U.S. GOVERNMENT PRINTING OFFICE

65–504 WASHINGTON : 2001

THE AGING OF AGRICULTURE: EMPOWERING

YOUNG FARMERS TO GROW FOR THE FUTURE

HEARING

BEFORE THE

SUBCOMMITTEE ON EMPOWERMENT

AND

SUBCOMMITTEE ON RURAL ENTERPRISES,

BUSINESS OPPORTUNITIES, AND

SPECIAL SMALL BUSINESS PROBLEMS

OF THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

WASHINGTON, DC, NOVEMBER 3, 1999

Serial No. 106–40

Printed for the use of the Committee on Small Business

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

(II)

COMMITTEE ON SMALL BUSINESS

JAMES M. TALENT, Missouri, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

DONALD A. MANZULLO, Illinois

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PHIL ENGLISH, Pennsylvania

DAVID M. MCINTOSH, Indiana

RICK HILL, Montana

JOSEPH R. PITTS, Pennsylvania

JOHN E. SWEENEY, New York

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

EDWARD PEASE, Indiana

JOHN THUNE, South Dakota

MARY BONO, California

NYDIA M. VELAZQUEZ, New York

JUANITA MILLENDER-MCCONDALD,

California

DANNY K. DAVIS, Illinois

CAROLYN MCCARTHY, New York

BILL PASCRELL, New Jersey

RUBEN HINOJOSA, Texas

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

SHELLEY BERKLEY, Nevada

HARRY KATRICHIS, Chief Counsel

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON EMPOWERMENT

JOSEPH R. PITTS, Pennsylvania, Chairman

PHIL ENGLISH, Pennsylvania

JIM DEMINT, South Carolina

FRANK A. LOBIONDO, New Jersey

EDWARD PEASE, Indiana

JUANITA MILLENDER-MCDONALD,

California

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

TOM UDALL, New Mexico

STEPHANIE O’DONNELL, Professional Staff Member

(III)

CONTENTS

Page

Hearing held on November 3, 1999 ........................................................................ 1

WITNESSES

Brown, D. Scott, Program Director, Food and Agriculture Policy Research

Institute (FAPRI) ................................................................................................. 6

Young, John, Farmer, Groffton, NH ...................................................................... 8

Cornwell, Lynn, Vice President, National Cattleman’s Beef Association ........... 10

Ecker, Terry, Farmer, Elmo, MO ........................................................................... 12

Gross, Steve, Farmer, Manchester, PA .................................................................. 14

Cobb, Bruce, Farmer, Bridgeton, NJ ...................................................................... 16

Johnson, Baron, Farmer, Johnson Bros., Inc ........................................................ 18

Smith, Gary, Executive Director, Chester County Development Council ........... 29

Baker, John, Iowa Beginning, Farmers Center .................................................... 32

Offutt, Susan, Administrator, Economic Research Service, US Department

of Agriculture ........................................................................................................ 34

APPENDIX

Opening statements:

Talent, Hon. James M ...................................................................................... 39

Pitts, Hon. Joseph R ......................................................................................... 42

LoBiondo, Hon. Frank A .................................................................................. 46

Prepared statements:

Brown, D. Scott ................................................................................................. 47

Cornwell, Lynn ................................................................................................. 52

Ecker, Terry ...................................................................................................... 55

Gross, Steve ...................................................................................................... 58

Cobb, Bruce ....................................................................................................... 65

Johnson, Baron ................................................................................................. 71

Smith, Gary ....................................................................................................... 77

Baker, John ....................................................................................................... 126

Offutt, Susan ..................................................................................................... 129

Additional Information:

Article ‘‘In Consideration of Farming’’ ............................................................ 133

(1)

THE AGING OF AGRICULTURE: EMPOWERING

YOUNG FARMERS TO GROW FOR THE FUTURE

WEDNESDAY, NOVEMBER 3, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON EMPOWERMENT, OF THE COMMITTEE ON SMALL BUSINESS,

JOINTLY WITH THE SUBCOMMITTEE ON RURAL ENTERPRISES, BUSINESS OPPORTUNITIES AND SPECIAL SMALL

BUSINESS PROBLEMS, OF THE COMMITTEE ON SMALL

BUSINESS,

Washington, DC.

The Subcommittees met, pursuant to call, at 2 p.m., in Room

2360, Rayburn House Office Building, Hon. Joseph R. Pitts [Chairman of the Subcommittee on Empowerment] presiding.

Chairman PITTS. Good morning, ladies and gentlemen. Thank

you for joining us here today for the first joint hearing of the Subcommittee on Empowerment and the Subcommittee on Rural Enterprises, Business Opportunities and Special Small Business Problems. The focus of today’s hearing is the aging of agriculture: empowering young producers to grow for the future.

Before I proceed with my opening remarks, I would like to note

that the Chairman of the Committee on Small Business, the gentleman from Missouri, Mr. Talent, is joining us today, and I am

pleased to yield to him for any opening comments he would like to

make.

Mr. TALENT. Mr. Chairman, I appreciate that, and I want to

thank you and Mr. LoBiondo for inviting me to join you in welcoming the participants of this joint hearing of the two Subcommittees on a subject that is very important. I think it is going to become increasingly important for the future of agriculture and an

opportunity for people in agriculture. The trend towards an agricultural system with the average age of the operators of our farms

nearing 55 years is of great concern to many in the agricultural

community. I share the concerns of that community and applaud

Mr. Pitts and Mr. LoBiondo for their willingness and desire to address this issue.

I am proud of Missouri’s agriculture industry and recognize the

importance of agricultural and agribusiness to the economy of Missouri. In fact, Missouri has a large number of farms, 110,000 of

them, making Missouri second only to Texas in states with the

most farms. As of 1996, more than 400,000 workers or a full 15

percent of our labor force back home was employed in agriculture.

Missouri is also ranked in the top 10 producing States of all major

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crops and livestock except citrus, and we are working on that.

Along with this accomplishment, agriculture contributed over $5

billion in cash farm receipts to the economy of Missouri in 1997.

Unfortunately, 1998 and 1999 have brought low prices and adverse production conditions to Missouri as well as all over the

country. A summer-long drought throughout Missouri devastating

much of the corn and soy bean crop, combined with a strong U.S.

dollar, economic turmoil in Asia, and the large global grain and

livestock supplies, we have the ingredients for a recipe for disaster.

The tillers of the soil and the husbandry of livestock have always

been honored professions. Thomas Jefferson wrote in 1803 that agriculture is the first in utility and ought to be the first in respect.

I agree with that spirit and admiration for the profession of food

and fiber production. In my years of interaction with Missouri’s

farmers and ranchers, I have learned that agriculture, specifically

production agriculture, is much more than just an occupation. It is

a way of life from which much satisfaction is gained from the creation of something of value from the tiniest of seeds. American producers take pride in the fact that they provide the most abundant,

the most affordable, and safest food supply in the world.

Our producers have a long and honorable tradition of creating a

legacy and way of life for posterity. The generational family ownership of the farm, passing down and sharing of the family small

business from one generation to the next is a great source of honor

and tradition which has been celebrated throughout American history. The University of Missouri Agricultural School, arguably the

most innovative and forward-thinking agricultural school in the

Nation, in 1976 began recognizing farms which had been family

legacies for over 100 years through its Century Farm Program. To

date, over 2,800 Missouri family farm legacies have been recognized as century farms.

The blood, sweat, and tears which have fertilized these family

legacies are the same stones upon which our Nation is built. Yet

this great tradition of the continuance of family farm legacies has

been short-circuited. Last August, the House Committee on Small

Business held two field events focusing on agricultural, tax, regulatory, and trade issues critical to the agricultural community. One

concern that was voiced at both of these hearings was the lack of

youth entrance into production agriculture. Producers at the hearings told stories of the barriers of entry into agriculture for young

people, the most hated of which was the estate tax. I wholeheartedly agree that this tax may be the single most harmful obstacle to the tradition of passing the farm down to the next generation. Why should producers work to create, sustain, and preserve

this legacy only to force their loved ones to visit the undertaker

and Uncle Sam on the same day? Why should the government penalize America’s original small business owners for wanting to pass

their heritage and way of life onto their children?

Beyond this discouraging tax policy, young people have to observe the reality that there has not always been a direct relationship between the hard work and intelligent management of the

farm by their parents and the profitability of their farm. They realize that Mother Nature is not always sympathetic. The world commodity market is well out of their control, and even during decent

3

years their parents only made a small percentage return on their

investment. As a result, young people often decide that it would be

easier and more attractive not to enter the family business.

In these hearings that we had in Missouri, I looked at panels like

the ones that we have here—which, by the way, I want to say that

we have a big sprinkling of young people here on this panel, so I

don’t want to suggest otherwise, but we had panels in Missouri on

the future of the family farm. A number of the witnesses were

farmers in their fifties. I wondered at the time whether we could

have hearings like that 15 or 20 years from now because as producers leave their farms, their children are not going into the farming business, and we might not be able to constitute a panel like

that in a few years if we don’t do something.

Of course, the climate cannot be controlled and the effects can

only be slightly mitigated, but something can be done to provide a

brighter outlook on the marketing side of the equation. Over and

over producers tell me that the key to the future of our agricultural

legacy is for producers to become price makers instead of price takers. They have to be empowered to begin finding ways to remove

themselves from the oppression often of the world commodity market. This will be accomplished through the establishment of producer-owned, value-added processing in the creation of other alternative marketing systems. We must provide producers with the effective technical assistance, engineering, business planning, marketing, organizational assistance to begin developing their own

processing and marketing system.

We all know the old parable that a farmer once shared with me:

If you feed a person fish, he will eat once; if you teach a person

to fish, he will eat for the rest of his life. If we can provide our

young farmers and ranchers with appropriate assistance, then they

will have the tools to reach up the agriculture value chain. Only

when that is accomplished will they have the ingredient that is

needed to regrow and grow again rural America.

Once again, I am pleased that the House Committee on Small

Business has the opportunity to listen to the concerns of agriculture, America’s original small business. I want to thank again

Mr. Pitts and Mr. LoBiondo and recognize Mr. Phelps also for his

consistent work and advocacy on this issue. I am looking forward

to the hearing and thank you, Mr. Chairman, for allowing me to

participate.

Chairman PITTS. Thank you, Mr. Chairman.

[Mr. Talent’s statement may be found in the appendix.]

Chairman PITTS. As Mr. Talent noted, we are here today to discuss an issue that is of great concern in the agricultural community, the lack of young people entering production agriculture. According to the most recent Census of Agriculture, the average age

of American farmers is 54.3 years of age and there seems to be a

shortage of young people waiting to succeed our aging farmers as

they prepare for retirement. Unfortunately, this shortage means

that many of our seasoned farmers with decades of farming experience have fewer people to pass on their legacy to and to benefit

from their accumulated years of agricultural experience. Older

farmers who are looking towards retirement often find their children are not interested in taking over the family farm, or if they

4

are interested, they are discouraged by the difficulties inherent in

the transfer of a farm from one generation to the next.

I have many farmers in my district, the 16th Congressional District of Pennsylvania, Chester and Lancaster Counties. These hardworking Pennsylvania farmers farm about 560,000 acres for a total

of nearly 6,000 farms. Over the years they have given me insight

into some of the reasons why young people are more reluctant to

enter farming. Many who grew up on farms are aware of the tax

burden they will face when taking over the family farm. In addition

to onerous estate and capital gains taxes, the lack of capital is another obstacle facing young people who want to go into production

agriculture.

There is no question that farming is a difficult lifestyle involving

long hours of work, unpredictable weather patterns, natural disasters, and fluctuating crop prices. These uncontrollable risks are intrinsic to agriculture and a reality that farmers deal with daily.

However, it is the other impediments, the ones that we have the

power to change, such as taxes, regulatory barriers, global market

access, that are most discouraging to aspiring producers.

I expect that some of the witnesses here today will share some

of the same concerns as my constituents. This hearing will allow

members of the two Subcommittees to hear firsthand the problems

facing aspiring farmers in rural America and then explore some

possible solutions. I am pleased to welcome our witnesses. We look

to them for insight into the state of agriculture today and the outlook of our changing rural economy. Young producers like those of

our first panel represent the future of agriculture, and many are

from the congressional districts of the Members sitting on this dais.

I thank them for traveling to Washington, D.C., for this hearing

and look forward to their testimony.

