. Yes. But certainly the counter-cyclical payment and 

the marketing loan payment will get capitalized as well because 

again the cash rents and, in turn, land values are a function of income that you can earn off that land and each one of those programs increases that income. So they all will get capitalized into 

land values. 

Mr. ETHERIDGE. Or in rent values. 

Mr. DUMLER. In rent values, yes. 

Mr. ETHERIDGE. Either or. 

Mr. DUMLER. Yes, sir. 

Mr. ETHERIDGE. Thank you. Mr. Moran, 5 minutes. 

39

Mr. MORAN. Chairman, thank you very much. One of the disadvantages of no longer being Chairman, and there are many, is 

that I’m now held to this 5 minute time limit. 

Mr. ETHERIDGE. But I didn’t take all mine, Jerry. 

Mr. MORAN. Thank you very much. Let me first acknowledge a 

number of folks in the audience that need to be recognized. Not 

only do we have the dean of K-State School of Agriculture, Fred 

Cholick here, but we have our host, the dean, Dean Kuhlman of KState Salina. And so we appreciate very much the hospitality 

you’ve extended to us. 

For my colleagues from out of state, we’re on the K-State Salina 

campus. K-State is in Manhattan, but this school here is generally 

devoted toward aviation. We have a very strong school of agriculture at Kansas State University. 

We also have with us Bill Fuller, who is the State Director of 

FSA. In the row behind him is Harold Klege who is the State Conservationist at NRCS and Adrian Polansky, our State Secretary of 

Agriculture, is also present. Plus, two of our leaders in the Kansas 

Legislature, Mark Taddiken, the state Senator who chairs the Senate Agriculture Committee and John Faber, who chairs the House 

Agriculture Committee. So we are surrounded by dignitaries. I tell 

you that mostly so that you can take your complaints to those 

folks. 

And then let me just speak briefly before I ask a couple questions. One, I think that folks need to know what a difficult circumstance this Subcommittee faces in regard to the new farm bill. 

I think it would be very difficult to draft a farm bill that provides 

the safety net that the current farm bill provides. The baseline 

budget that the House passed and Senate passed budget allow the 

House Agriculture and Senate Agriculture Committees to use in 

developing the farm bill, if you take the commodity title that we’re 

responsible for on this Subcommittee, it’s 43 percent less money 

than the 2002 Farm Bill. So when my Kansas constituents come 

to me and ask for a greater direct payment, higher loan rates, the 

reality is that we are asked to draft a farm bill, the commodity 

title, with nearly half the amount of money that was available in 

2002. 

Now the budget provides a $20 billion reserve fund which perhaps is something that we’re going to be able to utilize, but I remain very skeptical. Currently it’s required that we either raise 

taxes or cut other spending to take money out of that reserve fund. 

So in many ways it looks like we’re able to do more than, I think, 

ultimately we’ll be able to do. 

And in particular, the direct payment is under attack in Washington. The Senate Chairman of the Agriculture Committee has indicated that he very much wants the direct payment to be used to 

fund CSP. In the House our Chairman has indicated that this is 

an opportunity for us to fund a permanent disaster program: to 

take money out of the direct payment and use it for permanent disaster and to rebalance loan rates. 

And so one of the topics that I would like to understand from the 

hearing today is how important the direct payment is as a component of this three-legged safety net that we created in the 2002 

Farm Bill. 

40

And so let me ask particularly, Mr. Starck, in this case, you 

talked about those three payments and you had some pretty specific reasons why that direct payment was important to you as it 

would be to Kansas farmers. 

Mr. STARCK. For myself the direct payment is very beneficial in 

getting a start on the next year for your yearly inputs. You know, 

the counter-cyclical, you don’t know what it’s going to be. It’s nothing you can bank on. The direct payment, though, is very beneficial. The LDP, the problem with the LDP, as I stated, is you need 

to have the crop in order to collect that. If you don’t produce anything, the LDP does you no good if there’s an LDP there. But, yes, 

the direct payment to me is very beneficial. 

Mr. MORAN. Professor Dumler, the direct payment and its WTO 

implications as compared to loan payments, anything that you 

would care to—what payments are least market distorted. 

Mr. DUMLER. Direct payment is the least market distorting, as 

you well know. And we thought this was a WTO green box program 

meaning it has minimal market distortion, whereas, the countercyclical program and the commodity loan program each are amber 

box programs meaning that they have significant market distortion. So from the aspect of trade distortion, the direct payment has 

the minimum amount of those three. 

Mr. MORAN. I appreciate the way Mr. Starck phrased it which is 

we ought not try to figure out how to comply with negotiations that 

are ongoing, but it is important for the next farm bill, as best we 

know how, to comply with WTO as it is today. I never thought we 

should extend the current farm bill while we figured out what 

WTO was going to do and turn our farm programs over to 140 negotiators in Geneva, but we do not want the uncertainty that comes 

with a commodity program that’s subject to attack, constant attack 

at WTO. 

And using the Chairman’s extra time, Mr. Rome, you, I think, 

mentioned in your testimony, but I don’t think you said this vocally, payment limitations. It caught my attention because, as I understand it, there are three brothers farming in your farming operation. Payment limitations is a significant topic of conversation in 

Washington. Trying to figure out how do we best direct the amount 

of money that we can that increases the likelihood that farmers 

survive and that there’s rural development, and communities are 

alive and well. How would a change in payment limitations affect 

your farming operation? 

Mr. ROME. We’ve had to structure our operation differently as 

we’ve grown and it appears to be a deterrent for growth in that industry or in this industry. And so, I guess, and I mention in the 

final pages of my written testimony that the first farm check I 

brought in to our banker when we first started, they referred to it 

as a welfare check. And I told him that I thought we worked way 

too hard for this to be called welfare, even though I knew him well 

and he was kidding and so forth. 

But the reality is that the cost of production is important to a 

large farm, as well as a small farm, and the large farm just like 

the way we talk about family farms and I mention in there, we’re 

saving the family farm. We don’t talk about family pharmacist, the 

family druggist, the family grocer, so on, so forth. 

41

And the reality is that to be efficient you have to cover more territory and the equipment to do it is expensive. So our business is 

a lot more efficient with the three of us tied together, but without 

structuring our business and subjecting ourselves to—don’t remember the group that posts our numbers on the Internet as for the 

amount we—the environmental working group. You can be clever 

on how you structure things and hide that, but the reality is that 

just because you’re larger doesn’t necessarily mean those costs of 

production are any less. So it shouldn’t be a welfare payment in my 

opinion. It should be something that ensures that we have an economy, an ag business that ensures food and potentially energy now 

with ethanol for a long time and we’re not relying on other countries for that. So I think it’s something that our farm businesses 

are growing. 

Mr. MORAN. Thank you very much. 

Mr. ETHERIDGE. Thank you. Mrs. Boyda. 

Mrs. BOYDA. Thank you, Mr. Chairman. One of the difficulties 

that I have to deal with is I have to go after Jerry Moran too often. 

It’s just difficult, Jerry. You don’t make it easy on me. 

My question was pretty much the same, I think, as we’ve all 

been trying to get at too. There are three payments that are trying 

to be balanced and clearly we know that there’s going to be less 

money in the pot right now because it’s an equation that was set 

up. This is not an intentional thing that Congress is doing. It’s just 

the way the formula is working right now. 

So among those three and, I think, what you were trying to do, 

Mr. Chairman, was to say if we had more money how would you 

spend it. 

So if I could go at the same question that, I think, each one of 

us is going at, and I would ask each one of you: Are we saying direct payments? How do those three work and if you were writing 

the farm bill, Mr. Dumler, how would you balance those three? 

How would you do that? 

Mr. DUMLER. As an economist we like the idea of less market 

distortion. So from that standpoint the direct payment is favored. 

Mrs. BOYDA. And who’s going to get hurt by that? If we did it 

that way, who in Kansas will be hurt by that. 

Mr. DUMLER. If we went to more direct payments. 

Mrs. BOYDA. Yes. If we balance those three a little bit, but then 

we used more direct payments, who is going to get hurt by that? 

The corn growers, the soybean producers? Wheat? I know wheat—

God bless the wheat growers. They understand democracy, the context for it. 

Mr. DUMLER. If we think prices are going to remain high over 

the next few years, which the likelihood is they are, it’s no guarantee that they will, but they are, then no groups are really going 

to get hurt that much if we maintain or enhance the direct payments. Nationwide probably like cotton, for example, would be the 

group that would get hurt most if we move money from other programs to specifically the direct payments. 

Mrs. BOYDA. And as we all know, the Agriculture Committee 

tends not to be so bipartisan, but it does tend to be very regional. 

42

Mr. DUMLER. Right. But I don’t see groups here in Kansas, one 

commodity versus the other being hurt that much by potentially 

changing some of those programs around. 

Mrs. BOYDA. Dr. Miller, I had asked a couple of cattle producers, 

I know we’re talking—this is the commodity chair, but the fact is 

we have one hearing. We’re not going to have another hearing. And 

certainly talking about cattle production and livestock production 

I just—we wanted to make sure that those issues were being heard 

as well. 

So could you talk to me, Dr. Miller, about just how you market 

your livestock and do you think you have access to markets? You 

know what we were talking about. 

Mr. Starck used the words price takers or price taker on both 

ends of the deal; you take whatever price is out there. How do you 

feel about competition, your access to markets? 

Dr. MILLER. Where we live we don’t have a problem with access 

to markets because we’re within 10 or 15 minutes of two or three 

auction houses. 

Mrs. BOYDA. So you feel you can get a pretty good price for your 

cattle on a given day. It’s a competitive marketplace that’s running. 

Dr. MILLER. It’s a competitive marketplace and it seems to depend on which day you take them there, you know. And I guess 

it does, you know, what are they looking for, who’s there and what 

are they looking for today. And you don’t know that until you get 

there and you’re sitting there and they start bidding and then you 

know what they’re looking for today. 

But in the last, I would say, year or year and a half, cattle prices 

have been very good; extremely good. And like it was alluded to 

earlier about the ethanol thing and livestock feed. They kind of 

clash. And we do feel that a lot now when we call the co-op and 

tell them to come out and fill the wheat feeders. It’s not like it used 

to be at all. And it’s due to the ethanol plant down at Garnett. So 

if we can get rid of it we’ll——

Mrs. BOYDA. The press didn’t hear that. Thank you very much. 

I’m going to take a little bit more of the Chairman’s time, too, that 

Jerry didn’t take or maybe Jerry did. But from your standpoint 

what’s the one thing that we can do to help the young farmers? If 

we could write one piece into the farm bill what would that be? 

Mr. STARCK. Give them a farm. That is the toughest thing is in 

order to be—I’m 35 and I started when I was a freshman in high 

school with 80 acres and my dad helped me get it set up. 

Mrs. BOYDA. Good for you. 

Mr. STARCK. And I think in today’s climate, I have a six-year-old 

and it’s going to be tougher to get him into it than it was for my 

dad, I think. But one piece that would be a loan towards young 

producers, and how you define a young producer I don’t know. I’d 

like to consider myself young, but I’ve been doing this for 17 years 

too so——

Mrs. BOYDA. You’re young. 

Mr. STARCK. Thank you. But a loan that would encourage a retiree to sell that property at a reduced rate to a young producer 

and have tax benefits for that retiree to not have to take the ultimate top price of the market. 

43

Granted that’s not fair to the guy that can be competitive and 

bid the higher price, but to have that advantage for the young guy, 

he’s going to need that or else we’re all going to be pushing 40, 50, 

60 and there’s no one at 20 going to be coming back to take over. 

Mrs. BOYDA. In the last 3 years I haven’t met a farmer yet who 

doesn’t tear up when talking about the next generation. True story, 

not one. Thank you. 

Mr. ETHERIDGE. Thank you. All right. The gentleman from Iowa, 

Mr. King. 

Mr. KING. Thank you, Mr. Chairman. I just do want to say that, 

Mr. Starck, you’re going to be delighted at how great you feel when 

you’re jumping out of bed when you’re pushing 60. 

But in your testimony all of you impart so many questions and 

I appreciate all of it, all of us do. 

I’d like to turn first to Mr. Dumler and your discussion about all 

the farm program payments being capitalized and land prices, and 

I don’t know if it was intentional, you said prices instead of values. 

But I notice as I look through your testimony I didn’t pick out any 

chart in there that showed what had been the price of land value 

prices from 2002 through 2006 as your comparison for the income 

portion of this. Can you give us some sense of what that trend has 

been producer to producer sales rather than producer to hunter 

sales or city investment sales? 

Mr. DUMLER. I mean, land values, in general, have been trending 

up. And the tough thing is to distinguish between land values 

going up because of agricultural reasons and land values going up 

because of essentially non-ag influences in land values. 

Mr. KING. And that’s why I said producer to producer. 

Mr. DUMLER. Right. They’ve still been going up because of land—

agricultural uses. And there’s a recent survey from 2006–2007 from 

the Federal Reserve Bank in Kansas City that said for Kansas, 

anyway, dryland land values went up 71⁄2 percent and irrigated 

land values went up over 10 percent. So we’ve seen, from the ethanol and bio-fuels effect, quite an increase in land values. So that’s 

having quite an impact right now. Generally they have been going 

up over time. 

Mr. KING. I appreciate that. And just ask this question, it’s really 

not quite hypothetical: You said, though, as an economist we like 

the idea of less market distortion. So I went to what would be no 

market distortion. That would be the baseline that one would 

measure everything off of then, wouldn’t it. And so I had this sadistic thought of what if, in 1985, we had let our program sunset. We 

would have zero market distortion for a period of perhaps a generation. What would land values be or what would land prices be 

today? Could we function here? What kind of crops would be out 

here on this land we’re seeing today? Do you have a sense of what 

has been the effect over the last 22 years of farm programs? 

Mr. DUMLER. There was a study by my colleagues at Kansas 

State that was updated in 2006 that they estimated land values in 

Kansas would drop by about 30 percent if government payments 

were removed. Now today, because of basically bio-fuels and higher 

grain prices, we know that that impact would not be that steep. It 

would be significantly less than that if we expected prices to reVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00047 Fmt 6633 Sfmt 6601 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
44

main high long term. So certainly it has helped enhance those values or, if you want to look at it from a equity standpoint, keep that. 

Mr. KING. What about producer income. Would it be the same or 

would it have dropped 30 percent proportionally? Has it all been 

capitalized into land values? 

Mr. DUMLER. That’s the big debate among economists: what percentage of those are capitalized into land values. Some would say 

that it’s closer to about 50 percent. Others argue it’s closer to a 

hundred percent. I would argue it’s probably closer to a hundred 

percent than 50 percent. But income certainly would drop. I did a 

study looking at, okay, if payments were removed and the land values fell by that 30 percent, what would happen to profitability. Basically rate—rate of return on assets and return on assets would 

drop as well. 

Mr. KING. And at this time could I ask you to submit that study 

into the record. 

Mr. DUMLER. Sure. 

[The information appears following the prepared statement of 

Mr. Dumler:] 

Mr. KING. I’m very interested they even asked that question; appreciate that. I’d like to quickly, if I could, turn to Dr. Miller. And 

you mentioned fertilizer costs. And we’ve got something like 406 

trillion cubic feet of natural gas offshore the United States we can’t 

drill because of environmentalist barriers. We’ve got enough natural gas underneath public lands in the United States, non-national park public lands, to heat every home in America for the 

next 150 years we can’t drill. Or if we can, we can’t get the access 

to it. 

What would be your recommendation on the fertilizer costs recognizing that 90 percent of the input cost on nitrogen fertilizer, at 

least, is out of that natural gas? What would be your advice to the 

environmentalist community that might be in charge of some gavels in Washington D.C.? 

Dr. MILLER. The people that are standing there saying that you 

can’t bring the drills out here if we don’t want the hole in the 

ground, those people. 

Mr. KING. That’s a right hand question. 

Dr. MILLER. For myself I have to keep the holes out of the 

ground also, but, I guess, we’re in a predicament now where we 

can’t have everything. We’ve got to put the holes in the ground. 

And you have to do it, I guess, in a responsible way. We don’t want 

to dig up everything, I don’t suppose. But I think we have to start 

exploring our own resources. We can’t put the whole country into 

the atmosphere of being a park. I think we have to start using 

what we have, but use it responsibly. I don’t think we can have 150 

years of energy under our feet without using some of it. 

