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S. HRG. 107–254

AGRICULTURAL AND RURAL COMMUNITY ISSUES

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

MARCH 24, 2001

Printed for the use of the

Committee on Agriculture, Nutrition, and Forestry

(

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

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

RICHARD G. LUGAR, Indiana, Chairman

JESSE HELMS, North Carolina

THAD COCHRAN, Mississippi

MITCH MCCONNELL, Kentucky

PAT ROBERTS, Kansas

PETER G. FITZGERALD, Illinois

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

TIM HUTCHINSON, Arkansas

MICHEAL D. CRAPO, Idaho

TOM HARKIN, Iowa

PATRICK J. LEAHY, Vermont

KENT CONRAD, North Dakota

THOMAS A. DASCHLE, South Dakota

MAX BAUCUS, Montana

BLANCHE L. LINCOLN, Arkansas

ZELL MILLER, Georgia

DEBBIE A. STABENOW, Michigan

BEN NELSON, Nebraska

MARK DAYTON, Minnesota

KEITH LUSE, Staff Director

DAVID L. JOHNSON, Chief Counsel

ROBERT E. STURM, Chief Clerk

MARK HALVERSON, Staff Director for the Minority

(II)

(III)

C O N T E N T S

Page

HEARING(S):

Agricultural and Rural Community Issues, Lewis, Iowa ..................................... 01

Agricultural and Rural Community Issues, Spencer, Iowa .................................. 111

Saturday March 24, 2001, Lewis, Iowa

STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, Committee

on Agriculture, Nutrition, and Forestry ............................................................. 01

WITNESSES

Askew, John, President, Iowa Soybean Association ............................................. 07

Aust, Erwin, Shenandoah, Iowa ............................................................................. 33

Bentley, Rod, President of Pottawattamie County Cattlemen’s Association ...... 36

Brownlee, Adair County .......................................................................................... 37

Carney, Sam, Vice President, Iowa Pork Producers Association ......................... 11

Duffy, Micheal, Professor of Economics, Iowa State University .......................... 03

Fox Ridge Farms, Carson, Iowa ............................................................................. 36

Frederiksen, Shirley, Golden Hills Resource Conservation and Development

District .................................................................................................................. 09

Hanson, Jim, New Market, Iowa ............................................................................ 40

Hopkins, Gayl .......................................................................................................... 27

Jorgensen, Dan, Farmer, Audubon, Iowa .............................................................. 34

Lehman, Aaron Heley, Iowa Farmers Union ........................................................ 13

Morgan, Dan, Farmer, Corning, Iowa .................................................................... 39

O’Brien, Denise, Atlantic, Iowa .............................................................................. 23

Ortner, Bill, Farmer, Danbury, Iowa ..................................................................... 38

Shulte, Joyce, Southwest Community College ...................................................... 30

Swanson, Harold ...................................................................................................... 28

Williams, David, Farmer and Wallace Foundation Learning Center, Page

County, Iowa ......................................................................................................... 05

Zellmer, Alan, Farmer/Producer ............................................................................. 30

APPENDIX

PREPARED STATEMENTS:

Harkin, Hon. Tom ............................................................................................ 44

Askew, John ...................................................................................................... 69

Aust, Erwin ....................................................................................................... 93

Carney, Sam ...................................................................................................... 78

Duffy, Micheal ................................................................................................... 45

Frederiksen, Shirley ......................................................................................... 76

Lehman, Aaron Heley ...................................................................................... 83

O’Brien, Denise ................................................................................................. 87

Shulte, Joyce ..................................................................................................... 92

Swanson, Harold ............................................................................................... 91

Williams, David ................................................................................................ 64

Page

IV

DOCUMENT(S) SUBMITTED FOR THE RECORD:

American Coalition for Ethanol ....................................................................... 109

Center for Rural Affairs ................................................................................... 105

Iowa Pork Producers Association News Bulletin ........................................... 106

McGiven, Ed, EJM Farms, Inc. ....................................................................... 103

Oswald, Stanley, GMO, Starlink, Surplus Corn ............................................ 107

Vilsack, Thomas, Governor of Iowa ................................................................ 108

Williams, David, Statement Given to the National Research, Extension,

Education and Economics Advisory Board ................................................. 96

Watershed Information Sheet ......................................................................... 101

Saturday, March 24, 2001, Spencer, Iowa

STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, Committee

on Agriculture, Nutrition, and Froestry ............................................................. 111

WITNESSES

Blundall, Joan, Executive Director of the Seasons Center for Community

Mental Health ...................................................................................................... 117

Hamilton, Mark H., Positively Iowa ...................................................................... 122

Harl, Neil E., Professor of Economics, Iowa State University ............................. 114

Mason, Don, President-Elect of the Iowa Corn Growers Association .................. 119

Sand, Duane, Iowa Natural Heritage Foundation of Des Moines ....................... 124

Sundblad, Phil, Iowa Farm Bureau Federation .................................................... 126

APPENDIX

PREPARED STATEMENTS:

Harkin, Hon. Tom ............................................................................................ 154

Blundall, Joan ................................................................................................... 175

Hamilton, Mark H. ........................................................................................... 182

Harl, Neil E. ...................................................................................................... 155

Mason, Don ....................................................................................................... 178

Sand, Duane ...................................................................................................... 193

Sundblad, Phil .................................................................................................. 195

DOCUMENT(S) SUBMITTED FOR THE RECORD:

Bernhard, David ............................................................................................... 211

Biederman, Bruce ............................................................................................. 204

Jensen, Carl ...................................................................................................... 201

Naylor, George .................................................................................................. 212

Sexton, Keith .................................................................................................... 205

Sokolowsi, Lori .................................................................................................. 214

Tigner, Ron ....................................................................................................... 203

Vilsack, Thomas ................................................................................................ 200

(1)

HEARING ON AGRICULTURAL AND RURAL

COMMUNITY ISSUES

SATURDAY, MARCH 24, 2001, LEWIS, IOWA

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC.

The hearing was held, pursuant to notice, at 9 a.m., at the

Wallace Foundation Learning Center, Lewis, Iowa, Senator Tom

Harkin, ranking member on the committee, presiding.

Present or submitting a statement: Hon. Tom Harkin.

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

IOWA, RANKING MEMBER, COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

Senator HARKIN. Thank you very much. The meeting of the U.S.

Senate Committee on Agriculture, Nutrition, and Forestry will

come to order.

I thank you all for being here. I apologize for being just a little

bit late, a little bit of headwinds out there this morning.

This field hearing on agriculture and rural community issues at

the Wallace Foundation Learning Center is the first in a series of

hearings that we will be having here in Iowa, in the Midwest, and

other parts of the country, in order to get ready for the rewrite of

the Farm bill, which expires next year.

Some of the work will be done this year. We will be having hearings, getting input, advice and suggestions from different commodity groups and individuals around the country. There was some

thought that we might do a farm bill this year, but I do not think

that will happen.

Senator Lugar from Indiana is the ranking Minority Member on

the Committee. As you know, we have a unique situation in the

Senate where it is 50–50, but Senator Lugar and I have a good relationship. We are working together to establish an extensive hearing record as to what we ought to be doing in the next Farm bill.

We want to cover all aspects of it.

This is the first outline. I am going to make a short opening

statement and I then am going to recognize the panel of witnesses.

I am going to ask them to keep their comments relatively short, 5

to 10 minutes. Their statements will all be made a part of the official record, the hearing record. Then I would like to open it to questions from the audience.

We have an official reporter. I would ask you to take the mic,

state your name, and if it is a really complicated name like Smith,

just tell her so that the reporter can get the accurate name down

2

for the record. I would like to have a fairly open discussion and

suggestions from any of you who are here.

First, I am told that we have a couple of other public servants

here: Bob Anderson, who is a Page County supervisor is here.

Please stand and be recognized. Also in attendance is Bob Anderson, Page County supervisor, and Bob Brown Union County supervisor. Bob Brown, thank you for being here.

Now, again, are there any other elected officials that I should

recognize that we just did not catch when you came in? Clyde

Jones, Montgomery County supervisor. Anyone else?

OK. I have one other person I will recognize. Secretary of Agriculture Patty Judge could not be here, so she has a staff person

here. Mitch Gross who is with Secretary Judge’s office is here. I do

not know where he is.

I will just make a couple of opening statements, and we will sit

down for our panel.

I am pleased to be holding two hearings in Iowa today—one here,

and then another one this afternoon in Spencer—of the U.S. Senate

Committee on Agriculture, Nutrition, and Forestry.

The testimony from our panelists and from the audience will become a part of the official hearing record. Your comments, ideas,

and recommendations will be a great help to me and my colleagues

as we work to write new legislation and we hope improve programs

affecting agriculture and rural communities.

Let me also introduce my staff who is here. On my agriculture

committee staff, Mark Halverson, who is my chief of staff on our

side, on the Senate Ag Committee, and next to him is Alison Fox.

Alison is also on our ag committee. This is her second visit to the

Wallace Center here. She was here last summer. Some of you may

remember.

Also someone who worked on my staff for a long time and for the

last 8 years has been the state director of our Farm Service Agency. She is back on my staff doing rural development work, Ellen

Huntoon. Ellen is here. A lot of you know Ellen. She has done a

great job in rural development and agriculture.

Also on my Iowa staff is John Moreland who is working with agriculture and rural development issues as well. John Moreland is

back there, and next to him, Pam Ringleb. Pam, hold up your hand

so everyone knows you.

Those are my staf. If you need to get anything to me as we run

out of here to try to get up to Spencer, just speak to them. I am

sorry that Congressman Leonard Boswell could not be here; but his

staff member, Sally Bowzer is here. Sally, where are you?

I just saw Leonard the other day, and he knew about the hearing. He could not make it. As you know, he is one of our great,

strong supporters on the House side.

Farm families and rural communities in Iowa and across our nation need new directions in Federal policies. They have not shared

in our nation’s prosperity. Although Freedom to Farm has positive

features, it had serious shortcomings that I think are obvious.

We have got to learn from this experience and make necessary

improvements. We have got to start by restoring a built-in, dependable system of farm income protection that does not require annual

emergency appropriation.

3

We must also remember that farmers are the foremost stewards

of our nation’s natural resources for future generations. We should

strengthen our present conservation programs and adopt new ones

to support both farm income and conservation.

I have authored legislation to create a new, wholly voluntary program of incentive payments for conservation practices on land in

agriculture production. That approach—improving both farm income and conservation—should be at the heart of the next Farm

bill.

To meet these challenges, the next Farm bill must address the

broad range of farm and rural issues. We have got to do more to

promote new income and marketing opportunities—whether that is

through value-added processing cooperatives, creating new products through biotechnology, developing niche and direct marketing,

and, of course, overseas trading.

I see tremendous potential for farm income, jobs, and economic

growth through clean, renewable energy from farms: ethanol, biodiesel, biomass, wind power, and even down the way, hydrogen fuel

cells. We must also ensure that agricultural markets are fair, open,

and competitive, and transparent.

We cannot have healthy rural communities unless both farms

and small towns are doing well. We have to do more in the next

Farm bill to revitalize economics and improve quality of life in

rural communities. That includes support for education, health

care, telecommunications, closing the digital divide, water supplies,

transportation, as well as access to investment capital for rural

businesses.

That completes my opening statement. I thank you all for being

here this morning. I will now turn to our panel.

Our first witness is Dr. Michael Duffy. I will just go down the

line. Dr. Michael Duffy, professor of economics at Iowa State University, Dr. Duffy.

Oh, excuse me, before you start, I am sorry, just a minute, Mike.

I have got a letter here from Governor Vilsack that I want to be

made a part of the record, dated yesterday. The Governor states,

‘‘I encourage you to develop the next Farm bill to help farmers

produce conservation commodities, improve their bottom line, and

renew the public commitment to agriculture.’’ Basically he focuses

on conservation, but I just want to make that a part of the record.

Thank you.

[The prepared statement of Senator Harkin can be found in the

appendix on page 44.]

STATEMENT OF MICHAEL DUFFY, PROFESSOR OF

ECONOMICS, IOWA STATE UNIVERSITY

Mr. DUFFY. Good morning. I appreciate the opportunity to be

here. As an extension comment, you know that five minutes is

going to be very hard for me, so I will try to talk as fast as I can.

What I would like to do is cover two areas. One is the current

situation, as I see it, in Iowa agriculture and to give you what I

think are some issues that should be considered in the new Farm

bill.

First issue with respect to the current situation is with respect

to our income. We had the highest net income in 1996. Since then

4

it has dropped every year. In 1999, it was 1.45 billion. In 2000, it

appears that it will be up, although this is still preliminary, but

I think it is very important for us to realize that the government

payments have been the backbone of that net farm income.

In the 1990’s, net government payments averaged 55 percent of

the net, and in 2000, it appears as they will be very close.

Second issue that I think is important with respect to the current

situation is in our agronomics. We have a very narrow crop and income base in Iowa. Ninety-two percent of the cropland is devoted

to just two crops. Two-thirds of the entire state is covered with just

two crops, corn and soybeans. Eighty-nine percent of the cash sales

comes from corn, beans, hogs, or cattle. This lack of diversity creates problems, pest problems, environmental problems, and so

forth.

Also in the agronomic area, we have seen a change in production

practices that have resulted in more yields, increased sales, but

less income for the farmers.

Net income as a percent of the gross in the 1950’s was 35 percent. Today it is 20 percent, and if we take the government payments out, it drops to 12 percent. That means farms must have

three times the sales just to stay even.

It is important to note that size and efficiency should not be confused. The cost per bushel dissipates. The lowest cost is about three

to six hundred acres. Farms are getting bigger because they have

to earn an income, not because they are more efficient.

Turn now to the demographics that I think are also important

to the current situation. The average age of farmers is 52.4 years

old, which is up a full 3 years from just a decade earlier.

Today we have more farmers over the age of 65, Twenty-two percent, than we do under the age of 35, at 10 percent. We have more

nonfarm rural residents than we do farmers, and I think this is a

source of—can be a source of conflict, but I think it could also be

a source of benefits, if we choose to move that way.

Changing structure of agriculture is another area that we are all

familiar with, but I think it is important for us to realize 50 percent of the farmers in Iowa had sales of less than 50,000. Another

37 percent had sales between 50 and 150,000, which means that

87 percent of the farms in Iowa are small farms by the USDA’s definition.

What is happening now is that we have a few very large farms

and a lot of small farms that, in my opinion, we are losing the

heart of what made Iowa what it is, and that is the average family

size farm. This is happening in all sectors, including processing, retailing, and so forth.

Another area is the environment. We continue to have odor,

water, soil erosion, a series of problems in spite of the record government payments. What we need to do is address some of these

issues, recognize that the current system is seriously flawed.

I would like to move on then to some issues that I think need

to be considered for the Farm bill. First of these is energy.

We have had a serious impact on the cost of production. My estimates for Iowa is that it was a 6-percent increase in 2000 to 2001

for corn, and I concur with what you said, Senator Harkin, about

we need to continue to look at alternative uses, alternative crops.

5

We need to look at how on our farms we can make ourselves selfsupporting in energy, and I think that what we need to do is to

make sure that we continue to look at energy as we move into the

future, because it is going to be even more important and we are

not going to go back to where we were with the cheap fuel.

Second major issue that I think needs to be addressed in the Farm bill is a change in the definition of a farm. The $1,000 of

sales is antiquated, and I feel that it hurts everyone.

In Iowa, 10 percent of our farms had sales of less than ten—or

less than $1,000, and I think that is just ridiculous to call them

farms, and then we have programs that are directed and, as I said,

I think that it hurts everyone.

Payment policies, I think we need to start looking at programs

that are going to pay to support people, not commodities. To that

end, I support the Conservation Security Act that you put forward.

I have also submitted into the record a proposal, a modest proposal that we have, looking at some type of a guaranteed minimum

wage for farmers.

Regardless, we need to do something to support people and not

just commodities. I am very concerned that what we are doing is

bickering, and we are going to end up going to the lowest common

denominator and not seeing any real changes. I am about out of

time, so I will talk fast.

Level of payments, I think it is extremely important for us to

look at. That 55 percent has been factored into rents, land values,

and even the infrastructure. If we go cold turkey, we are going to

have a lot of problems, so whatever we do, I hope we proceed with

caution.

I would also like to encourage you to continue to look at programs for small and beginning farmers, but do not just throw

money at them.

Look at alternatives and options that concentrate on their resources. For too long we have tried to get rid of people, and now

we need to try to help people in agriculture. A lot of people say this

is inevitable, but nothing is. We just have to decide what type of

agriculture we want and to go for it. More than just raw products

should be in our future.

Thank you.

[The prepared statement of Mr. Duffy can be found in the appendix on page 45.]

Senator HARKIN. Thank you very much, Mr. Duffy. Great statement. Thank you.

Next we will have David Williams, a long-time friend and conservationist and farmer from Villisca, Iowa. Dave.

STATEMENT OF DAVID WILLIAMS, FARMER AND WALLACE

FOUNDATION LEARNING CENTER, PAGE COUNTY, IOWA

Mr. WILLIAMS. Thank you. Good morning. Welcome to the Wallace Foundation for Rural Research and Development. I am David

Williams, a family farmer from rural Page County.

Senator Harkin, I am pleased to have you come to Southwest

Iowa to visit us here at the Wallace Foundation.

We are proud to host this event here today. For your information, for those of you who have not been here, we have 1,200 memVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 77324.TXT SAG1 PsN: SAG1
6

bers in 19 counties of Southwest Iowa. We house the extension offices here and some other organizations.

We are very unique in that we have been able to pull this together to house this in a rural area. Some of our goals are not just

research, but also outreach and education and site-specific research

that you will see on this farm, so we are very proud of this.

I would like to address the 2002 Farm bill and the current Freedom to Farm Bill. The Freedom to Farm Bill, to my way of thinking, from the beginning was a—written by and for corporate agriculture. Simply put, allowing agriculture producers to plant unlimited acres of corn and soybeans without an acreage or bushel limit

was a disaster that previous history revealed.

The benefits of the Freedom to Farm Bill to corporate agriculture

include increased sales of seed, fertilizer, chemicals, and the lower

dollar grain prices to the multinational grain traders and lower

prices that gave easy access to the grain and livestock producers.

Corporate agriculture has welcomed and profited enormously by

large supplies of cheap grain.

Feed grain, excuse me—corn, soybeans, and wheat—in the Midwest have sold at a price below the cost of production and has allowed the integrators of industrialized agriculture to expand at a

rapid rate. The expansion of the large corporate livestock operations has been especially evident in the huge expansion of

megaswine farms.

There is no way family farmers can survive producing grain and

livestock below the cost of production. It is obvious with 50 percent

of the total farm income coming from government payments that

Freedom to Farm has been a dismal failure.

Here are some ideas I would submit for the 2002 Farm bill: Paying farmers who practice sustainable conservation practices would

be a first step in protecting our soil and water quality.

Monetary incentives would go to farmers who installed specific

conservation practices. Those farmers not adopting those government conservation practices would not receive government payments. Paying farmers to manage the resource base will actually

do more to improve their income than the current system.

Senator Harkin, your Conservation Security Act has really

brought that to the attention.

We need to target farm programs that benefit medium-sized

farms. These are the farms most at risk financially. Failure to do

this will be the demise of family farms. The current farm programs

follows the rule that the bigger you get, the more money you will

receive. Thus, we subsidize megafarms, bringing higher cash rents

and higher land prices.

We should have a safety net that puts a floor under grain prices.

A well-planned, on-the-farm grain reserve would also benefit the

farmer and be a cushion for a crop failure. There are other parts

of the safety net that I did not mention that I think are important.

We need to close payment limitation loopholes. We need to focus

the bulk of the support on each farmer’s first $250,000 of production.

I obtained from the Page County NRCS office the total dollar

amount requested for conservation construction practices that are

on file for cost-share in our county. We have a county that had a

7

very high percentage of conservation, and we have a 3- to 4-year

waiting list.

Conservation practices moneys requested in our county for Fed- eral and State government amounts to $4.7 million. Matching that

4.7 million means that we are putting $9.4 million of this conservation in our county in land, and that is to backlog the conservation

practices in Page County.

Some other comments: Encourage and provide loans to producers

who come together in a cooperative to add value to a value-added

product. Here in the Wallace Foundation we have got three different groups that we work with on livestock and put together a

value-added grain.

Pass the Agriculture Revitalization and Enterprise Act. I do not

have that with me. It is in the packet, Senator Harkin. It is called

ACRE. I will see that you get a copy of that.

Enforce mandatory price reporting. That has been—kind of held

up, and we need to see that that is happening.

Scrutinize and enforce antitrust activities of the food system.

This is critical to the independent producers, and I mean that, critical. It seems like we see three, four, five major food suppliers that

are trying to control, especially the red meats and grains.

We need to revisit the pork checkoff vote overturned by the current secretary of agriculture.

In summary, we are at a serious crossroad in the industrialization of agriculture versus the independent farmer. Our farm organizations, commodity groups, our land-grant universities, and our

state and Federal Government should draw a line in the sand and

decide whether they are going to support independent farmers or

corporate agriculture. These groups cannot continue to straddle the

fence if independent farmers are to remain viable.

To quote Aldo Leopold, this is something in my life that has been

a part of my thinking. In fact, Mike and I serve on the Leopold

Board at Iowa State. This is a quote that comes from his part of

the land ethic, and this is the quote: ‘‘We abuse land because we

regard it as a commodity belonging to us. When we see land as a

community to which we belong, we may begin to use it with love

and respect.’’

To me, this speaks to the sustainability of the land and family

farms. I appreciate the opportunity to share my ideas and thoughts

with Senator Harkin and the Senate Agriculture Committee.

[The prepared statement of Mr. Williams can be found in the appendix on page 64.]

Senator HARKIN. Thank you very much, Dave.

Senator HARKIN. Next, we will go to John Askew, president of

the Iowa Soybean Association. Good to see you on home turf here,

John.

STATEMENT OF JOHN ASKEW, PRESIDENT, IOWA SOYBEAN

ASSOCIATION

Mr. ASKEW. Good to see you too.

Senator HARKIN. Well, thanks.

Mr. ASKEW. Good morning. My name is John Askew. I am a soybean producer and family farmer from Fremont County, Iowa, and

currently serve as president of the Iowa Soybean Association. On

8

behalf of the members of the Iowa Soybean Association, the largest

state row-crop association in the United States, I wish to thank the

Senate Agriculture, Nutrition, and Forestry Committee and Senator Harkin for the opportunity to testify today on the important

topic of the future of agriculture in the United States.

As we rapidly approach the 2002 Farm bill, it is important that

Iowa soybean producers provide input on many of the critical

issues facing agriculture. Iowa is a leader in soybean and agricultural production. The future direction of the agricultural policy is

critical for a state such as ours. As a future of agriculture goes in

Iowa, so too does the future of our state.

Many important decisions must soon be made regarding U.S.

production agriculture. These decisions will cover a broad spectrum

of issues, from current domestic farm programs to expanded trade

opportunities and development. Iowa soybean producers understand that these decisions will have significant budget impacts.

We hope these important budget decisions will carefully balance

the social and economic needs of the farmer and rural communities

and the need of the public for a wholesome, safe, and plentiful food

supply.

From the perspective of Iowa soybean producers, long-term agricultural policy and budget considerations surrounding the upcoming 2002 Farm bill should focus on the following key areas: First,

agricultural policy should focus on enhancing the viability and the

long-term global competitiveness of Iowa and U.S. producers.

To this end, Congress and the administration should meet the

unfulfilled promises of the 1996 FAIR Act. Such promises include

the expansion of trade opportunities and markets, policies to increase domestic demand and utilization of agricultural products, increased funding for agricultural research, improvements in river infrastructure, and meaningful tax and regulatory reform.