Dr. Scott Brown is the program director at the Food and Agricultural Policy Research Institute, based out of the University of Missouri at Columbia. Mr. John Young is a farmer from Groffton, New

Hampshire. Mr. Lynn Cornwell is the Vice President of the National Cattlemen’s Beef Association and is from Glasgow, Montana.

Mr. Terry Ecker is a farmer from Elmo, Missouri. Mr. Steve Gross

is a farmer from Manchester, Pennsylvania. Mr. Bruce Cobb is a

farmer from Bridgeton, New Jersey. Mr. Baron Johnson is a farmer

from Inman, South Carolina.

Our second panel consists of experts who will share their experiences with programs designed to empower young farmers to begin

and sustain agricultural enterprises. Many of these programs give

hope to a generation of aspiring farmers while providing concrete

practical solutions to overcoming some of the obstacles existing in

agriculture today. I am pleased to welcome our witnesses on the

second panel, Mr. Gary Smith, who is from my district, the executive director of the Chester County Development Council; Mr. John

Baker, from the Beginning Farmers Center at Iowa State University; and Ms. Susan Offutt, the Administrator of the Economic Research Service at the U.S. Department of Agriculture. So we thank

all of you for joining us today.

Small farm and ranch enterprises are the backbone of rural

America, and it is my hope that this hearing will provide us with

useful information and recommendations about how to sustain this

5

strong segment of our rural economy and to preserve the rich

American tradition of production agriculture.

[Mr. Pitts’ statement may be found in the appendix.]

Chairman PITTS. Now I will turn the mike over to the distinguished Chairman of the Subcommittee on Rural Enterprises,

Business Opportunities, and Special Small Business Problems, my

friend from New Jersey Mr. LoBiondo, for his opening comments.

Mr. LOBIONDO. Thank you very much. I would like to thank my

colleagues, Congressman Pitts and Congressman Talent, for helping to arrange this. I am absolutely thrilled to co-chair this hearing

and to have the opportunity to hear from those of you who are in

the real world of agriculture every day, to help outline for us some

of the problems. Hopefully we can share this information with a

number of our colleagues to let them know there is a real problem,

that we think it should be emphasized so we can look to start to

find solutions. And I want to thank each of you for being here

today, for taking valuable time from your schedules to help us better understand what you are facing on a day-to-day basis. Thank

you.

Chairman PITTS. Thank you.

[Mr. LoBiondo’s statement may be found in the appendix.]

Chairman PITTS. Since Mrs. Christensen, the Ranking Member

of the Rural Enterprises Subcommittee, is unable to join us today,

I would like to now turn the mike over to my friend from Illinois,

Mr. Phelps, for his opening comments.

Mr. PHELPS. Thank you, Mr. Chairman, and thank all of you for

having this hearing and making it available to us, and each and

every one of the panelists for your participation today. We appreciate your input. I know that as a member not only of the Small

Business Committee but also the Agriculture Committee, I am

pleased to be able to participate in a hearing that ties the two together so well. It is my hope that this hearing will allow the Small

Business Committee to continue our discussion on the future of

farms and what we as the small business community can do to

help.

My congressional district covers 27 counties in central and southern Illinois. Every one of the communities I represent is deeply impacted when agriculture experiences tough times. These indeed are

some of the toughest in recent memory. Today’s hearing will focus

on America’s aging farmer population and the implications for

rural communities and the future of the family farm. We will look

at some of the roadblocks the younger farmers face and what we

can do to break down those barriers. Some of the possibilities we

will be discussing include greater access to capital, alternative

marketing strategies, estate taxes, capital gains taxes, state and

local grants, USDA programs and the linking of the older producers with younger producers.

Our panel this afternoon includes representatives from the Department of Agriculture, farmers, members of the academic research community, and farm industry representatives.

When the future of rural America is threatened, an entire way

of life is endangered. Our purpose today is to generate a discussion

about what we can do to keep our heartland alive, help it grow and

become even stronger. I would again like to thank the Chairman

6

for the recognizing the importance of this issue, and I look forward

to hearing the testimony of our distinguished panelists. Thank you,

Mr. Chairman.

Chairman PITTS. Thank you, Mr. Phelps.

We will now go to the witnesses. Each of you will have 5 minutes

for your statements. We will use the lights for your convenience.

Dr. Scott Brown.

STATEMENT OF D. SCOTT BROWN, PROGRAM DIRECTOR,

FOOD AND AGRICULTURE POLICY RESEARCH INSTITUTE

(FAPRI)

Dr. BROWN. Thank you, Mr. Chairman, for the opportunity to appear before these Subcommittees to provide information concerning

the current state of U.S. agriculture. The Food and Agricultural

Policy Research Institute is a joint project between the University

of Missouri and Iowa State University. Furthermore, we have formal relationships with Texas A&M University to examine market

and policy changes at the farm level, and with the University of

Arkansas to analyze the world rice market, and with Arizona State

University to examine the fruit and vegetable sectors.

During 1999, attention continues to be focused on the downward

pressure on prices for many of the major agricultural commodities.

This is occurring at the same time that some regions of the country

have experienced severe drought conditions, with the combination

of the two putting even greater pressure on some producers. In regards to the lower prices, no single cause can be identified, but

rather a combination of fundamental developments in the supply

and demands of the commodities.

World grain and oilseed prices are continuing to be pressured by

large production levels that would allow stocks to rebuild from

their very tight levels of 1995 and 1996. The higher production is

due both to increased area and generally favorable yields. In response to the strong price signals in 1995 and 1996, the area devoted to major crops has shown a significant increase. For the 1996

to 1998 period, world wheat area averaged 3.4 percent above the

1991 to 1994 period. A similar story can be seen in other crops as

well. Likewise, world red meat production is 14 percent higher over

the 1997 to 1999 period relative to the 1990 to 1992 period.

Coupled with increased area, world markets have also seen generally favorable yields since 1995. World coarse grains have seen

3 successive years of above average yields. In the past 30 years we

can find only one example, the 1984 to 1987 period, where there

were as many consecutive years above trend yields.

Price pressure due to increased supplies is not isolated to the

crops markets. For livestock the most notable example is pork.

After seeing strong prices in 1996 and much of 1997, pork producers responded with increased herds and additional production.

For 1999, pork production is expected to remain at historically high

levels. As a result the annual average price is projected to be as

much as 40 percent below the 1997 number.

Barring any major production problems, crop and livestock prices

will average substantially lower in 1999 and 2000 than what was

observed in the 1991 to 1995 period. However we must remember

that prices in those years were well above historical levels. In addiVerDate 11-MAY-2000 12:49 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00010 Fmt 6633 Sfmt 6602 E:\HEARINGS\65504.XXX pfrm08 PsN: 65504
7

tion, those prices brought increased area that, together with good

yields, resulted in more production. The additional supplies have

fallen upon a demand picture that has been weakened as a result

of the general economic problems centered around the Asian crisis.

Both additional supplies and weak demand for agricultural commodities are responsible for the lower prices we face today.

Our current estimate of commodity prices through 2005 shows

continued weakness in many cases. Corn prices, for example, are

expected to average $2.25 over the next 5-year period, far less than

1996 average of $2.71. It should be noted that our projections are

conditioned on average yields that result from normal weather patterns. If yields were to deviate from these averages, prices would

move accordingly. Wheat and soybean prices over the same period

are also expected to average far below the 1996 level.

Pork prices are also expected to remain below historical averages

over the 2000 and 2005 period. FAPRI projects pork prices will average slightly more than $42 per hundredweight over the period

which, would be the lowest level observed for many years. Structural change will continue to be one of the big drivers in the pork

industry.

Other areas of agriculture are expected to see higher prices over

the next few years. The beef industry is expected to see prices over

the next 5-year period that will be near those seen during the early

1990s. That is the result of the cattle cycle producing less beef production.

Although many commodity prices are at low levels, 1999 U.S. net

farm income is currently expected to exceed $48 billion. That is $4

billion higher than the 1998 level. Even though some commodities

like beef are showing higher commodity prices, the increase in farm

income expected in 1999 can be traced in large part to increased

government payments occurring as a result of the recent agricultural appropriations bill. Farm income in 1999 is still expected to

fall over $6 billion from the record level obtained in 1996. Yet it

remains above the average of the 1991 to 1995 period by over $5

billion.

One crucial point regarding the outlook for farm income is that

unless additional government payments are legislated for 2000, our

current estimate of farm income would suggest a decline of over 15

percent to near $40 billion for next year. This decline in farm income would only add to the current stress seen in agriculture.

While the news sounds rather bleak, and certain regions are

under tremendous stress, the U.S. agricultural economy as a whole

is still in much better shape than the early to mid-1980s. Income

levels are well above those of the earlier period, and debt-to-asset

ratios have remained at relatively low levels.

In closing, Mr. Chairman, I would like to thank you for the opportunity to address these Subcommittees and welcome any questions.

Chairman PITTS. Thank you.

[Mr. Brown’s statement may be found in the appendix.]

Chairman PITTS. We will proceed to all of the witnesses before

the Members ask questions.

Mr. John Young.

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STATEMENT OF JOHN YOUNG, FARMER, GROFFTON, NEW

HAMPSHIRE

Mr. YOUNG. Thank you, Mr. Chairman. I am a fourth-generation

apple farmer from New England. I have been raising apples for 37

years. My great-grandfather established orchards in the New

Haven area of Connecticut back in the 1880s. My grandfather, father, uncles, and cousins had five separate orchard operations covering some 600 acres. At this time only 57 acres remains with only

one person making a full-time living raising apples.

Today I will tell you a little bit about the family and why I believe that the family farm is on a decline, at least in our area of

the country. What has happened to these five orchards? There are

16 cousins in my generation, and only one is still farming full time.

My farm, which was the sixth owned by the Youngs, has been

downsized to the point that I raise apples mostly as a hobby and

part time.

My written testimony will give more complete details of what has

happened, but to summarize quickly, after the death of my grandfather, the five heirs could not find a way for either party to buy

out the other. There was little or no retirement fund set aside, so

the decision was to liquidate. Low profitability, tax laws, and inflated land values made it impossible for the younger family members to continue. My father’s orchard as well as his brother’s in

New York were sold because of a lack of interest in continuing by

my brother and the cousins of my generation. Long hours caused

because of lack of availability of farm labor at affordable rates, no

guarantee of a paycheck because of weather or low prices, the inability to secure additional capital to expand, and the need to liquidate assets for retirement of the older generation all played a

part in these orchards closing.

The one still being operated by my cousin has been downsized.

By downsizing he has done away with hired labor. By selling assets

he has done away with the need for bank financing. The question

is, will this orchard survive into the next generation? It will be

very difficult to pay inheritance taxes to satisfy the two nonfarm

brothers with this smaller operation.

My orchards started in 1962, expanded from 35 acres of orchard

to over 150. We had production at over 50,000 bushels of apples.

Low profitability and the lack of available credit to make major expansion as well as the cost of that expansion due to the inflated

land values in southern New Hampshire forced the sale of that

farm rather than passing it on to my four sons. Of the 20 offspring

in the Young family who could be farming today, only one does it

full time.

What is the state of family farms? I think that we need to look

at the size. In our area of the country, small part-time operators,

those who are not hiring outside help, are increasing in numbers.

They sell virtually 100 percent of their product directly to the consumers, and they rely primarily on a job off the farm to support

their families. The farms that fall into the middle categories, the

medium farms, by that I mean farms that employ anywhere from

one worker to in the neighborhood of 25, are by and large not financially viable—they are not making it financially, and they are

dipping into assets yearly in order to stay in business.

9

The large family farm, and what I refer to that in the orchard

industry or in our area is one that has between 25 and 100 fulltime employees, when you get to seasonality, there may be anywhere from another 150 to 250 or 300, they may have gross sales

in the $1 million to the $5 million range. These operations are successful. They generally are run by family members, and each one

of the family members has an area that is their expertise: accounting, sales, or production. This group of farms is successful as long

as they don’t need to hire outside management. This is the area

where more young people are going into more than anywhere else.

Why didn’t our young generation go into the farm on the Young

family? One, lack of profitability. Unlike most other businesses,

farms produce product without knowing what the price will bring.

Long hours and seasonal schedules. In our case, the lack of available farm labor at reasonable prices makes it virtually impossible

for employers, the owners of the farms, to work 40-hour weeks. No

way to pass on the purchase of the properties due to the Federal

inheritance taxes and no retirement benefits. Somehow the coupling of money put back into a farm has to be woven into a retirement plan that you can draw on the same as a person can draw

on a Roth IRA.