Mr. KING. Thank you, Dr. Miller. I just want to very quickly ask 

Mr. Rome because I’m dying to ask this question and it’s a very 

short answer. 

Mr. ETHERIDGE. Please be quick. 

Mr. KING. Was the nun’s use of the ruler to teach English an effective method? 

Mr. ROME. I think so. 

Mr. KING. All right. Thank you. 

45

Mr. ETHERIDGE. Mr. Smith, 5 minutes. 

Mr. SMITH. Thank you. We’ve heard about land values, 1031 exchange, certainly implies a discussion of capital gains taxes. Mr. 

Dumler, realizing that in the context of the farm bill we do need 

some revenue to pay for many of the safety nets not just in agriculture, but otherwise, would there be a down side to repealing the 

capital gains tax? 

Mr. DUMLER. It would certainly encourage additional investment 

perhaps. To be honest I haven’t thought about that significantly to 

put a whole—I don’t see a huge down side right now besides revenue. 

Mr. SMITH. You’re saying it would result in a decrease in revenue. 

Mr. DUMLER. From your perspective perhaps, yes. But keeping in 

mind also that people have a tendency to adjust how they manage 

their assets, whether they sell more assets or exchange those assets if that tax is there or not in place, it may or may not. I mean, 

I haven’t looked at it enough to give you a solid answer on that, 

but I wouldn’t expect certainly the amount of revenue, if it would 

drop, to drop in the amounts of the capital gains that’s taxed. 

Mr. SMITH. Okay. Thank you. Dr. Miller, you are a cattle producer for which I’m grateful. We’ve heard about energy issues and 

talked a little bit about the environmental activism. I was reading 

in TIME magazine the other day that the writer suggested that 

eating a T-bone steak or any beef product, I will surmise, is as 

egregious to the environment as driving a Hummer. And, I mean, 

I come from a very cattle heavy district and certainly have observed a lot of the obstacles to efficient cattle production and effective cattle production. 

What would be the single best thing to do in terms of a regulatory manner that would make your job easier and more effective? 

Dr. MILLER. That is a toughie. I don’t know the answer to your 

question. I can’t answer that one. 

Mr. SMITH. That’s fine. When we look at revenue-based approaches perhaps, Mr. Rome and Mr. Starck, what would you see 

in terms of payment limitations, what would be the right amount? 

And that might be a tough question too. Payment limitation: Would 

you support payment limitations, and if so, at what level? 

Mr. ROME. That’s the nice thing about having Mr. Dumler to do 

all the studies and to look at that and that’s where K-State and 

the economists fit into it. I think you would have to analyze that 

situation. You know, there probably is some limit somewhere, but 

again you have to evaluate it on what the business environment is 

that we’re looking at. So it’s sure not—it’s something that scares 

us when we hear the term anyway with the amount of capital that 

it consumes to run our business is when we see our first combine 

at $80,000 now be worth over a quarter million without a corn 

head. So right now with the current commodity prices due to ethanol and the bio-fuels and the other things that are going on, those 

things aren’t as big a concern and it doesn’t look like it will be in 

the future. 

But, I guess, we believe in cycles and taking that away, if we’re 

going to maintain the size of operations we need to produce the 

food for this country, I’m reluctant to put a number out there withVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00049 Fmt 6633 Sfmt 6601 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
46

out having some good justification as to why that number fits 

there. So I’m sorry, I can’t give you an answer. 

Mr. SMITH. Okay. But Secretary Johansen has put out the $200,000 number, adjusted gross income. 

Mr. ROME. There are so many loopholes that the devil’s always 

in the details. That’s been the thing that when we had the 2002 

Farm Bill everybody thought that was going to be great until you 

put things in the application and that’s the way most things are, 

it seems like, is you find out the details that don’t work and where 

the loopholes are. So are there enough loopholes to work around 

some of that? Can you create enough entities? You know, sometimes it really almost feels fraudulent when we talk about the subsidy program and that’s probably the most frustrating thing being 

in this seat. I don’t know that any of us that wouldn’t love to receive every bit of our income from the market like, it appears, we 

get for the next few years. But that hasn’t been the case for the 

25 years we’ve been here. So that’s again a concern when you put 

a limit on something when you don’t have a better crystal ball than 

what we do. 

Dr. MILLER. If I may, back to your question, the question that 

you asked me was which government regulation most affects the 

operation. It wouldn’t affect an operation like the one that we have. 

All of our cattle are on range. But I would imagine that that 

changes drastically when you get to like out here in western Kansas particularly where you have a lot of feedlot operations. Government regulations regulating how they manage those feedlots, the 

waste produced at those feedlots, that gets to be quite a problem 

when you have cattle in confinement. 

Mr. ETHERIDGE. Thank you. Let me thank each of our witnesses 

for your testimony and your time this morning. And we now will 

ask the second panel, if they will, to come forward. 

(Off the record.) 

Mr. ETHERIDGE. Let me thank each of you for being here. And, 

Mr. Pracht, from Kansas, thank you. 

Mr. Childs from Kansas. We’re really trying to save time. Mr. 

Parker also from Moran, Kansas. Mr. Mark Meisinger from Kansas. Thank each of you for coming. Your full statement will be included in the record. And we’ll start with you, Mr. Pracht, 5 minutes. 

STATEMENT OF JOHN C. PRACHT, CORN, WHEAT, AND 

SOYBEAN FARMER/RANCHER, WESTPHALIA, KS 

Mr. PRACHT. Thank you very much. I am honored to be here and 

I appreciate all the Representatives for coming down here and listening to us complain. As Mr. Moran said, we have hardly any 

money to work with so with what I’m going to say today, hopefully 

I’ll get half of what I’m asking for. 

My name is John Pracht and I farm in Anderson County. 

My wife, Reva, and I have three boys. I raise corn, wheat, soybeans and cattle. I farm with my two brothers, Bill and Dave. My 

family has been involved with agriculture for many generations. 

We are a true family farming operation. 

The challenges in agriculture are many. The high cost of fertilizer, fuel, machinery, property tax, health care and mother naVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00050 Fmt 6633 Sfmt 6601 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
47

ture’s lack of cooperation are just a few of the many items that I, 

as a Kansas farmer, deal with from day to day. Take, for example, 

liquid fertilizer last fall was selling for $160 per ton. This spring 

the price increased roughly 60 percent to $260 per ton. As everyone 

knows, fuel cost has followed the same path. The inputs that producers use to raise their crops have risen dramatically. These inputs are what producers have to have and cannot do without, nor 

skimp on. These inputs dramatically affect our end profit margin, 

which is becoming less every year. 

As for my family and I, we are fortunate enough to have health 

care for now. There are many producers that cannot afford it. My 

neighbor is around 60 years of age. He and his wife pay around 

$1,200 a month for their health care premium. I’m paying about 

half that. I do not know how we will be able to afford health care 

in the future. Every year my health care premium increases. This 

problem has to be dealt with or it will be even a bigger problem 

in the future. 

Property tax, machinery and machinery repair costs also rise 

every year. It is extremely hard for a middle sized farm operation 

to operate with the prices the way they are. For example, a new 

combine lists around $300,000. It makes me sad to think that I’m 

getting roughly the same price for my grain as my father did many 

years ago and his fuel, fertilizer, machinery prices were nothing 

like we have today. Hopefully with the help of ethanol and bio-diesel plants the price for grain will increase and stay increased. I 

think that if the farmer has higher grain prices that we will be less 

dependent upon government help. But higher prices are not the 

only piece of the puzzle. 

A safety net must be in place in the farm bill for disasters like 

droughts and floods. The new farm bill should raise the LDP price 

to higher levels than they are now. More money should be spent 

for disaster relief in the years we have crop failures. I know a lot 

of talk is to do away with the direct payment program, but for me 

it’s nice to know that some steady income is coming in. The money 

spent in the conservation program is money well spent, but I believe the program needs more money to carry on to benefit farmers 

as the program is intended. I do not think payment limitations 

should be in place for farmers who have higher incomes, if all their 

income comes from agriculture. Investors with other sources of income that own farms or ranches should not receive government 

payments. Ranchers with livestock should be included in the farm 

bill also. There is not a price protection for livestock owners like 

the LDP payment for the grain farmer. Emergency haying and 

grazing on CRP or buffer strips need to be released for haying in 

a much quicker time frame. When a drought occurs, livestock producers have to rely on buying hay and other feeding material to 

feed their animals which will end up costing them lots of money. 

There needs to be a disaster plan in the farm bill to help out cattle 

ranchers. 

Closing of some of the ASCS offices should not be done. This 

money saved is not worth the inconvenience that this will cost. 

I am not in favor of having mandatory animal ID. This decision 

should be left for the producer to decide. Located in Anderson 

County is a large Amish community. I’m sure that they are not in 

48

favor of this either. A lot of retired farmers have a few cows to supplement their incomes. I believe this could make some of them sell 

their cow herds and quit. I hope it has been taken into consideration how this might affect people such as these. This could lead 

to weeding out of the little producer. It appears like we are getting 

closer every day when issues like this arise to becoming large corporate farms instead of family farms. This is what happened to the 

hog producers. I think there would be other less costly and simpler 

ways of having animal ID. I would like to remind you that the cattle which had mad cow disease were traced back to the original 

owner without the help of this proposed animal ID system. I would 

support country origin of labeling if we were a hundred percent 

positive that the cattle producer would not have to pay for it. I 

strongly support farm bureau and farm credit for bettering life for 

rural America. 

In closing, I hope that Representatives and Congress can keep an 

open mind, bring all their ideas to the table and leave with the 

best solution. Please keep in mind what is best for the people that 

your decisions will have an effect on. Help keep family farms family farms and rural communities from extinction. Thank you. 

[The prepared statement of Mr. Pracht follows:]

PREPARED STATEMENT OF JOHN C. PRACHT, CORN, WHEAT, AND SOYBEAN FARMER/

RANCHER, WESTPHALIA, KS 

My name is John Pracht. I farm in Anderson County. My wife, Reva, and I have 

three boys. We hope that they can have a future in agriculture, if they choose so. 

I raise corn, wheat, soybeans and cattle. I farm with my two brothers Bill and Dave. 

If it wasn’t for my father, I never would have been able to get started farming. My 

family has been involved with agriculture for many generations. I would say that 

we are a true family farming operation. 

The challenges in agriculture are many. The high cost of fertilizer, fuel, machinery, property tax, health care, and mother nature’s lack of cooperation are just a 

few of the many items that I, as a Kansas farmer, deal with from day to day. Take 

for example liquid fertilizer last fall was selling for $160 per ton. This spring the 

cost increased roughly 60% to $260 per ton. As everyone knows fuel cost has followed the same path. The inputs that producers use to raise their crops have risen 

dramatically. These inputs are what producers have to have, and cannot do without, 

nor skimp on. These inputs dramatically effect our end profit margin, which is becoming less every year. 

My wife, Reva, and I have three kids. We arc fortunate enough to have health 

care for now. There are many producers that can not afford it. My neighbor is 

around 60 years of age. He and his wife pay around $1,200 a month for their health 

care premium. I am paying about half that. I do not know how we will be able to 

afford healthcare in the future. Every year my heath care premium increases. This 

problem has to be dealt with or it will be even a bigger problem in the future! 

Property tax, machinery and machinery repair costs also rise every year. It is extremely hard for a middle sized farm operation to operate with the prices the way 

they are, for example a new combine list price is around $300,000. It makes me sad 

to think that I am getting roughly the same price for my grain as my father did 

many years ago and his fuel, fertilizer and machinery prices were nothing like we 

have today. Hopefully with the help of ethanol and bio-diesel plants the price for 

grain will increase and stay increased. I think that if the farmer has higher grain 

prices that we will be less dependent upon government help. But higher prices are 

not the only piece of the puzzle. 

A safety net must be in place in the farm bill for disasters, like drought and 

floods. With so much money invested in farming today one bad year can bankrupt 

a producer. The new farm bill should raise the LDP prices to higher levels then they 

are now. More money should be spent for disaster relief in the years we have crop 

failures. I know a lot of talk is to do away with the direct payment program, but 

for me it’s nice to know that some steady income is coming in. Money spent in conservation programs is money well spent, but I believe the program needs more 

49

money to carry on to benefit farmers as the program is intended. I do not think payment limitations should be in place for farmers who have higher incomes, if all their 

income comes from agriculture. Investors with other sources of income that own 

farms or ranches should not receive government payments. Ranchers with livestock 

should be included in the farm bill also. There is not a price protection for livestock 

owners like the LDP payment is for the grain farmer. Lets say hoof and mouth disease was found in America, cattle prices would fall and many producers would loose 

large amounts of revenue. Times have changed, if something like this happens the 

American rancher needs a safety net to count on. Emergency haying and grazing 

on CRP or buffer strips need to be released for haying in a much quicker time 

frame. Lets say most of the county where a producer lives has received adequate 

rainfall, and the producer lives in a drought stricken area of the county. The USDA 

will not give the authority to hay or graze because the other part of the county has 

adequate conditions, this is not right. I know of cattle producers that this has happened to. When a drought occurs, livestock producers have to rely on buying hay 

and other feeding material to feed their animals, which will end up costing them 

lots of money. There needs to be a disaster plan in the farm bill to help out cattle 

ranchers. 

Closing of some of the ASCS offices should not be done. The money saved is not 

worth the inconvenient that this will cause. 

I am not in favor of having mandatory animal ID. I believe this program will 

leave less income for cattle producers. Not just the cost of tags will the producer 

have to pay for. I’m sure sale barns will increase their price of operation to be able 

to pay for the technology that has to he bought to make this program work. Packing 

plants will pass the buck on as well. This all adds up to less dollars for us. Located 

in Anderson County is a large Amish community. I am sure that they are not in 

favor of this either. A lot of retired farmers have a few cows to supplement their 

incomes. I believe this could make some of them sell their cow herds and quit. I 

hope it has been taken into consideration how this might affect people such as 

these. This could lead to weeding out the little producer. It appears like we are getting closer every day when issues like this arises to becoming large corporate farms 

instead of family farms. I think there would be other less costly and simpler ways 

of having animal ID. I would like to remind you that the cattle which had mad cow 

disease were traced back to the original owner without the help of this proposed animal ID system. I would support country origin of labeling, if we were 100% positive 

that the cattle producer would not have to pay for it. 

In closing, I know that tough decisions have to be made. I hope that Representatives in Congress can keep an open mind, bring all of their ideas to the table and 

leave with the best solution. I hope this letter can help all of you make your decisions a little easier. Please keep in mind what is best for the people that your decisions will have an effect on. Help keep family farms, family farms and rural communities from extinction. 

Sincerely,

JOHN C. PRACHT

Mr. ETHERIDGE. Thank you, sir. Mr. Childs. 

STATEMENT OF BARRY K. CHILDS, VICE PRESIDENT AND 

FIELDMAN, FARM MANAGEMENT SERVICES, INC.; CHILDS 

FARMS PTR., BELLEVILLE, KS 

Mr. CHILDS. Thank you for this opportunity to discuss a few 

issues. I’m a 53-year-old fourth generation farmer from Belleville, 

Kansas, with a BS and Master’s in Ag Economics from Kansas 

State University. 

The invitation was to comment on a few challenges ag producers 

are facing. It seems to be very open ended. Since you guys aren’t 

in control of mother nature, we’ll focus on just a few things that 

the Committee might be able to. 

First would probably be health insurance costs or health care insurance. Both availability and the cost continues to be a huge problem; possibly deduct them on Schedule F or Schedule C depending 

on your small business. 

50

Second, simplify how and when the dollars are received by producers and their landlords. The CCP concept was a very good idea; 

however, its implementation is almost impossible to follow. Quite 

a few people say they’re not sure what they’re supposed to receive 

when they’re supposed to receive it and I guess they do know how. 

I’ve included a little chart—flowchart simplifying the procedure 

from the local FSA office and I would challenge anybody on the 

Committee to try and explain the how, why and the when to a 90-

year-old or an 80-year-old landlord. It would be quite dramatic. 

And, I guess, the FSA offices should be applauded and thanked 

for their continued front line support with the farmers as far as implementing new procedures and ever-changing implementations. 