If these promises had been kept, the large government outlays

that have been required in recent years to support farm income

may not have been needed. Congress must complete the unfinished

agenda and provide support to agriculture in the interim.

We must address expanding our infrastructure capabilities. The

development of local food systems and value-added processing and

marketing systems is critical for the continued viability of rural

America. Additionally, the establishment of a national energy policy which addresses increased opportunities for biofuel use should

be a top priority.

Additionally, any decision on the upcoming farm bill should address and work toward improving risk-management tools and subsidies for crop insurance.

As an organization, we also believe that efforts underway to establish standards for financial and production systems are critically

important. We are convinced that helping Iowa and U.S. farmers

gain access to and understand the necessary information regarding

their farming operations is a key to leveling the playing field.

Second, we believe that soybeans should be treated equitably

under the next Farm bill. Agricultural policy decisions must provide improved safety nets for producers. Policy should include the

continuation of planting flexibility, maintenance of the current—

9

current marketing loan rates and the loan deficiency payment

structure, and the establishment of a counter-cyclical program.

Specifically, current loan rate ceilings should be set as floors, including the soybean loan rate of 5.26 per bushel.

A third and very important focus of upcoming farm bill decisions

should involve land conservation practices and the environmental

performance of agriculture. As the front-line stewards of the land,

producers are uniquely positioned to work toward increased and

improved environmental performance.

We support Senator Harkin’s leadership in proposing the Conservation Security Act. The Iowa Soybean Association is developing

a voluntary, systems-based approach to improved environmental

performance called Certified Environmental Management Systems

for Agriculture, or CEMSA. We believe CEMSA could be a complimentary ingredient of future conservation programs.

In conclusion, the Iowa soybean producers very much appreciate

the opportunity to provide these comments. We wish the committee

well in important decisions it must work on in the future of American agriculture. We are committed to working together in the 2002

Farm bill debate to develop the best possible farm policy for all

Americans.

Again, I thank the committee for its time and consideration

today.

[The prepared statement of Mr. Askew can be found in the appendix on page 69.]

Senator HARKIN. Thank you very much, John, on behalf of the

Iowa Soybean Association.

Senator HARKIN. Next is Shirley Frederiksen, Golden Hills Resource Conservation and Development.

STATEMENT OF SHIRLEY FREDERIKSEN, GOLDEN HILLS

RESOURCE CONSERVATION AND DEVELOPMENT DISTRICT

Ms. FREDERIKSEN. Thank you, Senator Harkin, for allowing me

to speak at the Senate Agriculture Committee hearing.

Resource Conservation and Development is a program administered by USDA/National Resource Conservation Service providing

technical assistance to private nonprofit organizations. Golden

Hills RC&D is a nonprofit organization that encompasses eight

counties in Southwest Iowa.

The goals of the Resource Conservation and Development board

focus on conserving the Loess Hills, strengthening the agriculture

economy, developing small, rural businesses, increasing tourism,

and assisting underserved clients. The board’s vision is to strengthen and diversify the economy of rural communities in Southwest

Iowa.

I would like to focus today on some current projects of the Golden

Hills RC&D board.

First, the Loess Hills and tourism. The Loess Hills National Scenic Byway is a system of more than 220 miles of county and state

roads through the Loess Hills, consisting of a main route and excursion loops.

This tourism project is an excellent example of rural development

for the 18 communities along the byway. Travelers stay at bed and

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breakfasts, stop at the old-fashioned soda fountains, eat at pie parlors and restaurants, and visit the local artisans.

Scenic America, the nation’s leading scenic byway organization,

named the Loess Hills Scenic Byway one of the ten most outstanding scenic byways in the country. Each year more than one million

people travel the Loess Hills Scenic Byway and visit its attractions.

Another focus is the small business development. Prairie restoration in the Loess Hills is a project providing cost-share to producers

clearing invasive species from their native prairies so they can

graze their cattle.

Over 99 percent of Iowa’s prairies are gone. The Loess Hills contain the majority of undisturbed prairie remnants and comprise the

last intact prairie system in Iowa.

The prairie restoration project has spurred many entrepreneurs

to diversify their existing, traditional agricultural businesses. Some

of the developing businesses that they have used as a sideline include: Tree-shearing, native grass seed collection, native grass

seeding for hire, prescribed burn business, and other cedar utilization businesses, such as mulch and biochips.

Strengthening agriculture is the third area I would like to discuss. Developing our alternative agriculture and local food systems

is another developing project. One of the efforts underway by the

Golden Hills RC&D board is to revive the grape and wine industry

in Western Iowa.

At one time Iowa boasted more than 6,000 acres of vineyards,

3,000 of which were in the Loess Hills. This distinct—The distinctive flavor of the fruit grown in this soil made the Loess Hills a

perfect location for vineyards and wineries.

For growers, the income potential in today’s market with conservative figures is approximately $1,800 net per acre for a fully

mature vineyard. Adding value to that grape by producing wine increases the profit potential to between $7,000 to $10,000 per acre.

Of course, that is using conservative figures, since I am a conservative person.

Golden Hills is very proud of the work that they have accomplished over the past 20 years, and with access to resources, project

opportunities yet to be explored include: First, local food systems,

integrating more locally produced food into the restaurants and

food-service industry in Western Iowa.

Second, alternative energy. There are a couple of ways to increase profits, and I hope Mr. Duffy will agree with these. One is

to increase the prices of products, and two is to decrease purchased

inputs. Utilizing alternative energy reduces input costs, thereby increasing net profits for farmers and businesses alike.

Golden Hills RC&D would like to investigate wind and solar energy and the use of biomass as alternative energy sources for rural

America.

Third, is ag tourism. We have a wonderful traditional agricultural system here in Iowa, and by sharing that ag experience with

visitors to the state, we can increase our profits again through

tourism.

In the next 20 years, we look forward to leading in the development of these projects and others.

11

Thank you for the support of the RC&D program, because I know

Senator Harkin is a large supporter of that, and for considering a

strong rural development component in the upcoming farm bill.

[The prepared statement of Ms. Frederiksen can be found in the

appendix on page 76.]

Senator HARKIN. Thank you very much. Appreciate it. Thank

you.

Senator HARKIN. Next, we have Sam Carney who is the vice

president of the Iowa Pork Producers Association. Welcome.

STATEMENT OF SAM CARNEY, VICE PRESIDENT, IOWA PORK

PRODUCERS ASSOCIATION

Mr. CARNEY. Thank you, Mr. Harkin. I am pleased to testify

today on farm commodity programs and other policies that will ultimately become part of the next Farm bill.

I am Sam Carney, and I produce hogs, cattle, corn, and soybeans

with my brother and my son. Our farm supports these three families near Adair, Iowa. I am also vice president of Producer Services

for the Iowa Pork Producers Association.

My comments today will focus primarily on livestock components

of the next Farm bill.

While much of the discussion and debate on the next Farm bill

will focus on grain production, please keep in mind a substantial

portion of Iowa’s corn and soybean crops are fed to livestock and

poultry. The pork industry represents a major value-added activity

in rural America and major contributor to the overall U.S. economy.

While the issue at hand today is the future of commodity programs, I believe the next Farm bill must also focus on conservation, trade, market competitiveness, environmental, food-safety,

and biosecurity issues.

Agriculture is moving from an unregulated to a regulated industry in most aspects of our farming operation. Nonetheless, livestock

farmers, except dairy farms, have operated in a marketplace without government subsidies and controls.

However, we have a huge stake in the next Farm bill discussion.

Approximately 60 to 65 percent of the cost of raising hogs is from

feed costs. Corn and soybeans are the major components for our

feed rations.

Therefore, any changes in commodity programs that affect the

price of feed have a profound financial impact on livestock operations. As major users of the grain and oilseed commodities, problems and issues of livestock producers ultimately affect grain and

oilseed producer prices.

As for conservation and environment, livestock producers in several states face or will soon face costly environmental regulations

as a result of state or Federal laws designed to protect water quality. This includes Federal regulations under the Clean Water Act

for TMDLs and the proposed new CAFO permit requirements. Federal regulators also are exploring the possibility of expanding Federal regulation of agriculture under the Clean Air Act.

Since 1997, EQIP has accumulated a backlog of 196,000 unfunded applications for approximately 1.4 billion in assistance,

more than half of which is for livestock producers.

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Farmers and ranchers are on the verge of a new regulatory era,

and it is impossible for us to pass on the costs of regulatory compliance. We are price-takers, not price-makers.

While I believe all farmers are true environmentalists, a typical

operation like mine cannot afford the investment it will take to

comply with new regulations. I urge the committee to provide the

assistance necessary to implement sound conservation practices to

protect our nation’s air and water.

I urge the committee to support at least ten billion over the life

of the next Farm bill in spending for USDA conservation practices

to address livestock’s environmental needs, specifically for water

and air quality.

These funds should be used to provide financial incentives, costsharing, and technical assistance to livestock, dairy, and poultry

producers to develop and implement manure and nutrient management plans that are built on practices that protect water and air

quality.

Any successful conservation assistance program must be available to every producer, regardless of the type of production, whether confinement, open feedlots. Of course, payment limitations could

apply similar to row-crop payments. I feel it is appropriate and fair

that the livestock community be treated in the same manner as the

row-crop producers through the use of similar payment limitations.

As for trade expansion, U.S. pork producers became net exporters

in 1995 for the first time. In order to sustain the profitability of

our producers, we must do a better job of product marketing and

doing away with market-distorting trade practices.

Pork producers believe funding for the Market Access Program

should be boosted. Also the trade promotion authority should be renewed and the U.S. position in the next trade negotiations for agriculture should include the total elimination of all tariffs, all export

subsidies, and all trade-distorting support for the pork and pork

products by other countries.

In addition, we believe that the Global Food for Education and

Child Nutrition Act should include pork, beef, poultry, and dairy

products as well as commodities.

As for animal diseases, if the current situation in the UK and

Europe has taught us anything, it shows how important biosecurity

issues are to U.S. livestock farms.

Although the U.S. has not had to face foot-and-mouth disease

since 1929, Congress and USDA must be diligent to ensure that all

preventive measures are ready—are taken and that our effective

and rapid response could be ready when needed. This includes surveillance, increased diagnostic capabilities, and a rapid response

plan.

While I believe most of these initiatives are underway, Congress

should fund 380 million for renovation of the Animal Diagnostic

Center in Ames. Quite frankly, this cannot happen fast enough.

As for the concentration of livestock industry, while not directly

related to farm bill discussions, I want to touch on livestock concentration issues. I have attached a summary of the IPPA activities

on captive supplies in the livestock industry, which date back to

1975.

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Obviously, our work is not finished. Therefore, I urge Congress

to continue supporting a free flow of market information, such as

the mandatory price reporting legislation. That legislation was an

important step in the right direction, and I thank you for helping

USDA fund its implementation.

I have also attached a bulletin on the pork checkoff, which I am

not going in detail at this time.

I appreciate the opportunity to be here today. I look forward to

working with you, your staff, and your committee as deliberations

on the next Farm bill continue. Thank you very much.

[The prepared statement of Mr. Carney can be found in the appendix on page 78.]

Senator HARKIN. Sam, thank you very much for your statement.

Senator HARKIN. Last we have Aaron Lehman who is with the

Iowa Farmers Union in Polk City, Iowa.

STATEMENT OF AARON HELEY LEHMAN, IOWA FARMERS

UNION

Mr. LEHMAN. Senator Harkin, my name is Aaron Heley Lehman.

I am the legislative director of Iowa Farmers Union, and I also

farm with my family as the fifth generation on our family farm in

Central Iowa. It is a pleasure speaking with you today on behalf

of our family farmers.

Senator, Freedom to Farm was adopted when commodity prices

were high and expectations for agriculture were unrealistic. In reality, the promise of a broad, market-based environment of opportunity for farmers was shattered by an ongoing commodity price

collapse.

The dream of farmers less entangled in government involvement

has turned into a nightmare of government dependency. While the

government subsidies have provided relief to farmers struggling to

survive, the payments have the side effect of fueling the trend toward larger and larger farms and concentration in agribusiness.

We are not asking you to tinker around the edges of a failed policy. We are asking for a return to common sense in farm policy.

We believe that a primary goal of the commodity program should

be to provide economic stability and opportunity for farmers; a program which recognizes market realities, resource sustainability,

and food security and safety issues.

We believe that commodity loans should be dramatically modified

to better reflect the cost of production for farmers. The current program artificially capped loan rates and ignores the marketplace, ignores the production factors, and ignores the rising costs of crop inputs.

Our proposal would place that loan rate as high as possible, but

not lower than 80 percent of the 3-year average cost of production.

It is time our loan rate reflected economic reality and common

sense.

We believe that we must take steps to control our inventory. In

this regard, no other production industry ignores the marketplace

like agriculture currently does. We are foolish to expect a marketplace, foreign or domestic, to blindly comply with our inventory

needs.

14

To manage our inventories, we believe we should establish reserves to ensure our commitment to renewable fuels production

and to humanitarian food assistance.

Finally, we should establish reserves in a limited, farmer-owned

reserve program. Participants should receive annual storage payments in exchange for storing crops until prices reach the cost of

production.

In addition, no industry can expect to continue to produce in a

volume that exceeds market demand. We believe the Secretary of

Agriculture should have the discretionary authority to offer a voluntary set-aside program. We feel that farmers should be rewarded

with a raise in commodity loan rates which reflects the level of

their own set-aside.

We feel strongly that program benefits need be directed to family

size producers. Unrestricted government payments, which the current program effectively provides, leads to large farmers using government assistance to bid up land prices and cash rents to levels

completely out of line with commodity prices.

If farmers want to farm half the county, let them do it, but do

not let them take taxpayer money to help finance it.

As farmers, we have a responsibility for sound land stewardship.

Farming, as in our family, stretches across generations. We do not

own land as much as we borrow from our children and try to make

the best use of it as our own contribution.

Senator we strongly support the Conservation Security Act and

we urge Congress to expand the Conservation Reserve Program.

Enhanced rural development programs must be an integral part

of the Farm bill discussion, and that enhanced cooperative development should be central in that discussion.

Production research should be directed to creating value—creating value that benefits family farmers, and funding should be targeted to the multi-functional aspects of agriculture, including less

capital intensive technologies, alternative value-added products, energy conservation, and renewable energy development.

Concentration of market power among a few large and highly integrated agribusinesses has reached an all-time high, and steps

need to be taken to address this concentration, and until these

steps are taken, a moratorium on agribusiness mergers should be

immediately enacted.

In addition, discriminatory pricing and packer ownership of livestock should be immediately halted. Checkoff program work should

be targeted to the benefit of family size producers and should be

accountable to producers. We feel that the producer referendum

ballots should be respected and not ignored.

In closing, Senator, your work in this next year on agriculture

issues will leave a permanent mark on the direction of agriculture

in the 21st Century.

While I want our policy to make us leaders in production and efficiency, I want more so that our policy points us to a strong,

healthy, rural Iowa and rural America. I want to pledge our efforts

to help make agriculture policy responsive to farmers and rural

communities while providing consumers with safe and secure food.

Thank you for your time, and I look forward to answering any

questions you may have.

15

[The prepared statement of Mr. Lehman can be found in the appendix on page 83.]

Senator HARKIN. Thank you very much, Aaron. I appreciate you

being here.

Senator HARKIN. Let me see if I can recap a little bit here some

of the things we have heard. Dr. Duffy, you talked about the income of farmers and how it has dropped down considerably since

the high in 1996, and made the point that 55 percent of our net

income came from government payments and that 92 percent of our

cropland in Iowa is devoted to two crops.

He said that in the 1950’s the net income of farmers was about

34 percent of gross. Now it is down to 20 percent of gross. According to USDA definitions, 87 percent of Iowa farms are small farms

with sales less than $250,000, is that correct?

Dr. DUFFY. Yes.

Senator HARKIN. Dr. Duffy made the point that we should do

some things in the Farm bill, like looking at being self-sufficient in

energy on farms. Might want to question you some more about

that.

The program should support people, not commodities. He made

a statement about some form of minimum wage for farmers. I

would like to investigate that. It was also pointed out that the level

of payments that we have had have been built into land values and

rents and things like that and that we just cannot go cold turkey

in terms of doing away with those.

First of all, I have a question of the Wallace Center. Are you

hooked up with the ICN?

Mr. WILLIAMS. Yes, we are.

Senator HARKIN. I saw that. I thought that you might be. You

have got a cable coming out here.

Mr. Williams pointed out that over 50 percent of the payments

were from the government. He suggested that in the Farm bill, we

have good conservation practices to manage our resource base, and

that we target our programs.

He mentioned the use of a grain reserve and a safety net, and

that we close payment limitation loopholes. Mr. Williams noted

that there was a three- to four-year waiting list in Page County for

conservation cost-share programs and that we have a long backlog

of those.

He also mentioned ACRE, which I have to have you explain to

me, because I am not all that familiar with it. He mentioned the

need for mandatory price reporting, and the need to investigate

antitrust activities. Mr. Williams stated. that the pork checkoff

should be revisited.

Mr. Askew talked about balancing the social and economic needs

of farmers and growth in rural communities. He said in the Farm

bill that we have to focus on global competitiveness, expanding

trade opportunities, research, and tax and regulatory reform.

He mentioned energy policy and biofuels in the new Farm bill.

Mr. Askew also suggested that we should look at risk-management

tools and insurance, and also the information flow to farmers. I assume you mean closing that digital divide, making sure that farmers get adequate information and up-to-date information, and ensuring that soybeans were treated equitably in the new Farm bill.

16

He mentioned the LDP structure, loan deficiency payment structure, and a counter-cyclical—need for some counter-cyclical-type of

program. Lastly, Mr. Askew noted land conservation and Conservation Security Act and the program that the Iowa soybean producers

have come up with called the Certified Environmental Management Systems for Agriculture, the CEMSA program.

Shirley Frederiksen talked about the Loess Hills Scenic Byway,

one of the ten best in the United States, and the prairie restoration

project. You mentioned a number of different things regarding the

grape and wine industry.

I can remember as a kid my dad buying Betty Ann Wine. Anybody ever heard of that? You drank that wild stuff?

I am not kidding you, there used to be big wineries over in Council Bluffs called Betty Ann Wine, and they had all these—I remember one time as a little kid seeing all those vineyards over there. Ms. Frederiksen indicated that wine could produce $7,000 to $10,000 per acre. She also spoke about local food systems, energy,

solar, wind, biomass, ag tourism. Their thrust was really that we

have to focus on rural development in our Farm bill.

Mr. Carney, with the Iowa Pork Producers, said that we should

focus on conservation, trade, market competitiveness, the environment, food safety, and biosecurity. He reminded us, as we always

need to be reminded, that any changes in commodity programs do

affect livestock operations one way or the other and that always

has to be taken into account. Mr. Carney also mentioned that this

EQIP backlog of 196,000 is what you mentioned in the EQIP program. Mr. Carney stated that we need a minimum of $10 billion in the

Farm bill for conservation over the life of the Farm bill. He indicated that payment limitations could be used also in livestock as

we do also in row-crop production.

He also mentioned trade and boosting the Market Access Program and including meat products in the Food for Education Program. I assume you mean that that is that new school lunch-type

thing we are talking about.

Mr. Carney mentioned the need for rebuilding and renovating

the National Animal Disease Center at Ames. That $380 million

mark, by the way, stands now at 446 million, so the sooner we get

it built, the cheaper it is going to be.

He indicated that concentration and really enforcing more and

getting more enforcing for the mandatory price reporting.

Mr. Lehman, representing the Iowa Farmers Union talked about

the payments basically has fueled the trend toward larger farms,

our goal in the Farm bill ought to be economic stability, opportunity to family farmers, resource sustainability, and food security.

He pointed out that the loan rate, ought to be set at the minimum of 80 percent of the 3-year average cost of production, and

that we need to control our inventories, like with reserves, renewable fuels, and some kind of humanitarian food assistance. Mr.

Lehman indicated the need for a farmer-owned reserve and for annual storage payments for farmers for the reserve program. He

said that benefits ought to be targeted to family sized producers.

Mr. Lehman also referred to the Conservation Security Act, expansion of conservation programs, rural development, enhancing

17

cooperative developments, and farmer-owned cooperative developments.

He said our research should be to create value that would benefit

the family farms, enforce antitrust laws, and stop packer ownership of livestock.

Does that basically summarize the testimony? Again, I thank

you, and what I would like to do is just—I have just a few questions, and then we will open it to the audience.

For Dr. Duffy I just want to ask: If there are only modest deficiency payments from increasing farm size above 300 to 600 acres,

as your Iowa Farm Business Association data indicates, would you

say that government payments which are directly linked to production and acreage might be offering alternative incentives to grow

even larger?

Dr. DUFFY. I want to make sure that we are clear. What I was

talking about was the cost per bushel dollars that it would cost to

produce it.

Senator HARKIN. Yes.

Dr. DUFFY. Then, yes, because the larger you get, the way that

the program is set right now, particularly with the LDPs, the more

Federal money you get, the more you produce, and so as we move

on out, basically what we have in the jargon is an L-shaped average cost curve, so we have initial economies of size, and then those

are dissipated, and then it flattens out, and the data for Iowa

shows somewhere between three to six hundred acres is that low

point, and then people just move along that cost curve. As they

move out, the more bushels you produce, the more payment you

get.

Senator HARKIN. What you are saying is there may be kind of

a perverse type of an impact. In other words, we have the commodity program, we have the payments, the LDPs. I assume you are

including the AMPTA payments on that?

Dr. DUFFY. Yes.

Senator HARKIN. Would I be right in saying or assuming that if

you are bigger and you get more payments, then you get more

money, that might enable you to bid up perhaps your neighbor’s

land in terms of getting larger? In other words, you get more

money, so would it have a perverse impact of actually farms even

growing bigger?

Let me rephrase that. Do our farm programs today, in your estimation, lead to larger farms? That is about as simple as I can

make it.

Dr. DUFFY. I believe they do, yes. Because, as you move out and

increase the payments, the larger you are, that it encourages an increase in size.

I also think that when you look, the payments that came out, I

remember when the Food Security Act—or the Freedom to Farm

was first passed, and I had a landlord call me and was asking

about how this worked and so forth, and I said, ‘‘Well, you are

under cash rent and so you are not eligible for any of the payments.’’ I had to wait until she was done laughing and said, ‘‘Just

watch me. I will get them.’’ In other words, she just bid up the

rent.

18

It works in a lot of different—The programs are exerting all

kinds of influences on rents, on land value, on the infrastructure.

It is—We need to be very conscious of when we go in and we tinker

with, if you will, that that has the intended as well as unintended

consequences. The biggest reason farms are getting bigger is because they have to generate an income, and the reason they have

to generate an income is because we have developed production

technologies where we basically just pass money through the farm.

This is a term coined by Lord Cochran about the technology

treadmill, where we just—you need more land, so you buy bigger

equipment. You buy bigger equipment, and your costs go up, so you

need more land. Then you adopt technology so that you can farm

more land. You have more equipment so you can farm more land,

so you bid up the rent so you can justify the equipment, and

around and around and around she goes.

There is a variety of reasons, and I would be happy to go into

it with you, but the government programs, do they cause per se?

Maybe not. Do they not do anything to discourage? Definitely.

Senator HARKIN. I see what you are saying. In some ways you

mean the System. Obviously, a farmer today with the new equipment and new technologies obviously can crop a lot more acres

than a farmer could 50 years ago, 30 years ago, 20 years ago. There

is no doubt about that, right?

The farmer can plant and crop more acres with bigger equipment, faster equipment, better technology, better knowledge, better

information on planting, better hybrids, for example.