What would I suggest to the Committee? I would suggest to the

Committee or Congress to expand the availability of financing this,

an area that is crucial. It is interesting to note that traditionally

the Farmers Home Administration has been the Federal lender to

farms. In our area the perception that if you get a loan from the

Small Business Administration, it is a start, it is a wonderful beginning, it is positive. If you get a loan from the Farmers Home Administration, it is the next step to bankruptcy. It is an odd perception, but it is quite prevalent, at least in our area.

Availability of labor. I would urge the committee and Congress

to endorse and support legislation which makes available seasonal

labor through foreign worker programs. Changes to inheritance

taxes need to be made and control of imports. In our industry we

are competing in a worldwide market. My grandfather used to say

that you only needed one crop in three to stay in business. That

was his advice to me when I was first starting. He said, don’t expect to get rich every year, you only need one crop in three to make

a living. That isn’t true anymore. If we have a crop failure in New

England generally, and a grower happens to be lucky enough to

have a good crop, and there is a chance for him to make a good

profit, the imports take over, and we immediately lose that opportunity to make the one in three that my grandfather would have

referred to.

Fourth, I would speak to the reduction of the paperwork burden.

Government continues to pass the burden onto the employer. We

created an I–9 system which passes the job of controlling our borders from the Immigration Service onto the farmer. We have created a reporting process for new hires, which is a paperwork burden that is collecting minuscule amounts of money for the deadbeat

dad program. Government continues to pass on its job to the employer community, and the small employers and the small farmers

cannot do that.

10

Mr. Chairman, I thank you for the opportunity to testify, and I

will answer any questions.

Chairman PITTS. Thank you, and you can enter your full written

testimony into the record, if you would do that, please.

[Mr. Young’s statement may be found in the appendix.]

Chairman PITTS. The next witness is Mr. Lynn Cornwell, Vice

President of the National Cattlemen’s Beef Association.

STATEMENT OF LYNN CORNWELL, VICE PRESIDENT,

NATIONAL CATTLEMEN’S BEEF ASSOCIATION

Mr. CORNWELL. Chairman Pitts, Chairman LoBiondo, members

of the Subcommittee, thank you for the opportunity to share my

thoughts on the aging of agriculture and the factors that currently

inhibit young farmers and ranchers from entering my profession.

Those of us involved in agriculture often overlook the important

work done by this Committee to ensure the viability of America’s

small businesses, and I commend all of you for your efforts to find

ways for young men and women to succeed in the business of producing food and fiber for our Nation and for the world.

I am Lynn Cornwell, vice president of the National Cattlemen’s

Beef Association. I am a rancher from Glasgow, Montana, thirdgeneration, and constituent of Congressman Rick Hill. I am excited

to be here today. I am on my way back to Montana after spending

the last few days in New York City at NCBA’s beef summit, a 1-

day summit held for beef marketers, which includes retailers, food

manufacturers, and food service operators. A key aspect of our

summit was to review our industry’s outlook and the economic factors that seemed to indicate beef demand might be stabilizing for

the first time in more than 20 years.

According to the industry analysts, preliminary beef demand

data for the first three quarters of 1999 has increased 4.59 percent

during the third quarter of 1999 compared to demand during the

same period last year. The rate of decline for beef demand has been

slowing since 1996, according to the Beef Demand Index, which is

calculated by leading independent economics and industry experts

using the USDA per capita beef consumption data and the USDA

choice retail beef prices adjusted for inflation.

In short, for the first time in two decades the light at the end

of the tunnel is growing brighter for cattle men and women. And

while we are eager to tackle the challenge of increasing demand,

our industry also faces the challenge that is the focus of today’s

hearing, an aging population of agricultural producers. One needs

only to review the average age data of the past few agricultural

censuses to recognize the trend.

I am not sure there is a clear-cut solution to enable and encourage young people to get involved in production agriculture. But in

reflecting on my own thoughts relative to the challenges that those

of us currently in the business face, I think there are some obstacle

issues that certainly pose a risk to beginning farmers and ranchers.

First, there is a constant battle against the loss of equity. This

is due in part to lack of business opportunity and shrinking returns

on investment. While we are seeing improved outlook on the demand side that will hopefully translate into sustained higher marVerDate 11-MAY-2000 12:49 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HEARINGS\65504.XXX pfrm08 PsN: 65504
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ket prices, the beef industry has experienced nearly $4 billion in

lost equity over the last 4 years.

As farm and ranch kids finish their education and, speaking as

a parent, hopefully become smarter, they begin to think, ‘‘Why

would I want to return to a lifestyle that requires me to work 16

to 20 hours a day and earn a measly $1,000 a month?’’ The present

net return to investment in the cattle business in my part of the

country is less than 1 percent.

In many parts of the country, farm and ranch values are doubling or tripling. In the case of ranches at least, this is not because

their income potential has substantially grown, but because folks

with the resources are willing to pay handsomely for their own isolated corner of the world. For young people trying to buy their way

in, they must compete against those who are not concerned with

a ranch’s productivity. They simply are investing in real estate.

Speaking of estates, for young men and women facing the prospect of inheriting the family operation, the tax implications are

horrible. Death taxes are one of the leading causes of breakups of

farms and ranches. NCBA recently celebrated its 100th anniversary. As part of that celebration, we recognized the industry’s centennial operations. One of the common costs and concerns of these

families, not to mention the industry’s younger participants, is the

prospect of buying their heritage back from the Federal government when death hits a loved one. Many families are forced to sell

out. If the operation happens to be located near an urban or suburban area, the farm or ranch often ends up in the hands of the developers. Open space is lost, habitat is lost, and, worst of all, one

more agricultural family is forced out of their business and way of

life. The death tax must go, and NCBA commends Congress for the

progress it is making in this regard.

Federal and state regulatory burdens also discourage a new generation of producers. Issues such as endangered species, clean

water, Federal grazing, booming wildlife populations, et cetera, all

impact livestock operations. Water quality and ESA habitat issues

are reducing/removing many livestock management options and

making remaining options increasingly expensive. Many operations

are choosing to sell out to bigger, more diverse corporate holdings.

Kids see Dad going to public meetings and having to spend an

ever increasing amount of time, energy, and resources on private

land issues in local, state, and federal forums just to protect what

he has. Forget trying to expand. It has gotten to the point that you

need to have a permit or license to do almost anything. Young people need to see a decided decrease in the command and control policies of this country.

Young people also face a daunting choice of opportunities off the

farm. Corporate America is recruiting hard in rural areas to find

employees that possess a strong work ethic. The lure of salaries

and benefits that corporate America can provide is strong. Technology also contributes to the view beyond the farm gate. The

Internet brings the world much closer to rural kids at a much earlier age and is having an impact on their life’s goals.

Mr. Chairman, I could go on and on but I think my point is

made. Agriculture needs to find ways to compete for the hearts and

minds of young people. I am grateful to you for the opportunity to

12

share my thoughts and look forward to working with you on solutions that will help us achieve our mutual goals. Thank you.

Chairman PITTS. Thank you very much, Mr. Cornwell.

[Mr. Cornwell’s statement may be found in the appendix.]

Chairman PITTS. Now Mr. Terry Ecker, a farmer from Elmo,

Missouri.

STATEMENT OF TERRY ECKER, FARMER, ELMO, MISSOURI

Mr. ECKER. Thank you, Mr. Chairman. My name is Terry Ecker,

and I am a fourth-generation farmer from northwest Missouri. My

family and I raise corn, soy beans, and tend a cow-calf operation.

My farm is located about 120 miles north of Kansas City near the

town of Elmo in Nodaway County. I am testifying on behalf of the

Missouri Farm Bureau, where I am past chairman of the State

Young Farmer and Rancher Committee. I have also served as past

vice chairman of the American Farm Bureau Young Farmer and

Rancher Committee, and I am currently serving on the Missouri

Soybean Merchandising Council. I would like to thank you for this

opportunity to share my views on some of the challenges facing

younger agriculture producers. A special thanks to Chairman Talent for his interest in agriculture and efforts to focus on restoring

profitability to family farmers.

I am 36 years old, married and college-educated. Upon graduating from college, I spent 3 years in the agriculture field, and

then the opportunity arose for me to purchase a farm next to my

family’s farm. So with the help of my father, I did that. My father

and I worked out an arrangement in which I trade my labor for a

share in his equipment. This agreement has worked well, and

today, 10 years later, my father is nearing retirement.

My father stills owns about 60 to 70 percent of the equipment,

and at some point I will have to decide whether to borrow the

money to purchase the equipment or purchase some other equipment. This crossroad is familiar to many young producers. The decision is even more difficult with low commodity prices. It is hard

to seriously consider equipment purchases with a $1.50 per bushel

corn. To put this in perspective, trading our equipment for just a

new tractor and a combine would cost about $120,000 to $150,000,

and that still wouldn’t give us the latest technology.

Having said that, my reason for turning to farming has not

changed. Farming is a way of life that I love. There aren’t many

occupations that allow family members to work side by side.

Difficulties in succeeding as a young agriculture producer. As a

young producer I have made the following observations of why it

is difficult for young producers to get started. First and foremost

is capital. It has become virtually impossible to enter production

agriculture without the assistance of family members who are already farming. Young people are long on labor, but short on capital. I was the youngest full-time farmer in my township 10 years

ago when I started farming. Today at the age of 36, I am still the

youngest farmer in my township.

Land availability. There is only so much land available, and it

is difficult for young producers to compete with established producers. Rental rates may be too high to cash flow, or younger producers are often forced to farm land that is marginally productive.

13

A third area would be risk management. Young producers with

low equity could be wiped out in a single year. Risk management

is critical to younger producers who can not afford significant income losses.

I did not expect to get rich when I started farming, but I did expect to have a decent standard of living. Today I see my college

friends doing well in their careers. They have 40-hour workweeks,

retirement plans and health care packages. They are buying

homes, cars, and have a sense of financial security. I see my prices

going down, input cost going up, and equity evaporating. So I often

ask myself at what point do I become a fool and should seek opportunities outside of agriculture.

Empowering producers to restore profitability. This Nation has

been blessed with a climate and a natural resource base that allows us to feed our population and much of the world. Yet it is disheartening to see some of the Nation’s brightest children avoiding

the return to the farm. Today, given the weakness of the U.S. farm

economy, many parents are discouraging their children from returning to the farm, farms which have been in the family for generations. Think about it. We don’t see recruiters at colleges line up

students to return to farming.

There is no single action that will brighten the future of the family farm, but I would encourage Congress to consider actions that

collectively could stem the tide for rural America. Some of these

are tax incentives. State and Federal tax codes punish farmers

with estate and capital gains, forcing older farmers to retain land.

Policymakers need to think outside the box for ways to use the tax

code to assist farmers. For example, many farmers and their

spouses are forced to work at least part-time off the farm. Is there

a way to possibly provide a tax credit for a portion of this off farm

income?

Adding values to commodities. Missouri now provides farmers

with a tax credit for participating in cooperative efforts that add

value to agriculture commodities. This provides an excellent example of how we can move toward selling products rather than commodities.

Federal loan programs. The Farm Service Agency operates several direct loan guarantee programs that can be helpful to farmers.

Excessive paperwork and reporting requirements may be preventing rural banks from participating in Federal assistance programs. To this end it would be helpful for Congress to review the

requirements placed on banks to participate and utilize FSA loan

programs.

Risk management is another area. Congressional actions to revise the Federal crop insurance program are absolutely critical.

The current program simply does not work and results in farmers’

reliance on ad hoc disaster assistance. As a farmer I would rather

have access to markets than a disaster payment. For example,

under the package recently packaged by Congress, I will receive

$4.70 an acre on some of the farmland that I farm. This money

would be better spent to help develop markets for producers of

every size.

Mr. Chairman, I spend quite a bit of time in the cab of my tractor thinking about the future. I continue to dream of taking over

14

the family farm. But my fear is that the continued low farm economy will force many young producers such as myself to take advantages of opportunities off the farm, and from where I sit, I hope it

doesn’t come to that. Thank you.

Chairman PITTS. Thank you, Mr. Ecker, for that compelling testimony.

[Mr. Ecker’s statement may be found in the appendix.]

Chairman PITTS. Now, Mr. Steve Gross, a farmer from Manchester, Pennsylvania.