One possible suggestion might be the direct payments have just 

two simple payment dates: Spring, and Fall. The CCP payments, 

if it’s harvested in the summer have it paid in the summer. If it’s 

harvested in the fall have it paid in the fall. Have a maximum of 

four payment periods so people know what’s going on. 

For 30 years I’ve had a very unique experience of working with 

farmers of all ages and sizes usually around the kitchen table. I’ve 

considered myself very lucky and extremely blessed to have been 

invited into the financial workings of so many farm families. The 

intergenerational workings of these businesses seem to be most 

challenging and most rewarding. 

This brings me to my third point: Getting young people to stay 

and come back to the farm. A few simple thoughts might be to 

change the recapture depreciation for the first year of machinery 

equipment to an installment sale provision such as used on the 

land. Most of you know that the recapture depreciation is taxed in 

the first year. It wouldn’t be a change to the total revenue received. 

It would be a matter of the timing. 

Second: Starter loans for farmers. I’m not sure how, in the governmental budgeting process, how loans or FMHA or FSA loans are 

figured in your budget. Cities and counties have revolving funds; 

loans are loans; they are paid back. They’re secured. But this 

would be a very good opportunity for young farmers to know what 

those loans are and the amount of those loans. 

Now with FSA program there are people that are approved for 

loans, but simply not—they don’t know when those loans are going 

to become available. 

The third one is probably the stability of the ag program: How 

else would we tell the young people that agriculture is an extremely excellent career? Let me explain why. When you’re a parent, if you’re lucky enough to be one, you talk about their future 

career, what’s the first thing that comes up? How a future or how 

that job is—does this job have a future and can they succeed at it? 

Is that job going to be constantly changing with regulations and 

government interference? Will that job be used as a political tool? 

And will the pay scale be known and will they be penalized for 

being successful? I’m sorry to say, but our past ag programs have 

told potential farmers and ranchers the wrong thing. 

Now we started with payment limits of $50,000 and dropped to 

$40. If you adjust the 1985 $40,000 limit to today’s—or just simply 

inflation, that’s almost $78,000. The other thing, 1985 Farm Bill 

was an 11 year program. The 1996 fortunately was 6 years. The 

51

2002 was 5 years and we don’t know what we’re going to have. The 

stability again is the issue. And again the prices are high now. 

Why can’t target prices and loan rates be set and adjusted for inflation? 

The CCP payments will not be a liability to the USDA in 2007. 

And where is that budgeted money going to go? Why can’t those 

unused budgeted funds be set aside for years to come when we, unfortunately, will probably need them. Do the same with the LDP 

payments. 

Any future legislation proposed, especially for ag legislation: 

Please have you or your staff do the due diligence that needs to be 

done. But before you decide on anything, make one more column 

in that. And title it: Will this be a positive or a negative for the 

future generations of farmers? If it’s not going to be a positive, if 

it’s a negative, don’t put it in there. If it’s a positive, however, and 

telling that next generation of farmers that they are needed, they 

are wanted, and we want them to keep producing food and fiber 

for this country and world, pass it and fight for it. How else can 

you explain to that next generation that they’re wanted and they’re 

needed. 

Again, thank you for this opportunity. We have entrusted you 

with tremendous responsibility for drafting and passing this ag legislation. I think that most people understand that there will always 

be short term wants and needs that must be addressed. With these 

decisions, however, always and without exception you and your fellow Congressmen and Congresswomen must determine whether 

that’s going to be a positive for the future generation of ag men and 

women. We cannot afford to lose another generation as we did in 

the 1980’s. Thank you. 

[The prepared statement of Mr. Childs follows:]

52

PREPARED STATEMENT OF BARRY K. CHILDS, VICE PRESIDENT AND FIELDMAN, FARM

MANAGEMENT SERVICES, INC.; CHILDS FARMS PTR., BELLVILLE, KS


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Mr. ETHERIDGE. Thank you, sir. Appreciate it. 

Mr. Parker. 

STATEMENT OF GARY PARKER, SOYBEAN, WHEAT, AND MILO 

FARMER, MORAN, KS 

Mr. PARKER. I thank you very much, Congressman Moran and 

Congresswoman Boyda, Chairman Etheridge. 

I first would like to change one word in my written testimony. 

On page two or second page paragraph two, the bottom—the second paragraph up from the bottom, it says ‘‘recently’’—when I’m 

speaking about a comment I’d made to Congressman Moran. Recent for me maybe isn’t recent for him. As you get older time goes 


11024013
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faster. So, Congressman, I do apologize. That was over in Emporia 

at one meeting and so I want to insert the words a few years back. 

Mr. MORAN. I remember. 

Mr. PARKER. Also, while I’m picking on Congressman Moran, we 

have a question whether Moran was named—Congressman Moran 

was named after the city or vice versa. In my written testimony I discussed back in Earl Butz’ tenure 

that we were encouraged to plant fence row to fence row mainly 

because of exports. 

I am cautious about the fact that we’re almost encouraging that 

for the recent avocation of alternative fuels and with ethanol and 

bio-diesel. So with caution I would want the Congress to consider 

some type of floor under crude oil so we have some protection for 

the people that are invested in these plants and then also because 

most of the plants are being built by farm monies or with an individual’s money and not corporate farms and et cetera. I could see 

in 6 months all of those plants being closed or broke for the simple 

fact the OPEC nations could easily cut their crude oil down to $20 

or $30 a barrel for 6 months and we’d be broke. So I do give caution there. 

The other thing that concerns me about planting fence row to 

fence row and putting so much emphasis on our corn and soybeans 

and, et cetera, is debate over food and fuel. Where will a public 

rather put the corn: In their stomach or in their fuel tank when 

it comes to the pinch. 

The importance on government fuel subsidies has to play a big 

part in where we go with alternatives fuels. Other things that are 

needed to be considered are alternate fuels such as hydrogen, electric, liquid coal and others. Just last Sunday Boone Pickens was in 

The Wall Street Journal saying that ethanol wasn’t any good. And 

I suppose if I was an oil and gas producer I would probably say 

that too. The other point I thought was he’s had natural gas—we’ve 

had natural gas for years, but we’re not running our cars on it, if 

this is what he’s proposing. 

I would like us to think down the road also are the flex fuel vehicles that we’re promoting now, will they be reliable in 10 more 

years or will we be looking at some other kind of an automobile or 

truck or tractor. I think we need to think that and I really am encouraged about the renewable fuel future right at this time because 

I have no other answer for our cars, trucks, combines and et cetera, 

but what we do have is using alternative fuel. But I do want you 

to keep these things in mind. 

Another thing, the discussion about the low interest loans and 

grants and in my written testimony I have some criticisms about 

some of the loans that we’re giving to young farmers and older 

farmers and the write-offs and et cetera. 

I am an advocate of trying to keep young farmers on the farm. 

Ever since I was a young man and working in some farm organization this has been a thing that we’ve always tried to work for is 

let the farmers stay on the farms. However, I don’t know what the 

criteria should be. I can recall back when I was a young farmer 

and my dad’s neighbor said to him you might not be doing him a 

favor by giving him a farm. Maybe it’s not the best possibility of 

him making an income. 

57

Our U.S. Government must protect our food and fiber that we 

produce out here on the farm because it is a strategical defense for 

our country. 

The one thing I recall back years ago was being at a Kansas 

State Board Agriculture meeting and a gentleman from a foreign 

country that was overtaken by the Nazis said the reason they were 

overtaken was because they could not feed their people. He said, 

‘‘This will never happen again in our country because we don’t care 

how much subsidy we have to give to our farmers. We want to have 

the food to feed them.’’ So this has always kind of stayed with me 

and I think this is a valuable thing to be thinking about. We’ve 

been blessed in this country to always have food, but that’s not 

guaranteed. 

I do support the government’s loan and grant for rural communities because I think that’s one of the only ways we’re going to 

keep a viable source of vital rural things going on. 

Concerning bringing young farmers back, I just had—yesterday 

I was visiting with a farmer in his 40’s and he was telling me his 

son just graduated from Kansas State. I said, ‘‘Well, you’re sure 

fortunate to have your son come back to the farm.’’ He’s well established. He’s inherited money and land. He says ‘‘I don’t know if it’s 

such a good deal or not. He’s just not making money like he should 

if he was in another business.’’ So I’m sorry to say I don’t have any 

ideas of how we can track this other than the fact I do think I mentioned in my written testimony that I think the young farmers and 

the farmers that want to stay on the farm and they’re smaller 

farmers, if we’d have some type of other type of employment in 

that community helps a lot. Maybe where they could stay on the 

farm, maybe one of the people work or et cetera and that will also 

take care of their—I’m sorry, I’m over time. I’m sorry, Mr. Chairman. 

[The prepared statement of Mr. Parker follows:]

PREPARED STATEMENT OF GARY PARKER, SOYBEAN, WHEAT, AND MILO FARMER, MORAN, KS 

Personal History 

I take great pride in this opportunity to testify before all of you today. While I 

am a scholar on neither farm programs nor agricultural policy, my 52 years of farming experience provide me with some expertise that I offer as qualifications for my 

testimony today. 

I began my farming experience in rural Jefferson County in the mid-1950s. I 

would likely still be there today were it not for the construction of the Perry Federal 

Reservoir. Both my farm and my parents’ farm were consumed by the reservoir—

offering ample motivation to pursue other options. My wife, Janice, and I moved our 

family to Allen County, where we have remained ever since. 

We were blessed with six wonderful children—and six children total—and a wonderful life. Each of our children has graduated from college and begun successful 

careers and lives of their own. Rural life, I believe, has been a major contributing 

factor in the development of their work ethics and senses of responsibility. 

Although my entire family has benefited greatly from a farm upbringing, I acknowledge that we have seen both the good and bad in agriculture. While my halfcentury in this profession has revealed many of the negatives in farm programs, I 

am not here today to criticize those programs. 

History of Farm Programs 

Yet it is important to note the sheer quantity of programs that have come and 

gone. 

I recall former United States Secretary of Agriculture Earl Butz’s tenure—a time 

when farmers were encouraged to plant from fence row to fence row. 

58

I was fortunate to be a personal acquaintance of Secretary John Block, and to become intimately familiar with the programs enacted during the Reagan Administration. 

I remember farm programs that attempted to entice people to continue farming, 

even when it was the wrong thing for the individual farmer to do. 

I have seen poor production farmers acquire low-interest loans that they were unable to pay back. These loans were made to farmers struggling so mightily that, 

even when the loans were written off, many of the farmers still were forced out of 

business. 

I have seen young farmers who managed to procure start up-loans, only to struggle for years to keep their heads above water. 

These events are not necessarily all bad. But in hindsight, it seems that sometimes the government is not doing these farmers any favors. The many attempts to 

assist us remind me of a friend of my father, who offered this advice: ‘‘You might 

not want to give your child a farm; you might not be doing them any favors.’’

Doing farmers a favor, however, has been the intent of each farm program enacted. Many times it has succeeded—I could not begin to imagine the number of 

farmers such as myself who would not be farming today were it not for many of 

these farm programs. Furthermore, please note that no one forces us to live on the 

farm; we choose this way of life, and most of us would not trade it for anything. 

To find continued success at the lives we have embraced, we must be skeptical 

of planting fence row to fence row. This was unsuccessful 3 decades ago, and probably will not be successful today or in the future. We must, therefore, consider carefully our current policies with an eye toward improvement. 

Successes of Previous Bill 

I realize you have heard a variety of suggestions on the upcoming farm program, 

and I am sure many of them are outstanding ideas. As a family farmer in Southeast 

Kansas, I have few problems with the current program. I appreciate the flexibility 

it offers and would change few things about it. There were several successes on 

which I would like to offer comment. 

First, the farm programs that have been a real success are the conservation programs. I believe this has effectively aided farmers in the preservation of our resources, the purification of water supplies, elimination of soil erosion, and several 

other key areas. 

I commend the Congress for providing additional funding to upgrade our waterways, as well as the locks and dams systems. This additional funding will not only 

upgrade river transportation in our country but provide safer communities to many 

served by these rivers. 

The funding of the farm disaster program was critically needed. We absolutely 

need protection from disasters over which we have no control. The crop insurance 

program has been a safety net to at least help cover production costs. While I would 

applaud its expansion to cover additional operating expenses, I believe it was a huge 

step toward protecting farmers. 

Suggestion: Modify Production Yield History Methodology 

In and effort to protect farmers even further, however, I would like to offer a few 

criticisms and suggestions that could be potentially incorporated into the 2007 Farm 

Bill. 

My primary concern is with the technique employed in determining production 

yield histories. This 4 year average calculation further penalizes farmers who already have suffered through extended hardships, such as droughts. As yields decrease, the production history continues to decline; consequently, insurance production yields and deficiency payments go down in lock-step. 

Anecdotal evidence that I have observed firsthand points to the shortcomings of 

the deficiency payment system. If I produce a below-average crop, I get paid on a 

low yield; farmers producing bumper crops receive large deficiency payments. The 

allocation of deficiency payments simply is not equitable in many circumstances. 

Furthermore, crop insurance programs are often handled inequitably. For example, farmers one county south of me can insure soybeans after wheat as a second 

crop. Farmers in Allen County are ineligible to insure a second crop, putting us a 

striking disadvantage to others only a few short miles away. Looking farther across 

the country, friends in Mississippi tell me second-crop milo can be insured for $190 

per acre. Assuming this to be true, chances are many farmers are likely motivated 

solely by the allure of insurance money. 

Suggestion: Keep Rural Communities Vital 

As farmers, it is probably unfair to expect the United States Government to keep 

us in business any more than the mom and pop grocery stores or shoe stores. HowVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00062 Fmt 6633 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
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ever, farmers play a strategic role that perhaps other small entrepreneurs do not—

the American farmer serves the vital role of feeding not only our citizens, but citizens from around the globe. In these times of tragic but inevitable worldwide strife, 

food production is one of our country’s best defenses. Maintaining this defense 

means maintaining the viability of our rural communities. 

U.S. Representative Nancy Boyda has expressed her commitment to keeping rural 

communities vibrant. From the time I was involved with American Farm Bureau 

Young Farmers and Ranchers, this has been an overriding concern. Years of observation have convinced me that having more and smaller farms in our rural communities will not keep them vibrant on their own. Other opportunities must exist in 

a town to combat many rising costs today’s farmers must face. 

The rising costs of farm equipment—coupled with the tremendous cost of planting 

a crop—is prohibitive for many prospective farmers. Still, small farms and farmers 

can continue to survive, if not thrive, if there is additional employment in the area. 

To forge an acceptable living, many farmers must seek additional full- or part-time 

employment in non-farm-related venues. 

American farmers are willing to adjust and embrace this additional challenge. To 

be able to do so, however, they need small industries to locate in rural areas and 

offer those employment opportunities. As many industries have moved overseas in 

search of low-cost labor, such opportunities have become increasingly difficult to 

find. 

Suggestion: Ensure Continued Availability of Affordable and Local Health 

Care 

The availability of affordable health insurance, health care facilities and local 

medical staff are essential to small American farmers. Health care is as important 

to farmers as many other farm programs. 

A few years back I spoke with U.S. Representative Jerry Moran at a meeting in 

Emporia. Commodity prices, I explained, are not the only thing making it difficult 

for farmers to remain on the farm. Health insurance costs are a major problem. 

With such exorbitant costs, it is commonplace for at least one member of a farm 

family to find employment off of the farm to pay for the family’s health insurance. 

I am encouraged with the current proposal for funding of rural health care facilities. The present program provides funding for the continued operation of criticalaccess hospitals in rural communities across the United States. The continued availability of local health care services is paramount to keeping farmers productive in 

our country. 

Suggestion: Address Bio-Fuel Industry Challenges 

Alternative fuels from agricultural products provide us with an outstanding opportunity to address one of our country’s most pressing energy crises. As we continue 

to make advances in this arena, I have an increasing sense of dread at the number 

of people—especially farmers—who are making significant and risky investments 

into bio-fuels. 

My fear is that most of our ethanol and bio-diesel plants are being built using 

the money of rural farmers and other individual citizens. These investments are 

being made as Americans face ever-rising prices at the gas pump. A few strategic 

moves by OPEC to drop crude prices could bring financial ruin on this industry and 

many of its investors. In a short time, we would see these new plants would shut 

down. Avoiding such a disaster—as bio fuels struggle to become more financially 

viable—would require the implementation of a price floor in oil imports, ensuring 

that bio fuels can remain financially competitive in the short term. 