I guess my question is though, and I have often thought about

this: Yet an individual farmer, I mean there is only 24 hours in a

day, only 7 days in a week, and a farmer has to sleep sometime,

and they have to eat. They have to tend to their family. They have

to do other things.

I mean there is only so much time within that time constraint

of a farmer. It seems to me there is just some limit on how much

that farmer can actually do. I mean, I do not know where that is,

but it may be a range, depending upon the land and the structure

of the land and how clear the land is and all that stuff, but it just

seems to me that there is some range in there where after you get

to a certain point, farmers just simply cannot farm any more land

and still be efficient. I guess I am talking about efficiency.

Mr. DUFFY. That is why occasionally within the data from the

Iowa Farm Business Association I believe 7,000 acres is the largest

farm that is in there, and we have farms bigger than that here in

Iowa, but there is some argument that rather than an L-shaped,

we actually have a U-shaped with a very long, flat bottom and then

actually you reach a point where your costs start going back up,

and you—primarily you are going to exceed your management ability.

Senator HARKIN. Yes.

Mr. DUFFY. You also shift from being a family farmer, in my

opinion, to being a personnel manager, because you have so many

hired men or women, and then you become—you are operating— you are managing people rather than managing the land.

Senator HARKIN. I see. I am going to throw it up to the panel,

because it is general discussion here. You mentioned one other

19

kind of a, if I might use the word ‘‘provocative’’ idea, some form of

minimum wage for farmers. Do you want to tell me what you mean

by that.

Mr. DUFFY. It was not intended to be provocative. It was intended to—I mean—— Senator HARKIN. I mean provoking thing.

Mr. DUFFY [continuing.] OK. I do not like to cause trouble.

[Laughter.]

Mr. DUFFY. Not too much. Dr. Lasley and I were having a conversation 1 day, and we were talking about the current situation

and where we are going and the concern that we have that people

are at loggerheads and they are concerned about what is going to

be just for them and not really looking at the whole picture, if you

will.

Senator HARKIN. Yes.

Mr. DUFFY. Then we came up and we decided that—Paul suggested, well, what about if we have a minimum wage for farmers

where we were paying people? I worked on and developed a proposal that I included with my testimony, and I have copies of it out

there, and I would love for people to look at it.

Basically the idea of the proposal is that a farmer would be paid

based on the number of hours that they work and up to a full-time

equivalent, and then beyond that they would get more payments,

and less than that, only get paid based on what they worked.

The way that they would get paid, the number of hours would

be determined by the number of acres and the crops that they had,

the amount of livestock that they had. We have fairly good estimates on the amount of time that it takes per litter or per acre,

and then you would just multiply that out.

That would give you your number of hours, and if that exceeded—and we used 8-hour days, 7 days a week, 50 weeks a year, and

those are things that could be debated. That comes up to 2,800

hours, and so in a nutshell, but that is what we have.

Senator HARKIN. That is in this paper?

Mr. DUFFY. In the proposal, yes, sir. I do not know. To me, it is

trying to support the labor that is involved. It offers all kinds of

neat advantages, in my opinion.

It is totally divorced from the market so that I feel that it would

be a green box as far as WTO is concerned. You would have total

freedom to plant. You could plant whatever you wanted. Offers a

lot of different kinds of features. I offer it for yours and the group’s

consideration.

Senator HARKIN. That is what we need. We need to start thinking outside of the box, as well as inside the green box.

Any other thoughts about—I am also concerned about the whole

aspect of trade.

Now, when you say ‘‘soybean producers,’’ we are in Washington

talking about what is happening in Brazil and the expansion of

crops here.

Last year, for example, I was in China in August and discovered,

boy, they have got a lot of land in production, and they actually

were exporting corn. We thought there was going to be a market

for us. They are actually exporting corn, but I do not know how

many good years they have in a row. They are expanding their crop

20

production in China too as well as soybeans. I do not know if they

export soybeans or not. I do not know about that.

I know they exported corn last year, so I am just wondering what

we see in the way of trade overseas. I mean how can we expand

trade? We looked at markets, but if Brazil is putting all this practically free land in production, and how do we compete with that?

That is what I do not understand.

Mr. ASKEW. Well, first we should look at sanctions’ reform. We

have sanctions against probably two-thirds of the people out there

in this world, that we are not able to deliver food and we can. That

is an important thing. Just the other day with Iraq, with one example of one way and then turn right around and go back the other

way.

It is important because we export half of our soybeans out of this

country. Brazil and Argentina are competitors to us. We have to

understand that. Are they more efficient than us? No. I mean logically look at this.

They are using Case IH combines that are shipped from here in

the United States down there. They are using seed that is very

poor. They get so much rain. They have to use so much fertilizer,

so many insect problems.

It is not that great down there, and we just had a group that

came back from Brazil and Argentina, and their first thing was,

keep it up, because they are hurting down there, but are we going

to run them out of business?

We had a group up here this summer that were from Argentina,

and we got to talking to them. There is a language barrier there,

but you could get a pretty good indication, but you know what?

Looking at them is like looking just out here in this group. They

have the same concerns we do. They have farming in their blood.

They are going to keep going as long as they can until they lose

money, and they are losing money down there.

The thing is, we bring our soybean prices up and we have that

same—there will be land in production. It will take 50 years to get

it fully in production, but right now the bulldozers are not moving

down in Brazil. They were back in 1995 and 1996, but we had good

prices back then.

Now we are looking at that we have got to be the Number 1 soybean exporter. We have got to be the dependable source, because,

frankly, if we keep these sanctions in place, we cannot be the dependable source for soybeans or corn or anything else.

We have got to address the problems inside our own boarders. As

for the biotechnology, I think we all support biotechnology to a certain extent. That is going to be the way we compete in the world

in the future, but we have got to be able to get by political aspects

of biotechnology and look at the positive aspects, especially out

there in the countryside where we are using less pesticides and we

are doing more out there using some biotech crops than we ever did

before.

It has increased our production, but our soybean-use rations is

tremendous. As we grow those beans, we are using them.

We can use a lot more if we use renewable standards. It is very

important.

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Ethanol, I think everybody out here is a big supporter of ethanol.

We also have to be a big supporter of biodiesel.

Senator HARKIN. On the biodiesel, you know this. I might tell the

audience. About a week ago I was in Cedar Rapids and poured the

first gallon of soy diesel into buses.

They have 32 buses in Cedar Rapids now running on soy diesel.

It is an 80/20 blend, 20 percent soy, 80 percent regular diesel.

The soy diesel is made around Sioux City someplace. If one percent of the diesel market in America were to use this soy diesel,

in this 80/20 blend, I think it would take about 300 million gallons.

Estimates are that it might boost the price of soybeans as much as

15 cents a bushel. Plus it cuts down on hydrocarbons, it cuts down

on pollution, and it cuts down on CO2 emissions. There would be

a 70 percent reduction in CO2 emissions if you use soy diesel.

I am sorry, Mr. Lehman.

Mr. LEHMAN. Well, in the area of trade too, we feel strongly we

need to aggressively pursue trade opportunities. We need to keep

in mind that those trade opportunities need to be fair for our producers.

I use Monsanto products just like those farmers do in Brazil.

They do not pay a tech fee.

Senator HARKIN. They do not pay what?

Mr. LEHMAN. A technology fee that is attached to products we

use, and when we ask why that is, it is because they do not have

the same environmental standards for—that we have to have here.

That is a cost of production that we face that their farmers do not

face.

We talked about China now becoming a competitor in—and becoming an exporter of corn. The labor standards for producing corn

in China are nearly nonexistent, and if we really want to compare

bushels produced in China and bushels produced in the United

States, then at the same time we are producing—we are comparing

how farmers are being treated in this country to how farmers are

earning income in China as well. Those labor standards need to be

taken into account too. We need to pursue those trade opportunities.

Senator HARKIN. Well, I agree with that. While I have been a

supporter in the past of what they call fast-track legislation, the

President’s ability to move trade legislation rapidly through the

Congress, I stopped.

I stopped being a supporter when the trade agreements carve out

any kind of environmental or labor standards. Because it seems to

me that that has got to be a part of our trade laws too. I am just

telling you what I feel, but they have got to be a part of our trade

laws.

Otherwise, we let people undercut by using basically slave labor.

We allow people to just do environmental pollution, which affects

the whole globe and undercut us.

I have always said that if we can protect CDs, compact disks, I

did not mean certificates of deposits. I mean compact disks. If we

can protect the compact disks and take action against any county

that would allow the piracy of compact disks, we ought to be able

to take action against counties that do not meet certain environmental standards and labor standards.

22

I would hope, and I make this statement forthrightly, I encourage all of the agricultural groups you represent and others that

may not be here, that this is one place where I hope the agricultural—agribusiness section, including farmers, will break from the

corporate business sector of America, because the corporate business of America is saying they do not want trade—they do not

want environmental standards or labor standards in our trade

agreements.

I mean it is especially important, vital to our farmers, that we

have those kind of practices. I encourage those of us involved in agriculture to take a separate stance, and that is just my own feeling.

Any other thoughts on this, Sam?

Mr. CARNEY. I do have a few, and as John mentioned, we have

two-thirds of our—we have sanctions on two-thirds of the countries,

and I guess what kind of upsets me is on our industrial tariffs we

average four percent. On the agricultural tariffs, we average

around 40 percent. This is a major problem.

I am sure people out here have to borrow money, and if anybody

had to borrow at 40 percent interest, you just as well walk out the

door. You are done.

We have got to get this changed. This is a major, major, major

issue with agriculture.

Senator HARKIN. Say that again. Tariffs—— Mr. CARNEY. OK. Industrial tariffs average about 4 percent. Do

not quote me, but that is the average.

Senator HARKIN [continuing.] Industrial on industry coming into

this country?

Mr. CARNEY. Going out to other countries too.

Senator HARKIN. Tariffs we face on our exports?

Mr. CARNEY. Yes. Maybe I did not explain it right, but as our exports on agriculture, we average 40 percent going out.

Senator HARKIN. That other countries put on our agriculture?

Mr. CARNEY. Right. The main reason is we put so many sanctions on. This is the thing that we have got to change. To me, we

should never have sanctions on a country unless we are outright

at war with them. If you want to put sanctions on a country, I do

not think it really helps.

Senator HARKIN. What you are saying, there are countries we

have absolute total prohibitions on, but other countries you are

saying we have one form or another?

Mr. CARNEY. Correct. You know, we have got certain things, but

what I am saying is: We should not use food or medicine.

I just do not think that is right, and I do not think that really

helps us help with other countries. This is something we should

eliminate.

Senator HARKIN. I agree with you, totally agree with you. A

funny little story: I remember once, one of my political heros was

Hubert Humphrey from Minnesota. He is now deceased. He was on

the Senate Ag Committee long before I got there, and he was talking about selling food to Russia and—during the height of the cold

war, and someone said something to Humphrey about selling—selling this food to Russia, and he said, ‘‘Well, I believe we should sell

them anything they cannot throw back at us.’’ [Laughter.]

23

Senator HARKIN. I thought that sounded like a pretty good philosophy to me.

[Laughter.]

I appreciate that. I am going to open it to the audience now. You

have heard a fairly good discussion here.

I just want to make one other point here, that the conservation

incentive. I appreciate a lot of you looking at the Conservation Security Act. Any further thoughts, refinements, suggestions that you

have on that, please let us know. If we do a conservation incentive,

it does shift the practices and less to the commodities, which I have

heard a little bit of here today.

I have got my little chart here. I am sure you can all see this

real well. It shows the CCC outlays for the fiscal year 2000. We

had $32.2 billion in outlays, but we only had 1.7 billion in conservation, so that gives you some idea of the small amount of

money that we put out in conservation.

I have always said, that we have got a lot of farmers out there

practicing good conservation. I do not mean just CRP or set-aside,

but I am talking about practicing good conservation. This takes

time. It takes equipment. A lot of times it takes out-of-pocket

money, but they get nothing for it. The Conservation Security Act

is to convey to farmers, ‘‘OK. Now, we are going to support you in

your practices, and if you want to do more voluntarily, we will pay

you.’’

Mr. WILLIAMS. Senator Harkin, there is also a direct long-term

societal cost to America in how we take care of our land.

Senator HARKIN. Yes, and I think that is going to be a good selling point to some of those who are now saying that we should not

be putting that much money out in agriculture, that we are already

hearing that kind of reaction coming back.

OK. I am going to throw it open, and again, I ask you to please

state your name so our reporter can get your name correct.

STATEMENT OF DENISE O’BRIEN, ATLANTIC, IOWA

Ms. O’BRIEN. Good morning, Senator Harkin. I am Denise

O’Brien from Atlantic, Iowa. I can say that 25 years I have proudly

been an organic farmer, and about 20 of those years I have given

ag testimony within Iowa and Washington D.C.

Senator HARKIN. I am very appreciative of you. You have been

there many times, and I appreciate it.

Ms. O’BRIEN. I keep nagging, but someday something will

change, and believe me, I have not got cynical yet. You know, I can

still smile.

First of all, I would like to make a comment about the lack of

gender balance on the program. It is good that Shirley is there, but

women do have a voice in agriculture, and to leave out that voice,

we leave out——

Senator HARKIN. You take that up with the Pork Producers, the

Soybean Association, and the Farmers Union. I just asked them to

please have someone come testify.

Ms. O’BRIEN [continuing.] I will take that up. It is really good if

the organizations would have women represent them on these, because women do add a voice to solutions, so I would encourage all

organizations to do that.

24

Senator HARKIN. Point well made.

Ms. O’BRIEN. I am representing actually an organization called

Women’s Food in Agriculture, because we do not have a voice in

a lot of organizations, so we have created an organization.

Today I am speaking on behalf of organic agriculture, which has

not been mentioned at all, and I think there is approximately now

in Iowa 170,000 acres of certified organic crops.

There is an alternative solution to some of this. It is not

everybody’s solution. I agree, but these farmers are profitable. They

are making it. They are turning a profit, but I also want to say at

the time that they are turning a profit, they are in grave danger

of losing their economic—or organic status because of the problem

with GMOs. We have not talked about GMOs this morning either,

genetically modified organisms.

When the organic crops get contaminated by genetically modified

organisms, they lose their—the farmer who has the organic crops

loses their market, and that market has been a market that has

been increased, profitability for them.

The National Organic Standards Board have made the standards

now, and there is zero tolerance of GMO contamination, so I think

that we have to consider what we are doing in this process of eliminating—or of contaminating these organic crops.

Recently the Organic Farming Research Foundation released a

state of the states report, and it is Organic Farming Systems Research at Land-Grant Institutions, so this report has come out

about the state of organic research in the United States.

I would like to say that because public funds support the landgrant system, we expect it to be responsive to the educational and

research needs of the constituents, including organic farmers, and

we have been totally left out.

I know this from 25 years of experience. We have always—My

husband and I have always been left out of any—all of these payments. We have been good stewards of the land. We have had a

crop rotation when the set-aside was based on corn base. We never

qualified for anything, not that we wanted government payments,

but we never qualified for anything because it was really—we

were—it was a disincentive for us to do what we did, but we believed in what we were doing.

Senator HARKIN. Are you suggesting that—and I am just asking,

that there should be special provisions made in the next Farm bill

that would help encourage organic farmers to give some better support somehow?

Ms. O’BRIEN. You betcha.

Senator HARKIN. Do you have some ideas on how we do that,

Denise?

Ms. O’BRIEN. we have it right in this book here. I have given this

book to Ellen, so she has got that.

Senator HARKIN. All right.

Ms. O’BRIEN. There is no support of organic research. We do

have—Iowa State has the only organic specialist in the country,

Kathleen Delate, and she has—Mike is raising his hand.

Mr. DUFFY. I was just going to say that connected with the Armstrong Farm, we also have a long-term research project that is soleVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 77324.TXT SAG1 PsN: SAG1
25

ly devoted to organic production. I thought I saw Bernie here, the

farm manager who is running it, so——

Ms. O’BRIEN. Yes.

Senator HARKIN. Somewhere here?

Mr. DUFFY [continuing.] Right back——

Mr. BACKHAUS. The Neely Kenyon farm.

Mr. DUFFY [continuing.] The Neely Kenyon farm, which is connected with——

Senator HARKIN. Where is it?

Ms. O’BRIEN. Adair County.

Mr. DUFFY [continuing.] It is connected with this——

Mr. BACKHAUS. It is part of our farm. My name is Rob Backhaus.

I am president of the Wallace Foundation.

Ms. O’BRIEN. To go on with the question you asked me: There

is 17 acres under research in Iowa, and many states have zero research going on into organics, and so with Iowa State having an

organic specialist, she is totally overworked and totally

unaccessible. I try to get ahold of her, and she is just understaffed.

I know we have to take this up with Iowa State, and Practical

Farmers of Iowa is doing that very thing.

Senator HARKIN. Now, again, in your practices, I will bet you do

not get any kind of payments at all for your practices.

Ms. O’BRIEN. Oh, no. We never ever have.

Senator HARKIN. Alison just reminded me under the Conservation Security Act you would.

Ms. O’BRIEN. Well, now we changed our farming situation over

the years and Larry is working off the farm now, and I do ten

acres, so we have got—but that is an encouragement to get back

in actually. It would be an encouragement.

To continue with my testimony, I just want to say that the good

news is that land grants in 39 states have research and/or resource

development for organic producers. Land-grant institutions in 19

states reported research acreage net gained in organically, 12 of

which have research land that is certified or in transition to certification.

The bad news is, is that of the 885,000 available research acres

in the land-grant system, only .02, or 150 acres, out of 880,000

acres is devoted to certified organic research. That is a totally unbalanced situation.

When we are looking for solutions, I think we ought to think

about organic agriculture, and I am really proud to stand here all

these years. I know people have thought I am kind of whacked out

sometimes about my organics, but I am standing here.

The private sector ag has taken on themselves to do the research, and the Organic Farming Research Foundation in California has funded programs in Iowa.

I want to point out that the Heartland Organic Cooperative,

grain cooperative that is located in Adair County, is now buying

the Stuart elevator, and there is going to be access for semi loads

of organic produce—or commodities, this is a commodity one, this

is corn and soybeans. They are just taking over the Stuart elevator,

so I think it is really relevant that—and they have operated 8

years in the black.

26

Compared to other—Mark is telling me that I have to quit. Everyone who knows me knows that I talk too much, but I would just

say that organic ag is a growing industry. It is an agriculture that

can be a vehicle to help the floundering small- and medium-size

farms survive and a vehicle to save our most valuable resource, the

land.

I would also like to say that a week from today at this very place

at ten o’clock is a biomass—the Union of Concerned Scientists is—

and Alan Teel, our extension agent in this county, is having a biomass meeting, and it is like from ten o’clock to noon next Saturday

morning, so I would like to encourage the farmers to come here and

learn about some biomass production.

[The prepared statement of Ms. O’Brien can be found in the appendix on page 87.]

Senator HARKIN. Denise, thank you very much.

I forgot to mention that we have a new member of our agriculture committee. Senator Ben Nelson from Nebraska is now a

member of our agriculture committee. He could not be here, but his

staff member, Sonny Foster is here. Where is Sonny? Thank you

for being here, Sonny. If any of you want to get anything to Ben,

Senator Nelson, please just give it to Sonny.

I just want to followup before you start, sir, on what Denise

O’Brien was saying. Maybe what Mr. Duffy was saying, that we

have 92 percent in a couple of crops, and, sure, we have moved in

that direction. I know that organic cannot be forever. It is not going

to replace it all, but maybe there is a lot of other little things like

that we can do around the state to help buttress and help provide

some really good support and income support and—for rural communities. Organics is one of them.

I know around the Washington D.C. area they have got a grocery

chain called Fresh Fields. They cannot build them fast enough.

People drive for miles to go to them, and they do all this organic

food, organic lettuce, organic meats, and all that.

Someone told me that they were selling pork, Sam, to this Fresh

Fields, organic pork or something, and where was it I read this?

Fresh Fields was buying all the organic pork that is being raised

today, and they cannot get enough.

There are some niche markets out there for operators. There are

some niche markets out there. Perhaps we ought to take a look at

that in the next Farm bill to see what we can do.

I might just mention one other area, and that is energy production. Somebody mentioned biomass. We have a project going on

down in Southwest Iowa. Any of you know about the switch grass

project that we have? How many of you know about it? The information got out decently anyway.

We have about 4,000 acres of switch grass going down there now,

and we are burning it in the coal-fired power plant in Ottumwa.

We just finished the first run this winter, and all of the results

look very good and there is more B.T.U. in a pound of switch grass

than a pound of coal.

If we can utilize CRP acres for switch grass and use switch grass

to provide energy, not going to replace all the coal, but I think I

have seen figures that with just a modest use of our CRP ground

27

in Southern Iowa, we might replace about seven percent of the coal

coming into Iowa.

That translates into several hundred million dollars every year

that would stay in the state rather than going outside the state,

so I think we have got to start thinking about these kinds of

things, aside from wind energy and stuff like that, but I think

there is a great potential for biomass.

Mr. DUFFY. May I interrupt? I am involved with that project

down there. I have conducted and done the estimated cost of production of switch grass.

Senator HARKIN. Yes.

Mr. DUFFY. That publication, it is in the press right now, but one

of the issues and the reason I wanted to bring it up is because

right now our costs of production are a little bit higher than the

coal that Alliant Energy, they can purchase the coal cheaper, and

I guess the reason that I am bringing this up is because this is an

area where maybe if we could look at an energy crop subsidy or

something like that or definitely more research into trying to get

the yields up. Because what we have found is obviously the higher

the yields and then the lower the cost would be.

Senator HARKIN. Sure.

Mr. DUFFY. This does need more work, but I think it shows a lot

of promise. That was what I was going to allude to. I am sorry to

interrupt.

Senator HARKIN. Just a research project then?

Mr. DUFFY. That is correct.

STATEMENT OF GAYL HOPKINS

Ms. HOPKINS. My name is Gayl Hopkins. I am active in the Iowa

Corn Growers and Environmental Issue Team, and before I—I

would like to focus my comments concerning the Conservation Security Act, but before I do that, I would like to make just one response to what was said earlier.

Their comment was about Dr. Duffy’s provocative comments. My

personal feeling is that maybe you have understated the importance of management and size, that the management skills I believe are an extremely important issue in size of operations.

First of all, I would like to—just getting back to the Conservation

Security Act, I would like to, first of all, say that I believe it is the

hot issue in agriculture right now, and I would like to talk a little

about why I think that is the case, and, second of all, I would like

to talk about why we as farmers should support it.

Mr. Askew here, his organization has come out in support. The

American Soybean Association as well as the Iowa Soybean Association has supported it. The National Corn Growers have endorsed

the concept of it.

We had a delegation there this past week. The Iowa Farm Bureau had a delegation there this last week. The Farm Ag States

Group, which is a group of ag commodity groups in Iowa, have

been discussing this issue. Carol Balvanz from cattle has made

some inquiries trying to understand what pasture rotation would

mean, as far as payments for pasture rotation would mean, what

about manure management and livestock. There has been some inquiries.

28

I understand that the EPA has asked for conversations looking

at what this would mean environmentally, so I really think this is

an issue that is Senator Harkin’s bill, our Senator’s bill, and I

think we ought to look at it hard, and I personally feel supportive.

The reasons why I think we should support it is I was in my FSA office yesterday, and I think the LDP on beans was $1.17. There

are—I do not want to change the payment—the way the farm program is working, but there are limits to trade-altering payments

that a farmer getting $4 for his beans but getting an additional

1.17 from the Federal Government, what that does to trade. We

can do some of that. That is built in to our trade agreements, but

there are limits to what we can do.

In the area of conservation, there are not limits. They talked

about a green box earlier. We need to be looking at other alternatives to assist farmers besides these direct payments that we

have been doing, or maybe I should say, in addition to them, because I do believe there is some limits, which I think is going to

give us some trouble down the road.