STATEMENT OF STEVE GROSS, FARMER, MANCHESTER,

PENNSYLVANIA

Mr. GROSS. Thank you, Mr. Chairman. First, I would like to say

it is an honor to be here, and I appreciate the opportunity to give

my testimony. I am a 31-year-old farmer from Manchester, Pennsylvania, which is just due north of Baltimore. My brother and I

are involved in a partnership and work closely with my father. We

farm about 1,200 acres. We raise cattle and hogs. We recently

opened a store due to the declining prices we were receiving from

our cattle and our hogs. We tried to sell our own beef and pork

through our store to recapture some of the profit which we have

seen decline over the past 3 years, as stated by some of the earlier

people. The costs of—the average price per year that we receive for

our steers has gone down every year, yet our costs have continued

to rise.

There are many barriers that we face as a young agriculture producer. One is the estate tax. My family and I worked hard to build

an operation. We paid taxes as we were building it. And then when

someone dies, we are punished again. A lot of that land, especially

in our area, the reason that it is assessed so high is due to causes

outside of agriculture, development pressures like was stated here.

Farms are stated—the estate tax is based on what the farm is

worth, and the value is raised on outside pressures.

The capital gains ties closely into that industry. A lot of older

farmers, especially in our area, that would like to sell some of their

farmland or assets to beginning farmers have to consider the capital gains when they sell their farms. My brother and I, for example, were negotiating with an older gentleman on purchasing his

farm. When he figured the capital gains cost and what he would

need for his health and retirement in case he would go into the

nursing home, it made it infeasible for both him to sell it to us and

for us to afford it.

Another dilemma I see in agriculture is the need for health insurance deduction. People that I went to school with and worked

with professionally all have health insurance as part of their package. They don’t pay tax on that. The farmer, being self-employed,

they only get to deduct a third of our health insurance every year.

I understand that is to be phased out over the years, but that is

costing me $4,500 a year right now, and I am only deducting a

third of it. I would urge you to think about immediate fully deductible health insurance premiums paid by the young farmer.

Another problem that I perceive in agriculture is financial assistance. I understand there is going to be some talk here about aggie

bonds here later. I myself looked into aggie bonds in our State sevVerDate 11-MAY-2000 12:49 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 E:\HEARINGS\65504.XXX pfrm08 PsN: 65504
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eral years ago, and there is a very good program there. However,

because my father had a farm and I had some cattle and some

farming experience, I was told that I did not qualify, which I

thought was unfair.

When I look around my local community, I hear about different

industries and how—I will use Starbucks Coffee as an example.

They got low-interest money from our State and from the county

development authorities because they were going to build in a new

area and expand. Yet myself, I wasn’t eligible for that. So I looked

at FHA for a loan, and as an earlier person stated, it was one step

away from bankruptcy. The paperwork to get a low-interest loan

states that you have to first prove you have been turned down by

other lending institutions. Yet when I look at my competitors, other

industries such as Starbucks Coffee, they do not have to prove that

they have been turned down by other industries to receive low-interest loans.

So this needs to be looked at a little bit. Instead of providing lowinterest loans to someone who is already in trouble, maybe we

should be rewarding people who have already managed their assets

properly.

Another thing that is really big in our area is farmland preservation. However, the objective of farmland preservation should not be

just to preserve land, but to preserve farming businesses and maintain characteristics that are ensured to continue the economic development of farming.

Just in closing I would like to touch a little bit on the trade

issue. I spoke earlier in my testimony that I had opened a store

and we were selling our meat locally. One reason we did that was

because our local grocery store was advertising Argentina beef and

putting it on sale. From my reading and research, they use practices there that have been outlawed and regulated in this country

for years, certain medicines and feeding practices that we don’t

allow here. That ties into a little bit of the trade issue that needs

to be looked at. Yet where is free trade necessarily fair trade? If

I have regulations and restrictions that prevent me from being the

cheapest producer of a product, of course it is going to be produced

overseas where it is cheaper.

I would like to thank you for the opportunity to testify today.

Chairman PITTS. Thank you, Mr. Gross. Again we will enter your

whole written statement into the record.

[Mr. Gross’s statement may be found in the appendix.]

Chairman PITTS. The next witness is Bruce Cobb, a farmer from

Bridgeton, New Jersey.

I would like to recognize Congressman LoBiondo.

Mr. LOBIONDO. Thank you. I would like to take the opportunity

to introduce our next panel member. It is Mr. Bruce Cobb from Shiloh, New Jersey. Bruce is in the 2nd Congressional District, which

I represent. I am pleased that he is here today.

Bruce owns and manages ARC Greenhouses, which is located in

Shiloh, and his business is unique in that he produces

hydroponically-grown herbs and specialty grains for professional

chefs and cooks. Bruce is a member of the Cumberland County

Board of Agriculture, the New Jersey Farm Bureau, the Agricultural Development Corporation, the Cumberland County CommuVerDate 11-MAY-2000 12:49 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HEARINGS\65504.XXX pfrm08 PsN: 65504
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nity Agriculture Advisory Board. And I would like to add that not

long ago I had the opportunity to visit and see Bruce’s operation

firsthand. I was both delighted and amazed to see how innovative

Bruce has been with his operation. He is very dedicated and a committed member of our agriculture community. I want to thank you

for being here today.

STATEMENT OF BRUCE COBB, FARMER, BRIDGETON, NEW

JERSEY

Mr. COBB. Thank you for having me. I would like to tell you a

little bit more about what we do than Mr. LoBiondo just said. I

think it would put my testimony in perspective. We are a business

that is 15 years old. It is a first-generation farm. It is a small farm.

Our revenues are between $1 and $1.5 million a year. We grow

specialty lettuces. We grow with recirculating hydroponic systems.

There are four or five things that we try to do, and that is grow

in a protected environment. We actually add sunlight. We light our

greenhouses all year-round so that we have a reliable supply week

in and week out. We schedule our crops so that we harvest daily,

weekly, so that we can have our product picked fresh to fill that

day’s orders. We recirculate all of our nutrient solutions so we don’t

have a negative impact on the environment. Our business philosophy in a nutshell is just to be a consistent supplier of high-quality

product.

We employ a tremendous amount of technology. We have to move

millions of gallons of water each day. We generate all of our own

electricity. We use the hot water from the cooler generators to heat

our greenhouses. We use electricity to light our greenhouses and

run the pumps. We use hundreds of computers that we have designed and built. Our intensive methods produce a very high quantity of food in a very small area. For example, our 2 acres of greenhouses in southern New Jersey produce about the same amount as

23 acres of prime land in the Imperial Valley.

What I have understood that we have been asked to respond to

the questions is why are not more young people attracted to agriculture, and what can be done to attract more young people to agriculture, and what can we do to help the people that are in agriculture continue to be successful or make them successful?

I think that simply the economics of the reality of farming today

keep people from entering agriculture. The ultimate consideration

from one who puts money up to go into a business is are they going

to get a fair return on their investment and sweat equity. A typical

business model today for farming, you buy some land, you buy a

tractor, and you raise some animals, and you sell them to someone

else who does the work of packaging, marketing, and does all of the

sales work. The farmer raises a commodity and the marketer essentially picks the price. So the marketer can always find someone

else either here or in another country willing to grow the product

for something less. That is the job of the buyer, and they do it well.

In other words, on the average, commodity farming will always be

a marginal business; therefore, young people who decide not to

enter this type of business are making a wise decision.

I think to attract more people to agriculture, people have to have

a higher regard for agriculture in general. Then a higher percentVerDate 11-MAY-2000 12:49 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 E:\HEARINGS\65504.XXX pfrm08 PsN: 65504
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age of entrepreneurs would enter agriculture. Young people start

farms, software companies. Both businesses are hard. Both require

brains, motivation, luck, ability, the whole gamut. All businesses

are hard. But people don’t understand that there are so many opportunities in farming and, therefore, aren’t attracted to farming.

People having attributes to run a successful business are attracted

to other types of companies. So I think it is a communications problem.

I think it is something that you could help us out with, and that

is to get the word out that there are lots of opportunities in farming, and the government can use your communication and your

abilities to get that word out.

There has been a lot of talk about capital. All new businesses require capital. It takes convincing people to obtain capital. So part

of being able to run a successful business is also being able to obtain that capital. I don’t know if we need a whole lot of programs

because I believe that a person who is capable of running a business can also get the necessary capital because they can prove to

somebody that they are going to get a good return on their investment, not marginal return on their investment.

The biggest thing that you can do is—the elimination of the inheritance taxes. I think the family farm, most farming entrepreneurs are funded by family funds. I think that is the most important thing you can do. If you would really like to promote agriculture entrepreneurship, then only eliminate inheritance taxes on

farms. That would really help.

I would like to hit a couple of things that you could do for us

right now. I see I am running out of time. One is the Social Security test. We have a lot of older people that work for us that get

upset when they get their Social Security wages cut; people that

have worked for other companies for 35 years and want to be productive a little bit more into their lifetime, and they feel they are

being cut by the government so that they get taxed at a higher

rate.

The INS. We have many workers from Mexican descent, and we

are always scared there is going to be an INS raid. We don’t want

our employees lined up against the wall and quizzed. We want

them treated like the human beings that they are, and we want to

have regulations that allow us to have a good reliable work force.

So let’s get these regulations for the INS so it is off the back of the

people.

Minimum wage I won’t hit on. I think that we need to reduce the

wage taxes on people entering agriculture, young people right now.

They are just paying—the 15 percent on the little bit they make

is too much.

I would have one suggestion that I would like to spend a little

bit longer than I have, but that is product labeling. As you already

understand our business, we try to have a relationship with our

customer. They know where our product was grown that they buy

from us.

One of the problems right now there is no truth in labeling. My

herbs are up against somebody else’s herbs, and by reading both

people’s packages of herbs, you would think that they said ‘‘packed

by,’’ that implies that it was grown by, and that is not true. Packed

18

by and grown by. It is the person that grew the product that has

all of the sweat equity and all of the hard work and all of the risks

into that product, not the person that bought it and packed it. They

only had title for it for a very short period of time.

So product labeling would help us with the negative effects that

the FQPA is going to have on the U.S. farmers. Product labeling

in a nutshell will help farmers with the costs associated with

FQPA; promote free trade, because people will know what they are

buying. It will educate consumers to buy local. It will let the marketplace push down the amount of pesticide use, and not costly regulations because people will know that if it was grown in the

United States, it has less pesticides on it. It will increase opportunities for entrepreneurs and attract investment in U.S. agriculture.

It will give farmers the help they need in moving from a commodity

to a brand name. It will give the farmers the power to fight the

large corporations that control the whole retail food distribution in

this country. And product labeling will benefit all farmers and all

consumers, and product labeling will release a wave of farmer entrepreneurship in this country. Thank you very much.

Chairman PITTS. Thank you, Mr. Cobb.

[Mr. Cobb’s statement may be found in the appendix.]

Chairman PITTS. Mr. DeMint.

Mr. DEMINT. Thank you, Mr. Chairman. It is my pleasure to introduce a constituent from my district, Mr. Baron Johnson, who

has come here today from Inman, South Carolina. Mr. Johnson is

a peach, apple, and small fruits grower in my district, and he is

a fourth-generation farmer, so he knows something about transferring of farms from one generation to the next.

South Carolina has the best peaches in the world, and Mr. Johnson is a big part of making that happen. We thank you for being

here and look forward to your testimony, Mr. Johnson.

STATEMENT OF BARON JOHNSON, FARMER, JOHNSON BROS.,

INC., INMAN, SOUTH CAROLINA

Mr. JOHNSON. Thank you. I want to thank you, especially you,

Mr. DeMint, for this opportunity to appear before you today. I am

a 24-year-old peach, apple, and small fruit grower from upstate

South Carolina located between Atlanta, Georgia, and Charlotte,

North Carolina. I am a fourth-generation peach farmer, but we

found it increasingly difficult to keep on doing what my family has

done for so many years. Because it is more difficult to commercially

farm peaches, we have gone from 600 acres total down to less than

200. I am attempting to diversify by trying to start a small berry

farm with blueberries, blackberries, and raspberries. I farm peaches and apples with my family full time and farm my berries at

nights and on weekends.

My comments today are developed with my particular farming

expertise in mind, but in talking with other people, they have some

of the same problems as I do.

A farm is just like any business with inputs and outputs. In

order to stay in business, the cash coming in has to exceed the expenses. With peaches, the cost of all inputs has gone up consistently year after year; however, what the farmer gets back for his

crop has not gone up in as many as 15 to 20 years. We can’t set

19

the prices, we have to get what we are given. The cost of land,

equipment, labor and chemicals has continued to increase, making

it virtually impossible to start a new farm from nothing.