Conclusion 

I have been farming most of my life. American agriculture has been a blessing 

for me and my family, and provided more than most people could ever want. It is 

my sincere hope that great deliberation will be given to these ideas and the ideas 

of others in generating a new farm bill that builds on the many successes of past 

programs while improving upon their deficiencies. 

Thank you for the opportunity to offer my thoughts on this topic. Please feel free 

to contact me with any additional questions.

GARY PARKER.

Mr. ETHERIDGE. Thank you, sir. 

60

STATEMENT OF MARK MEISINGER, WHEAT FARMER AND COW/

CALF PRODUCER, MARION, KS 

Mr. MEISINGER. My name is Mark Meisinger. I live in Marion. 

I farm wheat and I also have a cow/calf operation and three young 

boys that help me as much as they can on that. I’d like to begin 

my remarks by thanking the Committee for allowing me to testify 

this morning and for listening to the direct views of farmers and 

ranchers about the farm bill. 

I am not coming before you today to plead for more Federal 

money for farmers and ranchers. Clearly we’re going to have to 

learn to deal with less and we need to be aware of that. I believe 

most ag producers would much prefer to receive income from the 

value of the products that they produce. Unfortunately, in today’s 

farm economy that is not consistently reliable enough to maintain 

financially sound farms and ranches without Federal support. 

The past 10 years of farming have been very challenging as far 

as a Kansas producer is concerned. Low grain prices, exploding expenses and difficult weather have made it difficult to find the income needed for the family. This exposes the need for some kind 

of farm income stabilization so that we have a reliable source of 

food and fiber for our country. 

Has the current farm bill been sufficient? Yes, it’s been okay, especially the counter-cyclical support concept, but a revenue-based 

counter-cyclical program or possibly a savings account idea that 

I’ve heard proposed would be better in my opinion. These types of 

programs are necessary to stabilize income in difficult years. 

The recent increase in grain prices has at least provided an optimistic view of the future, provided we have a crop to sell. The support of crop insurance programs needs to continue. We have the expanded use of ethanol to thank for this current jump in corn prices. 

Our country needs to become increasingly reliant upon ourselves 

for our energy and Federal support needs to continue in this area. 

I believe most Americans would rather fill up their vehicle knowing 

they are supporting a Midwest farmer instead of a Middle East terrorist. Please continue to support the growth of the ethanol industry. 

I hope that our country can move away from direct support of 

farm programs. That clearly is what we see in the picture coming 

towards us in the future. But we do need crop insurance products 

and income stability products that maintain a reliable and healthy 

ag economy. 

One side note I might add, just locally, recently on Friday in my 

local Farm Service Agency office, probably heard it before, but the 

computer system’s running very slow. She said it was even a good 

day and yet we are waiting and waiting and waiting. So please do 

what you can to look into speeding up the number of servers or 

whatever needs to be done so that there’s not so much time spent 

there. And what’s more if that business is done at home, it’s going 

to have to be faster because individuals aren’t going to sit at home 

waiting and waiting and waiting to conduct business at home. 

Thank you. 

[The prepared statement of Mr. Meisinger follows:]

61

PREPARED STATEMENT OF MARK MEISINGER, WHEAT FARMER AND COW/CALF

PRODUCER, MARION, KS 

I would like to begin my remarks by thanking the Committee for allowing me to 

testify this morning and for listening to the direct views of farmers and ranchers 

about the farm bill. 

I am not coming before you today to plead for more Federal money for farmers 

and ranchers. I, and I believe most ag producers, would much prefer to receive my 

income from the value of the products that I produce. Unfortunately in today’s farm 

economy that income is not consistently reliable enough to maintain financially 

sound farms without Federal support. The past ten years of farming has been very 

challenging as far a Kansas is concerned. With low grain prices, exploding expenses, 

and difficult weather it has been difficult to find the income to support a family. 

This exposes the need for some kind of farm income stabilization so that we have 

a reliable source of food and fiber for our country. 

Has the current farm bill been sufficient? Yes, it has been okay, especially the 

counter-cyclical support concept. Whether that is left in place or we move to more 

of a savings account idea, it is necessary to have a method in place to stabilize income in difficult years. 

The recent increase in grain prices has at least provided an optimistic view of the 

future, provided we have some product to sell. The support of crop insurance policies 

needs to continue. We have the expanded use of ethanol to thank for this current 

jump in corn prices. Our country needs to become increasing reliant upon ourselves 

for our energy, and Federal support needs to continue in this area. I believe most 

Americans would rather fill up their vehicle knowing they are supporting a Midwest 

farmer instead of a Middle East terrorist. Please continue to support the growth of 

the ethanol industry. 

I hope that our country can move away from direct support of farm programs. But 

we do need crop insurance products and income stability support to maintain a reliable and healthy ag economy.

Mr. ETHERIDGE. Mr. Robbins. 

STATEMENT OF LEE ROBBINS, DIRECTOR, KANSAS

CATTLEMEN’S ASSOCIATION; COW/CALF PRODUCER, YATES 

CENTER, KS 

Mr. ROBBINS. Honorable Congresswoman and Congressmen, I’m 

Lee Robbins, a fourth generation cow/calf producer from Yates Center, Kansas. I’m a Director for the Kansas Cattlemen’s Association 

and USD 366 School Board Member. Thanks a lot for the opportunity to share with you some of my concerns about the beef business. 

My biggest challenges are not with the production of beef because I know I can compete very well as a producer. 

My big challenges lie in the marketplace. 

Previous rules by USDA have been detrimental to rural communities. I’m convinced that the four major packers control USDA 

whenever a meat issue is at stake. For example, USDA not allowing Creek Stone Farms to individually test cattle for BSE for export to the Southeast Asia market as they had requested. The demand there is huge. Our best USA beef is cheaper on their retail 

shelves than their own locally produced beef. 

Kansas State University did a study after losing our export markets to Southeast Asia and estimated it cost us 14 to 15 percent 

of our beef’s value. In 2006 Kansas’ value of beef production was 

$2.9 billion times a 14 percent loss: $416,000,000 of lost income to 

Kansas producers. The loss in Kansas income taxes, the 

$416,000,000 times an average of 6 percent paid by producers for 

a total of approximately $25,000,000 lost in state income taxes in 

2006 alone. If you take the producers $416,000,000 times an ecoVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00065 Fmt 6633 Sfmt 6601 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
62

nomic multiplier of five then approximately $2,000,000,000 was lost 

to our economies. These figures are just for 2006 in Kansas. 

Imagine the loss to all USA producers and economies. In private 

business customers dictate what they will purchase, not the sellers. 

Recently a judge ruled in favor of Creek Stone Farms for individual 

testing and USDA says it’s going to appeal so that it will still not 

be allowed. Simply put, it’s not about economics because a $50 test 

yields approximately $150 in value. 

Another recent example of USDA working against me as a producer is USDA trying to tie mandatory identification to country of 

origin labeling. A simple hot iron brand will suffice for COOL identification and cost producers very little. Individual ID would be 

much more expensive to producers, it’s hard to implicate and it 

would stop COOL in the long run. Just as the packers have told 

USDA to do. Our beef customers and producers want mandatory 

COOL implemented in the USA and deserve to get what they want, 

whether they’re here or overseas. So please support mandatory 

COOL. Current law prohibits ID use as verification for COOL so 

please don’t let it happen. It’s unnecessary and unintended. 

Captive supplies by packers depress live cattle prices. As captive 

supplies go up, live cattle prices go down. 

Without the use of captive supplies, packers will still have the 

same volume of cattle available to them as before. They would just 

have to bid on them in a true, live marketplace. I would encourage 

you to support legislation that limits captive supplies by meat 

packers because it will improve producer’s profits. 

Let me state in closing that consolidation and vertical integration 

has not been good, in general, for production agriculture on the 

rural economies. If we stay on the same trail as we’ve been on, 

then rural America will suffer even more. We must make some 

changes to improve profits. I’m not alone in my thoughts and opinions and thank you very much for your time and consideration. 

[The prepared statement of Mr. Robbins follows:]

PREPARED STATEMENT OF LEE ROBBINS, DIRECTOR, KANSAS CATTLEMEN’S

ASSOCIATION; COW/CALF PRODUCER, YATES CENTER, KS 

Honorable Congresswomen and Congressmen,

I am Lee Robbins, a 4th generation cow/calf producer from Yates Center, Kansas. 

I am a Director for the Kansas Cattlemen’s Association and a USD 366 School 

Board Member. Thank you for the opportunity to share with you some of my concerns about the beef business. 

My biggest challenges are not with the production of beef, because I know I can 

compete very well as a producer. But instead, my challenges lie in the marketplace 

Previous rules by USDA have been detrimental to rural economies. I am convinced that the four major packers control USDA whenever a meat issue is at stake. 

For example, USDA not allowing Creek Stone Farms to individually test cattle for 

BSE for export to the Southeast Asia market as they had requested. The demand 

there is huge. Our best USA beef is cheaper on their retail shelves than their own 

locally produced beef. 

Kansas State University did a study after loosing our export markets to SE Asia 

and estimated it cost us 14–15% of our beef’s value. In 2006, Kansas’s value of beef 

production was $2,971,488,000.00 × 14% loss = $416,008,000.00 has lost income to 

Kansas producers. The loss in Kansas income tax = $416,008,000.00 × 6% average 

paid by producers = $24,960.000.00 in lost state income taxes in 2006 alone. If you 

take the producers loss of $416,008,000.00 times an economic multiplier of five, and 

then $2,080,040,000.00 was lost to our economies. These figures are just for 2006 

in Kansas. Imagine the loss to all USA producers and economies. In private business customers dictate what they will purchase, not the sellers. Recently a judge 

63

ruled in favor of Creek Stone Farms for individual testing and USDA says it is 

going to appeal so that it still will not be allowed. Simply put, it’s not about economics because a $50.00 test yields approximately $150.00 increase in value. 

Another recent example of USDA working against me as a producer is USDA trying to tie mandatory identification to COOL. A simple hot iron brand will suffice 

for COOL identification and cost producers very little. Individual ID would be much 

more expensive to producers is hard to implicate and would stop COOL in the long 

run. Just as the packers have told USDA to do. Our beef customers and producers 

want Mandatory COOL implemented in USA and deserve to get what they want 

whether here or overseas. So please support Mandatory COOL. Current law prohibits ID use as verification for COOL, so please do not let it happen. It is unnecessary and unintended. 

Captive supplies by packers depress live cattle prices. As captive supplies go up, 

live cattle prices go down. Without the use of captive supplies, packers will still 

have the same volume of cattle available to them as before. They would just have 

to bid on them in a true, live marketplace. I would encourage you to support legislation that limits captive supplies by meat packers because it will improve producer’s 

profits. 

Let me state in closing that consolidation and vertical integration has not been 

good in general for production agriculture and rural economies. If we stay on the 

same trail as we have been on then rural America will suffer even more. We must 

make some changes to improve producers profits. I am not alone in my thoughts 

and opinions. 

Thank you for your time and consideration.

LEE ROBBINS.

Mr. ETHERIDGE. Thank you, Mr. Robbins. Let me thank each of 

our panelists for your comments and I will recognize myself for 5 

minutes as we move to some questions now. 

I want to first make a comment regarding the testimony of Mr. 

Childs and Mr. Parker. All of you mentioned in your comments and 

in your testimony about the challenges facing farmers in rural 

America as it relates to health care, about the growing costs of 

health care and health care insurance, how that affects Americans 

in the long run and how expensive it is. I wish there was something we could do in the farm bill to help that. I think all those 

in the audience would appreciate that as well. However, unfortunately, costs have gone up. However, that is not in the jurisdiction 

of those of us within this farm bill. That’s not our jurisdiction. 

But I do appreciate, let me say, because your testimony will be 

available to us and we appreciate you sharing your personal experiences. We can’t solve it in the farm bill, but we have to find solutions to these problems, not just for farmers, but for all Americans. 

It is a real challenge and I just want to require all of us who work 

not only in agriculture, but in other areas as well, help Americans 

have the necessary insurance they need. 

Mr. Pracht, to you and Mr. Childs, in both your testimonies you 

called for increasing market loan rates and consequently marketing 

of loan rates and loan deficiency payments. Some, including the 

Administration, caution that going in that direction is provocative 

and could increase new challenges to our farm programs in the 

WTO, World Trade Organization. What do you think about this argument and why do you think loan rates need to go up? 

Mr. CHILDS. I’m not sure I understand your question totally. The 

loan rates and target prices, I’m not sure how they were set in 


11024031
64

1996 and what basis they were. Were they based on cost of production, yield, revenue? I’m not sure how they were based so, therefore, I’m saying that the costs of that have gone up, I know, so if 

that’s—if the target prices and loan rates were based on that, then 

obviously those should go up also. 

Mr. ETHERIDGE. But when you move toward—the Administration’s position on this is if you move toward higher loan rates then 

that tends to increase production in those areas. Even if they don’t 

do it in the marketplace, they wind up under the loan which then 

creates the problem for the long term costs. 

Mr. CHILDS. For the long term costs of the program? 

Mr. ETHERIDGE. Yes, yes. 

Mr. PRACHT. I mean, it’s part of the safety net that needs to be 

around. You know, that’s just one thing we’d have now that I don’t 

want to lose, but if there’s another better source of means for doing 

it, I’d be all for it. And, yes, what you’re talking about would be 

cost—it’s costly. 

Mr. ETHERIDGE. That was the Administration’s position in there. 

Mr. CHILDS. What is the true cost of that loan to the Administration? 

Mr. ETHERIDGE. And I don’t know that number. 

Mr. CHILDS. I don’t either. 

Mr. ETHERIDGE. And I don’t know if there’s anyone out there who 

knows how they set it in 1996. We need to find out as we start 

moving forward. With that I will yield to the gentleman from Kansas, Mr. Moran. 

Mr. MORAN. Mr. Chairman, thank you very much. I’ll try to be 

brief and get us, as best I can, back on time. On health care, one 

of the things that’s in the Administration’s proposal that makes a 

lot of sense to me is in regard to rural development outside our 

commodity title, but no interest loans to critical access hospitals 

across the country. And there’s almost no community in Kansas 

that we don’t rely upon access to health care through what’s designated under Medicare critical access hospital. They have no additional money for building or for purchasing equipment and I have 

been very complimentary to the Administration at least in that 

proposal in regard to the farm bill. 

Mr. Childs, you know my ag person, Aaron Pelka, well. Would 

you make sure the two of you get together. I want to explore further this land versus equipment sale because I’m certain I don’t understand what you’re telling me: about how if you sell equipment 

it’s treated differently than if you sell land. And I think that’s what 

you’re telling me. Is that true? 

Mr. CHILDS. Yes, if you buy equipment you depreciate it. 

Mr. MORAN. The purchase of the equipment that we’re talking 

about, not the tax consequences of the sale of that equipment. 

Mr. CHILDS. I work with an older generation that would like to 

sell his machinery equipment to a young farmer. All right. If he 

does that, most of the time that equipment is depreciated down to 

zero. If he has a hundred thousand dollars worth of equipment, it’s 

recaptured in depreciation. That is all taxed in the first year of 

that contract. 

Mr. MORAN. And you’re talking about the tax consequence to the 

seller. 

65

Mr. CHILDS. To the seller, yes. 

Mr. MORAN. Mr. Meisinger, I may borrow your line. You got a 

good political line: Midwest farmer versus Middle East terrorist. I 

don’t have to give you credit for it. I’m going to use it regularly 

now. But let me ask you, you’re a cattle producer and yet are talking about the benefits of ethanol. How do you see it as a cattle producer when your input costs are increasing due to the cost of corn 

or grain. 

Mr. MEISINGER. I’ll respond to that because a cattle producer 

raising cow/calf so the impact to me is not as direct as someone 

who would be feeding. But from my perspective an opportunity to 

finally see, from a grain producer’s perspective, the opportunity to 

earn a profit for once on the product that we raise looks good finally for once that we can—I can support my family hopefully because of the increased price that we receive. Will it hurt the cattle 

producer? Yes, he’s been making money and I’ve been making 

money on the cow/calves that I raise. Will some of that profit come 

out of the cow/calf? Yes, it will. But for me, the opportunity to see 

an increased income and a profit because of the grain that I 

produce is good. 