In our environmental issue team, we have been dealing with impaired waters, TMDL, which is Total Maximum Daily Load, of either phosphorus or nitrogen in streams and who does what and

who should do what and things like this, and we have had—the

EPA has come—bypassed DNR in Iowa and declared hundreds of

water bodies in Iowa as impaired waters.

We are facing—to have to deal with this. Now, as an organization, we can say things like, what about the cities? What about the

65,000, excuse me, contractors who in the evening clean gas stations, lots, parking lots, things like this? That all goes into the

storm sewers.

If we focus upon what is wrong with everybody else and not with

what we can do to improve our own situation, we will be looked at

like the tobacco industry as being in denial, and I think what we

need is some way to assist farmers to make cleaner water and

cleaner air, but when they passed the Clean Water Act of 1972,

there were billions and billions and billions of dollars spent every

year for these municipalities. We have challenges but no money.

Senator HARKIN. Gayl, I have got to move on. We have got some

other people here waiting.

Ms. HOPKINS. OK. My last two points are: conservation needs

broader support—excuse me, agriculture needs broader support if

farmers are to receive payments. The public says, ‘‘What is our

money being used for?’’

The last thing I would like to say is that conservation, or being

good stewards of the land, is the right thing to do.

Senator HARKIN. Thank you.

STATEMENT OF HAROLD SWANSON

Mr. SWANSON. Thank you for the invitation, Senator Harkin. It

is nice to see you again.

Senator HARKIN. Yes. For her.

Mr. SWANSON. Harold Swanson. I am retired head of the Iowa

Western Community College ag department and have a farm and

14 years in ag business, fertilizer, ag chemical, and grain, and we

have—so I am a member of Ag Connect Board of Directors, which

29

is trying to connect farmers retiring with the current operators, retirees, and I also am on the—a member of the National Farm and

Ranch Business Management Education Association.

Senator HARKIN. All right.

Mr. SWANSON. Which was started in 1952, and I was one of the

original ones that started it as part of the Minnesota Vo Ag Farm

Management Program in Minnesota in 1952.

The grain company offered the Minnesota Department of Ag

Education a nice grant to start a farm management program, and

out of 500 ag teachers who were offered these things, 15 of us took

the challenge. I have been with it, and I have a tremendous collection of records, so—but that is just the background.

Senator HARKIN. Right.

Mr. SWANSON. Now, I am going to pick a little niche with my discussion today, and I will give you a copy of it. I will just read it

so we can get it over with real fast.

Maybe Congress can change the LDP system a little this year to

a program that will really benefit the small farmer, instead of setasides that cannot be initiated because of the time factor and the

provisions of the 1996 farm law. The regulations for the operation

of the LDP program have not been absolutely set.

Now, I am—Based on what I have read in the regulations, I do

not think the final—because I see there is some changes in the way

they have set up the LDP, so I am thinking that for 2001 some

things can happen.

This is what I am suggesting: Let us set up an LDP so the payments will be made available to bushels produced or not produced

based on a formula that calculates the portion of the crop that a

farmer would be entitled to if he was producing what was his share

of the estimates usage based on the percentage of the expected crop

that is calculated in July when the total certified acres are known

and the government has made the estimate for the average yield

and the estimated usage figure for 2001–2002 period and the expected carryout as of September 1, 2002. This system would be an

additional help for the farmers suffering from drought and other

disasters.

Here is how it would work: The bushels that a farmer would be

able to LDP would be based on the percentage of acres needed to

produce the usage figure at average national yield developed for

the crop in relationship to total acres planted.

If the acres needed would be 85 percent of the planted acres,

then each farmers’ share would be 85 percent of his planted certified acres times the national average yield as his LDP bushels,

whether he produced them or not.

This method provides some badly needed incentives to let the

high-yield producers recognize that they are part of the overproduction problem, and since there is no willingness to set up alternative

programs for producers on marginal land who have little chance for

profit, even with the very favorable prices, but contribute heavy to

the oversupply, this program would help the small farmer.

Senator HARKIN. Thank you. I have a vague idea. What you are

saying is you take what the total national usage would be, you figure the amount of crop acres that would be needed basically on an

average basis to produce that, then you get a percentage of what

30

every farmer based upon, I assume, some kind of crop history or

something like that, that they would be eligible for as their percentage of that total.

The only question I have on that: Does that not still provide the

bigger farmers with the bigger payments, and do we not still get

back to the same kind of rut that we are in now?

Mr. SWANSON. No. Because, first of all, you are going to be dealing with the average national, so this guy that has got big acres,

big high yields, is only going to get the—his LDP on national—on

national yield.

Senator HARKIN. OK.

Mr. SWANSON. The guy who is producing 100 bushel on some of

the marginal land, he would get the national average times his

acres.

It would be a very definite payment to the marginal producers,

which we need some help.

[The prepared statement of Mr. Swanson can be found in the appendix on page 91.]

Senator HARKIN. Give me that information. I will take a look at

it. I do not know that I understand all of it.

I am told by Mark we only have about 30 more minutes, and so

I am going to try to move as rapidly as I can.

STATEMENT OF JOYCE SCHULTE, SOUTHWEST COMMUNITY

COLLEGE

Ms. SCHULTE. Greetings, Senator Harkin, Joyce Schulte.

Senator HARKIN. Good to see you again.

Ms. SCHULTE. Thank you. I am representing community colleges,

students, work for a TRIO program at Southwestern Community

College.

Part of that criteria group are low-income students, many of

them needing food stamps. Various things stand in their way. Now,

I love to feed the world, but I would like to feed the world starting

at home in our colleges.

I do not know if there is some way to connect the students’ academic success via a TRIO program and food stamps or not.

I am going to be real brief and stop at that in contrast to my normal style. Thank you, sir.

[The prepared statement of Ms. Schulte can be found in the appendix on page 92.]

Senator HARKIN. Thank you very much. Food stamps TRIO program. Got it.

STATEMENT OF ALAN ZELLMER, FARMER/PRODUCER

Mr. ZELLMER. Senator Harkin, my name is Alan Zellmer. I am

Alan Zellmer.

Senator HARKIN. Spell that last name for us.

Mr. ZELLMER. Z-e-l-l-m-e-r.

Senator HARKIN. OK.

Mr. ZELLMER. I am a local farmer/producer. I guess the first

thing we raise is kids at our place, and then it trickles on down

to corn, soybeans, cattle.

31

I am going to come at you from the issue of: I have got involved

with a group that produces cattle for a specialty product. It is

Wagyu cattle.

Senator HARKIN. Yes.

Mr. ZELLMER. I can agree with the 40 percent tariff.

Senator HARKIN. I am familiar with that.

Mr. ZELLMER. We ran into that 40 percent tariff, and now the

cattle that we do raise are sold domestically here to fine restaurants and markets.

Senator HARKIN. You have an operation up around Perry? There

is somebody up there producing Wagyu.

Mr. ZELLMER. That could be.

Senator HARKIN. I just know, and they are doing a good job of

marketing.

Mr. ZELLMER. You bet. I am from Atlantic, is where I am from.

Senator HARKIN. Where do you market yours?

Mr. ZELLMER. Ours actually ends up in the finer restaurants now

here in the United States. There is enough Oriental people that

travel here and live here that they are looking for the product.

Senator HARKIN. Interesting.

Mr. ZELLMER. The product in Japan sells for around $64 an

ounce, and when they come over here, we can kind of sell it to

them at a bargain rate.

I have worked with an investor that ventured into this, and

there is a potential to bring a premium to just area cattle producers. They do not have to change anything in their operation other

than the semen that they are actually using with these cattle, and

where the potential top is on this, we do not know. We are going

to let the market dictate more so than we do in the corn and soybean part of our operation.

Now we started a feedlot to work into this project, and now actually when we started in the project, we had an engineer come out

and tell me, what do I really need to do as far as manure management and things like this.

There was some pretty basic and simple things that we had to

manage. Now I had my DNR visit, and it is my understanding that

the EPA was sued and, in turn, put pressure on the DNR to bring

this Clean Water Act up to date.

Senator HARKIN. Right.

Mr. ZELLMER. I agree that there are places that we need to

change and fix things, but we also need a lot of time and a lot of

definition as to actually what we have to fix.

Senator HARKIN. Yes.

Mr. ZELLMER. Because just being one producer, I cannot really

get a straight answer from anybody.

Senator HARKIN. How many head of production do you have, how

many cattle?

Mr. ZELLMER. I work 1,600 right now.

Senator HARKIN. You are over the 1,000 cap?

Mr. ZELLMER. Right. I hate to get into all those abbreviations, because I have not been involved with them enough to know them.

Senator HARKIN. Not all of that is Wagyu?

Mr. ZELLMER. Yes.

32

Senator HARKIN. You have got 1,600 of Wagyu. Is that right? You

have got a market for all of that?

Mr. ZELLMER. Yes. The thing that—I am all for Southwest Iowa

every way, shape, or form. It does not have to be just my operation,

because there is other area producers that are saying, ‘‘I will just

shut down versus comply.’’

Senator HARKIN. Yes.

Mr. ZELLMER. We are looking at $100 to $150 a head per pen

space to get up into compliance and then we have operational costs

besides, and everything that goes in the front of those cattle comes

off the land, and everything that goes out the back——

Senator HARKIN. This is one area where we cannot forget about

our livestock people in Iowa, this is both pork and cattle, for our

value-added products.

We have to recognize that we have to now meet some of these

environmental standards. We have to recognize that.

Mr. ZELLMER. Sure.

Senator HARKIN. You cannot just dump it all on the individual

producers. Just like I am talking about my Conservation Security

Act, I think what we have got to do is figure out some way—now,

I am looking for suggestions on this—on how we help people like

you to meet these things without, you say $150 a head. I mean you

cannot do that.

We have got to figure out some way of coming in with some supportive mechanism both on the national and the state level——

Mr. ZELLMER. Yes.

Senator HARKIN [continuing.] Here in Iowa to keep you in business and keep our cattle producers in business and yet meet these

more stringent environmental standards we have to meet.

Mr. ZELLMER. I would love to be involved with it.

Senator HARKIN. I am looking for suggestions, so if you have got

any thoughts and stuff on that, I am open for anything that we can

start building in, as I said, both national, but something has got

to be done at the state level too. There has got to be two ways on

that.

Mr. ZELLMER. I will stay in touch with you on what I can find.

Senator HARKIN. Any suggestions you have got on that, because

I recognize we have got to do this. We have got to help producers

meet these standards.

Mr. ZELLMER. Sure. OK. Thank you.

Senator HARKIN. Thank you.

Mr. ASKEW. We need to be on the front line of this as for working

out systems to document what we are doing out there. What we are

trying to do is associate—and as we talked to you a little bit about

the CEMSA program, but we are looking at environmental management systems for all of agriculture, so for the pork producer, for

the cattle producer, also to have a framework out there to show—

to be able to assess your own—what you are doing on your farms,

to look at what practices you can do, and then use these before regulations come out.

Because with production agriculture, they will be coming, so we

have to be on the front line of this, and we will work with you on

that to help develop those processes.

33

Senator HARKIN. That is good. You are right. It is coming, so we

better get on the front end of it. Actually, we should have gotten

on the front end of the livestock situation some 20 years ago. We

did not do that then either. Yes, go ahead.

STATEMENT OF ERWIN AUST, SHENANDOAH, IOWA

Mr. AUST. Thank you, Senator Harkin. Glad to have this opportunity. I am Erwin Aust that lives in Shenandoah, Iowa. I am an

assistant commissioner with the Page Soil and Water Conservation

district along with Dave Williams up there, and also I am a board

member of the Iowa Watershed.

Our organization supports the planning and treatment of conservation needs of soil and water resource development—watershed

bases, and—because of conservation needs cannot be often solved

on the individual farm.

We certainly support or appreciate the support you have given to

the conservation efforts, Senator Harkin. I would like to address

primarily the Iowa Watershed Organization’s supports project like

the PL566, Little Sioux Water Quality Project, Hungry Canyons,

and those type of programs.

Today I would like to primarily address the 566 program. It is

operated in about 36 counties in Iowa, and currently there are

projects authorized in about 22 counties.

Funding nationally was cut in half in 1993, and that was primarily to shift the money in the direction—the emergency Midwest

flood that we had in 1993 with the intent we were told to restore

1994, 1995, and which has never happened.

The program in Iowa had operated by a four, five million dollar

level. Recently they have gotten about a million dollars a year. This year only $360,000 was allocated to Iowa. Back in the Page

district, we do have the Mill Creek watershed. It was receiving

some pretty good funding, and there is a lot of interest in the county, and it was helping with the land treatment work and so on and

helped quite a bit in terms of trying to relieve some of the backlog

of individual farmers that wanted to apply practices. Mr. Williams

well-documented in his remarks kind of the backlog of interest that

exists among individuals.

This program, like the Mill Creek has not received any funding

or very little in the last several years, since the 1993 cutback.

To wrap it up, there is over—like over 50 projects in Iowa that

have made a large impact on rural development, meaning flood

control, erosion control, water supply, recreation, wildlife improvement needs, and that sort of thing.

I will wrap it up there to save some time, and mainly our comments address supporting the existing programs and—as well as

addressing the new aspects, and that is one area of existing program that is successful, like to support.

Senator HARKIN. I appreciate it. We have got, I forget, how many

small watersheds that we have got now that over the years have

basically filled up, and they need to be cleaned out and refurbished.

Several thousand in the state of Iowa, if I am not mistaken.

Mr. AUST. In the neighborhood of 1,500 structures in Iowa, and

there is probably hundreds of those that are approaching a 50-year

life, and some legislation was passed a year ago to allow funding

34

to help local communities restore those, and that is part of that

package also.

Senator HARKIN. Yes. 1,187 in Iowa, and there is 2,200 that need

immediate rehabilitation. 284 in Iowa that need immediate rehabilitation. Thank you.

Mr. AUST. Thank you.

[The prepared statement of Mr. Aust can be found in the appendix on page 93.]

STATEMENT OF DAN JORGENSEN, FARMER, AUDUBON, IOWA

Mr. JORGENSEN. Senator Harkin, glad to have this opportunity,

and please bear with me. I have never done anything like this before. I am Dan Jorgensen. I am a farmer from Audubon County.

I would like to address two issues, one is our energy issue, and as

you see from my shirt, I am a Tall Corn Ethanol, building a plant

at Coon Rapids, Iowa, and—as a value-added project for agriculture.

This is a very important project, so I think whatever help you

can give us in value-added projects as far as in the fuels, I think

that is very important as far as less dependence on foreign oil, and

then we develop a better market for our own commodities. It is a

real plus, and I have been involved in this, and we hope we can

make an impact on our area economically.

The other area I would like to address, maybe I would like to put

this in quotes. Maybe I am one of those ‘‘evil, large farmers.’’ We

farm 4,000 acres. There are two husband-and-wife teams directly

involved in management and ownership of this farm.

Senator HARKIN. Yes.

Mr. JORGENSEN. We impact six families. We rent from I think

eight retired farmers. We rent from two investor farmers, and then

we own a little bit of land ourselves, so I think as we talk about

changing this, it does have a lot of economic impact on Iowa and

on different farms. You know, we cannot just go in and cut everything down and say we are only going to help out that 300 acres.

Maybe that is not a—Maybe that is a pipe dream of the past to

some extent.

Our economics have gone beyond that. I do not think—You cannot afford a $150,000 combine on 300 acres. It is—It just does not

work out, and so the economics have driven this. As Dr. Duffy said,

we cannot just go in and wipe everything out. We have to be very

careful, and hope we can make these changes, and hopefully we

can make some improvements on this.

The idea of the minimum wage, just that struck me as, I would

not want to pay the people that work for me minimum wage, and

so often minimum wage gets tied to substandard living, and I do

not think that is what we are looking for in agriculture.

We need to—Just like when we are developing jobs, we do not

want those as poor jobs. We want them as good jobs. I am not saying Dr. Duffy’s idea does not have some merit to look at, but that

to me is a little bit of a scary possibility. As we look at minimumwage jobs in our society, they cannot support a family, and we are

about——

Senator HARKIN. That is true.

35

Mr. JORGENSEN [continuing.] I enjoyed the fellow’s comments

about raising kids. I just had my granddaughter here this last

week, and I still have her tape in the car, and we need to have

good economic stability too. We cannot just cut everything off, and

it would be a train wreck, and we went through that in the 1980’s.

Senator HARKIN. OK.

Mr. JORGENSEN. Thanks for your time.

Senator HARKIN. Two things I would just say on that, Dan: First

of all, one on ethanol. One of the things we are looking at is changing some of the tax structures. The cooperative building of ethanol

plants is kind of what we are looking at, what we are seeing happening out there, but you do not get the kind of tax advantages

that, say, a private entity would get, so we are trying to figure out

how to change the tax structure to give the same tax benefits to

cooperative owners as to, say, the bigger, privately held ones, and

so I think there may be some changes in that regard.

Mr. JORGENSEN. That is very important, because there are 442

member—investor members, and the bulk of those are producer

members in this cooperative, and so that is important to get that—

some of that help, and also if—put in a plug maybe for the—I do

not know the number of the bill or whatever it is, but on the Commodity Credit Corporation’s reimbursement to—like the increase

grind or increased usage of corn and feed grains.

Senator HARKIN. Yea.

Mr. JORGENSEN. We hope that may be expanded or extended, the

time period on this, because that would be a real help in developing

value-added projects in your grains.

Senator HARKIN. Exactly. I just want to make sure, I have never

said this, that larger farmers are evil.

Mr. JORGENSEN. No. I use that—Like I said, I put that in quotes.

Senator HARKIN. The only questions we are asking basically and

from the farm policy standpoint is: Do the programs, the Federal

programs that we have now, does it tilt the playing field, and if it

does, do we want to do that or do we want to do something else?

I am just sort of asking those questions.

Mr. JORGENSEN. Yes, I would have never dreamed 15 years ago

that we would farm that number of acres. It does tilt that playing

field, to be honest about it.

Senator HARKIN. Yes.

Mr. JORGENSEN. I have never went out and asked anybody to

rent their farm. To some extent some of those people—We did rent

one other farm this year, and that guy came and said, I do not

think—I am going to rent it out now so I can start selling some

of my equipment because I cannot replace it with new stuff.

Because the economics he was farming 300 acres, and the economics were not that we could pay—He is 62, and he was going

to work for us part-time, to help us out part-time, which we were

grateful for, so there is a lot of things involved.

I just never would have dreamed that our farm would have got

to be that many acres either.

Senator HARKIN. Thank you very much.

Mr. JORGENSEN. Thank you very much.

Senator HARKIN. I appreciate it.

36

STATEMENT OF FOX RIDGE FARMS, CARSON, IOWA

Fox Ridge Farms. Fox Ridge Farms, Carson, Iowa. I am one of

those 13 percent, or we are, that—of the top dollar amount on it.

I can remember farming, and I was in it when it was all organic.

I have been around that long.

As I listened here to all the discussion, it is all economics. Our

operation, which is cattle and hogs, corn and soybeans, and alfalfa

on it, we do it with two boys and myself on it.

I would like to say that our income is not the 55 percent that

we get from the government. There is evidently somebody getting

a lot of money that we are not getting from the government, but

I want to reiterate, we have had a livestock operation that has

been very profitable, up until a few years ago. We dropped the hog

operation, approximately 4,000 head at one time, because of the environmental people and things like this and cost, what we have to

do to keep the operation going.

Two weeks ago we sold our last cattle. Well, we got one head left,

last cattle, on it, and we—in farming it seems like we have to deal

with many government agencies on it, and we are getting to the

point that we do not feel like we want to fight it anymore. We have

to spend so much money to keep this operation going.

We have personally put out—and we have terraced all of our

ground and put out approximately $120,000 of our own money on

it to do this in order to farm.

Now in order to raise cattle, we are going to have to spend a lot

more money, and at my age and my boys’ age, I do not feel that

we want to do this. This is—all these government agencies is going

to close down many of the livestock organizations in this state, and

it already has in the hog operation, and it is going to do it in the

cattle operation on it.

I would like to see, and I think the answer to your problems in

agriculture is the overseas market. We do not have it.

Like when Russia invaded Afghanistan and Carter shut down

shipping agriculture products over, that cost me a lot of money

when he done that, because I had a lot of beans on hand which was

going to be shipped on it. You know, I would like to see what they

can do to get our products overseas, and I do not know how you

are going to do it, because their cost of operation is much cheaper

than ours, and I think we are pretty efficient too on it. Thank you.

Senator HARKIN. Thank you very much. Appreciate that. Yes,

sir?

STATEMENT OF ROD BENTLEY, PRESIDENT OF

POTTAWATTAMIE COUNTY CATTLEMEN’S ASSOCIATION

Mr. BENTLEY. Hello. My name is Rod Bentley. I currently serve

as president of the Pottawattamie County Cattlemen’s Association,

and on the pollution thing, we are very concerned about clean

water. We want our kids and grandkids to have clean water.

Senator HARKIN. Sure.

Mr. BENTLEY. The zero run-off 100 percent containment thing for

most of us is going to make it very financially difficult to stay in

business, as some of the other guys have said.

We think filtration, sediment control and filtration, would be a

viable project. We need more engineers to help design things.

37

Senator HARKIN. Yes.

Mr. BENTLEY. That is——

Senator HARKIN. You are saying that the zero tolerance is going

to be detrimental for you?

Mr. BENTLEY [continuing.] It will put probably 90 percent of the

cattle feeders out of business.

Senator HARKIN. Again, what I am looking for is—I am not certain I can overcome that, but what I am looking for is: How do we

provide the necessary support?

Because obviously it is a societal benefit. If we are going to start

the project, everybody benefits, so why should the burden just be

on you? Why should we all help in some ways to help build these

structures or tanks or lagoons or whatever you need and to help

support the proper application of that on land as a fertilizer?

Mr. BENTLEY. Exactly.

Senator HARKIN. That is what we are trying to do, so if there is

any advice you have on that or any ideas, I am looking for it, OK?

Mr. BENTLEY. Well, I think filtration——

Senator HARKIN. Well, what we are talking about is better filtration strips and buffer strips and things like that, sure.

Mr. BENTLEY [continuing.] Yes. The 100 percent containment

thing is just you are going to put lagoons all over the country that

have the possibility of busting——

Senator HARKIN. Yes.

Mr. BENTLEY [continuing.] Possibly causing a lot of trouble.

Grass filter strips, those things I think are just something that

would be a better deal. There are places where there is feedlots

that are not where they should be. We all know that.

Senator HARKIN. True.

Mr. BENTLEY. Some of them need to move.

Senator HARKIN. I understand.

Mr. BENTLEY. It is going to cost us a lot of money. We are the

medium size I guess, and I have a son that farms with me, and

we want to keep farming.

Senator HARKIN. Again, we have got to take a look at farming

animal waste. You know, I never called it ‘‘waste’’ when I was a

kid. Anyway, we never called it that, but anyway, we looked upon

that as a pretty valuable resource.

Mr. BENTLEY. Exactly.

Senator HARKIN. With some jiggling of the System and System

supports it could be used once again, as we did in the past.

Mr. BENTLEY. Sure.

Senator HARKIN. Absolutely.

Mr. BENTLEY. Thank you.

Senator HARKIN. Thank you. Yes, sir? This is it. OK.

STATEMENT OF RON BROWNLEE, ADAIR COUNTY

Mr. BROWNLEE. I am Ron Brownlee from Adair County. I am on

the Soil Conservation Board, and I am also a farmer in Adair

County. One thing I think we forgot here is health care for farmers. I know in the last few years mine has nearly tripled. Mine

went up 32 percent last year. That is a lot of increase. That is one

thing I think we need to look at.