To get into farming you either have to be born into it, marry into

it, or inherit it. A young person coming out of high school or college

wanting to start farming probably has no collateral to put down on

the loan, and that makes it difficult to get a loan at all or at a decent interest rate.

Currently, I am paying 10 and 15 percent interest on a line of

credit and loan, which makes it very hard to pay anything toward

principal to start getting out of debt. Because it takes 3 to 5 years

with tree crops to get a good first crop, you have to have a second

job that can sustain you for the first 3 to 5 years when have you

zero cash flow in. In the fruit business, we have found that you

must start out small and build over time. However, in many of the

row crop operations in the State, the narrow profit margin has accelerated the trend for those farms to become larger to take advantage of the economies of scale. This trend helps lower cost of production, but it makes it even more difficult for young farmers to

get started.

We produce a crop that is extremely labor-intensive. We also live

in an area that has a low unemployment rate, and we need programs to help us gain access to additional labor supplies at no additional cost. We don’t need additional regulations to add costs

without adding any benefits. There is enough of those already.

The agricultural economy is also increasingly dependent on world

markets and international trade. It is virtually impossible to compete with imported crops. It seems common sense not to import a

commodity while they are fresh and in season here to compete with

our own local growers. We need means of praising farmers and the

safest food supply in the world. We need to encourage the public

to support local farms rather than tell them if they eat fresh fruit,

they will be exposed to pesticides. The public needs to be educated

about pesticides, what they are, why we need them, and the realistic probability of residues, and realistically how much residue it

would take to actually make somebody sick.

Let me close with a few comments that come from experience. In

commercial peach packing, the broker, freight company, grocery

store warehouse, and grocery store all make money. Why can’t the

farmer make a profit? The gap between what the farmer gets and

what the grocery store gets is too big. For instance, if the grocery

store is asking $1.59 a pound, this equals $40 a box. The farmer

probably gets 40 to 45 cents a pound, which is $10 a box. Most

other countries spend 30 to 60 percent of their disposable income

on food, and we spend 10 to 12. The farmer has got to be able to

grow his product, manage his farm and realize a profit in the end,

and it is just not happening.

Federal, state, and local governments compound the frustration

that farmers feel by providing incentives for other businesses to locate next to our farm, drive up land prices, but will not consider

the same incentive package for the start-up of a small agricultural

business. BMW came in 20 minutes down the road from us. South

Carolina Port Authority bought the land and leased it to them for

$1 a year. We can’t compete with that.

20

The bottom line to getting young people into agriculture comes

down to making a profit. If young people cannot find a way to

make a profit in agriculture, they will find other professions. The

net result will be the loss of thousands of small businesses and no

young people replacing these lost farmers. If this continues to happen, we will be importing more and more food of sources of unknown origin and unknown production practices. Thank you.

Chairman PITTS. Thank you, Mr. Johnson, for that excellent testimony.

[Mr. Johnson’s statement may be found in the appendix.]

Chairman PITTS. We thank all of you for your testimony. It has

been extremely informative.

Now, if you will indulge the Members, we would like to ask the

panel some questions. We will limit each Member to 5 minutes per

round.

I will start with a question for Dr. Brown. Dr. Brown, it is obvious from the testimony from the panel that farm income has been

static or greatly reduced. Yet I haven’t noticed my grocery bill getting any lower. What is happening to the profit margin that the

producers are receiving? If the money isn’t going to the farmers’ pocket, where is it going, and what can be done to increase the

profit margin?

Dr. BROWN. One of the things that we need to look at is how productive we have been in agriculture over the past several years.

That is one of the reasons that I do think when you look at many

agriculture commodities, the prices have remained fairly constant.

We have been very good at producing an ample supply of food and

have kept prices fairly flat in nominal terms.

When you look at what is happening when we go to the grocery

store, yes, we do see prices over time have crept up. Part of that

can be associated with some of the additional costs that must be

borne by other players that are in that food chain. Wages for the

folks to transport that food, to put it on the shelf, all have increased over time. So we have seen some costs for those additional

players in the system increase.

Whether or not the kinds of margins that we see in place in some

commodities today more than take care of that additional cost is

a question that should be addressed.

Chairman PITTS. Mr. Young, you mentioned off-the-farm income,

to maintain the farm. Is it often necessary for you or your spouse

to hold a second job to make ends meet? Is this a common practice

for young farmers?

Mr. YOUNG. Well, in New England and New Hampshire, the only

segment of the agricultural industry that is increasing in numbers

are people that really earn their living off the farm, and they are

doing their agriculture, farming, as a part-time operation, and they

are doing it because they love to farm. They can’t really afford to

do it, but they are really earning their living on the outside.

Also the other component that makes that work, is that they

have taken the middleman out. They are into some niche or some

retail area in which they can deliver their product directly to the

consumer. Those are the people in our area that are successful. The

ones that are in the middle category in size of farming are the ones

that are really hurting and really declining.

21

Chairman PITTS. Mr. Cornwell, you and several other panelists

mentioned estate taxes, the death tax. We have a bill introduced

in Congress that would provide for the elimination for both estate

and capital gains tax if a farm pledged to stay in farming, if they

were in a state program, or if they would sign an affidavit that the

farm would stay in farming. What is your opinion of this type of

approach for some kind of tax relief?

Mr. CORNWELL. That would be great, Mr. Chairman. I know the

National Cattlemen have worked hand in hand with a lot of Members of this Committee to see that that gets done. We were disappointed that we didn’t get the bill signed, but at any rate, I think

that would have a direct impact on the livestock industry. I know

it would have. If those ranchers were just allowed to stay in business, that would be great.

I will give you an example. There was a ranch that was a neighbor to our family operation in northern Montana that sold about

2 months ago just because the younger generation couldn’t pay— I think the ranch was valued at about $8 million. It was a fairly

large operation, and the taxes were over $3 million, and so the people that were operating the ranch were my age, two brothers. They

liquidated the cow herd and at an auction sold the ranch because

they couldn’t pay the taxes. That ranch had an annual operating budget of about $800,000 and employed about eight family members. So that operation is gone, and I don’t know what is going to

happen to it.

Chairman PITTS. One other troubling aspect of the death taxes

is that when you liquidate assets, when you have to sell assets to

pay death taxes, there is a limit then to what you can borrow when

you have to go to the bank to borrow; is that correct?

Mr. CORNWELL. That is correct.

Chairman PITTS. Mr. Ecker, you suggest that tax credits should

be developed to aid young farmers. What are the best structured

tax incentives that would benefit young farmers, in your opinion?

Mr. ECKER. Well, if there would be something on payroll taxes

that a spouse or the young farmer pays in connection with his offfarm job, some type of tax credit that he could apply from his offfarm job to his farm income would be one way. Another way is, just

like I mentioned, on our new generation cooperatives in Missouri.

We are now getting a tax credit. If you invest in that cooperative,

you are going to get a tax credit of 50 percent, that is what it looks

like it is going to be now, of what your investment was that you

can carry forward I think it is 5 years, or you can even carry it

back a few years, which is a good benefit.

Chairman PITTS. Thank you. My time is up.

Mr. LoBiondo.

Mr. LOBIONDO. Thank you. I have just a couple of questions. We

talk about the product labeling. Let me just explore that for a moment. You were running out of time when were you talking about

that. Are you finding that beside the problem of folks not realizing

that maybe the product wasn’t grown by the people who are sort

of portraying it that way—when we get into this area of EPA and

labels and the pesticides, do you find that at this stage of the game

what EPA is looking to do is going to further hurt your ability to

grow and produce?

22

Mr. COBB. Absolutely. It is going to be a real detriment to the

average U.S. farmer. We try not to grow with pesticides, but that

is for a marketing thing, not because I am against pesticides. However, buyers, their job is to buy at the best price. They will just buy

from people that are able to use those pesticides in Mexico or Israel

or wherever, and they will get better quality, and it will be shipped

in overnight. We will not be able to play on the same playing field.

Mr. LOBIONDO. So basically what would happen—correct me if I

am wrong—is that our farmers would be denied the use of certain

labels; the same chemical manufacturers here in the United States

would ship and sell those labels to Argentina, Chile, wherever it

may be; our farmers will have a difficult time staying in business;

and people will be getting more pesticide than they would have if

they were eating American-grown food?

Mr. COBB. That is absolutely correct.

Mr. LOBIONDO. Kind of insanity, isn’t it?

Thank you, Mr. Chairman.

Chairman PITTS. What would you put on the label?

Mr. COBB. Years ago when you bought strawberries in a quart,

you knew that Mr. Jones down the street had the best quality

strawberries, so you bought Mr. Jones’ strawberries. So you should

put down the name of the person that grew that product and the

farm. With the Internet, everybody has more information nowadays. So why shouldn’t they know exactly where their product

came from? They would give people real faith in what they ate.

We are going to promote open houses. If you want to come see

our operation, you can come visit us one Saturday every quarter.

I think people would like to do that. They like to see where their

food came from.

Mr. LOBIONDO. Let me just take off on that for a minute, too.

Right now nothing stops you from putting your name on your label

and selling it, but is the problem that somebody either cross-country or down the street can, in fact, put a label on the product that

is somewhat misleading or downright misleading?

Mr. COBB. Absolutely. Two issues. One is where the product was

grown, and the other is improper labeling or truth in labeling, as

I will put it. A lot of packages—you can go out and look at tomatoes. A lot of specialty things say, ‘‘Packed by ABC Company.’’ You

would think that the ABC Company was the person that grew it,

not it came from Chile.

So yes, there are two issues there. We do label all of our products

that go out the door. We think that is important. But I think other

farmers should do that as well because that builds a strong farming industry, and that is important to me.

Mr. LOBIONDO. So in our supermarkets a consumer can go into

a produce aisle and find a container that is labeled ‘‘Packaged by

ABC Corporation’’ and think that it is grown by ABC Corporation

in Hometown, USA, and actually that product could have been imported from Argentina, Bolivia, Colombia, or wherever it may be.

Mr. COBB. Almost all of competitors in the herb business you

could find will say that is true.

Mr. LOBIONDO. Thank you.

Chairman PITTS. Mr. DeMint.

23

Mr. DEMINT. I will direct my question to Mr. Johnson, but I

would like comments from some of the rest of you, too.

Congress is considering raising the minimum wage. I would just

like to know if that is going to be a help to you, Mr. Johnson.

Mr. JOHNSON. It is going to cut into a profit margin that is not

there now. Labor is our biggest thing. We have several guys that

stay year-round. You have to prune peach trees, thin them, spray

them. There are things to be done all year long. If the price of labor

went up, that would cause our payroll to go up, the taxes to go up

and everything. Not just that, but the products that we buy in,

they will have more in them, and they will go up. The price of what

we get back for our commodity has not gone up in years and years.

So it would not help us at all.

Mr. DEMINT. Any other comments about minimum wage?

Mr. COBB. May I respond to that? I hope you understand that if

you raise minimum wage, you reduce the number of jobs for minimum wage for low-skilled people. That is what you do, because as

I put up greenhouses,—if the minimum wage goes up $1, I will

spend money, capital, to reduce the labor input that I need. So the

only people that lose in minimum wage jobs are the people that you

are trying to help in the first place.

Minimum wage jobs teach people. They give them the opportunity to teach people how to show up for work everyday, which is

a skill that, unbeknownst to me, a lot of people don’t have in this

world. They give people pride. They let people get off the public

welfare rolls. We have three people that are now—have started the

minimum wage job, have now moved up to becoming U.S. citizens.

They are making considerably more than the minimum wage. If

they didn’t have that opportunity 5 or 6 years ago, they would not

be productive citizens now.

You are hurting the people that you are trying to help. We don’t

expect people to stay on minimum-wage jobs around our place. We

expect them to get trained and move on and move on up the ladder,

because that is what America is about. Any increase in minimum

wage will increase capital input, which will reduce the number of

jobs.

Mr. CORNWELL. Minimum wage would have a pretty minimal effect in the livestock industry. Most of our people are individual

family operations, and a lot of them don’t hire help. But even in

the feed yards, a lot of the feed yards have indicated to us that

they don’t have a lot of people at those levels now. I would say that

it would have minimal effect.

Mr. GROSS. Minimum wage in my area is more of a training

wage. I do not have migrant laborers like the other two, but high

school children or people that attend my church ask for their children to have a job on my farm when they are in high school, 16

or 15 years of age.