Mr. MORAN. I have been very surprised. You know, the criticism 

of ethanol now is that it’s increased the price of corn. That’s exactly 

why we got interested in producing ethanol is because of the price 

of corn. And so I remain a strong supporter of renewable fuels for 

a number of reasons, but it originally started out, how do we help 

farmers have some profitability for the commodities they grow. In 

that regard about input costs, one of the reasons that the amount 

of money that’s available to the commodity title in drafting the 

commodity title in the next farm bill is that commodity prices are 

higher. Therefore, as they score they create a baseline. The amount 

of money that we have to spend on this commodity title gets based 

upon the amount of money we spend today under the farm bill. It’s 

less because of higher commodity prices. There ought to be a way 

we can change that and some of you suggested—Mr. Childs suggested about how we capture what we’re not spending and save it 

for the future. 

Let me ask this question because much of what the debate in 

Washington has been, we’ve heard a bit of this from USDA: is that 

everything in agriculture is going well with the commodity prices. 

But what I fail to ever hear anybody talk about is the increasing 

input costs. And so as a producer perhaps you could explain to me 

what the consequences are of higher fuel, fertilizer, natural gas 

and other input costs. Has the increasing commodity prices that 

you’re receiving for your commodities, has that more than offset 

the increasing costs of production? 

Mr. MEISINGER. Not yet because we haven’t raised the crop to 

sell into that higher market yet. It will help, but the increase in 

costs that we’ve withstood the last 2 or 3 years is not going to be 

long term sustainable for us at the price that we were receiving for 

our products. It took out the profit margin. There was basically no 

profit. And $1.70 corn across the scale, last year 40¢ nitrogen, it 

did not compute. So the increase in grain prices will hopefully—if 

we can have something to sell into that—hopefully help offset those 

66

extravagant prices because I don’t see them coming down unfortunately. 

Mr. MORAN. Yeah. We’ve tried to explain to the Administration 

and others that the consequence of higher prices unfortunately is 

lower prices in the future and we know the cycle will continue and 

you cannot base the farm bill upon commodity prices that they already take. Thank you, Mr. Chairman. 

Mr. ETHERIDGE. The Congresswoman from Kansas. 

Mrs. BOYDA. I’d just like to again thank you all for doing this in 

front of everyone and getting it on the public record. And I’d like 

to highlight some things that I’ve heard out in the field so we make 

sure that in the many comments that you’ve made, I’d like to pull 

out a couple. 

We are working on an emergency haying provision in the conservation credit. And Jerry asked—Mr. Moran asked, too, if that’s 

what we were talking about, yes. So your voice has been heard on 

that and that amendment is going in. And I’d like to make sure 

that each one of the panelists understand today what we’re talking 

about and why we need some provision to allow some emergency 

haying. Thank you for helping. I didn’t understand the depreciation 

either and I appreciate getting that done. 

And then one thing that I have heard repeatedly, with the anxiety over the FSA and the NRSC offices is the computer systems 

and I’d like to make sure that that’s duly noted that we really need 

to make some upgrades on our computer system. So as you’re making trips back and forth and now over a few more counties that, 

in fact, we have computer systems that do work. 

I’d like to talk about, when you were talking about, Mr. Robbins, 

competition and what—again this is one of the very, very pervasive 

things that I’ve heard up and down the district as I’ve been out 

talking—that our rural producers are lacking that truly competitive market. And I’d like for you to just again talk to me about 

when you can sell, how you sell, what the day to day looks like for 

you when you’re trying to get out there and sell your cattle. Do you 

feel like you have an open and free market to do that; a competitive marketplace? 

Mr. ROBBINS. Well, when I market my cattle I use Superior Livestock Auction which is the video auction and I also have a couple 

of local markets that are relatively close. And I market most of my 

production through those tools. I also hedge on the board of trade. 

So as far as my individual market there, I feel pretty well covered. 

Now if I decide I want to take my cattle out West and feed them, 

that’s where I get pretty scared because I’m at the mercy of, as I 

said, the packers. And you’ve usually—you’re in a set time limit. 

When they’re ready to go, if something bad happens in the market 

that’s caused by who knows what, you’ve got only a limited amount 

of time to market those cattle. Now as far as if they’re in my position at home, I can buy some time. 

Mrs. BOYDA. Specifically what would you have the Agriculture 

Committee do? 

Mr. ROBBINS. Well, pass country of origin labeling. I think that 

would definitely help us. And try to stop some of the consolidation 

in the packing industry. I think that would help tremendously. It’s 

67

not an easy job to do, but I think that will help add to our profits 

and our profits are our profits. 

Mrs. BOYDA. And what I hear again around, and I don’t mean 

to be putting words in your mouth, but I hear often about captive 

supply and how in fact that’s—could you address that or what 

would you have——

Mr. ROBBINS. Definitely. 

Mrs. BOYDA. What would you have the Agriculture Committee do 

about that? 

Mr. ROBBINS. I would hope that it could be legislated to where 

the packers can only purchase the cattle within 14 days of slaughter. They can’t own them prior to that because it adds, like I said, 

to their captive supply and that’s how they help manipulate the 

market and depress the market. 

Mrs. BOYDA. Thank you. I would just come back on a different 

subject, too, we were talking about the three legs of our farm subsidies. We heard earlier in the first panel about the direct payments. I didn’t hear that in this particular panel as much. Real 

quickly and I only have a few seconds left, do I hear that same 

from you about direct payments? Or are you again in the countercyclical versus the LDP’s as the longer legs of that stool? 

Mr. PARKER. I think personally that the direct payments are 

much superior because when you don’t have crops it’s hard. And I 

know I’ve been in situations where I’ve been with friends from Illinois raising 230 bushel crops and we’ve raised 40 or 50 on some 

drought and they get a huge LDP payment and we don’t, and I just 

think it’s a fairer way. However, I would like to comment on the 

LDP’s because they are monies that come in the first part of the 

year and the last part and this year the government cut those percentages down where we only got 20 or 30 percent of the LDP at 

the first of the year, which is the time when you need the money. 

Mrs. BOYDA. I yield back the lack of balance of my time. 

Mr. CHILDS. I might comment that the total dollars and the stability of it is probably more important than the amount. 

Mr. ETHERIDGE. The gentleman from Iowa. 

Mr. KING. Thank you, Mr. Chairman. The solution for everybody 

out here is more dollars per acre. You just have to figure out how 

to get that. So we are trying to figure out how to get that all together and I appreciate that, but I wanted to comment, Mr. Childs, 

I think you said the single most important thing here and it’s 

something that maybe you think that was redundant to us, but, 

you said: ‘‘We have entrusted you with a tremendous responsibility 

to draft and pass ag legislation.’’ And I think it’s important that 

that’s reiterated because that needs to be on our conscience at all 

times. And even though we get involved in the policy side of this, 

but that little reminder brings that back up to the top. That’s the 

purpose of this and it is a high responsibility. I wanted to just note 

that this panel heard this. And I appreciate that. 

Now, Mr. Pracht, I wanted to talk with you a little, if I could, 

about COOL. A hundred percent positive producer, you’re a hundred percent positive producers wouldn’t have to pay for it. I mean, 

I appreciate that sentiment and that thought, but how in the world 

would we ever get there. So does that mean to me that you’re—I 

mean, I have to interpret that means you’re opposed to COOL beVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00071 Fmt 6633 Sfmt 6601 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
68

cause I can’t imagine how we’d ever be a hundred percent positive 

that it wouldn’t be passed on to the producer. 

Mr. PRACHT. Yeah, I don’t know either and that’s a question nobody really knows. COOL is good. You know, putting the United 

States logo on our meat and stuff, there’s nothing wrong with that 

at all, but I don’t want to be the one that has to maybe, in the end 

run, pay for it as coming out of——

Mr. KING. But you don’t really have advice for us on how we’d 

ever be sure that the producer isn’t paying for it. 

Mr. PRACHT. That’s exactly——

Mr. KING. And when I look in the meat case in Washington, D.C. 

and I see Australian steaks that are porterhouses at $16.25 a 

pound and U.S. T-bones at, say, $12.25, what should I draw for my 

conclusion there; are they marketing Australian beef? 

Mr. PRACHT. Yeah, they are. 

Mr. KING. And so there are two sides to that coin. They may not 

be equal. I just want to point that out. And then, in trying to move 

along here at the request of the Chairman, and I appreciate 

everybody’s testimony. I wanted, if I could, to turn to Mr. Robbins. 

I want to tell you, I agree with your view on USDA’s prohibition 

on BSE testing at Creek Stone. The government should never intervene in a value added endeavor by a producer or a packer or a 

marketer, especially because there was no down side to that. It was 

their opportunity to add value to their product and USDA stepped 

in. So I agree with the court decision. I agree with you, Mr. Robbins. And I wonder, would you agree with that statement? 

Mr. ROBBINS. Yes, sir. 

Mr. KING. And then the Creek Stone operation today, is there 

anything that prevents any of the packers from adopting a COOL 

program voluntarily? 

Mr. ROBBINS. Not to my knowledge. 

Mr. KING. But you’ve got some figures here that show that the 

BSE testing, I presume that’s what you’re referencing, was $50 a 

head and there’s $150 upside to the marketing and I don’t challenge that. That seems reasonable to me. Creek Stone then could 

also do country of origin labeling on the livestock to pay a premium 

if they could find a marketing opportunity to compete against that 

Australian beef, could they not. 

Mr. ROBBINS. They could and, in fact, now that I give it more 

thought, that’s already being done. They just don’t label it. Maybe 

they do label it as USA beef also, but they have their own logo just 

as Tyson has on his that identifies it as their meat product. 

Mr. KING. At least Creek Stone, but does it say U.S. beef born, 

raised, fed and slaughtered. 

Mr. ROBBINS. I can’t answer that. I don’t know that for sure. 

Mr. KING. So the bottom of my question is if there’s a marketing 

advantage to COOL, how come I don’t see anybody using that out 

there now? I mean, it’s clear when it’s BSE testing and marketing 

to Asia. So why don’t we have examples anywhere, even the smaller private packers, that have been at odds with some of the larger 

operations? 

Mr. ROBBINS. I assume there probably is and I wouldn’t say that 

Creek Stone is not labeled USA beef. I know it’s identified as being 

69

produced in the United States and totally produced here and processed here. 

Mr. KING. I think——

Mr. ROBBINS. The problem is they can’t test and that’s where you 

lose—that’s where they lost their market to Japan. 

Mr. KING. They can’t actually even trace, though, today, can 

they? 

Mr. ROBBINS. They can. 

Mr. KING. Well, not in a market efficient fashion where you’d 

hang them on a hook and say these are U.S., these came from Mexico as feeders, these came from Kansas as feeders. I mean, we really can’t do that effectively at a marketing situation, can we. 

Mr. ROBBINS. They can. Yes, sir, they can. 

Mr. KING. How are they doing that? 

Mr. ROBBINS. They run it all through their plant primarily. 

Mr. KING. How do they trace back to premises of origin? 

Mr. ROBBINS. They’re tied in real close with the individual producers. 

Mr. KING. Thank you very much. Mr. Chairman, I yield back. 

Mr. ETHERIDGE. The gentleman’s time has expired. 

Mr. Smith, 5 minutes. 

Mr. SMITH. Thank you, Mr. Chairman. Mr. Parker, if I might ask 

you some questions, and let me just begin by saying that as I crisscross the Third District of Nebraska I would say the biggest concern in agriculture is inputs right now. Doesn’t matter how high 

the price of corn is, with the increasing amount of inputs there’s 

a great concern. Now you advocated for a price floor for petroleum. 

Let me also say, just give you a background of my approach here 

I think it’s in the consumer’s best interests that we have good ag 

policy so we have an affordable, efficient and available food supply. 

Can you tell me how a price floor for petroleum would be in the 

best interests of the consumer. 

Mr. PARKER. I’m sorry, I guess I don’t know if the word advocate 

is proper. I have concerns about it. The people that have invested 

in petroleum plants, especially bio-diesel plants and ethanol plants; 

having any protection of not being sold out and by not having some 

type of a floor. And I’m not the original person that I heard it—

actually I heard this from the Governor of Montana, I think, and 

he was concerned about liquid coal. But his concern and he said in 

his statement that you don’t see Wall Street investing in these 

plants. You see individuals. And the reason they don’t is because 

there’s no protection for it. They’re not going to put their money in 

where they could be sold out in a 6 months time and I—personally 

I can’t see——

Mr. SMITH. Sold out as in closure. 

Mr. PARKER. As if the OPEC nations decided that we were putting too much and weren’t selling enough petroleum base to the 

United States, what would be the fastest way to increase that 

would be just to cut the production—increase the production or cut 

the price in crude oil in the United States, which our consumers 

would buy the cheapest regardless of the other economic advantages and put a real strain on the plants that we have and the people that have investments in these plants. I just think that we 

ought to be aware of that as other things. 

70

Mrs. BOYDA. Would you yield, please, just a moment. 

Mr. SMITH. Yes. 

Mrs. BOYDA. But you’re not suggesting that we have a price floor 

for oil. If the price of oil comes down that’s a good thing. What 

you’re suggesting is we have a price floor from an investment 

standpoint so people know if it goes below this that someway or another we are able to withstand that. Is that your suggestion? 

Mr. PARKER. Yes, I’m talking, particularly, about imported oil, 

imported crude. Just protect the people that have their investments 

in ethanol plants. A number of people in rural areas have really 

invested heavily in these plants and I could see what 6 months 

would do. 

Mr. SMITH. I mean, your written testimony, as well as your 

verbal testimony, did state the implementation of a price floor in 

oil imports. And I’m fearful of government intervening at the extreme cost to the consumer and especially ag producers. I was talking to a retailer the other day who talked about the price controls 

of the early 1980’s saying that retailers could not make more than 

30¢ per gallon. And when in actuality it was roughly a 5¢ margin 

and so what we found is everyone raising their margins up to 30¢ 

per gallon. That is extremely concerning to me and the advocacy 

of a price floor on oil imports does scare me. Thank you, Mr. Chairman. 

Mr. PARKER. Can I make one comment, please. 

Mr. ETHERIDGE. Sure. 

Mr. PARKER. I guess, like I said, the Governor from Montana 

brought this up and I thought about it. I don’t know if that is the 

thing that we need to use. I just think that you as Congress-people 

are really, you know, you’re supporting bio-fuels and I am too, but 

I think we really need to be concerned about the investment we’re 

putting in these plants and whether it’s based on the floor of oil, 

we do have some type of a base on our wheat and our corn, et 

cetera, that is logical. 

Mr. ETHERIDGE. Thank you. And let me thank each of our panelists today for coming and being—both panels. You’ve done an excellent job. I think this has been a good hearing and now I’m going 

to ask whoever will set the mic up. We’re fortunate today to have 

with us the Kansas State Secretary of Agriculture, Mr. Adrian 

Polansky. And I would ask him to come forward and make any 

comments he would like to make before we close the hearing. 

STATEMENT OF HON. ADRIAN J. POLANSKY, SECRETARY OF 

AGRICULTURE, STATE OF KANSAS, TOPEKA, KS 

Mr. POLANSKY. Good morning, Chairman Etheridge and Members of the Subcommittee. Thank you for hosting the hearing today. 

Kansans are certainly proud to have two Members of this important Subcommittee: Ranking Minority Member Jerry Moran and 

Representative Nancy Boyda. Both have strong interests in success 

of Kansas agriculture. 

As Kansas Secretary of Agriculture, an active farmer, father of 

an active farmer and daughter-in-law with two grandsons hopefully 

growing roots in that good Republic County soil for another generation, I represent a diverse agriculture that is a national leader in 

the production of wheat, corn, sorghum and soybeans. And as you 

71

know, we are a leader in livestock production. We’re also moving 

toward leadership in cotton production. In 2005 we produced 

87,700 bales of cotton placing us 17th in cotton production. We 

have also climbed to 18th in milk production. Cash receipts for our 

farm marketings were nearly $10,000,000,000 in 2005. And Kansas 

ranks 7th in food farm product exports, which were valued at $2.7 

billion. I support the work of the Kansas Farm Bill Coalition and 

their consensus recommendations on the 2007 Farm Bill. 