38

Another thing, your conservation act. I have been excited about

that ever since I heard about it. I was at the summit meeting in

Ames last year, and I think this is the right direction for family

farms to go, to give the money to the people that are doing the good

job out here instead of rewarding the people that are causing the

problem.

Senator HARKIN. Exactly.

Mr. BROWNLEE. Another thing that I am concerned about is pasture land going into CRP. If we put pasture land into CRP, it has

to be cropped two years, so we are encouraging people to raise a

crop that we already are overproducing, so why are we doing that?

If we are going to put pasture land in CRP, why do we not just

put it into CRP? It is rough ground, probably should not be tilled

anyway.

Another thing is, we are not getting enough money for conservation. In our county, we probably—our REAP applications, we

maybe get 5 to 10 percent of the applications approved because

there just is not enough money for them.

As far as value-added, I think soy diesel, our ethanol is the right

way to go. We need to be processing more of our products here in

our own state, instead of—we ship out 80 percent of what we grow.

We need to process it here and then ship it out. That would bring

in employment into the state and would help our own state.

Senator HARKIN. Absolutely.

Mr. BROWNLEE. Thank you.

Senator HARKIN. Thank you very much. You are right about

health care issues. It did not come up here, but I hear a lot about

it. I get a lot of letters and calls on the health care costs for farmers and their families. You are right about the pasture and the

CRP.

This is another one of the things we are looking at. We have for

the about 34 million acres in CRP right now, and the authorized

level is 36 million, 36 point something, but when the initial bill

was passed, and I was involved in that in 1985, we authorized 40

million, and it was dropped down to 36.

There are some people pushing that the CRP thing ought to be

raised. Again, a lot of the wildlife people and the hunters and that

type of thing are pushing for 44 million acres of CRP, and I do not

know.

I am kind of thinking that may be a bit much, because maybe

we could boost it to 34 million, up some closer to 40 million. I do

not know. I do not know how people feel about that.

STATEMENT OF BILL ORTNER, FARMER, DANBURY, IOWA

Mr. ORTNER. It hurts young farmers. Bill Ortner, Danbury, Iowa.

My brother and I farm 4,000 acres, and we have two young sons

that are trying to start farming, and our land around Danbury is

very hilly, but we use good conservation practices. Our land is

about all no-tilled or otherwise terraced, one or the other, and we

have got two sons that are trying to start farming.

As you talk, increasing the conservation program, it sounds very

good to the public, but all it does is encourage outside investors to

come in and buy our land and raises our land prices so we cannot

start—I have got the only son here I think that is 20 years old that

39

wants to farm, and I have been sitting here and listening to a lot

of the rigamarole, and we have got to get back to the basics.

We have got to be able to get young people. Mr. Duffy said it,

we have got more farmers over 62 years old than we have got

under 35.

I am also a local Pioneer sales rep, and I have got 100 customers.

I lost nine customers last year. I will lose another ten this year.

This thing is as serious as it was in the 1980’s, and nobody realizes it. You can tell by my voice I am upset, because this is so important right now.

What you decide in the next 5 years on this farm program, in my

belief, will decide whether we have corporate farming in this country or whether we have family farms. We need—we need a grain

reserve program so bad. Because another thing that is so unbelievable is that we keep trying to raise Federal crop. That is the wrong

thing to do.

When you raise Federal crop subsidies up and you make 85 percent Federal crop, it lets the large farmers—I have got farmers in

my area farming 17,000 acres, gives them the ability to go out and

borrow the money and rent the land away from even us.

I mean you are talking about 300 acre farmers. That is in the

past. They all have full-time jobs, because Mr. Duffy said it: You

make 20 percent return on equity. OK, an acre of corn, if you can

produce $300 off of that is fabulous, but 20 percent is only $60 an

acre. 300 acres is $18,000. No family can live on $18,000, because

the man said, his health insurance went up. Most of our health insurance is between $5 and $10 thousand a year.

I cannot believe it. We have all come here and talked, but we

have really never said the true problem, and I would like to talk

to you personally. I could talk a long time, or my brother has been

calling you. Cannot think of your name.

Mr. MORELAND. John Moreland.

Mr. ORTNER. John Moreland, about once a month because we are

so concerned, and I can see things changing so fast, and it is just

a vital concern, but getting back to the CRP, I am sorry——

Senator HARKIN. What if most of that CRP was in the buffers?

Mr. ORTNER [continuing.] Well, that would be a good point, but,

see, do not make it as CRP, because he has got to rent land. He

cannot afford to buy it, so what we need is more set-aside.

Then—I know all of the Soybean Association, they do not want

set-aside, but we have got to have it, because then the set-aside—

and pay us for the set-aside to make buffer strips and to take the

worst 10 percent of our soil out of production, because then he benefits from it and not the landlords. Otherwise, if you talk CRP, the

landlord gets all the money, not the young person trying to rent the

farm.

Senator HARKIN. Fair enough.

Mr. ORTNER. Thank you.

Senator HARKIN. I cut someone off.

STATEMENT OF DAN MORGAN, FARMER, CORNING, IOWA

Mr. MORGAN. My name is Dan Morgan. I farm in Corning, Iowa,

member of the Wallace Foundation for 10 years. I agree with a lot

of what people said today. I disagree on a few things. I like the

40

LDP program because it ensures me there is never going to be a

surplus. I know 4th of July that I better have my grain sold because it is probably going to be cheaper.

A few things: CRP program he is talking about, two-year history on CRP: I was paying $35 an acre two years ago for pasture. Last

year it cost me 83 cents per cow/calf unit per day, $25 a month.

That is what it figures out to.

What they are doing in Southwest Iowa is taking the two-years,

getting it into the CRP, taking it away from myself and the young

son I am trying to bring into farming. Exactly what he says. When

young people—you start farming, they get the marginal land. The marginal land is now in CRP. What I rented for $35 an acre two

years ago is 90 bucks an acre CRP now. No fool would rent it to

you for that.

Senator HARKIN. Yes.

Mr. MORGAN. The second thing is: Don Stenholm the other day

was having a hearing with the National Wheat Growers Association, and they said to him: ‘‘We need more money.’’ He says to

them, ‘‘There is no more money.’’ ‘‘If they cut the budget,’’ he said, ‘‘the only place that money will come from is Social Security and

Medicare.’’ I know damn good and well that two percent of the

farmers are not going to be able to take on the aging population

and take away their Social Security and Medicare. I agree with

that.

Third thing is, I think the LDP program works, but I think there

needs to be a cap on the amount of bushels you can collect per

year, and the reason I am saying that is because a year ago they

had a drought in Indiana. Those guys raised 35, 40 bushel an acre

of corn some places. They do not get any LDP. We are raising a

good crop. We get a big LDP. We need to take care of everybody,

but we need to do it equitably.

Senator HARKIN. Make it a bushel-based program?

Mr. MORGAN. Right, exactly. The other thing is: I will seed down

some of my land if you will give me the LDP I have had for the

last two years.

Senator HARKIN. Yes.

Mr. MORGAN. I will not raise any corn or beans on it, and I will

raise hay and pasture on it.

Senator HARKIN. Continue based upon what your history has

been for the last couple, three years?

Mr. MORGAN. Right. It looks like to me it would be an economic

incentive because you are guaranteed you are not going to get any

of that—any more corn and soybeans from me, but if you will give

me the average LDP. Thank you.

Senator HARKIN. I like that. That is a provocative idea.

[Laughter.]

They are trying to get me out of here. I have got to get to Spencer.

STATEMENT OF JIM HANSON, NEW MARKET, IOWA

Mr. HANSON. I just wanted to make one comment to the gentleman, concerning that. You mentioned something about the buffer strips. We have seen this. Buffer strips has gotten a lot of publicity, but in a lot of cases though we are reestablishing buffer

41

strips where a few years previous were naturally established, but

producers have come in or people have bought this property and

stripped them out, so we are paying for the raping of a land literally that should not have happened in the first place.

I have never been a real—It took a long time for me to be a proponent of CRP. I realize all the good that has come up out of it,

but in my county, a lot of the CRP did not—where we—this was

ground that would be farmed by the young farmers, as the gentleman said, and what happened, it became—the landlords and the

people instead of passing it on just kept on and saw the availability

of utilizing this to their benefit, and you cannot blame them, but

a lot of them potential young farmers have left.

Whatever program or however we develop a program, there is

going to be some way that someone is going to find a way to counteract it.

Senator HARKIN. Well, we certainly know that.

Mr. HANSON. Excuse me, my name is Jim Hanson. I am from

New Market, Iowa.

Senator HARKIN. Never underestimate the ingenuity of farmers

to beat this farm program.

[Laughter.]

Senator HARKIN. Any other concluding statements before we take

off from any of the panelists who are here?

Mr. DUFFY. I would just like to say thank you very much for the

opportunity. You and your colleagues have a tremendous job in

front of you, and I agree wholeheartedly. What you decide here is

going to decide the fate of agriculture and which direction we want

to go, and so I wish you well and God’s speed.

Senator HARKIN. It is a heavy load.

Mr. WILLIAMS. We have to look at the state of Iowa, the individual farms, and land we are on. We have to look at watershed. I was

talking about a small stream runs through my farm, and I think

the biggest thing that is happening right now in society is that the

money that we have got to put in buffer strips, the filter strips, and

I think we can do a tremendous job of cleaning up that water.

Senator HARKIN. All right, Dave.

Mr. ASKEW. Yes. Thank you for the opportunity to speak to you.

I know I cannot let you go without talking about our river infrastructure and support for the locks and dams on the Mississippi,

and also we have the small river on the west side of the state, the

Missouri, which we need to make sure with the plans that are coming out that we have—to use sound science.

We have to understand that and realize that those river systems

are vital to our exports and also just to our internal ability to market our grain. Thank you.

Senator HARKIN. I understand.

I am glad you brought that up. I support that wholeheartedly. In

order for us to get our grain to the ports, we have got to have our

river traffic. We have got to upgrade those locks and dams.

Quite frankly, to those on the environmental side that are opposed to that, I say that is the most environmental thing that we

can do. If we do not repair those locks and dams and utilize the

natural flow of water to haul our grain down to New Orleans, it

is going to require I think a couple of million more trucks a year

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up and down those highways just to carry that grain, and that is

environmental pollution. That beats up our highways. That tears

things up. I mean this is probably the most environmental benign

thing that they can do.

Ms. FREDERIKSEN. Just a comment about adding value to our

crops here. That is very important, and anything we can do to

streamline things such as soy diesel or ethanol or the alternative

energy sources I think would be a great benefit to make it easier

to adopt those items.

Senator HARKIN. I am looking again for these like niche little

things. If there is something that people can start growing grapes

or something again in the Loess Hills, there ought to be some way

to really help them to promote that. I mean if they can provide

some income for a couple, three families or half a dozen, that is

good. We have to look at things.

Mr. CARNEY. Senator, I want to thank you. I guess we have

touched on conservation, trade, market, environmental, food safety,

biosecurity today. I realize that new markets are important. Everything we talked about today is important.

Personally, I figure the environmental and the new regulations

that are coming and trade is probably our huge, top priorities, but

good luck and if you ever need any help, call.

Senator HARKIN. Thank you, and I appreciate all of the input

from the different associations, the Pork Producers, the Farmers

Union—— Mr. LEHMAN. I also want to thank you for coming today, and I

hope to encourage you to do more and more of these meetings

around the state.

Senator HARKIN [continuing.] This is the first. We have another

one today in Spencer. Believe me, we are going to be having more

of these kinds of hearings. I need all the input we can get before

we start hammering down this Farm bill.

I thank you all, some of you coming a great distance. Please feel

free to either e-mail me, write, call. Some of you said you have

been calling Moreland. Any thoughts, suggestions you have for

input on this Farm bill, please let me know.

Again, I thank you all for being here.

[Whereupon, at 11:35 a.m., the committee adjourned.]

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MARCH 24, 2001

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DOCUMENTS SUBMITTED FOR THE RECORD

MARCH 24, 2001

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HEARING ON AGRICULTURAL AND RURAL

COMMUNITY ISSUES

SATURDAY, MARCH 24, 2001, SPENCER, IOWA

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC.

The committee met, pursuant to notice, at 1:35 p.m., at The

Hotel, Spencer, Iowa, Hon. Tom Harkin presiding.

Present or submitting a statement: Hon. Tom Harkin.

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

IOWA, RANKING MEMBER, COMMITTEE ON AGRICULTURAL,

NUTRITION, AND FORESTRY

Senator HARKIN. Thank you all for coming here today. I guess I

am supposed to gavel this thing to order or something like that. I

really appreciate you being here. Can you hear in the back all

right? If I do not see any heads nodding, I am going to be worried

here in a second. Can you hear me in the back? Can you hear in

the back? You cannot hear in the back. If you cannot hear, raise

your hands.

[Laughter.]

Senator HARKIN. It is an old joke. I do not know what we are

going to do if we do not have any loud speakers back there and you

cannot hear. This is not acceptable. This goes back quite a ways.

Do you suppose there is any way of getting any speakers back toward the back so people can hear? Because you have got both of

them up here. I do not want to disrupt everything. We have got a

limited amount of time.

Audience member. We are OK now. They have improved it a little bit.

Senator HARKIN. Somebody has turned it up a little bit?

Audience member. Yes.

Senator HARKIN. If you can hear me back there, raise your

thumb, give me a thumbs up. OK. That is good enough.

Anyway, thank you for being here today. I guess all of us better

just drive these things and speak into them so everybody can hear.

We just had a great hearing, not quite this big. It was pretty big.

I thought it was big, but this outdoes that. We just had one down

in Lewis, Iowa at the Wallace Foundation Center. We had a great

turnout down there and a lot of good suggestions, good testimony.

We will do the same thing here. I am going to make a short opening statement and recognize some people. I am going to turn it to

the panel, go down the list, ask them to make a short, concise summary of their statements. I might have a few questions and interVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00115 Fmt 6601 Sfmt 6601 77324.TXT SAG1 PsN: SAG1
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action. Then I would like to turn it open to the audience. We have

a standing mic somewhere, I hope.

Back in the center someplace there’s a mic that I cannot see back

there. You have got a roving mic. OK. Good. Then I will just ask

you since this is an official hearing, I am going to make sure you

state your name for the reporter who is taking it down. If it is a

difficult name like Smith, please spell it out, will you?

Let me recognize some people who are here, some public officials.

Iowa State Senator Jack Kibbie is here. Jack, where are you? Senator Jack Kibbie is here.

Iowa State Representative Marcie Frevert is here.

Kossuth County Supervisor Don McGregor is here. Don, thank

you for being here. Clay County Supervisor Joel Sorenson is here.

Thank you for being here.

Clay County Supervisor Sylvia Schoer is here. Thank you for

being here.

Our soil commissioner for Cherokee County, Tom Oswald, is

here. Tom is here. Thank you for being here.

Buena Vista County Supervisor Jim Gustafson is here. Way back

in back. All right, Jim.

We have Dick Drahota, rural development from Storm Lake.

Thank you for being here, Dick. Gene Leners, treasurer of Palo

Alto County. Gene is here someplace back there. Tom Grau who is

deputy undersecretary of USDA. Where is Tom? Thank you for

being here, Tom.

Did I miss anyone? Are there any public officials here that somehow slipped under the radar screen? I thank all of you for being

here. If I did miss anyone, I sincerely apologize.

Today I am pleased to be holding two hearings of the U.S. Senate

Committee on Agriculture, Nutrition, and Forestry, in Iowa. The

testimony from our panelists and from the audience will become a

part of the Committee’s official hearing record. Your comments,

ideas and recommendations will be a great help to my colleagues

and me as we work to write new legislation and improve programs

affecting agriculture and rural communities.

Again, let me introduce someone else to you just to make sure

you know who everyone is here. My chief of staff on the Agriculture

Committee is Mark Halverson right behind me. Many of you have

worked with him in the past. Allison Fox is also on my Agriculture

Committee and works mostly with conservation issues. Let us see.

Where is Claire Bowman? Claire Bowman is also on my Ag Committee staff and is here today. Maureen Wilson, I want to make

sure you know Maureen. She runs all of my Iowa offices out of

Sioux City for western Iowa. Maureen is here. Right back there,

Maureen Wilson.

Farm families and rural communities in Iowa and across our nation need some new directions. They have not shared in our nation’s prosperity. That is clear. Although Freedom to Farm had its

positive features, it had some serious shortcomings which are now

obvious. We have to learn from experience and make the necessary

improvements. We have to start by restoring a built-in, dependable

system of farm income protection that does not require annual

emergency appropriations.

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We must also remember that farmers are the foremost stewards

of our Nation’s natural resources for future generations. We should

strengthen our present conservation programs and adopt new ones

to support both farm income and conservation. I have authored legislation to create a new, wholly voluntary program of incentive payments for conservation practices on land in agricultural production.

That approach, improving both farm income and conservation, I

think should be at the heart of the next Farm bill.

Now, to meet the challenges, the next Farm bill must address

the broad range of farm and rural economic issues. We must do

more to promote new income and marketingopportunities, whether

that is through value-added processing cooperatives, creating new

products through biotechnology, or developing a niche and direct

marketing. I see tremendous potential for farm income, jobs and

economic growth through clean, renewable energy from farms: Ethanol, biodiesel, biomass, wind power and even, on down the line,

hydrogen for fuel cells. We must also ensure that agriculture markets are fair, open and competitive.

We cannot have a healthy rural America and rural communities

unless both the farms and the small towns are doing well. We must

do more in the next Farm bill to revitalize economies and improve

the quality of life in our rural communities. That includes support

for education, health care, telecommunications, water supplies,

transportation, as well as access to investment capital for rural

businesses.

That completes my opening statement. I also have a letter from

Governor Tom Vilsack to be made part of the record. I will not read

the whole thing. He said, I just encourage you to develop the next

Farm bill to help farmers produce conservation commodities and

improve their bottom line and renew the public commitment to agriculture. I just ask that that be made a part of the record in its

entirety.

[The prepared statement of Governor Vilsack can be found in the

appendix on page 108.]

Senator HARKIN. With that, again I welcome the panel, and I

thank many of you for coming a great distance and for more than

one time being witnesses for the Senate Agriculture Committee.

Some of you have been there many times before. It has always

been valuable input from all of you, and I appreciate you being

here. We will just go down the line.

I will start with someone who whenever I mention his name in

Washington, everybody knows immediately who I am talking

about. He is Perhaps the foremost agriculture economist in the

United States today. We are just proud to have him here in Iowa

and at my alma mater, Iowa State. If the Iowa State women just

do half as good against Vanderbilt tonight as Neil Harl has done

in his lifetime, we will blow Vanderbilt away tonight. Neil Harl,

thank you for being here.

[The prepared statement of Senator Harkin can be found in the

appendix on page 154.]

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STATEMENT OF NEIL E. HARL, PROFESSOR OF ECONOMICS,

IOWA STATE UNIVERSITY

Mr. HARL. Thank you, Senator. I appreciate the opportunity once

again to be before the Senate Agriculture Committee, and I will try

to keep my remarks brief. I am always reluctant to be critical of

the handiwork of the U.S. Congress, but I want to—— Senator HARKIN. Why should you be different?

Mr. HARL [continuing.] Make it clear that I do think that the

1996 Farm bill has failed spectacularly. Let me just quickly mention why, and let me then follow that with some commentary as to

what I think we might want to do.

The legistion was supposed to reduce government outlays and

phaseout subsidies, and it has not done that. We have reached

record levels this last Federal fiscal year, $28 billion plus. I’ll Return to that point in just a moment. It was supposed to produce

increased exports. It has not done so. In fact, we have dropped

about 18 percent. It was supposed to slow the land clearing process

in South America. Instead more land entered production in Brazil

and Argentina in the years since 1996 than in the 1990 to 1996 period. It was supposed to reduce distortions and economic decisionmaking. It has not. It has produced probably greater distortions

than we had prior to 1996. One item, we are consistently producing

commodities below the cost of production, distorting the cost of

commodities as inputs to others. It was supposed to keep government out of agriculture, get government out of agriculture. Instead

government is probably playing a greater role than ever.

Why did it fail? First of all, it substituted an adjustment model

based on economic pain for a model of relatively painless adjustment. Farmers do not like economic pain and Congress does not either. At the first turn, when economic pain began to be obvious,

farmers started receiving funds from Washington so that the adjustment process built into the bill really did not operate. I do not

think politically it could operate. I do not think in an open, democratic system we can expect an adjustment model based on economic pain to work very well, and it has not. I remember in testimony both before the Senate and the House, on both sides of the

aisle, in 1998 they showed great reluctance for economic pain to be

the adjustment mechanism.

Export projections were quite unrealistic. We were told we were going to hit $80 billion within a few short months, and it dropped

instead. We forgot the lessons learned about 70 years ago that it

takes a ton of money to replace lost income when you have inelastic

demand. Once you let commodity prices fall, it takes an enormous

amount of funding to replace that lost income.

Agriculture is the only sector expected to produce flat out. Deere

does not. Intel does not. Boeing does not. No one else except for agriculture. It is vital we recognize that some of the voices active in

debate in 1996 now profit from all-out production. Those who are

involved in handling, shipping, storing, exporting and processing

all like flat-out production. Farmers need to begin marching to a

drummer they have bought and paid for, not a drummer bought

and paid for by someone else. As an example, if Deere had been

operating under Freedom to Farm principles for the last three

years, there wouldn’t have been enough parking lots to hold the

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equipment. You could have bought a new tractor for less than my

dad bought his first John Deere B in 1946 for $1,365. Of course,

Deere did not operate that way. They slowed down the assembly

line and eventually shut it off when they were in overproduction.

What is the problem? In a word, it is production. Too much.

Technology is marching us down the road faster than we can get

it sold. If you think back over the last 70 years, what if we had

had no technology in agriculture since 1930? What would corn be

worth? A lot more than it is today. Would farmers be better off?

Probably not. Because, as the world’s best economic citizens, they

would have long ago bid it into cash rents and bid it into land values. Land values would be a lot higher. There is an interesting link

there.

We anticipate that at some point funds may not be there. Let me

talk about our three options, Senator. The first option is we can go

back to Congress year over year and ask for funds. As long as we

can get funding, then we can limp by. Loans will stay current.

Lenders will be happy. It still leaves trauma. No doubt about it.

What if we get an economic downturn? We are in the early

stages probably of one now, although there is some difference of

view. We may not have so much money sloshing around Washington as we have had in the last five years. Dealing with that second

outcome is the second option.

Another possibility is we could encounter a shift in priorities.

What I was hearing from the administration until just the last few

days was maybe we should reassess funding for agriculture. I hope

that is not the case.

Let us assume that we cannot get the funding and funding declines. What is likely to happen? We would see a decapitalization

of land values because the evidence is clear. We have capitalized

a very substantial part of our benefits into land values and into

cash rents. We could see—with a cold turkey withdrawal of funding

a 50 percent decline in land values. That is awesome. That destabilizes lenders. It destabilizes the entire rural community. It sucks

a lot of equity out of the sector. I do not know of anyone in or out

of Washington who wants to preside over that kind of an outcome.

We are very vulnerable. We have become hooked on payments.

That is a dangerous situation to be in. The farther we go, I fear

the more the danger. Because we are building up larger and larger

expenditures. The second option is one that would be very painful.

If we can get the funding, which is No. 1, then start suffering a

reduction, No. 2.

No. 3, begin a shift toward less dependence on subsidies and

modest efforts in other directions. Let me mention, first of all, an

emphasis on conservation. I commend you, Senator, for the conservation security program. That is one of the bright spots. I am

supportive of CRP expansion. I would support 40 million acres. I

would even support 45 million acres. That in conjunction with your

program is an important part of this.