The whole theory behind the minimum wage, my understanding

is that is a training wage. That essentially—not only do they get

the minimum wage, but they get a little responsibility, learn to

show up to work on time, like he referred to. They don’t stay fulltime, they move on and leave my farm and go to a college or another profession. So it would hurt me, as he indicated. I will use

more technology if minimum wage is raised.

24

Mr. YOUNG. I think, speaking from my industry in New England,

there are very few minimum wage earners in the apple industry

in the Northeast. But you can believe that if a person is being paid

$7 an hour, and minimum wage goes up 50 cents, he is going to

expect a raise. So there is going to be an effect, but there is not

going to be many people that are going to directly receive it because they are earning the minimum wage now.

I think it would be a significant cost that would impact the industry, another one that we probably don’t need, because what we

are trying to do is raise the bottom, and the bottom is not who is

going to be raised, but somebody significantly above the bottom.

Mr. DEMINT. Thank you, Mr. Chairman.

Chairman PITTS. Mr. Sweeney.

Mr. SWEENEY. Thank you, Mr. Chairman. I want to thank you

and commend both you and Mr. LoBiondo for conducting these

hearings, and the panelists for participating with your very compelling testimony.

I also want to apologize. I have been running in and out because

I am in the middle of a Banking Markup. It is kind of an interesting day for me because the banking hearing is about debt relief

for foreign nations, about a billion and a half dollars. As I sit here

representing a district that is substantially agricultural—and the

hub of our economy is really agriculture—and I go through the

pain and the anguish of the family farmers in my district every day

talking about how we overregulate, how we overtax, and the Catch22 that you all have done a better job talking about it than I could.

It really has an effect on you.

I would ask first if I could submit a formal statement to the

record and ask a couple of questions, if I might.

Mr. Young, I am from your part of the world. Upstate New York

is not dissimilar from New Hampshire. You spoke about the need

for family farmers to seek outside income. You said in response to

a question from Congressman Pitts that it was now more the trend

that the family farm income really wasn’t from the farm as much

as it was from the outside income.

What kind of effect, and other panelists might want to answer

this as well, what kind of effect does that have on production and

on our guarantee that we are going to have fresh viable products

and produce or whatever for the areas that we live in, or does it

have an effect?

Mr. YOUNG. Well, we are having an increase in numbers of

farms, but they are small farms. They probably won’t necessarily

stay in business forever. These are not the kinds of operations that

can be passed on to family members. They are the kinds of operations that are relying on their living, and they are only doing it

because they love farming.

It is interesting. Before we downsized my farm, and basically I

am just doing it as a hobby now, we went out and started a travel

agency so my wife would have a place to go to work, because she

had worked the 25 plus years that I had been on the farm. Today

my oldest son who was on the farm with me manages a travel

agency. My youngest son, who never actually worked on the farm,

is actually working as an agriculture consultant for one of the

25

grower organizations in New England. So we are staying in agriculture to some degree, but we are relying on income off the farm.

Mr. SWEENEY. I presume when we are dealing with perishable

goods, as dairy are and other products are, it is going to have a

negative effect both for the consumer and for the community at

large to not be able to ensure that you can purchase or buy those

products freshly locally. Would you agree with that?

Mr. YOUNG. Well, to some degree the importation of things such

as apple juice concentrate from China has taken the bottom out of

the market. Over the years when we have had crop failures, we

could generally get 4 to 5 cents a pound for juice apples. This year

the top you can get is 33⁄4 because of the importation of foreign concentrate.

It is very difficult to maintain an industry when we lose the

basic financial structure under it due to imports that are coming

in that are being grown differently.

Mr. SWEENEY. As I believe Mr. Cobb pointed out, there are different rules in trade policy. We could have a long discussion on

that. I will try to get to some more here. I have a lot of them.

For Steve Gross, I just wanted to ask you, you mentioned that

you are in partnership with your brother and your parents. Have

you thought about what is going to happen to the land once your

parents retire, what the implications are? Have you done those

kind of calculations?

Mr. GROSS. I can’t give you the hard figures or the number, but

I will just speak from my mind. Due to the development in our

area, increasing in industry and in housing, land prices have skyrocketed, especially in the last 10 years since I have been out of

college. We have done some preliminary estate planning, and we

have transferred some farmland. My grandfather did transfer a

farm to my brother and I, which we purchased. However, the bulk

of our family assets, which my father and grandfather owned together, would have an assessed value in the millions.

The estate tax from just when my grandfather passes away to

my father and mother’s share, we have had some preliminary

meetings with consultants, accountants and everything, and it is

going to be about $57,000 that we have to come up with in a year

just to pay the tax after we have a funeral when my grandfather

passes away. So how are we going to transfer our largest asset

then from my mother and father to my brother and I? We are not

sure yet. There are a number of tools at our disposal, but it is

something that is going to have to be worked at. If something

would happen to them, if they were to precede my grandfather in

death, we would be in real trouble.

Mr. SWEENEY. I see my time is up. I just wanted to say that I

think one of the most important things we need to do in Congress

is to get the story that each of you have told out to America so they

understand your plight as well.

Thank you, Mr. Chairman.

Chairman PITTS. Thank you.

Mr. Thune.

Mr. THUNE. Thank you, Mr. Chairman and members of the

panel.

26

How many on the panel here participate in Federal farm programs? A couple. If we had to look at things that we could change

in the Federal farm policy that we have today, what would those

things be, in your estimation? Mr. Ecker or Lynn, if you want to— either way.

Mr. ECKER. When we passed Freedom to Farm Act, which I am

for Freedom to Farm Act, there were promises made that we would

open markets, regulatory reform and such along those lines, and it

really hasn’t happened. I would a lot rather sell my product for a

reasonable price than receive a government payment. And so I

think that we need to look at opening our markets and just regulatory and tax reform, which would help lower our cost of production so we would be more competitive with other countries.

Mr. CORNWELL. Thanks, Congressman.

I think that we need to keep government involvement to a minimum. It sends out mixed signals to a lot of producers. And when

you have support prices for a lot of commodities, it makes a lot of

lazy farmers out of some people, and it actually guarantees some

people to be in business that shouldn’t be.

But I guess what I am saying is we ought to be kind of careful

on these government programs.

Mr. THUNE. The reason that I ask that is there is a lot of discussion going on. I serve on the Agriculture Committee, and there are

hearings scheduled after the first of the year which would examine

the wide range of Federal farm programs as to what changes or improvements might be made. It seems to me at least today that

there are a lot of problems in creating additional surpluses and it

is aggravating a problem that we already have, which further depresses prices.

I look at my area of the country, and we are predominantly a lot

of small towns. I have 200 or thereabouts towns with fewer than

200 people. As all of those towns and the population base shrinks,

there are fewer and fewer farmers and ranchers on the land, less

population, which impacts education, which impacts health care

and all of these other things. What we are seeing is the family

farm goes by the wayside, and so does the community that it supports. There are a lot of sociological implications that go along with

that.

But if there were things that we could do to keep young people

in farming—and some of the things that had been mentioned, getting rid of the death tax, obviously, to allow those operations to be

passed on. But say, for example, you are a farmer, somebody who

wants to get into the business, and you don’t have the benefit of

having a family that is currently farming that can pass on that estate. What are the barriers to entry, and what could we do to remove them?

Mr. CORNWELL. The cost of capital is too high for young farmers

that want to get in the business. I think there ought to be some

kind of incentive or form of a low-interest loan or things to good

qualified borrowers that would allow people to either expand their

operations or get into the business.

Mr. THUNE. To what degree—go ahead.

Mr. GROSS. Farming is very unique. It is capital-intense with little return on the investment. Terry alluded to earlier a new comVerDate 11-MAY-2000 12:49 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00030 Fmt 6633 Sfmt 6602 E:\HEARINGS\65504.XXX pfrm08 PsN: 65504
27

bine at $120,000 or a used one, whatever, he would only use that

machine 6 or 8 weeks out of the year. If he was going to spend that

money in industry where he would run that machine and use that

$120,000 for 365 days a year and put two or three shifts on it, it

would be a lot different. So the capital intensity is there. We need

some kind of break. There are things to do.

Mr. THUNE. Let me, if I—I know, at least my understanding is,

Mr. Ecker, that you are associated in some way with value-addedtype enterprises. That to me, again, seems, from my point of view—

and where I come from, we are a long way from terminal markets,

and anything that we can do to add value to the product along the

way. What things could we do in terms of incentives? Is there a

role for us to play to encourage or stimulate or in some way enhance value-added agricultural opportunities out there?

Mr. ECKER. In the state of Missouri, two ethanol plants broke

ground, costing me $13,000. As a young producer I cannot take

that out of my budget. But this year the Missouri General Assembly passed tax incentives. So if I invest this $13,000, I am going

to get $6,500 back in tax credits. Now, I can justify that because

it is reducing my costs, so therefore I am going to gain on the other

end because as I sell my corn through this ethanol plant, I am

going to get a better return on my investment because I am going

to get a value-added product sold that way.

Mr. THUNE. That is something done by the State of Missouri?

Mr. ECKER. Yes.

Mr. THUNE. If I might have one additional question, and Dr.

Brown, this might be a question to you, too, or others who would

care to comment on this. One of the things that people in my region of the country are honing in on right now, in terms of the

issues that are impacting agriculture, is the whole issue of concentration. And to what degree does—those of you who sell your

products, you have fewer and fewer buyers, it seems like, at every

level up the chain. What is your assessment as to what degree that

impacts the future prosperity of agriculture?

Dr. BROWN. I think we are going to see a lot of debate about concentration in the coming year. We at FAPRI, as you may know, are

in the business to try to evaluate alternative policies. We will stand

ready if there is any kind of movement to curb concentration or so

forth to try to help to analyze what that may mean to producers.

Take hogs, for example. A lot of these smaller mid-sized producers

are going to continue to find markets very hard to come by. This

concentration is going to make those markets even less available

than they are today. So one of the things that producers are going

to have to look at very hard is where the market will be a year

or two down the road. Ten years ago I may have had three or four

options of where I am going to sell my hogs. Today I may have one.

We want to make certain that producers are in the position that

2 or 3 years down the road, those markets are still there.

Mr. COBB. May I respond to that as well? I was just reading on

the front page of The Packer or The Produce News that eight companies, food distribution companies, Safeway one of the examples,

eight of those people now control 40 percent of the distribution, retail food distribution, in this country.

28

Product labeling will help the farmer have some power against

the buyer because right now the extra job is to get it at the lowest

price. If we can’t get our name to the consumer and we have that

roadblock in front of us, we will never make it. It will not be possible.

Mr. THUNE. I appreciate all of your answers. I think it is true,

whether it is grain buyers or meat packers or whatever, there are

fewer and fewer. That does limit your options, and ultimately it

has a direct impact on price.

Incidently, I am very much in favor of your idea about labeling.

It certainly applies to products that come in my region of the country, and I am sure Mr. Cornwell would agree that beef would be

a good idea to help market our product there as well. Thank you

for your answers.

Mr. CORNWELL. Price reporting is going to help, too.

Mr. THUNE. Right, and we have made some progress on that.

Thank you, Mr. Chairman.

Chairman PITTS. Thank you.

Mr. Moore.

Mr. MOORE. Thank you, Mr. Chairman.

I want to apologize to the Committee and to the panel members.

I was, and, in fact, I am still, in a Banking Committee hearing. I

have been involved in their markup, and I just came in.

I did want to ask Mr. Gross a question or two. I have reviewed

your written testimony, sir. You indicate the primary issue that always comes to mind is the need to eliminate estate taxes. You say

in your written testimony, death tax elimination is the Farm Bureau’s top tax priority. Is that correct, sir?

Mr. GROSS. Yes.

Mr. MOORE. If elimination of death taxes is not in the immediate

future, not in the foreseeable future at least, would you be interested in legislation that would increase the tax credit, say, from

$675,000 to $3 million? Would that be helpful?

Mr. GROSS. Yes, but we would like it to be generated towards the

family farms. There is some room for negotiation in there. Credit

should be given to people like myself or Mr. Ecker, who are helping

the family farm generate that farm, build the assets, as maybe opposed to all farm heirs—have other jobs.

Like, for example, I have a sister who is a doctor. She has stated

that she would not be interested in our farm and the assets. However—so if the assets were passed to her,—the estate tax could

apply. If it stays into farming, then I would support that, yes.

Mr. MOORE. But your indication is through your written testimony that you wanted the estate tax itself eliminated?

Mr. GROSS. Yes, I think so, yes.

Mr. MOORE. But you would be generally supportive of a bill that

would increase a credit, say, to $3 million. Wouldn’t that cover the

great majority of farmers in this country, don’t you think?