Kansas agriculture continues to be a significant contributor to 

the economic well-being of our state. We have an agriculture tradition and we believe the future lies in our fields. 

Increasingly agricultural resources provide raw materials for a 

broad range of nonfood products such as chemicals, fibers, construction materials, lubricants and fuels. Bio-based and bio-energy products provide new and expanded markets for agricultural feed 

stocks. They will reduce our nation’s dependence on petroleum and 

other imported materials and diversify our agriculture. 

The farm bill is vitally important to the future of Kansas agriculture, to our nation’s security and to our rural communities. Also, 

to be equitable, it must be tailored to fit diverse agriculture from 

Kansas to Florida to Alaska. 

I will leave the budgetary issues to the Members of Congress and 

will focus on what I think deserves to be looked at to be a part of 

the legislation. 

First and foremost, the provisions of the next farm bill must comply with the World Trade Organization rules of trade between nations. 

After that we must ensure a viable safety net for farmers. Reducing the protection offered by the existing safety net is unacceptable. 

Production costs, including the cost of land, as you’ve heard, fuel, 

fertilizer and other inputs, have increased dramatically since the 

current farm bill was enacted. The reality is that we have already 

reduced dramatically the effective safety net since passage of the 

last farm bill. Crop farmers cannot survive in the future if we’re 

going back to prices livestock producers were historically accustomed to, and that is a new reality. 

Preparing for a new generation of farmers is a necessity, not an 

option. Beginning farmers are most at risk if the safety net is 

weakened. New farm policy must provide landowners with tax benefit for selling to beginning farmers. We must also streamline and 

enhance the Farm Service Agency beginning buyer finance program. Finally, we must allow beginning farmers equal crop insurance risk protection. 

While the bulk of Kansas agriculture produces wheat, corn, soybeans, sunflowers and sorghum, the value of our specialty crop production has doubled in the last 5 years. The Specialty Crop Block 

Grant Program first established in the current farm bill should be 

enhanced. I also believe the Farmers Market Nutrition Program is 

worthy of enhancement, that risk management protection should 

be improved and that farm to cafeteria programs should be more 

firmly established. Risk management tools must continue to be improved and a permanent disaster program provision should be included in the next farm bill. Conservation costs to your program 

72

should be strengthened and a meaningful working lands program 

should be enacted. 

It is time to look at enhancements to the Conservation Reserve 

Program. For the least fragile parcels of land enrolled in the CRP, 

USDA should allow up to 2⁄3 of those acres to be used to produce 

energy crops under no-till practices. I believe this has potential to 

enhance wildlife benefits and maintain the conservation impacts 

while providing an additional income for the farmer and freeing up 

additional Federal budget resources for CRP involvement of our 

most fragile lands. 

Strengthening the viability of America’s farm and ranch operations benefits the rural economy. A program that provides funding 

for local, state and farm level programs to encourage innovative 

marketing strategies, new business ventures and market or product development is needed. It is also imperative that we increase 

Federal investment in research of cutting edge technology to keep 

us competitive in the world market. 

The farm bill also must make a strong commitment to an ongoing, aggressive, renewable energy initiative. We must move away 

from our dependence on foreign oil and reap the positive economic 

impact renewable energy holds for our environment and for our nation’s farmers and rural communities. 

Biotechnology can help answer the world’s need for safer, more 

abundant and more nutritious foods. It can play a part in developing competitive cellulosic ethanol production and it can give us 

crops that require less water, important for states like Kansas. 

USDA, FDA and EPA can help us reach those goals sooner with 

additional funding that will allow them to improve and speed up 

the permit approval processes. 

Finally, we must eliminate the unfair prohibition on the interstate sale of state inspected meat to create new opportunities for 

small businesses in rural communities. It also is a matter of fairness, since our foreign meat processors that are considered equal 

to federally inspected plants may sell their products throughout the 

entire United States. 

The upcoming debate on farm policy is an opportunity for us to 

develop policy that preserves existing food production, prepares for 

a new generation of farmers, and promotes new opportunities as 

agriculture continues to evolve to meet new needs. The challenge 

will be to accommodate many points of view without becoming polarized in our mission. 

I thank you very much for the opportunity to be honored to 

present some comments this morning and certainly if there are 

questions, I’d be ready to stay after to address them. Thank you 

so much. 

[The prepared statement of Mr. Polansky follows:]

PREPARED STATEMENT OF HON. ADRIAN J. POLANSKY, SECRETARY OF AGRICULTURE, 

STATE OF KANSAS, TOPEKA, KS 

Good Morning Chairman Etheridge and Members of the Subcommittee.

Thank you for hosting this hearing today. We’re proud to have two Members of 

this important Subcommittee: Ranking Minority Member Jerry Moran and Representative Nancy Boyda. Both have a strong interest in the success of Kansas agriculture. 

73

As Kansas Secretary of Agriculture I represent a diverse agriculture that is a national leader in the production of wheat, corn, sorghum and soybeans. And, as you 

know, we are a leader in livestock production. We also are moving toward leadership in cotton production. In 2005 our growers produced 87,700 bales of cotton, placing us 17th in cotton production. We also have climbed to 18th in milk production. 

Cash receipts for our farm marketings were nearly $10 billion in 2005, and Kansas ranks seventh in farm product exports, which were valued at $2.7 billion. 

I support the work of the Kansas Farm Bill Coalition and their consensus recommendations on the 2007 Farm Bill. 

Agriculture continues to be a significant contributor to the economic well-being of 

Kansas. We have an agricultural tradition, and we also believe the future lies in 

our fields. 

Increasingly, agricultural resources provide raw materials for a broad range of 

nonfood products, such as chemicals, fibers, construction materials, lubricants and 

fuels. Bio-based and bioenergy products provide new and expanded markets for agricultural feedstocks. They will reduce our nation’s dependence on petroleum and 

other imported materials, and diversify our agriculture. 

The farm bill is vitally important to the future of Kansas agriculture, to our nation’s food security and to our rural economies. Also, to be equitable, it must be tailored to fit diverse agricultures—from Kansas to Florida and Alaska. 

First and foremost, the provisions of the next farm bill must comply with World 

Trade Organization rules of trade between nations. After that, we must ensure a 

viable safety net for farmers. Reducing the protection offered by the existing safety 

net is unacceptable. Production costs, including the cost of land, fuel and fertilizer, 

have increased dramatically since the current farm bill was enacted. The reality is 

that we have already reduced the effective safety net significantly. 

Preparing for a new generation of farmers is a necessity, not an option. Beginning 

farmers are most at risk if the safety net is weakened. New farm policy must provide land owners a tax benefit for selling to beginning farmers. We also must 

streamline and enhance the Farm Service Agency’s beginning farmer finance program. Finally, we must allow beginning farmers equal crop insurance risk protection. 

While the bulk of Kansas agriculture produces wheat, corn, soybeans, sunflowers 

and sorghum, the value of our specialty crop production has doubled over the last 

5 years. The specialty crop block grant program, first established in the current 

farm bill, should be enhanced. I also believe the farmers’ market nutrition program 

is worthy of enhancement, that risk management protection should be improved, 

and that farm-to-cafeteria programs should be more firmly established. 

Risk management tools must continue to be improved, and a permanent disaster 

program provision should be included in the next farm bill. Conservation cost-share 

programs should be strengthened, and a meaningful working lands program should 

be enacted. 

It is time to look at enhancements to the Conservation Reserve Program. For the 

least fragile parcels of land enrolled in the Conservation Reserve Program, USDA 

should allow up to 2⁄3 of those acres to be used to produce energy crops under notill practices. I believe this has the potential to enhance wildlife benefits and maintain conservation impacts, while providing additional income for the farmer and 

freeing up additional Federal budget resources for more CRP enrollment of the most 

fragile lands. 

Strengthening the viability of America’s farm and ranch operations benefits the 

rural economy. A program that provides funding for local-, state- and farm-level programs to encourage innovative marketing strategies, new business ventures and 

market or product development is needed. It also is imperative that we increase 

Federal investment in research of cutting-edge technology to keep us competitive in 

the world market. 

The farm bill also must make a strong commitment to an ongoing, aggressive renewable energy initiative. We must move away from our dependence on foreign oil 

and reap the positive economic impact renewable energy holds for our environment 

and for our nation’s farmers and rural communities. 

Biotechnology can help answer the world’s need for safer, more abundant and 

more nutritious foods; it can play a part in developing competitive cellulosic ethanol 

production; and it can give us crops that require less water. USDA, FDA and EPA 

can help us reach those goals sooner with additional funding that will allow them 

to improve the permit approval process. 

Finally, we must eliminate the unfair prohibition on the interstate sale of stateinspected meat to create new opportunities for small businesses in rural communities. It also is a matter of fairness, since foreign meat processors that are considVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00077 Fmt 6633 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
74

ered equal to federally inspected plants may sell their products throughout the 

United States. 

The upcoming debate on farm policy is an opportunity for us to develop policy that 

preserves existing food production, prepares for a new generation of farmers and 

promotes new opportunities as agriculture continues to evolve to meet new needs. 

The challenge will be to accommodate many points of view without becoming polarized in our mission.

Mr. ETHERIDGE. Mr. Secretary, thank you for your comments and 

they will certainly be a part of the record. We appreciate that. Let 

me also thank again our panelists and all those who have been 

present. Before we close, I’m going to ask the Ranking Member, a 

good friend, if he has any closing comments he’d like to make. 

Mr. MORAN. Mr. Chairman, thank you very much. Again I thank 

my colleagues for making the effort to be in Kansas and to listen 

to Kansas farmers and ranchers. I know that Nancy and I have 

very much appreciated the extra effort that you made to be here 

personally. 

My assumption is that if anyone has any written testimony they 

would like to present to the Subcommittee, it will be made a part 

of the record and they need to present that to the Committee staff 

within the next 10 days; 30 days, 30 days it won’t be too late. I 

started to believe those time frames in Washington; 30 days will 

be fine. 

I also wanted to point out how much effort has gone in in Kansas 

to our farm groups, both Farmers Union and Farm Bureau, as well 

as all of our commodity groups coming together to create a coalition 

and to develop a uniform set of positions in regard to the next farm 

bill. That’s very much appreciated. 

We have three Kansans who are serving in national offices, national leadership: Greg Schelor is here. Just recently the National 

Chairman of the Grain Sorghum Producers. John Thaemert is here. 

He’s the President of the National Association of Wheat Growers. 

And we have Ken McCauley, who is the President of the National 

Association of Corn. I didn’t say the right words: National Association of Corn Growers. Thank you. And so Kansas is well represented on a national level, but I know again that Nancy and I 

would very much appreciate any input, advice and suggestions 

from any and all of you as we try to figure out what we do on behalf of Kansas agriculture. 

And I know that not every Kansan is a farmer or rancher, but 

there is not a Kansan who will not be affected by this piece of legislation. And there is no more important piece of legislation, no more 

important bill that will work its way through Congress this year 

that will affect the Kansas economy than this one. And so any help 

that you can give us to make sure that we have our feet on the 

ground and an understanding of what’s important and what matters to get the job done as best we can would be greatly appreciated. 

And again I appreciate the dose of Kansas common sense and 

good judgment that we have right before we leave for our nation’s 

capital. It’s a good thing. Thank you very much, Mr. Chairman. 

Mr. ETHERIDGE. Before we close, let me again thank each of you 

for coming. Thank Jerry and Nancy for their hospitality and for 

yours. They’ve done a lot of work in helping pull together witnesses 

75

for our staff and the hospitality of Kansas is as I’d always expected 

it to be when I visit here. 

And let me, I guess, expand what Jerry said. He said—he was 

talking about Kansas. The truth is this bill will affect every American. Whether they farm or not, they are consumers in one way or 

another. And it really reaches outside the borders of the United 

States for people around the world who really depend on American 

food products to separate them from hunger. So this is an important piece of legislation and certainly your input is appreciated. 

Under the rules of the Committee, the record of today’s hearing 

will remain open for 30 days to receive additional material and 

supplemental written response from witnesses to any questions 

posed by a Member of the panel and any other materials you may 

want to share and with that ladies and gentlemen——

Mr. SMITH. Just briefly, I promise. I made a joke about the Nebraska/Kansas State rivalry, but a great example of how we can 

work together——

Mr. ETHERIDGE. That will cost you greatly. 

Mr. SMITH.—is last year I toured the wheat research facility in 

Manhattan. Great opportunity not just for Kansas but to Nebraska 

wheat growers as well and we can share information. So I know 

that working together we can accomplish a lot. Thank you. 

Mr. ETHERIDGE. He’s trying to get out of the ditch. And when 

you’re the state next door you want to get out of the ditch real 

quick. 

Mrs. BOYDA. Amen. 

Mr. ETHERIDGE. Okay. With that this field hearing of the Subcommittee on General Farm Commodities and Risk Management 

stands adjourned. Thank you. 

[Whereupon, the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:]

76

77

PREPARED STATEMENT OF WILLIAM V. ‘‘BILL’’ HANSON, CHAIRMAN, CROP INSURANCE

PROFESSIONALS ASSOCIATION, WASHINGTON, D.C. 

Chairman Etheridge, Ranking Member Moran and Congresswoman Boyda:

I want to thank you for holding this important hearing here today. The policies 

that you have responsibility for have a direct and dramatic impact on so many people’s lives, and I think it is appropriate that have this hearing among us, and greatly appreciate your listening to the needs and concerns of rural America. 

I am Bill Hanson, and I have worked with and among farmers and the agricultural industry for most of my life. For the last 25 years, I have been involved with 

Crop Insurance at the state and national levels, working for FCIC/RMA and in the 

private industry as an agent, I also currently serve as Chairman of the Crop Insurance Professionals Association (CIPA), an association of agents from around the 

country who are dedicated to service and the success of the crop insurance program. 

As you embark upon the writing of a new farm bill, I want to emphasize the importance of our Federal Crop Insurance Program, and urge the Committee to be 

very careful not to undermine the program which is providing incredibly valuable 

risk-management tools for farmers. 

Before getting into this any further, I should note that whereas the farm bill expires in September of 2007, and therefore must be reauthorized, the Federal Crop 

Insurance Act does not sunset. Crop Insurance has been deliberately kept separate 

from the farm bill because: (1) it is not meant to be viewed as a government program like the farm bill; and (2) it is a complex public-private partnership that 

should be considered separately and carefully. 

However, knowing that money (or lack of money in terms of the Federal budget) 

is an issue in the farm bill, and knowing that some are viewing crop insurance as 

a potential bank or source of offsets for other spending needs in the farm bill, I 

think that it is important people understand: (1) why the crop insurance baseline 

has increased; and (2) what are the potential ramifications of trying to take money 

out of the program—the point being that Crop Insurance is the wrong place to go 

for money needs in the farm bill. 

The reason the crop insurance baseline has increased is two-fold. First, it is because of the success of the program—more and more farmers are purchasing higher 

levels of insurance. This is exactly what Congress intended in 2000 when it passed 

the Agricultural Risk Protection Act (ARPA). Second, the increased commodity 

prices that farmers are enjoying means more risk to insure, which means higher 

premiums and therefore more premium subsidy which the government provides. 

The fact is that if a corn loss is sustained this year, instead of being indemnified 

at $2.00 per bushel for non-revenue policies or $3.03 per bushel for revenue policies 

(last year’s market), the producer will be indemnified at $3.50 per bushel for nonrevenue policies or $4.06 per bushel for revenue policies (this year’s market). It 

speaks volumes that even though premiums have increased this year, most farmers 

are still buying up at the same levels—they haven’t dropped coverage levels to make 

up for the increased cost—to me this says that they still find insurance to be necessary and a good deal. In any case, it would seem unwise to penalize the program 

for its success. 

The point is, to the extent you take away from either the delivery system, or the 

levels of support in the crop insurance program, the result could very well be a retreat from the ground we have gained since 2000, and an actual weakening of the 

farm safety net at the very time we are wanting to strengthen it. Is this really the 

goal of the farm bill? 