Second, I really believe firmly that we need to return authority

to the secretary of agriculture that was swept away in the brief euphoria of 1996. I would specifically mention the farmer-owned commodity reserve. It worked better than we give it credit for. It could

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work even better if it were fine-tuned. I do believe that is one important element in addition to emphasis on conservation.

No. 2 also, in terms of authority of the secretary, I think we need

to have some modest effort, on a market-oriented basis, to begin to

try deal with our oversupply in years when our weather is so very

good, as it has been. There are a number of good proposals. I have

reviewed a large number. I like the so-called flexible fallow program because it is market-oriented. It leaves the decision with the

farmer. Each producer looks at their costs and bid in their land to

a retirement program. It is likely to be more attractive in the periphery than it would be in the core area of production. That is

what we should do rationally. I like that, and there are some other

possibilities as well.

We should also focus on the structural transformation of agriculture. I have circulated today copies of a paper I am giving next

Tuesday at a seminar at the National Press Club. I will have the

pleasure, Senator, of introducing you at that event. We really need

to look very closely in addition to the traditional side of farm policy

to start thinking about this structural transformation of agriculture, what I call the deadly combination of concentration in

input supply, output processing and output handling, coupled with

vertical integration from the top down. I consider that to be a deadly, deadly, deadly situation.

We should do what is necessary to assure meaningful, competitive options for producers. For if you do not have meaningful, competitive options as a producer, you are going to get squeezed and

you are going to end up being a serf. I do not use that term just

to be inflammatory, but we have enough experience in the broiler

industry to know where we are headed unless something is done.

I would put a high priority on trying to maintain meaningful, competitive options. If you come to the end of a 5-year contract to

produce hogs in Iowa and you do not like the replacement contract,

you say, ‘‘I cannot live on that’’. Sorry. That is the best we are

doing this year. You look around. If the nearest competitive option

is 900 miles away and there is local dominance by the packer, then

you know what is going to happen with the disparate bargaining

power you have. I really would emphasize that.

Let me just mention one other thing and then I will close. Senator, I think we need to start thinking about a global food and agriculture policy. We are in roughly the stage we were about 70 years

ago when we were arguing, is there a place for a national forum

policy? We went through the 1920’s, a painful decade. We argued,

is there any role for the Federal Government? The decision was,

no, there is not really a role for the Federal Government in forum

policy. We since have decided there is, and we operate under that

assumption today. We are about the same position in terms of a

global policy.

Let me mention some of the components in a global food and agriculture policy. Leading the list is boosting Third World economic

development. That is the last frontier for increasing food demand.

The potential is awesome. I do not hear voices supporting Third

World development where there could be a genuine increase in the

demand for food as their incomes rise. There is almost universal

support for that.

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Second is food safety. We are probably going through the period

of greatest concern in my lifetime about food safety. This should be

a front burner topic as part of a global food and agriculture policy.

Food security is another one. We have not known hunger in our

lifetime in this country, but that is not true elsewhere in the world.

We need to assure people that there will be food security and that

we will take the necessary steps. They still remember the 1973 embargo under the Nixon administration.

Equitable sharing of germ plasm is another possible feature of a

global food and agriculture policy. There is a lot of worry about

that, especially in the Third World countries and in the tropics.

Trade obviously must be a part of a global food and agriculture policy.

Finally, inventory management. If we have to do something on

the downside, then we should have commitments that they will do

likewise. I do not believe, however, that what we do modestly on

the downside has very much to do with South America. I honestly

believe that there is no empirical evidence to support the assertion

that modest efforts on the downside induce land clearing in Brazil.

As said earlier, we have actually had more land entering production since 1996 in those countries than we had in the period 1990

to 1996.

I thank you for the opportunity to appear. I would be happy to

take questions down the road. Thank you.

[The prepared statement of Mr. Harl can be found in the appendix on page 155.]

Senator HARKIN. Thank you very much, Dr. Harl. As usual, a

very excellent statement.

Senator HARKIN. Next we turn to Joan Blundall who is the executive director of The Seasons Center for Community Health in

Spencer. Joan.

STATEMENT OF JOAN BLUNDALL, EXECUTIVE DIRECTOR OF

THE SEASONS CENTER FOR COMMUNITY MENTAL HEALTH

Ms. BLUNDALL. Thank you. I appreciate the opportunity to

present testimony to you today. Frankly, if we had a farm bill that

was working, I would not be at this table today. The things that

I will report on are things that usually are not discussed in meetings relating to agricultural policy, but they are critical because

what happens with agriculture policy ultimately comes back and

impacts every farm and rural family in Iowa. I am not pleased to

report that as executive director of Seasons Center for Community

Mental Health in this corner of Iowa we have a 17.3 percent suicide rate which is six points higher than the national average as

of a year ago. This year it will be even higher.

Senator HARKIN. Say that again How much was that, Joan?

Ms. BLUNDALL. 17.3. That is—and the national average is 11.2.

Suicide is just another indicator of other underlying mental health

problems. At Seasons Center for Community Mental Health every

day we hear scenarios from families where the consequence that

the way that we live in rural America is not working for families.

It was not too long ago that an honor student was referred by

her school. At 17 she was suicidal, was unresponsive when the

therapist asked questions until the therapist said, I hear your faVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00121 Fmt 6601 Sfmt 6601 77324.TXT SAG1 PsN: SAG1
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ther is a farmer. Then the girl broke down about how difficult

things had been within the family for years. We were able to avoid

hospitalization by giving sample drugs and counseling. The family

had no ability to pay for their services, did not fit into any category

for services. The farmer sold the family antique china cabinet to

pay for services. I wish he had not paid for services.

We had a child this week at the age of 14 who was—who came

in suicidal. The bills to take care of this child will be $200 per week

between medication, visits to the psychiatrist and therapy appointments. The family was ineligible for the State Medicaid program.

They were $12 over the limit for state-supported insurance program, and there is no mechanism to assist them. The family has

decided to drop out of treatment and just seek services from the

psychiatrist and get medication. This family unfortunately is in a

situation where the choices that they have are either to give up the

job in the grocery store, which is necessary income for the family,

divorce or play Russian roulette with which part of medical care

they can afford at the time. The categories we have to help farm

families with different types of assistance are based on urban models. They do not fit the realities of our people.

We have had a 12 percent increase in service as well as a 25 percent increase in emergency calls. On average we have 140 emergency calls a month for a population base of 108,000 people. We

class emergencies as a call where the individual is at risk to themselves or another person. The state hotline has also experienced an

increase in mental health calls though they may not be classified

as emergency calls.

The families who seek services at Seasons often seek them for

problems of marital discord. What we found when the family comes

in, the family is a healthy family, but one of the members is severely depressed. If we can treat the depression, the family can remain whole. Our greatest increase in services in the area is between 13- and 15-year-olds. Children are the symptom bearers.

Mental health concerns that are not taken care of at this age will

crop up later on. We are creating an inventory of expenses for the

future related to human costs.

At a meeting just a week ago here in Spencer sponsored through

a Federal program that I think is very effective we had well over

100 farm families attend. One of the things that is of major concern

to me and something that I would not have predicted, in the survey

that was given to the families we found that the major concern

they had in one of the survey categories which was stress. I would

have predicted that as being first. The second concern area for

adults was mental health problems Farm families and rural people

do not admit to mental health problems. It does not fit our culture.

It does not fit with the realities that we have about stigmatization

of care. This says to me that it is a red flag that we need more and

more help. For children the health concern that was greatest had

to do first with abuse, and second it had to do with lack of insurance or coverage for health care.

If we look at what we can do about the situation and even if we

can create a farm policy that is going to lead us to the stability

that Dr. Harl talked about, we have a period of time where folks

are hurting that are going to call for immediate attention. One of

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the things that we have to consider is what the consequences have

been of not having cost-based reimbursement for mental health

services as is done in rural health clinics. We have almost been

crippled—and I say almost because we will not be crippled—in our

response to the needs of our rural families in this part of Iowa. We

have almost been crippled because of the adjustments that we have

had to make because of the inadequate financial support for Medicare and Medicaid population. In a 14 county area we can document that we had to make $467,158.14 worth of adjustments because income from Medicaid and Medicare and the waiver program

were inadequate. We would have been able to serve everyone who

had a problem and do a lot of prevention if the basis was there.

Second, I think that some of the requirements that are necessary

regarding having physicians present in a clinic create barriers to

access to care. We are in a health shortage area. We do not have

those professionals there, and, therefore, we can get severe waiting

periods. Tax relief and loan repayment for physicians who go

through the national service corps can be helpful. We do not have

enough psychiatrists and mental health professionals in the state

of Iowa to assist with the needs that are coming. Rural health network grants and outreach grants have been a lifeblood in our being

able to respond even though we do not have resources. I hope that

continuation of these programs is something that can be worked toward. We need that kind of basis if we are going to be able to respond to the emergent needs that are coming now.

Thank you very much.

[The prepared statement of Ms. Blundall can be found in the appendix on page 175.]

Senator HARKIN. Thank you very much, Joan, for an excellent

statement and rundown on what’s happening here.

Senator HARKIN. Now we have Don Mason, president-elect of the

Iowa Corn Growers Association. Don.

STATEMENT OF DON MASON, PRESIDENT-ELECT OF THE IOWA

CORN GROWERS ASSOCIATION

Mr. MASON. Good afternoon. Thank you, Mr. Chairman, for offering my organization this opportunity to testify in front of your committee to present our views on the direction of American farm policy. Again, my name is Don Mason. As you well know, I farm about

800 acres of corn and soybeans about 45 minutes south of here in

the little town of Nemaha. In my spare time my partner and I also

raise about 5 to 6,000 head of hogs per year. I am the presidentelect of the Iowa Corn Growers Association, a farm organization

that represents over 6,000 growers in Iowa. I am a former Peace

Corps volunteer. I worked for four years in South America and

have seen a good share of the world. When I came back to Iowa— as soon as I got back to Iowa, I seized the opportunity to get my

hands into the Iowa soil and work the soil. It is my goal in the position that I am to make sure the young men and women in Iowa,

my potential replacements, if you will, have the same opportunity

to get their hands into Iowa soil and work the land.

I am reminded of a comment I heard some time ago with regard

to farm policy that I think is very applicable in this situation. A

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rection they hoped Congress would go with the Farm bill. A farmer

stood up and said, Mr. Secretary, I would like you folks to work

together to create a farm bill that will allow me to thrive rather

than just survive. That is very aptly put, Senator Harkin. I would

sure like to see a program that encourages Iowa’s farmers to

thrive, not just to survive.

I believe that the process that you, Chairman Harkin, and your

counterparts in the House have laid out and have embarked on will

bring all commodity groups to the table to have some fruitful and

honest discussions of where we go next.

Last year U.S. farmers experienced the lowest corn prices in

more than a decade, the lowest wheat prices in 8 years, the lowest

soybean prices in nearly 30 years, and the steepest decline in milk

prices in history. Just two and a half years ago as a pork producer,

I saw the lowest hog prices since the depression years.

Why is the farm economy in crisis? Can you lay the blame entirely on the Federal Agriculture Improvement Act and Reform of

1996? Probably not. In large part the crisis is being fueled by four

consecutive years of record global grain production and combined

with a weak export demand, both of which are beyond the scope

of the 1996 Act. U.S. ag exports are projected to be lower again this

fiscal year after reaching a record high of nearly 60 billion in fiscal

year 1996. Large global production, the Asian and Russian economic crises, and a strengthening dollar have all contributed to a

weakening of those exports.

We do support some of the underlying principles of the 1996

Farm bill. We like the ability to plant what we choose and what

the market demands, to let the market help us make decisions on

the farm rather than Washington bureaucrats.

A more appropriate question is: Is the 1996 act doing or is it capable of doing all that farm policy could and should do to help deal

with the problems we face now and to help with recovery? Clearly

the answer to that is no.

Now, I will not delineate all of the supplemental emergency titles

that Congress has had to enact since passage of the 1996 bill except to comment on a fundamental shift that we find quite troubling, and that is the amount of our net farm income that comes

directly from the government. Dr. Harl has already alluded to this.

Our chart, shows very graphically the amount of government assistance as a percentage of U.S. net farm income. It has risen dramatically over the last four years. If you talk to most farmers, certainly not just corn growers, they will tell you that we would rather

make our income from the market and not from the government.

Having said that, I would like to quickly summarize our vision

for agricultural policy. Our discussion of farm policy is guided by

eight fundamental principles: First, that agricultural policy should

not artificially impact land values and stimulate overproduction

around the world.

The Federal Government should not and cannot guarantee a

profit, but it should help producers manage risk.

Ag policy should continue and expand environmental programs

such as CRP. Payments for conservation practices should be fully

supported and liberally funded.

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Policies should promote value-added processing of commodities—

example, ethanol production, which we have got quite a bit of going

on in Iowa, particularly where the value-added is captured by

farmers. Just an aside here, I would mention that in efforts to promote value-added projects by farmers we have to be careful not to

penalize farmers because the value-added enterprise that they develop happens to have the wrong legal structure or happens to be

a few million gallons of ethanol too big or something like that. Let

us be careful in developing programs.

Policies should retain the planting flexible of Freedom to Farm.

Policies should make a commitment to reducing trade barriers

and sanctions. As the Senator well knows, I have spent some time

lobbying for improved relationships with Cuba and trading relations with Cuba and so on. We made some ground, headway last

year. I would say that we have got to remain vigilant so that the

intent of that legislation is carried out and that we do not slam

that door shut again.

Policies should be directed to improving our infrastructure such

as upgrading the lock and dam system on the Mississippi River.

Finally, policies should support research, development and marketing programs for commodities.

After weighing all of these needs and concerns including addressing the need for a safety net to deal with price downturns and disasters, we also believe that an integral component of the new Farm

bill should be some kind of a system of counter-cyclical payments.

Our group is currently considering a proposal to create such a payment, and we are hopeful that our national president will be able

to present the National Corn Growers Association’s findings on this

proposal to the House Ag Committee and, of course, to this committee as well by the end of April. We have noted with great interest

a lot of proposals out there, and we look forward to presenting a

very novel approach to counter-cyclical payments in the very near

future.

The Iowa Corn Growers Association believes that any reform initiatives should promote conservation. We also see considerable

promise in the Conservation Security Act. We think it is a great

effort. We are committed to the voluntary nature of conservation

programs, and we applaud your efforts to reward producers for the

conservation practices that they have undertaken or intend to undertake on their own initiative.

In trade policy we also believe that we should continue our efforts to eliminate trade barriers, to honor our commitments to

WTO negotiations. Therefore, we oppose policies that would continue to directly interfere with our WTO obligations and stimulate

overproduction.

In conclusion, given various proposals presented by farm organizations to address the problems of the farm economy, we understand that it is going to be a little bit difficult and it is going to

be quite a job to reach consensus on a farm bill. I remain hopeful

that we can do that. To paraphrase Robert Frost, we have miles

to go before we sleep. I am also hopeful that a farm bill process

continues to be conducted in such a way as to promote a very

thoughtful dialog about where we need to go next.

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Senator Harkin, I look forward to working with you to define

proposals in a farm bill that will help Iowa’s farmers to thrive and

not just survive. I commend your work on this committee, and I appreciate this opportunity to express the Iowa Corn Growers Association’s views. I will be happy to answer any questions that you

might have.

[The prepared statement of Mr. Mason can be found in the appendix on page 178.]

Senator HARKIN. Don, thank you very much for a very strong

and forthright statement. I appreciate it very much.

Senator HARKIN. Next we turn to Mark Hamilton with Positively

Iowa. Mark is also the publisher of the Times-Citizens newspapers

of Iowa Falls, Iowa, and he is secretary/treasurer of Positively

Iowa.

STATEMENT OF MARK HAMILTON, POSITIVELY IOWA

Mr. HAMILTON. Thank you, Senator. It is an honor to be here

today. I want to discuss a serious threat to agriculture’s future and

to Iowa’s future that goes well beyond farming.

Rural Iowa as a whole is dying. There is a relentless geographic

cleansing that is going on in more than half of Iowa that not only

threatens the existence of communities, but also endangers Iowa

cities and farming as an industry.

Demographic trends tell us that mathematically the rural Iowa

population base cannot sustain itself.

The farming industry and Iowa cities seriously underestimate

the damage to their interests if rural communities are allowed to

decline. In agriculture, where off-farm income is becoming a more

necessary component to financial success, rural nonagricultural

jobs are becoming fewer and further from the farm. Cities, which

sometimes view rural communities as unworthy competitors for development resources, fail to recognize the traditional source of over

half of their growing labor needs.

Clearly, the demographics of the existing indigenous rural population dictate depopulation. A resettling of rural Iowa must occur.

The question is under what set of policies and goals will that resettlement take place. The current policy record has produced a lowskill, low-wage resettlement result—jobs our own state college

graduates do not find acceptable. Different initiatives can drive a

more attractive and more acceptable route to resettlement.

I have four suggestions I would like to briefly bring to your attention.

No. 1, we need a support system for competent professional developers at the local level.

I submit that the National Main Street and Main Street Iowa

model has been, by far, the most effective program for rural Iowa

communities that I have seen in the last 20 years. It saved downtown Iowa Falls and has saved many other Iowa downtowns as

well.

The model requires local financial and human commitment and

leverages that with State and Federal training, expertise and

matching financial support. It also requires the local communities

to follow tested development models if they want to participate. I

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suggest you look to that model in the area of rural economic development.

No. 2, when we talk about rural problems, we often hear about

rural poverty. What is more crucial to this discussion is the staggering level of rural wealth. Sixty percent of Iowa farm land is

debt-free. That translates to $35 billion in unencumbered assets.

There must be incentives to move just a small portion of those assets into a pooled, risk-shared system to resettle rural Iowa with

good high-skilled jobs. You need financial and tax experts to take

a look at this. I am certainly no expert. Local banks are required

to invest locally through the Community Reinvestment Act. Why

not farmers as well?

We offer farmers incentives to treat their land in the public interest. Why not expand that concept to the use of their government-created wealth for the greater public good?

No. 3, one of the most difficult hurdles for local communities is

to overcome the 150-year-old definition of community boundaries

that were made for a horse and buggy economy. The state of Iowa

and its neighboring states may suffer in much the same way. Regional coordination of state and Federal laws and regulations could

be improved among the north central states in a number of areas.

A joint effort among neighboring states pointing to a reduction of

jurisdictional barriers would be productive and worthwhile for

rural revitalization. We ask communities to look beyond their

boundaries for improved alliances and economies of scale. The

states in the region should do the same thing.

Northern Great Plains, Incorporated, a five-state regional nonprofit rural development organization, which I believe, Senator

Harkin, you were instrumental in creating back in 1994, is bringing out recommendations on such a project next week I think it

will be worthy of serious Congressional consideration.

No. 4, how do you coordinate a sensible, efficient approach to resettlement of rural Iowa? This is where I think real, effective, affordable progress can be made immediately. Our organization, Positively Iowa, has led a private sector, grass-roots issue development

process for the last 6 years.

Our single goal now is the creation of a Center for Community

Vitality for Iowa. The Iowa 2010 Strategic Planning Council proposed this idea. Iowa State University Extension and the College

of Agriculture have endorsed the concept. The center can be modeled after the Leopold Center for Sustainable Agriculture. It would

be unique in that rural leadership that is actually working in the

rural development trenches will guide it in concert with existing

academic and development organizations.

I am suggesting a decision making body that might be called the

Rural Regents. It could direct and coordinate rural research and

communication and really offer rural areas the information and resources needed to make better decisions as they chart their own

routes to diversification beyond agriculture.

This center could lead research, dialog and deployment of resources to make better and more coordinated decisions. I believe an

appropriation of no more than $1,000,000 could establish this center The Iowa legislature is currently considering a resolution of

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support. I hope you will give this final recommendation your careful consideration.

The job of bringing back rural Iowa gets harder with each passing day. The Center for Community Vitality is an idea whose time

has come today. Thank you for your consideration.

[The prepared statement of Mr. Hamilton can be found in the appendix on page 182.]

Senator HARKIN. Well, Mark, thank you very much. That was excellent. We will get back to that. I have got some questions for you

on this one.

Senator HARKIN. Next we will go to Duane Sand, who is with the

Iowa Natural Heritage Foundation of Des Moines.

STATEMENT OF DUANE SAND, IOWA NATURAL HERITAGE

FOUNDATION OF DES MOINES

Mr. SAND. Thank you, Senator Harkin, especially for this invitation to speak about conservation needs and farm policy. We are

grateful for your long history of conservation leadership, Senator.

We hope the Ag Committee will work with you to better balance

conservation programs and farm subsidies in the next Farm bill.

We ask the committee to address both needs in the same bill.

Last fiscal year Federal farm support payments were about ten

times greater than USDA conservation payments. Farm subsidies

enable the cultivation of some highly erodible lands, flood plains

and grasslands that would not be cultivated in the absence of subsidies. Congress and USDA should do more to prevent and mitigate

subsidized environmental degradation.

We strongly endorse the Conservation Security Act as a means

to help balance conservation and farm support. Senator, your sponsorship, leadership and staff support for the Conservation Security

Act is greatly appreciated.

Farmers and taxpayers can get more benefit from farm policy if

CSA is enacted. The 1996 Farm bill did little to correct

unsustainable farmland uses. Billions of dollars in production subsidies only encourages more cheap grain. CSA can help farmers

transition to sustainable land uses and conservation practices.

Farm policy can buy soil, water, air and wildlife benefits in addition to food security.

We think CSA has three major improvements for farmers. First,

the public pays more of the farmers’ cost of providing conservation

benefits. Too many farmers cannot afford to do conservation. The

public should pay a hundred percent of real costs of many practices.

Second, it can apply to all agricultural lands. Stewards of the

land are eligible, and a history of environmental abuse is not needed to make the land eligible for incentives.

Third, it is readily available and well funded. Conservation payments will become as accessible and dependable as farm subsidy

payments.

We also think CSA has four major advantages over current farm

policy. First, conservation payments are not considered distorting

of free trade and are not subject to the subsidy limits set by World

Trade Organization.

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Second, more producers will voluntarily sign up, thus agreeing to

the conservation compliance requirements for wetlands and highly

erodible lands. By the way, Senator, we especially appreciate your

efforts to strengthen conservation compliance and Swampbuster by

restoring the ties to crop insurance and revenue assurance. Senate

support is even more important now because of the recent Supreme

Court ruling on Section 404 wetland regulations.

Third, there will be more urban support for farm programs because CSA will benefit the environment in large parts of the Nation that historically have not participated in farm subsidies.

Fourth, CSA is a legitimate alternative to the Freedom to Farm

promise that farmers would transition to market prices and farm

subsidies would end in 2002.

CSA is a sustainable agriculture transition program that can

provide help if Congress no longer supports market transition payments.

I will take a couple minutes to give an example what CSA can

do for Iowa. The map on display is the watershed for the Iowa

Great Lakes complex. This 62,000-acre watershed which is partially in Minnesota provides drinking water for several thousand

residents, provides recreation for roughly one million visitors annually. This area has growing small communities because of high

quality natural resources. It shows that water quality contributes

to rural development because people move to attractive recreation

areas.

Agricultural runoff is a great concern to local citizens and their

water utility managers. Sediment, phosphorous, pesticides, and

microbiological contaminant problems require much more work for

water protection. Best management practices and wetland restorations to filter farm pollutants are greatly needed to prevent lake

pollution.

Phase one incentives under CSA would greatly expand nutrient

management, manure management, integrated pest management,

and conservation tillage practices on the 37,000 acres of cropland

in the watershed, which is gold in color on that map.

Phase two incentives would help adjust land use on targeted

soils. It would pay for buffer strips, cover crops, conservation crop

rotation, establishment of pastureland, or for the restoration of

wetland prairie or other wildlife habitat. The small dark blue spots

and lines are areas that deserve those kinds of land use changes

in order to protect the lakes which are the large blue areas.