Mr. GROSS. Yes.

Mr. MOORE. And small business as well?

Mr. GROSS. Yes.

Mr. MOORE. I have a bill that does that. I may send you a copy

of that. Thank you.

29

Chairman PITTS. I can’t resist this question. If you were faced with a bill that would raise the minimum wage by $1 over 3 years,

but in that bill also you would repeal the death tax and have 100

percent deductibility for health insurance, how would you vote?

Anybody care to comment?

Mr. GROSS. I would probably vote in favor of it.

Mr. THUNE. Is the Chairman looking for suggestions?

Chairman PITTS. You have been an excellent panel. We thank

you for your testimony. We would like to stay here and continue

with questions, but we have another panel. Thank you very much

for your testimony. If you would submit your written comments, we

will enter them into the record.

I would like to call the second panel to testify. Before turning the

chair over to Mr. LoBiondo, I would like to introduce the first witness. Our second panel is composed of Mr. Gary Smith, Ms. Susan

Offutt, and John Baker. John Baker is from the Iowa Beginning

Farmer Center. Susan Offutt is the Administrator of the Economic

Research Service for the U.S. Department of Agriculture.

The first witness I want to introduce is one of my constituents,

Mr. Gary Smith. He is the executive director of the Chester County

Development Council. I think that he has served in that position

for about 24 years. The Chester County Development Council is a

private nonprofit economic development organization in Chester

County, Pennsylvania. He is a cattle farmer. He has a great deal

of experience and expertise. I worked with him for many years

when I was in the State legislature.

It is a real pleasure, Gary, to welcome you. At this time if you

would make your statement, and I will turn the chair over to

Chairman LoBiondo.

STATEMENT OF GARY SMITH, EXECUTIVE DIRECTOR,

CHESTER COUNTY DEVELOPMENT COUNCIL

Mr. SMITH. Thank you, Mr. Chairman. Good afternoon,

Chairman Pitts and also Chairman LoBiondo and members of

the Joint Subcommittee. It is certainly a privilege to be here this

afternoon to give you some thoughts and reflections about this important issue here facing this country.

My name is Gary Smith. I am Executive Director of the Chester

County Development Council. We are a nonprofit organization that

serves the economic development needs for Chester County, Pennsylvania, for the past 40 years. I have had the privilege of serving

as the executive director for 24 of those years and during my tenure have been able to watch a lot of corporate investment come

throughout Chester County. I have also been chagrined that economic development as a profession, which I practice on a daily

basis, often fails to consider agricultural development as an integral part of our economy.

On a personal note, I have been born and raised on our family

farm on 111 acres in West Bradford Township, Chester County. My

father was a fourth-generation dairy farmer that immigrated here

from northern Ireland. We successfully manage today a registered

Holstein cattle herd for many years and until my father passed

away 14 years ago, at which time I have managed to maintain a

registered herd, polled Hereford cow-calf operation, a purebred

30

herd of 50 animals, and also raise various crops on our family

farm, and continued my occupation off the farm as well.

I have been involved in creating and sitting on many agricultural

organizations that support and enhance the profession of farming

within our suburban marketplace. I also have had the unique experience to draw on since I work with both the economic development

and agricultural development community on a daily basis. I want

to bring to you this morning or this afternoon a few of my personal

commitments and passions that have drawn this committee together in looking at the future of farming within this country.

I believe that we need to integrate economic development and agricultural preservation to be incorporated into a seamless process.

Managing the affairs of our organization of 12 members, staff

members and operating budget of 1 million dollars, completely supported by the private sector, I have observed that our profession in

the general sense of the word provides an abundance of economic

development services to a wide array of companies that are dotted

across our landscape. Unfortunately, agriculture has been perceived merely as open space within the growing suburban community. Many public policymakers have considered sound preservation

programs in order to preserve open space, i.e., farming; however no

one is paying any attention to preserve the occupation, the livelihood, and the professional development of the farmer.

Chairman Pitts, you and your like-minded colleagues have shown

tremendous leadership capabilities as an ally of farming, particularly in the area of estate planning and reforms that minimize inheritance taxes which have been imposed upon passing on family

farms. This has been a significant step in the right direction towards maintaining stability and continuity in preserving the family

farms.

Farming is a business. I emphasize it is a business. It is a business without walls. Unlike the corner gas station or the office

building or the industrial factory, it functions as an economic unit

within itself with certain fixed costs as well as variable costs that

are beyond the farm entrepreneurs’ control. We need to deliver a

system here in this country that is more attuned to helping a farmer with technology improvements, with production improvements,

and with succession planning as a consequence. We in Chester

County propose to establish an agriculture development council initiative as our response to this need.

Since I have been personally burdened with the farm issues for

many, many years, I have attempted to create new loan initiatives,

particularly for Pennsylvania farmers. I currently administer over

26 different low-interest loan programs for businesses and industries throughout our service area. There are no loan programs

available for farmers in Pennsylvania, as Mr. Gross, a farmer witness, here indicated. With this in mind, I became aware of existing

Federal legislation that also would enable Pennsylvania to create

new loan programs and take advantage of programs which other

States have taken control of. I began writing editorials in farm

journals to get the attention of our Ridge administration, and to his

credit, unlike the three previous administrations which had deaf

ears to farming in Pennsylvania, the Ridge administration was

truly open-minded. They invited me to come and convince senior

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policymakers that there was actually a need to create a new program. Now Pennsylvania is proud to offer the Next Generation

Farm Loan Program, which is being marketed throughout the

Commonwealth. I am proud to say that we have many projects that

are being used or are using this program.

Allow me to update you on farming as we experience it here in

Pennsylvania. Farming is the number one industry in Pennsylvania. Agriculture in southeast Pennsylvania, where Chester County is located, is tremendously productive, growing 42 percent of the

State’s market value on 23 percent of the State’s farms, 16 percent

of the State’s farmlands. Chester County is number two in agricultural production after Lancaster County, which is also part of Congressman Pitts’ constituency. Unfortunately, Chester County as

well as Pennsylvania as a whole has twice as many farm operators

over the age of 70 than under the age of 35. Since Chester County

farms cover about 175,000 acres or about 36 percent of the land

area of our county, it has an amassed revenue base of $342 million,

according to USDA statistics. Despite the importance of agriculture

in the region, we are losing farms and farmlands at an alarming

rate. From 1960 to 1992, the region lost 28 percent of its farms,

and total farm acreage declined by 21 percent. Chester County is

losing over 8 acres a day in farm ground.

It is clear that a set of interrelated barriers are at work to adversely affect the viability of agriculture. They include the following: One, the shortage of beginning farmers to replace retirees;

two, the increasing valuation of farmlands for nonfarming purposes; three, the increasing inability of farmers to attract low-interest guaranteed loans; and the difficulties with intergenerational

farm transfers; five, the decline in beginning farmers with the technological knowledge to succeed economically and commercially.

Given these factors, there are three new initiatives we would like

to talk about: One, the loan issues. Expand the funding which is

a vitally important issue; two, to permit Farm Service Agency

guarantees on aggie bonds; three, exempt aggie bonds from the volume cap on industrial development bonds.

Also, there are some other issues I want to talk about, but I have

written testimony to provide you this, farm succession issues which

we need: One, provide concerted assistance to retiring farmers to

facilitate transfer of farms; two, to encourage collaboration among

farmland preservation organizations and agricultural development

agencies that benefit beginning farmers; and we are looking at beginning farmers skills issues, sponsor programs that provide beginning farmers with prerequisite skills.

Today I would like to conclude my comments by just suggesting

the following. I would like to say in conclusion I contend that

young farmers need to be encouraged to examine a range of succession strategies as they seek the continuation of their farm business,

strategies that consider less capital-intensive farming practices and

more communication among partners upon marketing opportunities, ongoing skill acquisitions, and better low-interest loan guarantee programs.

Thank you for the opportunity and thank you so much for the

commitment to the future of young farmers in this country.

[Mr. Smith’s statement may be found in the appendix.]

32

Mr. LOBIONDO [presiding]. We want to thank you very much for

your testimony, and all of your written testimony will be submitted

for the record.

Next we welcome John Baker, Iowa Beginning Farmer Center.

John, thank you for being here.

STATEMENT OF JOHN BAKER, IOWA BEGINNING FARMERS

CENTER

Mr. BAKER. Thank you. Honorable Members of the House, it is

indeed a privilege and an honor to appear before you today, and

I want to thank you for it. I am an attorney, and I work for Iowa

State University. I work for the Extension Service. I am the staff

attorney at Iowa Concern Hotline, which is an information and referral hotline open to all Iowans. I answer the legal questions that

come in. I am also the administrator of the Beginning Farmer Center, which is a legislatively-created center to look at the issues surrounding helping young people get into agriculture. It was created

in 1994. It was the first beginning farmer center in the Nation.

Other States have had some success in passing out legislation. And

it was funded by the Iowa Legislature.

In addition to my duties, I am also the coordinator for the National Farm Transition Network. It is a network of some 20 organizations. The purpose of the network is to support programs that

foster the next generation of farmers and ranchers. We cover about

25 different States. There is a program in Pennsylvania, the Pennsylvania Farm Link, that has been in existence for several years

that is a member of the national network.

I believe the most important question facing American agriculture today is whether or not there will be another generation of

independently owned and operated farms and ranches. We will

solve the problem that we have in the farm economy. We always

have, and we will again. But if we only solve that problem for the

immediate short term, and we don’t look to the next generation, I

would argue that we have accomplished very little.

I think this is an issue that is coming to the fore, and it is being

recognized by many American farmers. Certainly in Iowa we have

had an increase in the average age of farmers with a decrease in

the number of farmers. In 1980, we had about 120,000 farms. We

are down to about 96,000, and there is some estimate that we will

lose about another 6,000 within the next 1 to 2 years. So it is a

big issue.

I would also like to commend to you an article written by a farm

wife, Ms. Allison Berryhill. I provided that in my written material

to you. It was in the Sunday Des Moines Register. It was called ‘‘In

Consideration of Farming.’’ She concluded, she lamented the fact

that her children probably won’t farm. She related the tale of a

number of farmers in their community, near Atlantic, Iowa, in

southwest Iowa, who are no longer farming. She wound up this

poignant article with a statement that said, ‘‘We are still farming

the land, but we have altered our production. I don’t think we are

raising farmers anymore.’’

[The information may be found in the appendix.]

Mr. BAKER. I think that is something that many farmers feel

today.

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The Beginning Farmer Center is engaged in a variety of activities to assist beginning farmers. We conduct seminars around the

State. We have developed a Farm Savvy manual. I have provided

you with an outline of that manual. We have done research into

issues surrounding farm business succession plans, and we are

going to in January of next year start a longitudinal study of several hundred Iowa farmers about their farm business succession

planning, and if funds can be found, we hope to replicate that

study all across the Nation.

I work more on the micro level with existing farmers, trying to

figure out how to bring people into their farm businesses. So I

would like to spend a little bit of my time talking about that, and

then I would also like to make a few recommendations.

I think there are several issues barriers facing young farmers. I

think number one is the insufficient farm exit strategies of existing

farmers. I have the opportunity to put on several seminars every

year on farm business estate planning and business succession

planning. The average age of the people that show up at those are

probably 60 plus years old, and they have no estate plan and no

business succession plan.

The other phenomenon that I see out there is called ‘‘farmer

boy.’’ Farmer boy is that 55-year-old farmer who has no managerial

authority on the family farm, that is still under the control and

ownership of the 80-year-old father.

So those are the kinds of exit strategies: Insufficient entry strategy; two, overreliance on borrowing money to buy your way into

farming. If you want to get into farming quick, borrow a lot of

money, and if you want to get out of farming quick, borrow a lot

of money; three, difficulty in obtaining appropriate financial, managerial, and production assistance; four, lack of community support.

As my previous speaker Mr. Smith mentioned, we don’t look at agriculture as an economic opportunity; five, difficulty in identifying

entry points into farming unless, as one of the previous speakers

said, you are born into it; six, the inability to acquire capital. At

least in Iowa we still have a very active agriculture lending in our

banks.

If I may be so bold, I would recommend to you several different

recommendations. Unlike some of the previous speakers, these will

not deal with Federal gift and estate tax, nor with capital gains

tax. They deal with the income tax. In Iowa we have a standing

joke that an Iowa farmer would rather die than pay taxes, so they

do. And we don’t bring young people in. I think that we could use

the Income Tax Code to incent that. For instance, we could provide

a $20,000 income tax credit on the first $20,000 of income for the

lease or sale—or lease of farm business assets to a beginning farmer; likewise, a tax credit to the beginning farmer.