Crop Insurance today is an incredibly valuable risk management tool for the 

farmers I serve. Don’t misunderstand—the three-piece safety net of the 2002 Farm 

Bill is also important, but it is designed to provide a safety-net in times of low 

prices. Crop Insurance on the other hand is designed to be tailored to the particular 

risks on the individual farm, and the particular market risks of the day—and that 

is why it is so important for helping farmers mitigate and manage their real risks 

this year, when prices are generally high. 

Revenue products (CRC, RA) have allowed farmers not only to cover production 

risks, but market risks (declining prices) as well. These products not only allow you 

to protect down-side risks on both the production and market side, but it also provides the security needed to capture opportunities in the market. For example, 

many farmers have contracted corn 3 years out at great prices—and it is the Crop 

Insurance products that give them the certainty to do this. 

Finally, I think it is worth noting that the structure of the Crop Insurance program is no doubt a reason for its success—the partnership between the Federal Government and private companies which makes the products affordable; and the servVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00081 Fmt 6621 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
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ice-based competition among the agents who explain the products and provide essential advice in their service to farmers is critical. 

Farmers generally have challenges enough in managing their farm—and so it is 

helpful to have an agent who is surveying the many policies and products that are 

available and helping tailor those products to the particular needs of the farm. Good 

agents are particularly critical when storms come—as they inevitably do—and the 

farmer sustains a loss. Having an experienced agent who can manage the claim during these times is invaluable. 

In summary, while crop insurance isn’t new, it is more important than ever to 

thousands of farmers. The ability to tailor coverage to each individual operation, obtain coverage at a meaningful level and affordable price, secure the coverage from 

a local, trusted insurance professional, and know that the coverage is in place and 

the fact that it can be counted on for financial planning purposes all combine to 

make crop insurance the cornerstone of many farmers’ financial and risk management plans. These benefits of crop insurance always have and will continue to account for the success and acceptance of the program. 

Again, I want to thank you for the opportunity to appear before you today and 

prepare these remarks for your consideration. 

PREPARED STATEMENT OF JOE KEJR, PRESIDENT, KANSAS ASSOCIATION OF WHEAT

GROWERS, BROOKVILLE, KS 

Dear Honorable Chairman Etheridge and Subcommittee Members,

Thank you for the opportunity to provide written testimony regarding the 2007 

Farm Bill on behalf of the wheat grower members of the Kansas Association of 

Wheat Growers (KAWG). We have several members in the audience today who recognize this legislation’s large impact to the agricultural communities of Kansas. Our 

testimony provides an overview of our state’s wheat industry, our policy recommendations for the programs of the commodity title programs, as well as several 

recommendations for crop insurance. 

On average, Kansas is the largest wheat producing state. Nearly 1⁄5 of all wheat 

grown in the United States is grown in Kansas; this is why it is called the ‘‘Wheat 

State’’. Kansas is also the number one in flour milling in the United States. 

Kansas produces hard winter and soft winter wheat. Winter wheat planting in 

Kansas takes place in the fall, from late September through October. In the spring, 

the wheat comes out of dormancy with the warm weather and spring rain and grows 

to maturity. Kansas wheat is harvested in the summer, from late May through early 

July. 

Kansas wheat producers deliver enough wheat each year to bake 36 billion loaves 

of bread and enough to feed everyone in the world, over six billion people, for about 

2 weeks. One acre of Kansas wheat produces enough bread to feed nearly 9,000 people for 1 day, and we plant more than 10 million acres per year. 

The Kansas wheat industry is not only essential for feeding the world but looks 

forward to contributing wheat straw into cellulosic ethanol production in the near 

future. Maintaining our wheat industry contributes nearly 20,000 jobs, $1.9 billion 

to the state’s economy and the heritage that comes with being the ‘‘Breadbasket of 

the World’’. 

Through our policy development process, Kansas wheat growers participated in 

producing the National Association of Wheat Growers (NAWG) Title I Proposals 

which recommend a direct payment for wheat to be increased to $1.19 per bushel 

and that the target price be increased to $5.29 per bushel, while maintaining the 

marketing loan program as currently structured. 

This level is needed to provide an adequate safety net for wheat. Since 2002, 

wheat growers have ONLY received direct payments, not counter cyclical or LDPs. 

Two-thirds of Kansas wheat producers surveyed identified the Direct Payment as 

the most important program for their wheat operation. These fixed, reliable payments are non-trade distorting, depended upon by lenders for farm financing, and 

do not evaporate in a drought. 

According to USDA data, historical input costs for 2005 and 2006—the most representative of forecast production costs over the term of the next Farm Bill—averaged $215.79 per acre. The average yield, on the other hand, has stayed around 38 

to 42 bushels. Using these numbers, the average cost to produce a bushel of wheat 

is around $5.29 while the average market price over the term of the 2002 Farm Bill 

has been approximately $3.40 (2003–2005). While most wheat growers purchase 

crop insurance and rely on it heavily, affordable coverage is typically limited to 65 

to 70 percent of expected yield. Wheat growers expressed concern, therefore, about 

ensuring that a safety net exists for the other 30 to 35 percent of the crop. By proVerDate 0ct 09 2002 15:33 Mar 24, 2009 Jkt 041481 PO 00000 Frm 00082 Fmt 6621 Sfmt 6621 I:\DOCS\110-24\48169 SOLEM PsN: REBEKA
79

viding a safety net to wheat growers of $1.19 per bushel in the form of a direct payment, Federal farm policy can assure growers, their families and their bankers that 

they have a predictable and dependable safety net. 

KAWG has examined a number of revenue assurance programs but has yet to find 

one that will provide adequate support for wheat growers. These programs do not 

work well in areas like Kansas where we have widely variable climatic conditions 

and agriculture production yields. Because of those variable factors many Kansas 

crop acres are planted to wheat, a crop that endures those conditions. In order to 

meet WTO obligations, these programs are normally capped at 70 percent coverage—not viable coverage of risk from a business perspective. 

In fact, if a revenue assurance program had been a component of the 2002 legislation, wheat growers would have received a small payment in only 1 out of the past 

5 years. This is the same period of time that Kansas wheat farmers have incurred 

multiples crop disasters due to drought, flood and freeze. Thus none of the revenue 

scenarios that have been presented to this point provide any ‘‘safety net’’ for Kansas 

wheat farmers. 

Over the past 7 years, Kansas producers have developed an intimate relationship 

with crop insurance and this year we continue to have that connection. These experiences have gone into these policy recommendations for crop insurance. 

Through the drought western Kansas wheat producers have seen a significant decline in their t-yields. We join 20 other Kansas agricultural organizations in supporting that if a county is declared as a disaster, then the Risk Management Agency 

would plug in full t-yield or the farmer’s actual production history (APH), whichever 

is higher. This drought has also brought forward concerns with production history 

that combine continuous and summer fallow fields in the same unit. These are two 

separate production techniques that result in their own production history and they 

should not be lumped together. Additional concerns regarding production history include the ability to keep this history in situations where producers develop a cash 

rent arrangement with their landlords as they do with a share rent relationship. 

Finally, we believe that longer production histories result in more stability with regard to crop insurance claims. 

Through this year’s Easter freeze to central Kansas’ wheat crop, we have identified a need to redefine when a crop is heading vs. headed. In adjusting the crop for 

damage prior to the crop being headed, adjusters count every green tiller as tillers 

that will continue to produce to maturation. Wheat producers are well aware that 

this is never the case and that continued development of the plant will result in 

only a fraction of those tillers developing to full maturity. This procedure should be 

adjusted for scientific and actual production knowledge. Additionally, the RMA determination for a second crop on that field is too late. We would propose that RMA 

work with respected researchers to come up with more accurate date for determination of heading date. 

Administratively, our producer members recommend that RMA have state offices, 

similar to the Farm Service Agency and the Natural Resources Conservation Service, for closer contact with producers rather than regional offices. We would also 

suggest the inclusion of a state producer review Committee for this agency. 

Finally, we would like to share our support of Congressman Moran’s proposed 

amendments to the Conservation Reserve Program (CRP) and Conservation Reserve 

Enhancement Program (CREP). CRP has had a large impact on the state of Kansas 

and our rural communities with 3 million acres enrolled over the 20 years of the 

program. By allowing the harvesting of biomass resources from CRP acres for ethanol production, we will further our country’s goal of energy self-sufficiency as well 

as add to the economic development in our rural communities. 

Additionally, our state has developed a CREP for water conservation of the 

Ogallala Aquifer. Our rural communities developed with irrigated agricultural production and this plan for conservation will have a dramatic effect on them. Allowing 

dryland agricultural production on acres enrolled into this CREP will accomplish 

the goal of reducing irrigation through retiring over-allocated water rights while 

transitioning these economies into this lower input production option. Dryland production will support the local rural economy through continued agricultural production. 

Sincerely,

JOE KEJR, 

President. 


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1 U.S. Department of Agriculture, National Agricultural Statistics Service Agricultural Statistics Database, U.S. and All States Data—Cattle and Calves, 1994–2005. 2 U.S. Department of Agriculture, Economic Research Service, July 9, 2002. 

3 USDA Economic Research Service, ‘‘Beef Values and Price Spreads,’’ available on-line 

athttp://www.ers.usda.gov/briefing/foodpricespreads/meatpricespreads/.

PREPARED STATEMENT OF PAUL PENNER, VICE PRESIDENT, KANSAS ASSOCIATION OF

WHEAT GROWERS, HILLSBORO, KS 

Dear Honorable Chairman Etheridge and Subcommittee Members,

Thank you for the opportunity to provide written testimony to the Field Hearing 

held Tuesday, June 5, 2007 at the Campus Center at KSU Salina, 2310 Centennial 

Road, Salina, KS. We would like to provide our response to further inquiry of the 

panelists regarding the 2007 Farm Bill on behalf of the wheat grower members of 

the Kansas Association of Wheat Growers (KAWG). 

The discussion at the hearing included the impact of higher grain prices on operations with grain and livestock segments. As wheat producers we appreciate receiving higher prices for our crops in the marketplace but it does not lessen the importance of having a reliable safety net for agriculture production during low price cycles. During these up-cycles in crop prices, livestock producers choose wheat as feed 

grain and as a grazing option for livestock nutrition. 

Much discussion was held on the impact of government program payments on 

land values. All the value of agriculture land whether from the marketplace, program payments or recreation is eventually capitalized into value and rents. Land 

is a highly valued asset in our country as a stable investment and as valuable collateral for production agriculture that depends upon financing. Wheat producers 

have identified direct payments as a reliable system of Federal support for maintaining agriculture production on our land. 

The panelists clearly reiterated the importance of direct payments as compared 

to loan deficiency payments and counter cyclical payments. The wheat producers of 

Kansas have depended on these payments through the weather and market cycles 

of agriculture production and we insist that these payments be strengthened in the 

next farm bill. 

Regarding the discussion about repealing capital gains tax, wheat growers support the reduction of capital gains taxes. Additionally, some of the discussion of the 

Subcommittee meeting focused on potential incentives for young and beginning 

farmers. We would support a lower capital gains tax for land transfers and capital 

purchases to qualified beginning farmers. A capital gains tax incentive to sellers 

who transfer land and capital to a beginning buyer would assist with one of our primary concerns in agriculture, the future generation of producers. 

Regarding payment limits, wheat growers oppose further payment limitation reductions and would request a commensurate increase in the payment limitation to 

accommodate the direct payment increase. 

Thank you for this opportunity to provide comments. 

Sincerely,

PAUL PENNER, 

Vice President. 

PREPARED STATEMENT OF KEN WINTER, PRESIDENT OF THE BOARD, KANSAS

CATTLEMEN’S ASSOCIATION, JUNCTION CITY, KS 

On behalf of the Kansas Cattlemen’s Association, I appreciate the opportunity to 

provide comments on the challenges of Kansas agriculture as it relates to the farm 

bill. Kansas has a rich history of agriculture and is the second largest cattle producing state in the country. With over six million head of cattle in production each 

year, producers have a vested interest in the farm bill and current legislation. 

Background 

Since 1994, more than 122,000 cattle ranches and farms have closed down or left 

the beef cattle business.1 In 1997 the average family farm consisted of only 487, and 

farming and ranching families often depend on off-farm income for their livelihood.2

The rancher’s share of each retail dollar earned on beef was 47¢ in 2005, down from 

56¢ in 1993.3


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Family producers are efficient; however, control of the agriculture industry by 

large corporations has adversely affected family production. Independent cattle producers are at the mercy of large corporate packers. The Packer’s and Stockyards Act 

was introduced in 1921 to protect producers from of a small number of meat packers 

controlling the livestock markets. The act bans price discrimination and manipulation, and other unfair and deceptive practices; yet the Packers and Stockyards Act 

has not been enforced as acknowledged by the USDA Inspector General. His report 

detailed the failure on the part of the Grain Inspection, Packers and Stockyards Administration to enforce the Packer’s and Stockyards Act. 

Examples Within the Feeding Sector 

As a commercial cattle feeder I find it increasingly difficult to find real competition in the fat cattle markets. We are located in Dodge City, Kansas where there 

are two packing plants with in 2 miles of our front door, another located 70 miles 

to the south at Liberal, and one 60 miles West by Holcomb, Kansas. These plants 

have a slaughter capacity of well over 15,000 head per day. We have a thirty thousand head, one time capacity, feed yard and market from 1,000 to 3,000 head of live 

cattle to the packers each week. Our location would seem to be in the heart of demand for South West Kansas, but not so. 

Each week we put out a list of market ready cattle for the three packers, Excel, 

Tyson, and Farmland, to look at and bid on. Twenty years ago when the same physical facilities were owned by Excel, Hy Plains Dressed Beef, National, and IBP, we 

had four bidders weekly in our yard. Sometimes sleeping out overnight just to be 

first to get a list and bid on our cattle. Today IF three buyers show up at the yard 

they will come in Monday, Tuesday, or Wednesday, and more to get an inventory 

of available cattle in the industry than to bid on cattle. 

Excel is the only packer that consistently shows up each week with a bid on our 

cattle. National has not been to our yard for maybe 6 months, Tyson comes in most 

every week. Tyson and Excel show interest and indicate a willingness to buy cattle 

most every week, but when the trade takes place only Excel is timely with a true 

market bid while Tyson will call after the trade takes place to see if we have anything left over to sell at a discounted price. National would take all cattle that we 

would turn in on their grid or at the high of the week, but we refuse to sell that 

way. National’s grid cattle must be turned in on Tuesday, before any trade takes 

place, National has the right to start slaughtering the cattle Wednesday, again before any trade has been established, and the cattle are then priced according to their 

performance in the packing plant but based off of the cash price to be established 

sometime later in the week. You give the cattle to the packer and have no idea what 

the price might be. This is a far cry from having packers camp out on your door 

step just to get in line to bid. 


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In the industry today there are many undisclosed deals between packer and producer all with the promise of getting more money for the producer who enters into 

these arrangements but with no regard to the overall lowering of the market 

through reduced competition. Branded products are an excuse used by the packers 

to justify their arrangements to procure a consistent supply and quality of cattle. 

When in fact what this does is keep the packer from competing in the cash market 

to out bid other packers for these cattle. Producers will supply through breeding, 

feeding, sorting, or verifying what ever the packer is willing to pay most for. But 

the packer has found out that if he pays the same price for all cash cattle regardless 

of quality that he can drive producers into grid, formula, and branded programs to 

receive a premium over cash which encourages the best cattle out of the cash market leaving the lesser quality cattle to set the price on all cattle.

The reported cash market in my opinion/experience is much less than what is reported. When you take into consideration cattle sold at the high of the week and 

other similar undisclosed arrangements, cash may be as thin as 25–30% of cattle 

sales on any given week. If transactions took place like this on the CME or the 

CBOT people would go to jail, just ask Martha Stewart. When you drive on the 

highways across our country you must obey the laws for the protection and safety 

of all, as cattle producers we ask nothing more. We need enforceable rules that 

allow everyone to know what is going on. We need to know what is trading, to 

whom, at what price, and when. All need access to the market who have like product. Special deals, that include some and exclude others does not provide fair equitable access to the market place. 

The Kansas Livestock Association always responds with ‘‘we are not going to tell 

our producer how to sell cattle’’ which is the same as promoting these under the 

table deals between packer and producer which limits what other producers can do. 

Cattle need to sell in an open market system, where all hands are on the table.