Phase three incentives would help pay for on-farm research,

demonstration, and establishment of whole farm conservation systems. Such systems might include organic farming transitions, the

building of soil quality through carbon sequestration, better manure management using alternative livestock systems, the control

of invasive exotic species that affect wetlands or natural areas, and

the comprehensive pollution prevention for farmsteads and

feedlots.

Farm conservation programs are now used in the watershed, but

progress is still too slow. The Conservation Reserve Program, the

Wetland Reserve Program, the Environmental Quality Incentive

Program each make important contributions to this watershed and

deserve much greater Federal support. However, a Conservation

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Security Act is needed to supplement these efforts. CSA creates the

means for serious planning and serious funding to support sustainable systems on working farms.

We urge the Senate Ag Committee to authorize CSA to enable

major new spending for the conservation of America’s natural resources.

Thank you for the chance to comment.

[The prepared statement of Mr. Sand can be found in the appendix on page 193.]

Senator HARKIN. Duane, thank you very much for giving me a

good rundown on the CSA. That is pretty good.

Senator HARKIN. Now we turn to Phil Sundblad with the Iowa

Farm Bureau Federation from Albert City, Iowa. Phil.

STATEMENT OF PHIL SUNDBLAD, IOWA FARM BUREAU

FEDERATION

Mr. SUNDBLAD. Thank you, Senator Harkin. As you said, my

name is Phil Sundblad. I live near Albert City with my wife, Brenda, and our two children. I farm with my father. We have about

a thousand acres of corn and soybeans. I appreciate the opportunity to be here today on behalf of 155,000—plus members of the

Iowa Farm Bureau.

Farm Bureau members from across the country debated the future of farm policy at our annual meeting in January. Based on

that debate Farm Bureau supports maintaining the basic concepts

of the 1996 FAIR Act including direct payment program and planting flexibility. In addition, we are seeking an additional $12 billion

to accomplish our goals within the farm program of an improved

safety net, expanded conservation programs and more funding for

trade promotion activities.

We are very concerned about the approach taken by the House

Budget Committee to provide this funding. The budget resolution

provides for additional money for farm program, but makes it

available contingent on passage of the Farm bill by July 11. The

next Farm bill will have long-term implications for the future economic health of agriculture as well as our rural communities. Good

policy takes time to develop. If this trigger is maintained in the

budgeting process, it is likely that only the commodity titles will

be addressed.

The Farm bill is about more than program crops. It is about

trade, conservation, rural economic development, risk management

and credit. The program crops comprise only 22 percent of the

gross cash receipts in agriculture. A farm bill that addresses only

those program commodities ignores the majority of agriculture. We

cannot support this approach. We urge the Senate to provide this

funding without a contingency to ensure adequate time for debate

on a farm bill that includes all titles, not just commodity titles.

Farm Bureau’s proposal for the next Farm bill includes these

components: The next Farm bill should be WTO compliant. Our

participation in the World Trade Organization’s agreement on agriculture is critical to allow our producers access to foreign markets.

Ninety six percent of the world’s consumers live outside the United

States. We cannot afford to shut the door on those markets.

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We support continuation of a direct payment program based on

current payment rates and base and yield calculations We ask that

oilseeds be added as a program crop, making permanent the assistance that Congress has provided over the past 2 years for oilseed

producers.

Rebalancing loan rates to be in historical alignment with the soybean loan rate. In addition, we support flexibility in the loan deficiency payment program to improve its usefulness to producers as

a marketing tool.

Implement a counter-cyclical income assistance program to provide an additional safety net feature for producers.

Conservation programs should be expanded in the Farm bill. Producers are facing increased pressures from Federal regulatory programs such as the EPA’s animal feeding operation rules, water

quality standards and total maximum daily loads. Voluntary, incentive-based conservation programs are proven to work, but these

programs have been significantly underfunded and targeted primarily to row crop producers. We support an additional $3 billion

investment in conservation programs to expand the Environmental

Quality Incentives Program and to establish an environmental incentives program similar to the Conservation Security Act which

you proposed, Senator Harkin.

Congress should increase funding for trade programs including

market access development and Foreign Market Development cooperator program. Removing barriers to trade is only the first step.

We must then convince the consumers in those countries to buy

American agricultural commodities. In addition, we must fully utilize the Export Enhancement Program and the Dairy Export Enhancement Program to the fullest extent allowable under the WTO

agreement. We are unilaterally disarming ourselves against our

competitors if we do not use these programs.

In conclusion, farmers look forward to working with you and the

Senate Agriculture Committee as we develop a new Federal farm

program. I believe we have proposals that take the best features

of the 1996 FAIR Act and combine them with some additional income safety net protection and expanded conservation and trade

programs to help agriculture share in the economic success that

this country has felt over the last several years.

We cannot design a successful farm program isolated from other

policy considerations. Congress must recognize that farm policy is

about more than just the program crops. Our success or failure on

the farm is dependent on many factors including market exports,

Federal monetary policy, corporate mergers and acquisitions, tax

and regulatory policies and transportation to name a few.

Thank you for the opportunity to testify today before the Senate

Agriculture Committee.

[The prepared statement of Mr. Sundblad can be found in the appendix on page 195.]

Senator HARKIN. Phil, thank you again Thank you very much for

a very good statement, Phil.

Senator HARKIN. Thank you all. These were good, concise,

straightforward testimonies. I am going to do a quick run-through

to make sure that I heard you clearly. Then we will try to open it

up for some questions

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Basically to recap, Dr. Harl said that he felt that the bill had failed. Last year there was over $28 billion in subsidies and no increase in exports, which were in fact, down 18 percent. The land

clearing process in South America did not stop. In fact, we have

even greater distortions and more production now. It did not help

in getting government out of agriculture. He asked the question

why. Because Congress does not like economic pain. Boy, is that a

truism. We forgot the lessons that as income falls, it takes a ton

of money to replace it. He basically said that the essence of it is

that overproduction is the problem. Technology is increasing at a

rapid pace

Dr. Harl, basically you said that we had three options. First, just

to keep up the annual payments, just keep them going and get by.

You also raise the question, what if we have an economic downturn? Is Congress just going to give us the money?

Second, a reduction of payments. Then you point out what that

might do to land values if we do that.

The third was a shift to less dependence on direct subsidies and

a shift to something else.

You mentioned the CSA, raising the CRP perhaps to 40 or 45

million acres which was in the initial legislation we passed in 1985.

You said the authority of the secretary of agriculture to do other

things like the Farm Loan Reserve. It needed to be fine-tuned. To

deal with oversupply you mentioned the flexible fallow program

and some structural changes might be needed in terms of concentration of the inputs and the output end along with vertical integration. You were suggesting by that that ought to be something

that we look at in the Farm bill. We need to basically have meaningful, competitive options for farmers. You mentioned that we

should to now be thinking of a global food and agricultural policy

rather than just a national one. You mentioned some of the elements that that would entail.

Joan Blundall reminded us all of what happens to policies that

we enact. It has human dimensions to it. Things happen as a result

of these. It was quite shocking to learn that the suicide rate is 17.3

percent and that is just in this area, I assume, in your area, which

is well over the national rate. She related some stories of families

under stress selling their family heirlooms to pay for health bills.

That we have a problem in that—and I have to look at this—that

a lot of our assistance is based on urban models and is not applicable to rural areas. I will take a look at that, and I need some more

information on that. Just the lack of insurance for health care that

we have in rural America and the need for mental health professionals in rural America and that we just do not have them. We

need more rural health outreach grants.

Don Mason with the Iowa Corn Growers, you basically said that

we need a policy that makes us thrive and not just survive. That

is good. He Talked about getting all the groups to the table. Again,

Mr. Mason went through the lowest corn prices in a decade, wheat

in eight years, soybeans in 30 years, and milk. Four years of record

production globally and the strengthening of the dollar. Saying that

there is a lot of dimensions to why we are in this problem.

Mr. Mason said he liked the flexibility of the 1996 Act to make

their own decisions, but the amount of net income from farming is

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disturbing. He had the chart to show that. Basically Mr. Mason

said that in the policy—and I wrote these down as fast as I could,

we should not inflate land values artificially. We should not guarantee a profit. We should expand environmental programs. He

mentioned the CRP. We should do more to promote value-added

products, retain the flexibility of the Farm bill, reduce trade barriers and sanctions and mentioned research programs and the river

problems that we have with our locks and dams on the Mississippi.

You also mentioned that we need a counter-cyclical payment. You

said that the Corn Growers would be presenting this to us by the

end of April. I look forward to a novel approach as you said. I am

looking forward to that. Then also mentioned the Conservation Security Act in promoting conservation.

Mark Hamilton with Positively Iowa talked about rural Iowa

dying and resettling must occur. How do we do that? What policies? He had four suggestions. To support a system for local developers. He mentioned National Main Street and Main Street Iowa.

Something that I had not thought about, he talked about the rural

wealth that we have. We always talk about the problems, but we

have $35 billion in land that is debt-free in Iowa. Then you talked

about incentives for people that have this wealth to invest in rural

Iowa. I would like to examine that more. That is an interesting,

provocative idea. I do not know how we do it, but that is a lot of

assets.

Third, he mentioned that 150 year old definition of community

boundaries and mentioned the Great Plains Initiative that we

started. The Great Plains was to try to start breaking down some

of the those old, artificial boundaries. Last you said, how do we coordinate this resettlement? Talked about creating a Center for

Community Vitality, requesting a million dollars to establish the

center. I understand that the Iowa legislature, you say, is also looking in to assist in this, as I understand it.

Mr. HAMILTON. Although they are not considering funding at this

point because of the states—they are right now considering endorsement of the concept and hoping that funding will come from

elsewhere.

Senator HARKIN. Like us?

Mr. HAMILTON. Yes.

Senator HARKIN. All right. I understand that. I got that picture.

Duane Sand talked about that Federal payments were ten times

greater than our conservation. In fact, I have a little chart which

I am sure all of you can see quite well. All this shows is that the

CC outlays for last year, $32.2 billion total and only 1.74 billion for

conservation. You said ten times. More than 10 times. Fifteen

maybe, sixteen times.

Mr. SAND. I included some conservation operations, some personnel in my figure. That is all.

Senator HARKIN. This is just CCC outlays. You can see it is quite

distorted. He mentioned the need to balance conservation and commodity needs in the Farm bill. Strong endorsement of the CSA and

the fact—he gave a good description of what CSA would do, that

there would be three major improvements. The public would pay

more for conservation; it would apply to all ag land; and it would

be readily available. He mentioned how it would be within the

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green box of the WTO, voluntary. Would help us get more urban

support and mentioned those aspects and then had an example of

how it might work in the Great Lakes complex here and ran

through the three levels that we have in the CSA, the three different levels of participation.

Phil Sundblad with the Iowa Farm Bureau mentioned that the

National Farm Bureau wanted to continue the direct payment program and flexibility in any new bill. There was a concern about the

House Budget Committee that said we had to have a farm bill by

July 11. He said that was not time enough. I can assure you that

is not time enough, Phil. He went on to say that the Farm bill is

broader than just a commodity program. We have to think about

trade and conservation and rural economic development, risk management and credit within a farm bill. He said there were six

things we had to keep in mind in a farm bill. It should be WTO

compliant. We need a direct payment program, and you said we

should include oilseeds with that. We have to rebalance the loan

rates to get them more in line again with the soybean rate. There

should be a counter-cyclical program. Conservation programs need

to be expanded. You say they are underfunded. You mentioned the

need for $3 billion for the EQIP program, for example, and then

talked about the Conservation Security Act. Then mentioned the

need for funding for the Market Assistance Program, for the Foreign Market Development Program and the EEP, the Export Enhancement Program, that we need. He said keep the best features

of the 1996 Act and combine with the above recommendations for

a new farm bill. Again closed by saying that the farm policy is

about more than just program crops.

Again, all great testimony, and I appreciate it very much. What

I would like to do is just ask a couple of questions. Then I am going

to open it to the audience for suggestions and comments.

First I want ask to Dr. Neil Harl and the rest of you, I heard

some talk this morning about CRP. Now, again you mentioned— in the 1985 Farm bill when we first started the CRP program, we

authorized 40 million acres. Then that was cut back to 36 million

acres. We got about 34 million acres in right now. Now, I have

been getting a lot of input from a lot of sectors, wildlife, sportsmen,

people like that, others and some farm groups and others saying

we need to expand the CRP program to 40 to 45 million acres.

Now, I heard this morning from some people saying that, well, that

would not be wise because what about the availability of land for

young farmers, that this bids up the rental value. If there are

young farmers who want to farm, this hurts them especially, I

guess, in southern Iowa where I was this morning. I do not know

about this area. I just wonder if you have any thoughts about that

and how careful we have got to be and how concerned we have to

be about that aspect.

Mr. HARL. I am very sensitive to the plight of the young farmer,

and I think we should continue to be sensitive. However, as I was

saying, if we have income, it is going to get capitalized into land

values. The more income we have, the higher land values are going

to be because farmers bid it in every time. They always have. The

only way you can keep land values low is to (a)reduce government

payments or (b)shrink margins even more which would be exceedVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00134 Fmt 6601 Sfmt 6601 77324.TXT SAG1 PsN: SAG1
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ingly difficult to do because there is very little to capitalize in land

values right now. While I am very sensitive to it, I really think

that that should not be a determining factor here. We are dealing

with trying to boost farm income. That will necessarily provide

some buoyancy in land values.

Senator HARKIN. If farm payment programs were geared more to

the producer and production practices of that producer rather than

tied to a commodity, would that be a divorce that we might want

to look at in terms of worth of land values?

Mr. HARL. It would a separation. I am not sure it would be a divorce, if you can permit me that distinction.

Senator HARKIN. OK.

Mr. HARL. The problem we have is this: Let us say that we have

a program in place that targets the more erosive land, the marginal land as CRP does, and we double the payments on those for

practices. You have to use those practices on that highly erosive

type land. On the other hand, let us say we reduce payments on

the best land that has no erosive capability. What will we see? We

will see the value of the best land fall. We will see the value of the

erosive land rise

Senator HARKIN. That is right.

Mr. HARL. That even though we separate those, as long as it is

tied to land, to a specific type of land, it is going to have the same

effect basically. It is going to get capitalized into those values. You

will find people bidding up. We saw that with the CRP. In southern

Iowa where I am from in some of our counties down there, Decatur,

Wayne, Appanoose, and Davis, actually that program raised the

bottom end of the land values because there was an assurance of

income.

Now, there is one other argument that I think is a potent one.

That is, it hurts input suppliers. There is no question about that.

You do not sell machinery. You do not sell fertilizer. You do not sell

chemicals.

Senator HARKIN. That is right.

Mr. HARL. Those areas are hurting anyway. They are going to

hurt no matter what. What we are dealing with here is the potential over the next several years of seeing what I call the core of production for corn and soybeans actually shrink because we are not

able to sell our products as rapidly as we are increasing yields. If

you look at the current yields that are being reported by some of

the contest participants like Mr. Childs from Delaware County, we

know that it is possible, physically, to produce over 400 bushels to

the acre.

Senator HARKIN. That is right.

Mr. HARL. Everybody will slowly march in that direction. Unless

we can increase the demand for corn at that rate, we are going to

see a shrinkage of the cornbelt. What we need to do is be sure we

have in place programs to encourage the idling peripheral land. hat

is the most rational economically, to encourage the peripheral land

to shift. That is what Freedom to Farm would have done had we

stayed the course, but nobody likes that because it squeezes everybody. In the process of squeezing the peripheral people enough that

they go out of business or shift to another crop, it squeezes even

those on the best soils. No one likes that. We have to take that lesVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00135 Fmt 6601 Sfmt 6601 77324.TXT SAG1 PsN: SAG1
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son, I think, and see if we cannot encourage that land to shift. Especially where it is erosive I think the CRP program is a very good

program. It has proved that since 1986 when the first bidding occurred.

Senator HARKIN. Any thoughts on this, Don?

Mr. MASON. I was going to just make one quick comment. That

is that one of the great attractions to CSA is the fact that it does

make that separation between the land and the payment and apply

it more to a practice. Not only that, but as I understand the provisions of CSA, it would be available to folks in prime farm country

as well as marginal areas. It would be less likely to cause that distortion there between those areas.

Senator HARKIN. Thank you for mentioning that. Thank you for

telling me about my own bill. I forgot that. Because he is right.

Don is right, there are also other things in CSA, like water quality,

for example, that is taken into account rather than just erosion.

Mr. HARL. Relatively speaking would an owner of relatively flat

Clarion-Webster silt loam be getting as much or be eligible for as

much relative to what they are now getting? Would those who have

the erosive land probably be eligible for more than they are presently getting? I would say that is probably the case.

Senator HARKIN. That is probably the case. That is true. It still

would be open.

Mr. HARL. It would have to be attractive to the people who have

the best land who do not have the erosion problem, typically. They

have other problems, runoff, nonpoint source, all kinds of other

things. It is a question of the detail. As the old saying goes, the

devil is in the details.

Senator HARKIN. I can see someone on that kind of flat land that

might say, ‘‘Gee, they would like to put in some buffer strips,

maybe even a few windbreaks’’. Pretty the countryside up a little

bit. Just for things like that that just might help and that they get

a nice payment for those practices that they are engaging in. Then

they might want to say,‘‘Well’’—on tier one there are still farmers

on that kind of soil that are not doing conservation tillage.

Mr. HARL. It is true.

Senator HARKIN. They could do that. That is tier one there. They

get in that tier one.

Mr. HARL. It is a question of the attractiveness, the feasibility

and the attractiveness to the individual as a practical matter.

Senator HARKIN. That is true. That is true.

Mr. HARL. I am not saying——

Senator HARKIN [continuing.] There will be some who will say to

heck with it. I know that. It is Better to go the voluntary route and

to get people to think about it. Hopefully they will be more community-minded and they will think about it. These payment levels

would cover more than their cost of complying or doing that, at

least in the first tier anyway.

Well, rental rates. If we do get set asides or flex fallow, do we

need to be concerned about the impacts on feed costs and livestock

industry? I am constantly reminded by my cattlemen and my pork

producers that do not forget about us. It is not just a commodities

program.

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Mr. HARL. The answer to that is clearly yes. It would increase

the cost of feed. Cost of feed is now below cost of production, so we

have a distortion occurring. Generally the livestock industry will

adjust. If you have cheap grain, that normally leads eventually to

cheap livestock. The livestock industry can adjust to slightly higher

feed prices. What they find difficult is great volatility in feed price.

I would agree that it would raise the price of feed, I think fairly

modestly, but it would raise the price of feed compared to the ultralow levels existing now. There probably would not be any $1.30 or

$1.40 cent corn, for example, if you had some buoyancy built in

there with some provisions to reduce supply. What we are after is

to try to get those prices up.

Senator HARKIN. You are arguing for a balance.

Mr. HARL. That is right. Exactly.

Senator HARKIN. Arguing for a balance. What should we do about

South American land, anybody, coming into production? does anyone have any thoughts about that? We have looked at the same

data, and we see the same thing. It just comes into production. I

do not know what we do about it.

Mr. HARL. Senator, there is a book out, a very good book, published by Iowa State University Press 1999 by Philip Warnken, The

Growth and Development of the Soybean Industry in Brazil. It cites

the reasons why that country essentially forced the development of

the soybean industry. I have pulled out from the book several factors that were involved. No. 1 was the embargo of 1973 that sent

a clear message around the world, including Brazil, that we are not

a dependable supplier. That was a niche for them. No. 2, we supplied them with varieties of soybeans that were appropriate for

their climate. No. 3, we trained plant breeders. No. 4, they plowed

about $4 billion U.S. dollars between 1970 and 1990 into the soybean industry in Brazil. No. 5, had subsidies on inputs for a while.

They had preferential tax policies. There is not one mention, not

one mention in the entire book, about U.S. farm policy. Not one

mention. There were other factors, I think, that were clearly responsible. My own assessment is, Senator, I do not think that what

we do modestly on the downside is going to have much effect. They

are going to continue developing that land. I do not think there is

much that can be done about it. We just simply have a huge competitive problem on our hands. Their variable costs are a little

lower than ours. Some argue our land values are too high. Remember, we learned about 160 years ago that land values are not price

determining. They are price determined. We capitalize into land

values whatever there is in expected profitability. There really on

a competitive basis, is no necessary relationship between land values and perceived competitiveness. There is for individual producers, but not on a competitive basis between the two countries.

Mr. SUNDBLAD. Senator.

Senator HARKIN. I am sorry, Phil.

Mr. SUNDBLAD. Just as a comment, recent groups have come

back from South America. We probably lost our No. 1 status in the

world as soybean producer to them, but also there is a fair amount

of corn being grown down there. The original thinking was that the

climate was not very good for growing corn, but not the case. That

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is also a concern that we need to have. Their corn production can

be very high also, and they have the acres to do that.

Senator HARKIN. I was in China in August and they are producing a lot of corn in China too. In fact, last year they exported corn

from China. I do not know what is happening this year, but last

year they did. We thought they were going to be buying stuff from

us. I have never been to Brazil, so I do not know what is going on

there. I see the data and I see the figures, and you are right.

Mr. SAND. Senator, I have a quick comment about what do we

do about South America and their land use decisions. I would say

we set a good conservation policy and ask the rest of the world to

become good conservationists like we are after we get a real conservation program in place. We still have issues of what about U.S.

policy and the amount of land we are bringing into production.

With wetland regulations we now have reduced net loss to agriculture, net loss of wetlands to cropland, to only about 30,000 acres

a year. It is still net loss in spite of everything that the government

is doing to restore wetlands. Likewise on grasslands we still have

a net loss of grasslands because more land is still being brought

into production in spite of what we are spending on CRP and our

other conservation programs.

I would just go back to the point we have got to bring conservation programs into balance with the subsidy programs because we

are distorting our land use decisions too. We do not yet have a good

system when a farmer says, I am throwing good money after bad

to continue to farm these flood plains and to continue to farm these

eroded, poorly productive hillsides, to give them the ability to put

that land back into grass where it is a sustainable use. That is why

we are so supportive of Conservation Security Act.

Senator HARKIN. I appreciate that. Again I say to all of you on

this Conversation Security Act, we introduced it, but we are reworking it. Again, any suggestions and advice—any of you in the

audience, please take a look at it. If you need it, you can get it from

my office. I am getting more and more co-sponsors for it. I hope to

make it the heart of the Farm bill and sort of build the other programs. We have to have some counter-cyclical programs, direct

payment programs and things like that involved also, but to make

this conservation one that we can hinge it around. Because as you

point out, we do tend to get some urban support for that.

One other aspect of the Farm bill I want to mention—and I am

really glad Mark Hamilton is here—that we have got to focus on,

and that is this whole area of rural economic development and how

we get more funds. I am looking at things like digital device, how

we get broadband access into small communities, any kind of tax

proposals that would help us in that regard, also new funding

mechanisms to get capital here.

Mark, have you heard about this proposal from the Federal

Home Loan Bank Board which would issue CDs, certificates of deposit, not the other little CDs—based on a Standard and Poor 500

index? It is an interesting proposal. I am going to get it to you. You

take a look at it. It is a way that they think of getting money to

small rural banks. For example, like those of us who live in small

towns, I mean, you do not get much return on a CD. If that bank

could take that CD and tie it to a Standard and Poor’s 500 stock

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index so that you would benefit on the upside, but you would never

lose more than what you have got in it, but you could gain on the

upside. That this might help get some money down to some of our

smaller rural banks for the purpose of investing locally. I want you

to take a look. I am going to get it to you. I want you to take a

look at it. It is an interesting proposal, sort of just kind of new, just

started. I want you to take a look at it. Some things like that we

have just got to deal with in this Farm bill.