In terms of value-retained or value-added closely held enterprises, I think we should provide low-interest loans or no-interest

loans to them, provided they make an opportunity for a young

farmer.

Finally, I think that it would be appropriate for the USDA to

provide matching grant funds to organizations such as Farm Link

of Pennsylvania or the Beginning Farmer Center or any of these

34

other programs to help link aspiring beginning farmers with landowners, farmers, and ranchers.

Thank you for your attention to my remarks, and I would be

happy to answer any questions.

Mr. LOBIONDO. Thank you very much.

[Mr. Baker’s statement may be found in the appendix.]

Mr. LOBIONDO. Since the vote is in progress, we are going to

have to take a recess. Our best guess is that we have probably

three votes. I apologize for the delay. This is something that is sort

of out of our control, but we will be back as soon as we can.

[Recess—4:25 p.m.]

Mr. LOBIONDO [presiding]. All right. We will come back to order

and, once again, apologies for some of these things are out of our

control.

Next we will hear from Susan Offutt who is the administrator for

Economic Research Service for the U.S. Department of Agriculture.

Welcome.

STATEMENT OF SUSAN OFFUTT, ADMINISTRATOR, ECONOMIC

RESEARCH SERVICE, U.S. DEPARTMENT OF AGRICULTURE

Ms. OFFUTT. Thank you, Mr. Chairman. I am pleased to be here

today, to discuss the aging of agriculture and the participation of

young producers in farming.

One of the most remarkable trends in the United States has been

its transformation from a largely agrarian society with a third of

the population living on farms in the 1920s to a highly urbanized

society today with fewer than 2 percent of the population on farms.

At the same time farm numbers have declined by two-thirds, the

remaining farm population is slowly aging. The most recent agricultural census determined the average age of farmers to be 54.3

years. Because such findings may lead to speculation about the future of farming in America, it is useful to look more closely at those

who farm, those who wish to farm, and to try to understand the

reasons people enter and leave farming.

Over the past 4 decades, the average age of American farmers

has crept up from 51.3 years in 1964. Today’s farmer, at age 54,

is about the same age as most self-employed small businessmen in

the U.S. The average age has risen over time as farmers have decided to work longer, reflecting the fact that, like the rest of the

U.S. population, they are healthier longer than their counterparts

decades ago. The average age also rises as the composition of the

farm population changes, with relatively fewer young people than

in the past.

It is also the case that the agricultural census data, which are

the numbers that the committees had access to, overstates the average age of the farmers. The census counts one operator per farm,

usually the eldest member of a farming family. So a father, aged

60, would be counted as the farmer, the farm operator; but his son,

perhaps 36 years old, expecting to take over the farm, would not

be counted in the census at all. That is appropriate since it is a

farm census, not a population census, but it does lead to the exclusion of this younger group of people who are full-time farmers in

the calculation of the average. So farmers appear older than they

probably are.

35

The next census is going to count everybody on the farm; I can

report that to you. But it is the case that the number of young entrants has fallen over time. About 10 years ago about 70,000 people

entered farming—not all of them young, by the way—and today

probably 60,000 do every year.

And as I said, there are probably more people, young people, in

farming than the numbers show. We know this because the Department of Labor that collects data on participation in the labor force

finds that many more people report that their full-time occupation

as farming than USDA counts as farm operators. So we don’t know

exactly the size of that difference, but it seems likely that at least

some of them are this next generation of farming. They are not lost

to us, we are just trying to count them in a different way.

But still it is the case that the traditional pool of new entrants

into farming, white males in their 20s who grew up on farms, is

declining. It was about three-quarters of a million people in 1990;

it is probably down to about 365,000-some today. And of course this

shrinkage is due to the fact that there are fewer farms; but also,

like everybody else in the economy, farm families have fewer children, so the pool is smaller. But even so, the typical path to farming is entry through the family farm business which was mainly

the point of the discussions today.

But there is an alternative path called the agricultural ladder in

which—people work on farms, become tenants, and then turn into

owner-operators. There is reason to suspect that path to farm participation in farming may make a comeback because of the increase

in minority farmers. The census counted about a 10 percent increase in minority farmers over the last one, that brings their numbers to about 50,000 and they tend to enter farming by starting as

hired labor on a farm.

The net result of entry and exit into the farm sector over the decades has, of course, been fewer farmers, although the total number

has appeared to stabilized; it is about 2 million over the last two

censuses. What has generally happened is that several farmers are

replaced by one more productive farmer. That is one farmer who

produces as much as the others, but with lower labor input, just

his own.

Increases in labor productivity have been rapid enough to maintain farm output in the face of these fairly steep declines in the

number of farmers. So what that means is that changes in the age

composition of the farm population, or its overall size, have not and

will likely not have adverse implications for the Nation’s food security. There will always be, we believe, enough farmers to produce

what we need to eat.

However, it is the case that these shifts in the nature and the

age distribution of the farm population raise concerns about the

structure and composition of farm and rural communities. Let me

just briefly talk a little bit about the barriers to entry into farming.

You heard a lot about barriers in the first panel and I think the

story is familiar, but I want to emphasize the relative

attractiveness of farm versus nonfarm earnings when a young person decides what profession to undertake. When the nonfarm economy is robust, as it has been for the past 10 years, young people

opt for higher but also more stable nonfarm income and employVerDate 11-MAY-2000 12:49 Feb 15, 2001 Jkt 010199 PO 00000 Frm 00039 Fmt 6633 Sfmt 6602 E:\HEARINGS\65504.XXX pfrm08 PsN: 65504
36

ment. That may be particularly true in traditional farming regions

in the U.S. and the Upper Midwest, in the Plains, where the populations tend to be highly educated. When the economy puts a premium on highly skilled labor, those who are more educated do better. And it seems likely in the past decade that has been an added

inducement for people to choose off-farm employment over farm

employment.

But it is also true that good times in the off-farm economy may

actually encourage entry into farming. That is because farm families, like most families in the U.S., have two earners. So it may be

the case that when a couple is confident about their ability to earn

off-farm, they feel they can take on the risk of having one of the

earners be a farm operator.

So the impact of the farm economy versus the nonfarm economy

can cut both ways. But once you decide you want to be a farmer,

that is not the end of it. As we heard, access to capital is the largest barrier. Farm businesses have relatively high capital requirements. The estimate is, it takes about a half a million dollars in

assets to support a farm household. That is a lot of capital.

Where do you get it? You can use your own, it comes from your

family, you can have it provided by others, or you can borrow it.

Up to this point you have heard mostly from people who enter

farming with their own capital; that is, it is transferred to them

through their family, and those are the kinds of farmers that tend

to survive and, not surprisingly, do better early on.

There is another class of people, though, who don’t have very

much, if any, of their own capital for farming and they have to borrow it or they have to try and acquire it in other ways by leasing

land, for example, or machinery, but otherwise get access. Borrowing is probably the familiar route, but there are other ways to

get one’s hands on the level of assets needed to be successful in

farming these days. But there are considerably fewer people who

enter farming with low levels of assets, so that is pretty good evidence that it is a significant barrier to entry.

We have already had discussion about the influence of federal

and state policies on the entry of young people into farming. The

Taxpayer Relief Act of 1997 was, in fact, a significant event. Our

analysis shows that the changes do indeed make it easier to transfer the family farm across generations by reducing the likelihood

that the farm or some of its assets will need to be sold to pay State

taxes. That law probably reduced by about 40 percent the number

of farmers who even had to worry about filing for estate tax. So it

did already have a significant effect on the burden of inheritance

taxes, although it but by no means reduced it to zero.

These people who enter farming without capital from their family

very often have sources of credit from Federal lending. The Farm

Service Agency under the Agricultural Credit Improvement Act of

1992 created a beginning farmer down payment farm ownership

loan program, and it required the agency to target a percentage of

its farm operating and ownership loans to beginning farmers and

ranchers.

Over the last 5 years FSA has in fact provided loans totalling

$2.5 billion to more than 34,000 beginning farmers and ranchers

and in many regions of the country that is a quarter of all small

37

farmers in the region. So these FSA loans reach a large audience.

And in addition to the subsidized Federal loans that you heard

about, aggie bonds are then used to underwrite subsidized State

loans.

The Secretary, under the 1992 act, has an advisory committee on

beginning farmers, and they reported to him and he is considering

their recommendations which go to changes in tax law and pick up

many of the themes that you heard from your first panel.

Thank you. I would be happy to answer questions.

[Ms. Offutt’s statement may be found in the appendix.]

Mr. LOBIONDO. I think Mr. Congressman Phelps has a few questions. I just have one very quick question for both of you. And let

me say that the other members of the Committee will be submitting questions in writing because of the way our schedule got so

messed up here today.

But if I could ask you, What is the one most important thing that

we as a Congress, as Washington, could do for the ag community?

Mr. BAKER. In my opinion, it would be to take a look at the Federal income tax code and use income tax incentives to bring a

younger person into a farming business at an early point.

I get the opportunity to put on farm and estate and business

planning seminars, and the majority of people that come to those

seminars are 65 or older. They have no business cessation plan, no

escape plan. The way most Iowa farmers get out of farming, they

made that decision within the last week because the harvest is

over and they want to be out by March. They spent 40 years building a business and they want to spend 4 months moving it. It just

doesn’t happen.

And the income tax code, in my opinion, would incent people to

bring that labor, that young person into the business at an early

point and cause that transition to take place over a period of time.

All of the statistics and studies show that small businesses, the

sooner you transfer the management, the better the likelihood that

the business will succeed to the next generation; and when you

have the 70-year-old farmer that has turned over no managerial

control to his son, there is a very high probability that that farm

business will go out of existence.

Mr. LOBIONDO. Thank you. Do you have an opinion on that?

Ms. OFFUTT. The research we do, which is based on national research about farmers, shows that compared to the 1930s, the circumstances of farming today are so diverse and so varied that

there probably is no one thing that will help everyone.

Mr. LOBIONDO. That is fair.

Ms. OFFUTT. I don’t mean that to be a nonanswer.

Mr. LOBIONDO. That is okay.

Congressman Phelps.

Mr. PHELPS. Sorry I had to leave early on, and it is just one of

those days. In looking at your testimony, I guess try to sum up concern of what both of you said—try, and in one question, it looks

like the large-scale industrialized agricultural movement trends of

consolidation and those sorts of things are—I don’t know what your

study or recommendations or impact showed about the whole rural

setting, the problems that for every job loss and farm we have,

there are those small businesses that are impacted, which I think

38

makes it so appropriate for us to talk about this in the same setting.

Do you think the economy of farming will be affected?

I know you, Ms. Offutt, you mentioned in your statement about

the productivity and the food is still going to be available; but it

seems like, if this trend continues, we are going to see impact on

rural life even being more depressed.

What is your estimation of what you found in your studies?

Ms. OFFUTT. Well, as I said, the census this time showed that

the total number of farms today in the U.S. is about the same as

it was 5 years ago. That is really the first time in decades that we

have seen a level—leveling off of the decrease in the total number

of farms.

Now, a very small percentage of those farms produce most of

what we eat, as you said. But a lot of other people are involved in

farming for a diversity of reasons, but they are successful, and not

in the sense that they are all big corporations who are sending food

overseas, but because they found ways to be successful where they

live and in the communities where they live.

I will leave for you an article in a periodical we just published

today about what makes small farms successful in every region in

the country. There are ways to help people succeed on their own

terms that will keep them farming on the land.

Mr. PHELPS. And, Mr. Baker, I know that you have covered your

experience in your State and what you supervise on farm and other

features along that theme. It looks like you have to take into account how—the blending of entering and exiting the occupation in

terms of what is happening today. So how is the transfer to the

farm in the financial picture arranged?

Mr. LOBIONDO. Excuse me for just a minute, Congressman, we

have two options here quickly. We are either going to have the option of asking you all to wait while we go vote again or we can adjourn the hearing and submit questions in writing.

Mr. PHELPS. I think they have waited long enough.

Mr. LOBIONDO. If it is okay with you, Congressman Phelps, we

will submit the question in writing and ask for a written response,

so we don’t hold our panel members up anymore.

Without objection, I will leave the record open for 5 legislative

days.

And with that, I want to thank you very much, and this hearing

is adjourned.

[Whereupon, at 4:44 p.m., the subcommittees were adjourned.]

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