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Opportunities for Congress 

It is imperative that the Congress mandate and ensure the proper enforcement 

of the Packers and Stockyards by establishing an Office of Special Counsel at USDA 

to oversee both investigations under, and enforcement of the Act. It is essential that 

Congress amend the P&S Act to prevent unfair or deceptive practices, to define ‘‘unreasonable preference or advantage,’’ and to correct a recent misinterpretation by 

the U.S. appellant court system: a meatpacker should not be allowed to avoid the 

P&S Act’s jurisdiction by claiming it engaged in unfair market practices (that are 

harmful to the economic wellbeing of producers) in order to maintain competitiveness with other meatpackers, that are likewise engaged in the same unfair practices. Producers need to be assured that Congress will not allow unfair and anticompetitive market behavior to take place. 

To maintain and increase the cash value of cattle, there needs to be an increase 

in competition and an enhancement of fair practices in the industry. Steps need to 


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require a certain percentage of daily slaughter to be purchased from the cash market. Congress needs to ensure that there is transparency among contracts between 

packers and producers. Competition is imperative to the livelihood of independent 

producers. 

PREPARED STATEMENT OF KURT KOCHER, CLOUD COUNTY PRODUCER, GLASCO, KS 

July 5, 2007

To Jerry Moran and Nancy Boyda;

The farm bill expires in Sept. of 07 and several things need to be continued in 

the new draft. Winter wheat will be planted as the new bill will be implemented, 

it concerns me that the crop insurance program which is an integral part of our marketing program, may change. This change may affect the way we do our risk 

management. Some of the area farmers were not aware there was a possibility of 

doing away with the subsidizing of their premiums. Their initial response was dropping it all together. I don’t believe this is the right answer. I equate it to a car that 

is out of gas and has a flat tire, you put in gas and fix the tire, you don’t shove 

it off the cliff. The costs that producers have to cover have continued to increase 

dramatically in the last year or so. Current crop prices will help offset expenses, 

to hopefully realize a respectful margin. What about future expenses and prices? 

The bottom-line is this: continue to support the crop insurance program and work 

to enhance it to make it a better risk management tool for producers to use. With 

good risk management by ALL producers a disaster assistance program would no 

longer be necessary. 

Respectfully submitted.

KURT KOCHER, Cloud County Producer. 

PREPARED STATEMENT OF EDIE DAHLSTEN, VICE PRESIDENT, KANSAS FARM BUREAU, MANHATTAN, KS 

Chairman Etheridge and Members of the Subcommittee on General Farm Commodities and Risk Management, welcome to Kansas! Thank you for the opportunity 

to appear before you today and share the views of Kansas’ farmers and ranchers 

as we enter this critical time for American Agriculture. My name is Edie Dahlsten 

and I serve as the Vice President of Kansas Farm Bureau. 

Kansas Farm Bureau is the state’s largest general farm organization, having 

40,000 members who actively earn their living from farming and ranching. Additionally, Kansas Farm Bureau is part of a nation-wide organization, the American Farm 

Bureau Federation, consisting of over six million members from all fifty states and 

Puerto Rico. 

My husband and I operate a 3rd generation family farm in McPherson County, 

Kansas where we produce wheat, soybeans, milo and corn on a 100% no-till operation. In 2000 we closed out a successful farrow-to-finish swine operation and 

changed our grain operation entirely to the no-till system. We, like so many in this 

part of the state, understand the all too recent reality of the challenges Mother Nature—farming’s best friend and worst enemy—can inflict on agriculture. Early this 

year we were optimistic and excited about the prospects for 2007. The wheat was 

beautiful, a full profile of moisture was ready for spring crops and in many parts 

of this state, agriculture was set for a banner year. The challenge began on Easter 

weekend, when much of the state experienced several days of crop-killing temperatures. The central part of the state—where you sit today—has been the most devastated with estimates of as much as 50% to 100% loss in many fields. 

We are here today to talk about how you can help best position production agriculture across Kansas and the nation to combat the unknowns at home and in the 

world marketplace. With that in mind, I want to share with you several solutions 

that Kansas Farm Bureau supports as you move forward in your discussions about 

the reauthorization of the farm bill. It is important to note that we like many other 

groups support the basic structure of the 2002 Farm Bill—it has worked well for 

many and can continue to provide with us with a strong foundation going forward. 

Supporting the Structure of Farming 

Solid foundations are important to success. In farming, operators rely on direct 

payments, counter-cyclical support, and marketing loan payments as the foundation 

for their businesses. The three-legged structure of our current safety-net should be 

maintained. 

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Direct payments represent a $5.2 billion investment according to the CBO baseline. This investment helps farmers meet the day-to-day capital requirements on 

their farms and ranches and provides consistency in net farm incomes. Direct payments provide stability which insures production agriculture against the inconsistent nature of commodity prices caused by fluctuations in the world market or 

weather. In the end, U.S. consumers benefit in that their small investment provides 

consistently affordable food, fiber, and increasingly, fuel. We support continuation 

of this essential element of the current program. 

While the Counter-Cyclical program of the 2002 Farm Bill has worked well in 

many instances, producers who have experienced yield reductions due to weather 

in times of higher prices have not benefited from the program. This is especially 

true in the northwestern counties of Kansas, where 6 to 7 years of drought conditions have resulted in few bushels harvested in a time where prices, especially for 

wheat, have been high, resulting in few payments when many producers needed 

them most. Likewise, at times, other producers have received payments when yields 

have risen but prices have been low so payments have been made even though farmers may not have needed the support. 

For those reasons, Kansas Farm Bureau supports the implementation of a revenue-based counter-cyclical program where payments would be triggered by a shortfall in state crop revenue rather than a shortfall in the national average price. This 

modification would allow the counter-cyclical payment to fulfill its roll as a key component of the farm safety net. 

Assistance for Those Who Need It 

One need not travel far from here to see the impacts of weather related disaster 

and thus the need for permanent assistance for those producers impacted. As you’re 

already aware, the current practice of ad hoc assistance seems to have run its 

course—they are difficult to pass and public perception is not necessarily well informed nor is it favorable. Kansas Farm Bureau supports the development of a 

county-based catastrophic assistance program available in counties with sufficient 

adverse weather to be declared disaster areas. The program, proposed by the American Farm Bureau Federation accomplishes several goals. First, by re-rating crop insurance and using a minimal producer fee, it provides coverage within existing 

budget baselines. As you all have heard as recently as the fall of 2006 from our 

President Steve Baccus, KFB is not completely enamored with the current structure 

or state of the crop insurance industry. We believe that in addition to the benefit 

of a permanent catastrophic assistance mechanism you also have the opportunity 

to inject competition and affordability into the crop insurance system during this 

process. 

Second, the AFBF catastrophic assistance program would focus on losses below 50 

percent of normal production for all crops—providing producers of any commodity 

with a baseline of coverage and protection. Additional crop insurance coverage could 

then be purchased up to traditional levels of coverage providing protection against 

production shortfalls. 

Ultimately, we believe that ensuring farm revenue through the counter-cyclical 

proposal above when combined with the standing catastrophic assistance program 

just discussed will result in an integrated and affordable farm safety-net for American producers. A shift which makes our producers better positioned to succeed in 

a global agricultural market. 

Accessing Markets and Trading Partners 

Part of the challenge in farming and ranching, like any business, is in identifying 

and securing consumers for our products. That need for new and expanding markets 

implies our participation in the WTO process. While some have begun these discussions with the concept that the United States should re-align its farm programs in 

anticipation of compliance with a future agreement in the stalled talks, we believe 

that approach to be premature. One of the tenants of our farm policy has always 

been its ability to level the playing field in the global market. We should not amend 

that practice based on unknown outcomes of the negotiations. Farmers and ranchers 

are willing to lower farm program payments as part of the WTO negotiations only 

when we can secure opportunities to sell products overseas. 

Second, until that agreement is finalized, we believe that it is critical to continue 

to provide Trade Promotion Authority to the President to facilitate our ability to 

identify and negotiate access to the markets of individual nations. Through this authority, we can continue to pursue opportunities in an efficient and effective manner 

until broader agreements can be reached. 

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Flexible Conservation and Energy Opportunities 

While we realize that this is not the Subcommittee with jurisdiction over conservation or energy. However, it’s not often that we have the opportunity to entertain Members of the House Agriculture Committee. Given that we wanted to mention several priorities of Kansas Farm Bureau in other areas. 

First, it’s important to note that our membership is well aware that stewardship 

of the land and success in today’s market are linked. With the rising cost of fuel 

and fertilizer it only makes sense to employ farming practices that minimize those 

input costs. To that end, many of our members have and continue to employ notill and minimum till practices, participate in CSP and EQIP, and to look for opportunities to maximize their values through enhanced water conservation. 

It’s the opportunity for water conservation that we are most concerned about 

today. The State of Kansas recently began negotiations with USDA to establish a 

Conservation Reserve Enhancement Program (CREP). The goal of that program was 

water conservation, and the target was an area of the state, above the Ogallala Aquifer, where water levels have declined to a critically low level. Part of the proposal 

would have allowed producers to dry land farm enrolled acres—this was rejected by 

USDA. We would ask for your assistance in clarifying the law so that where the 

goal of the CREP is water conservation, dry land farming could be allowed by 

USDA. 

The second conservation issue that we wanted to mention today is the concept 

that bio-mass products such as switch grass could be grown and harvested from 

CRP acres. We’re also supportive of this change which will facilitate continued expansion of the growing renewable energy segment. 

Finally, KFB believes that the new opportunities in energy represent a part of the 

future of agriculture and rural America. We’ve signed on as a partner in support 

of the 25 X ’25 initiative in hopes that as a nation we will continue to pursue this 

important initiative. We also believe that the current farm bill debate provides new 

opportunities to fund innovative research into cellulosic ethanol and other renewable sources. 

Rural Development—Positioning for the Future 

The need for new markets, development of new products, and identification of new 

economic opportunities has never been more prevalent than it is in rural America 

today. Many of our communities have experienced over a century of out-migration 

resulting in the loss of youth, leadership, and the reality that at the passing of the 

current generation, vast amounts of wealth will transition from rural areas to the 

cities and suburbs. 

While current funding within the Rural Development Title benefits infrastructure 

and health care access—both important to rural communities, we believe that those 

dollars should be refocused to support development of entrepreneurial activity, identification and encouragement of leadership, recruitment and retention of young people, and the creation of opportunities for local wealth generation and philanthropic 

activity. These tools will enable rural communities to create a bright future using 

existing resources and human capital. 

Conclusion 

Thank you once again for the opportunity to share the views of our members. We 

realize that there are no easy solutions to many of these issues, and that there are 

many who simply favor shifting funding from currently successful programs that 

equip our members for success. We believe that there are workable solutions and 

that consensus can be reach in a way that maintains production agriculture as a 

vibrant and productive component of our economy and our nation. Kansas Farm Bureau stands ready to assist as you seek solutions for America’s farmers and ranchers. 

Thank you. 

For more information please contact:

EDIE DAHLSTEN, 

Vice President,

Kansas Farm Bureau, 

Manhattan, KS 66503; 

TERRY HOLDREN, 

National Director,

Kansas Farm Bureau, 

Topeka, KS 66612. 

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PREPARED STATEMENT OF DARYL A. LARSON, FARMER AND RANCHER, MCPHERSON, 

KS 

June 5, 2007

Rep. Jerry Moran and the House Agricultural Committee,

In light of all the complaining from the large livestock and poultry producers as 

well as from some of the food processors and retailers about the price of corn and 

other grain and oil seeds being too high, I would like to offer the following suggestion. The powers to be in Washington, D.C. need to decide if they want to keep the 

price of agricultural commodities low so that feed and food stays a little lower or 

if they want the agricultural producers to get a fair price from the market. Just remember, as you probably already know, that our cost of production has increased 

dramatically because of the increase in price of fuel, fertilizer, equipment, insurance, 

etc. If you choose to try to keep the price of commodities low to please the people 

that are complaining, then remember we will have to be subsidized if you want to 

keep us in business so the USA does not become totally dependent on foreign countries for our food needs, which would be a horrible mistake. If this is the path you 

choose then I ask that you develop a media campaign explaining your actions to the 

taxpayers of the USA so they know it is not the farmers and ranchers that are getting rich from the subsidies, but that it is the people that buy and use our commodities that are benefiting.

DARYL A. LARSON, 

Farmer and Rancher. 

PREPARED STATEMENT OF GARY MELANDER, ASSARIA, KS 

Farm Bill Comments 

Current government farm programs tie subsidy price supports to farm production. 

Additional bushels equal additional subsidies. This emphasis on production subsidies ignores the wisdom of the marketplace. Farm decisions made on subsidy considerations distort grain markets and individual commodity supplies. These subsidies encourage and finance excessive application of fertilizers and other crop inputs, the farming of fragile lands, and the creation of crop surplus and low commodity prices. 

At this point in history, when there is talk of global warming, a developing energy 

crisis, water shortages, and pollution, Americans are coming to the reluctant conclusion that our natural resources are finite. It is imperative that farm programs encourage resource conservation, not resource consumption. 

Tax dollars that have been chasing crop production should be shifted into programs that stimulate and support conservation. We need to establish resource consumption standards for agriculture. If farmer Jones can meet the energy standard, 

or other critical standards, give him a serious subsidy award. When Jones discovers 

new farm tactics that reduce crop inputs while maintaining satisfactory yields, increase the subsidy. Give him tax dollars for efforts to protect the land, wildlife, and 

clean air and water. A healthy environment is as critical to the good life as is food 

production. We cannot expect the marketplace to recognize and reward this critical 

conservation work.

GARY MELANDER, 

Assaria, KS. 

PREPARED STATEMENT DON J. HINEMAN, WHEAT FARMER AND COW/CALF PRODUCER, 

DIGHTON, KS 

To: Members of the Subcommittee on General Farm Commodities and Risk Management 

Field Hearing—Salina, KS, June 5, 2007

My name is Don Hineman and I am a dryland farmer and cow-calf producer from 

Dighton in West Central Kansas. The multi-year drought on the High Plains was 

devastating to my crop production from 2000 through 2006. Like many of my neighbors, there were several years during that period that my net farm income would 

have been negative had it not been for farm program payments. Obviously production-based payments were of no benefit to me during this time. It was the direct 

88

payment component of the farm bill that supported me during those tough times 

and allowed me and most (but not all) of my neighbors to stay in business. I thank 

you for providing that support and I strongly urge you to maintain an adequate 

level of direct payments in the next farm bill. 

As a wheat farmer and beef producer I am very aware of our need to export a 

significant portion of our agricultural production. Therefore I am quite hopeful that 

the new farm bill will be WTO-compliant and will not contain provisions that would 

jeopardize the U.S.’ ability to export wheat and beef. The truth is that productionbased program payments do a number of things wrong and do very little right. Such 

payments do not provide a safety net to U.S. producers during times of production 

shortfall, they distort market signals and stimulate overproduction of selected crops, 

and by doing so they have a significant negative effect on farmers in other parts 

of the world whose governments are unwilling or unable to play the price support 

game. As an American I worry about the negative sociopolitical implications of such 

a policy and as a Christian I am concerned about the humanitarian effects. It is 

possible to craft a farm bill that provides adequate support to U.S. producers without distorting market signals and adversely affecting our counterparts in other 

countries. I urge you to search for such a solution by reducing dependence on production-based support payments and moving toward direct payments and other 

forms of compensation that would be WTO-compliant. 

Thank you for your consideration,

DON J. HINEMAN. 

PREPARED STATEMENT OF STEVEN CLANTON, COMMISSIONER, KANSAS WHEAT AND

SOYBEAN COMMISSIONS, MINNEAPOLIS, KS; ON BEHALF OF KANSAS ASSOCIATION OF

WHEAT GROWERS; KANSAS WHEAT COMMISSION

Dear Honorable Chairman Etheridge and Subcommittee Members,

I am Steven Clanton. I currently am a Commissioner on the Kansas Wheat and 

Soybean Commissions. I would like to report to you on the work to which I was a 

part. Several Kansas agriculture groups met throughout last year to discuss the upcoming farm bill. 

I know this was presented to our Kansas delegation and would like to now 

present it to this Subcommittee. 

Thank you for this opportunity to present this to you. 

Sincerely,

STEVEN CLANTON, 

Minneapolis, KS.

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