I know that, Joan, like you say, a lot of this is tied to policy, but

it all works together. If we are going to resettle rural America as

Mark Hamilton says, we ought to be doing it. I believe that. I believe there is a role for that. I believe that people would live here

if, in fact—as long as we got—I do not want to get on my soapbox.

If we have got the best schools for their kids anywhere in America,

that is economic development. That is economic development.

Think about that. That brings people here. People will give up a

lot if they know their kids are going to get the best education anywhere in America.

Second, if we have—if we have not the low wage, but some different types of job opportunities for people here. That means if they

can get on broadband and they can become part of this new economy, why not live here rather than live someplace else? They do

not have any traffic problems and things like that. To the extent

that we can get continuing education from our universities and our

community colleges around the state of Iowa and more fully utilize

the Iowa Communications Network for that so that people can continue lifelong education. These are the kind of things that tend to

bring people to Iowa. That has got to be a part of this Farm bill

mix in some way. Any further suggestions I would appreciate it.

I am going to open it to the audience unless someone has some

other things that you want to bring up or mention or hit me with

here at all. No. I am going to try to open it up to the audience here.

What I need to have you do is, like I said, just say your name. If

it is difficult, just spell it out so the reporter can get the proper

spelling. We have a mic that Claire, I guess, is going to pass

around. Here is a man right here already.

Mr. ROSE. My name is Frank Rose. I live in Spencer, Iowa. I am

not a farmer. I am a farm owner, but not a farmer. I am concerned

about the farmer. You are talking about a farm bill that is in the

future. We need something now. We have just gone through eight

years where there was not a policy for the fuel and whatever. It

has lacked that. As a consequence, we are paying for it with higher

fuel prices, higher fertilizer prices, things of this nature which is

a determining factor for the young farmer. I believe that the Federal Government caused this, so they should take the responsibility. I believe that they should take what the average cost would be

for the farmer in a normal year, what it is going to be for this year,

and I think immediate payment should go to the farmer for this.

Senator HARKIN. Are you talking about energy costs?

Mr. ROSE. Yes, sir.

Senator HARKIN. I see.

Mr. ROSE. The energy costs—because the past 8 years Clinton

did not have an energy program. It has an effect on it. Neil Harl

made the statement that the Freedom to Farm did not have the exVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00139 Fmt 6601 Sfmt 6601 77324.TXT SAG1 PsN: SAG1
136

ports. Two years ago I went across the street to Tom Latham’s office, and I talked to him about this. He brought out the fact that

three years in a row in Congressional records they voted additional

money for the Clinton administration to use for export enhancement and the Clinton administration did not use one dime of it.

Senator HARKIN. Export enhancement?

Mr. ROSE. That is right.

Senator HARKIN. Export Enhancement Program.

Mr. ROSE. That may be what happened to our exports deal. We

need something immediate. Thank you.

Senator HARKIN. You are right about the Export Enhancement

Program. It was not fully utilized under President Bush or under

President Clinton. Keep in mind the Export Enhancement Program—and the one problem I have had with it is it has mostly

gone for wheat. We did not get much help in corn on that. Plus we

had problems with Europe on the Export Enhancement Program

because we ran into problems on the WTO compliance nature of

the Export Enhancement Program, so we have had some problems

with it. That is no excuse. It is just to say that there have been

some real problems with it. It needs to be geared more toward corn.

My staff says virtually no corn has been used under the Export Enhancement Program. It is been all wheat, and that is not right,

that is not fair.

On energy though, I really take to heart what you say about energy. Someone mentioned this morning in the hearing—and I bring

it up for your thinking—that we who are charged with the responsibility of developing the Farm bill, and by the way, it is not too

far in the future. We are talking about this next year—is that we

got to start looking at some things that we can do on energy in agriculture. How can farmers become more energy self-sufficient, for

example? Well, we know that the most plain ones are ethanol. We

mentioned soydiesel. If we could just get 1 percent of diesel to be

soydiesel, that is about 300 million gallons. That would boost soybean prices by at least 15 cents a bushel. Last week I was in Cedar

Rapids and poured a gallon of soydiesel into a bus. There are 32

busses in Cedar Rapids running on soydiesel. It works just fine.

They have solved all the problems in it. Now we just have to make

sure that we try to get it used nationally.

How can farmers themselves become more energy self-sufficient?

There are proposals for wind energy which you are familiar with

in this area. Solar. Biomass. Of course, that is more applicable to

CRP land. We have that project ongoing now in southeast Iowa

where we have 4,000 acres of CRP land growing switchgrass, and

the switchgrass is being burned in a boiler in Ottumwa, the

Ottumwa power plant. Some of the initial results were pretty good,

again depending upon the yield of the switchgrass itself. That is a

possibility. There is a lot of different possibilities like that that we

ought to be looking at.

Mr. ROSE. May I just say one other thing?

Senator HARKIN. Sure.

Mr. ROSE. In 1996 Congress voted to drill oil in Alaska, and Clinton vetoed it. OK. That would put out a million barrels a day.

What would that do to our farm economy had he not vetoed it?

137

Senator HARKIN. I do not know a heck of a lot. I do know that

you are talking about the Arctic National Wildlife Refuge up there.

To access oil would supply about as much as we use in six months

plus it would take over seven years to get it to market. It would

not be available for seven years. Ninety-five percent of Alaska’s

north slope is already open for exploration. Ninety-five percent is

already open. The natural gas that is there cannot get here because

we do not have a pipeline for it. Quite frankly, I think the only reason they want to drill in ANWR is so they can get the oil to sell

it to Japan. It is not going to help us one bit.

I will say this: We need natural gas. Canada has more natural

gas than they know what to do with. We are supposed to have a

free trade agreement with Canada. What I do not understand is

why we are not getting more Canadian natural gas down here.

That is why two months ago I asked for the GAO to do an investigation. I want to find out what happened. We were told a few

years ago we had a couple hundred years of natural gas, not to

worry. We had more natural gas than we knew what to do with.

All of a sudden we have one winter that is a little colder, and all

of a sudden we have no natural gas. Something is not ringing true

here. I want to find out what happened to the natural gas. Why

are we not getting natural gas from Canada? What happened to all

that natural gas they told us a few years ago that we had in abundant supplies for the next foresee—for as long as our lifetimes and

our grandchildren’s lifetimes? Something funny is going on out

there, and I would like to get to the bottom of it on natural gas.

Yes, ma’am.

Ms. SOKOLOWSKI. Hi. I am Lori Sokolowski from Holstein. I

would like to express a thank you to you, Senator Harkin, for allowing local farmers to give our input into the new Farm bill. The

program that I am going to talk about today most people do not

know about because it is a new program that we are starting in

Iowa. I will give just a brief history and where we are up to date.

It is a local food connection farm to school program. I introduced

a new project on local food connections in the Iowa Farmers Union.

The background for this program started in 1999 when I started

networking with a group of local producers marketing our own food

products together. Our organization is called Northwest Iowa Meat

and Produce. Last summer we started developing an institutional

market in the Cherokee County community. We began working

with the Sioux Rivers RC and D on our rural supermarket project.

Northwest Iowa Meat and Produce became a test program for their

food project.

This past November the food service director from the Cherokee

County school and I attended a local food connection farm to school

conference in Ames. We were recognized as being the first local

food connection in the state for providing ground meat products in

a local school system.

Senator HARKIN. Good.

Ms. SOKOLOWSKI. I learned from that conference that Iowa has

been approached to join a Federal school lunch program along with

nine other states. In January of this year I put together a group

of people who could create a new program for the development of

a statewide institutional market. This is a way for producers in

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Iowa to be able to network together. In the two months since we

have had our meeting each agency and organization has found

ways to make changes in the current programs and be able to collectively work together on being one team for this initiative. We

will meet together again on March 30. Iowa is now a pilot project

program for the Federal school lunch program. We will be introducing a complete food nutrition package offering both meat and

produce from local farmers.

Senator HARKIN. That is good.

Ms. SOKOLOWSKI. Iowa has the oldest population age in the

United States. However, our state is rich in resources. We need to

take steps to turn this State around in agriculture and to help

farmers find other alternatives in their current farming operations.

We need to find alternative markets for their food products. It is

time for local farmers to take control of marketing their own food

products. It is time for producers to have more input on the current

agricultural programs in our state. It is time to have programs that

support local producers, not large corporations. It is time for local

farmers to keep the retail share of our products and to share those

profits in our communities. It is time for us to stop the importing

of food products into our state, especially the items that are not labeled with the country, state of origin.

I would urge everyone to support the program that we have

started. It is a challenge that we face. Sometimes we have to buck

the system to get this started, but we have a lot of support out

there. After March 30 we will have a new update on our new development.

Senator HARKIN. I commend you. this is the type of out-of-thebox kind of thinking and little things that we can do in the state

of Iowa. It was said this morning that 92 percent of our productive

land in Iowa is for two crops, soybeans and corn. Maybe we ought

to be thinking more about livestock production, how we do different

types of livestock production, different types of livestock. Again,

this is not going to replace it all, but little niche markets, little

things that are going on around. I met a producer this morning

who was producing Wagyu beef. I do not know. It is expensive. He

has got a market for it. Not everybody can do it, but I am just saying there may be things like that. What can we do to promote that

and help take away some of the economic disincentives for doing

things like that?

Organic farming. We are getting more and more organic. What

was that mentioned this morning? A hundred and some thousand?

I forget. 140,000 acres in Iowa right now to organics. Evidently it

is growing. There is more and more of a demand for that. Again,

it is not for everybody, but, gee, if this helps bolster some local income. We had a thing about what do we do to help people if they

want to get involved? The CSA, by the way, Conservation Security

Act, will help organic farmers because they will be able to do some

conservation practices and get paid for it. Otherwise they would

not get anything. I just ask you to start thinking about things like

that, some of the things that came up this morning.

I am sorry. Yes. Go ahead.

Mr. ROHWER. A Chinese proverb says, unless we change our direction, we are likely to go where we are heading.

139

[Laughter.]

Mr. ROHWER. I used to think it was a joke. They say the way we

are heading pretty soon there will be one farmer per county and

his wife will have to work in town to put groceries on the table.

Mr. ROHWER. The relevance of this can be seen in the Economic

Research Service finding that the top 10 percent of the farm subsidies get 60 percent of the subsidies. The top 10 percent nationally

get 60 percent. In Mississippi 83 percent, and even in Iowa it is

most of 50 percent. I propose that, as one gentleman said, we disconnect the subsidy from commodities and direct it toward people.

If that is done, it can be done in a number of ways. One way would

be to have a limitation that amounted to something. Incidentally,

do not leave that limitation to the discretion of the current secretary of agriculture. That would not work at all well.

Flexible fallow will be the same thing without a limitation. It

will again exacerbate the bulk of the benefits going to those who

are already the wealthiest. Of course, the two of the biggest difficulties with the 1996 bill is that there is no provision for beginners whatsoever, and there was provision for people who were not

even farming anymore. That is not good.

The idea of urban support, every farm bill has in the preamble

that this is for the family farmer, and then the benefits go to the

top 10 percent again. We could get some significant urban support.

Now, I should not say this because I have talked to the devil. I

visited with Larry Bohlen at the farm forum who is the man that

started the StarLink fiasco. He says that his supervisor wants him

next to work on family farm issues. Well, if all that political generation of power could be devoted to family farm issues, think what

we might have.

My plea is that we have a limitation on the subsidy per farm

household. There are a number of possible ways that that could be

done that I will not go into. I am sorry. I am Robert Rohwer from

Paullina, Iowa, an active farmer and a landowner.

Senator HARKIN. I am sure that we will have a debate once again

on payment limitations. We do. Sort of as day follows night we will

have a debate on it. I do not know where it is going to go, but we

keep having a debate on that every time we come around. I do not

know. Neil, do you have any observations on his——

Mr. HARL. Let me just add this: Under flexible fallow the benefits would go to those who would enjoy the better prices, including

the ones who did not bid their land into the program. Plus there

would be a higher loan rate for those who did. Now, to the extent

that that benefit falls unevenly, it would do as Mr. Rohwer says.

The problem that we face is, is it politically feasible to impose

tough limits? In 1999 we had a $40,000 limit. In 2000 it was

raised. The sum today of everything you could collect would be

something over $400,000, from all the programs. We have a limit,

but it is not a very effective one. That is a worthy objective. With

each passing day it becomes less and less possible because of the

growth of the supersize operation.

Senator HARKIN [continuing.] If anything I think—and again,

this is my sixth or seventh farm bill—it comes up every time. Now

I recognize more of a support or at least thinking that we do not

140

need to subsidize every last bushel and every last bale of cotton.

We just do not need to.

[Applause.]

Senator HARKIN. I sense this more and more, that it is just leading to all kinds of distortions. Obviously if you subsidize every last

bushel and every last bale, then it does, of course, I should not say

this in front of an economist, it does seem that it really promotes

larger farming operations because the bigger you are, the more

money you get. Then you can outbid someone else for land. Therefore it just promotes getting bigger. Our farm policies basically

have the perverse kind of an effect. It is really actually promoting

larger farmers if we subsidize every last bushel and every last bale.

Mr. HARL. Senator, in my view this is one of the threats to continued subsidization in agriculture. The nonfarm world is very supportive of funding if they think it is going to family farmers in

trouble. The polls have shown for years that 60 to 65 percent of the

people, uniformly, regularly indicate that. If they think it is going

to the huge operations, that support drops and drops sharply. we

do have a threat here that we need to deal with in terms of maintaining a flow of funding for family size operations.

Senator HARKIN. Absolutely. Yes. Back here. We have a whole

lineup of people back here. Go ahead here, and there are a whole

lineup of people.

Mr. SOLBERG. My name is Linus Solberg, and I am from Cylinder, Iowa.

Senator HARKIN. Hi, Linus.

Mr. SOLBERG. It gives you that they let radicals in here, does not

it, Tom? They did not frisk me or anything. I want to thank you

for having these hearings out in the country and testimony from

farmers and not lobbyists. I would like to talk about a lot of things,

but I am just going to talk about the pork checkoff. I am just going

to talk about only the Farm bill.

In America it seems that you can only get as much justice as you

can afford. When Congress debates the next Farm bill, family farmers will not be able to afford much justice, but corporate America

will. Why do we continue to force family farmers to subsidize corporate America with overproduction?

In 1996 I told my Congressman, Tom Latham, that Freedom to

Farm would be a disaster. Any farm program that forces farmers

to plant fence row to fence row so that corporate giants can purchase cheap grain for export and cheap feed for the industrial livestock operations is doomed to fail. Forcing farmers to produce as

much grain as possible in order to milk the government out of deficiency payments is ridiculous. Never in U.S. history have farmers

been forced to maximize their government payments by predicting

when grain prices will reach an annual low.

The new Farm bill needs to give our new secretary of agriculture

the authority to manage grain supplies. For decades we have received ridiculous promises of increased exports. Farmers have

heard all the propaganda. Corporate America brainwashed many of

us into believing that GATT, NAFTA, WTO and Fast Track will

save the family farm. Every farmer and rancher supports more exports. However, we need to face the facts. Most industrial nations

141

have their own overproduction problems, and the poor nations that

need our food cannot afford it.

If the Ford Motor Company operated like the American agriculture, it would run all its assembly lines at full capacity 24 hours

a day while actively seeking technology to produce even more cars.

Rather than reducing output and meet demand and make a profit,

they would continue to overproduce even though they were losing

thousands of dollars on every car they make. If Ford executives behaved this way, they would be asking their stockholders to subsidize the company’s losses on their cars. That is exactly what is

happening in American agriculture. Congress and administration

wants taxpayers to put billions of dollars into a system that is producing more grain than the market can handle. Now, you did not

write this. OK? No American business operates this way.

Freedom to Farm was written by corporate America to sell seed

and chemicals and make available piles of cheap grain. Farm Bureau and our commodity groups have been on the bandwagon since

the beginning. Supporters of Freedom to Farm promise that the export explosion would keep prices high forever. They lied.

Senator HARKIN. Linus, how much longer? Thanks, Linus.

I did not want to cut you off. I just wanted you to sum it up was

all.

Mr. SOLBERG. I would like to have you solve the problem at the

end. I will give you a copy.

Audience member. Good summary.

Senator HARKIN. It is a good summary. I just wanted you to summarize it. I did not mean you to sit down. Go ahead.

Mr. NOLIN. My name is Karl Nolin. I am the president of Nolin

Milling, Dickens, Iowa. If there was a Neil Harl fan club, I would

have been an original member. I only—I got lots of thoughts, but

I only want to talk about one thing. We are going to develop new

seeds. I want these new seeds that are going to do wonders for our

environment to either be owned by the colleges or by some entity

of the government. These new seeds are going to be perennial crops

that we plant once and harvest year after year after year. They are

going to do wonderful things for the environment. We have to make

sure that all the new crops that are going to be developed and all

kinds of new traits have some public domain because there is going

to be contracts on these crops that you will not own, you will rent

the plant. When you rent the plant, I would rather rent it from

Iowa State college than a private entity. It is going to happen. It

has to happen. It has tremendous things to be said for the environment because we are going to plant that crop. It is going to hold

our soil. It is going to keep our water from being polluted. We are

also going to have nitrogen fixing so that we do not have to use

nitrogen fertilizer which cleans up East Lake Okoboji so it looks

like West Lake Okoboji.

There is a lot of really good stuff coming down the pipeline, and

we got to get in the Farm bill lots and lots of research money so

this becomes public domain and we are going to develop all types

of specialty seeds. Corn is not going to be corn. Corn is going to

be corn with special proteins so we do not have to add any soybean

meal to feed. Corn is going to be 35 percent oil corn. Maybe we can

raise corn instead of soybeans. We can change anything around.

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The other thing, we can do this. There is a new corn plant that

is a perennial, will grow year after year, that has been found in

Mexico. We do not have to use gene splicing. It is just a matter of

standard plant breeding. It is going to take us a long time if we

do it with standard plant breeding, but we can do these things.

Senator HARKIN. Corn that just grows year after year?

Mr. NOLIN. Yes, we just go harvest.

Senator HARKIN. How does Pioneer feel about that?

[Laughter.]

Mr. NOLIN. Pioneer understands this. Pioneer understands it

completely. Pioneer will not sell us seed. You are talking to a man

that sells a machine that transfers seed. We are out of business

with that machine. Pioneer understands it. They do not have to sell

you a bag of seed. They rent you the plant, and you pay an annual

fee. We also farm a little bit. I want to pay my annual fee to somebody that is easier to do business with than—well, I just assume

Iowa State college—easier to do with than Monsanto. You got the

point. I would like to have you look into it.

Senator HARKIN. Thanks, Karl. I will do as many people as I can

here.

Mr. BIEDERMAN. My name is Bruce Biederman. I am from north

Iowa, Grafton area. I have a farm bill that I have been pushing for

the last couple years, and I have been working on it for the last

15. It basically addresses what Professor Harl has been talking

about. I call it the zero cost farm bill because I go with the loan

rather than any subsidy payments whatsoever. Support, not subsidize. What I call it is cost of production loan on all storable commodities, corn, wheat, beans, oats, cotton, anything. It would be set

up so that in the fall is when you decide whether you are going to

be a participant of the program, and this year’s crop would be eligible for the cost of production loan. Then the next spring you determine—you set aside maybe a small percentage of your land to start

with. It would be like conservation reserve acres to start with rather than——

Senator HARKIN. Is this a nonrecourse loan?

Mr. BIEDERMAN [continuing.] The loan would be set up so that

when it came due that the price was not at or above the loan rate.

It would default into a farmer held reserve. Then once it gets into

there, it would have a little bit like Bob Brooklyn’s program, like

125 percent release and then 150 percent call rate. Then the size

of the reserve would determine how much of that particular commodity would be up for program the next year.

Another stipulation would be that it figures out to about like a

1,500-acre farmer would be about the maximum size that you

would subsidize or support this way. Once you get certain crop—

or commodity up to a certain level, that you would maybe shift to

another one or whatever. You do not have to set aside. You would

modify the price. It would bolster it to at least the cost of production or above, and you would be guaranteed a good price if it did

go on the reserve. It would be self-regulating because the size of

the reserve could be determined by the production.

Senator HARKIN. Do you have some paper on that?

Mr. BIEDERMAN. Yes, I do. I have several copies.

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Senator HARKIN. Thank you. Thanks, Bruce. If any of the panel

up here have any thoughts or suggestions, just yell out. Yes. Go

ahead. I am sorry. Go ahead, please.

Mr. WIMMER. My name is Perre Wimmer. I am a local livestock

broker. Talk daily, weekly with a lot of pork producers in northwest Iowa, southwest Minnesota. A lot of the topic today has been

on grain. However, I guess my question is in regard to the pork

checkoff recent vote that occurred. In talking to most pork producers they feel and realize they need to promote their product. However, a lot of them very concerned that the recent referendum that

was clearly won in the favor of those producers has been circumvented and overturned without any regard to those persons

that voted. Just wondering if there is any input from your part on

that?

Senator HARKIN. Well, I was going to ask if that is right. We had

the pork producers this morning. Well, if you are asking my view

on this, look, we are facing a difficult situation. It looked as though

the district court in Michigan was going to throw the whole thing

out. I understood that Secretary Veneman had to try to reach some

agreement on this and to strike some kind of a deal. I understand

that. My only question is why it had to be a two year? Now it goes

to 2003. That seems to be way too long. We intend to have her

down before the Ag Committee to ask about this. I do not know exactly what the next step is in this.

I will tell you one of the things I am thinking about working on

in the Farm bill that I have not mentioned here but I would like

to have feedback from you on it. The whole checkoff issue as I

talked to both sides on this issue, raised a really serious question

in my mind as to all these checkoffs that we have. We have corn

checkoff, soybean checkoff, cattle checkoff, pork checkoff, chicken

checkoff, turkey. We have all these checkoffs. It seems to me that

when you have a mandatory checkoff system like that, that periodically it ought to come up for a vote of the producers.

[Applause.]

Senator HARKIN. I am just saying every five years there ought

to be a vote among those who participate as to whether they want

to keep it or not. That might have a salutary effect. There was

some legitimate concern on the part of some pork producers that

the council——

Audience member. NPPC.

Senator HARKIN [continuing.] Yes. The checkoff people were too

close together and that they were not separated and they were not

really getting value for the checkoff money they were putting in.

Well, if a vote has to come up even in court or anything every 5

years, then maybe the people who are handling all that money will

be more responsive to the producers and go out and be a little bit

more careful. Like anybody here that has got to run for reelection.

You pay attention to your constituents.

Mr. WIMMER. I guess my concern of the whole thing was that it

was a democratic process that was gone through, and that vote was

made. Whether NPPC liked it or not, that was the will of the people. Al Gore even got a chance to take his court to the supreme

court. It appears to me that the pork producer was just cirVerDate 11-MAY-2000 11:58 Aug 21, 2002 Jkt 077324 PO 00000 Frm 00147 Fmt 6601 Sfmt 6601 77324.TXT SAG1 PsN: SAG1
144

cumvented at that point. Just the principle of it. Whether you are

for it or not, the principle of how that was handled is of concern.

Senator HARKIN. It is of great concern. It was not handled well.

Like I said, the court case was one that was hanging over their

heads. Perhaps—and I just throw this out—I do not know that both

sides like this. I have suggested that maybe we ought to just have

another election. Maybe just have another vote out there. Well,

those who won the vote said we had the vote. I am not certain that

we just cannot—maybe we have to go through that process again.

I do not know.

Audience member. Vote until you like the outcome?

Mr. CHRISTENSEN. We have another example here that could be

stated. Carl Jensen has one.

Senator HARKIN. We are facing the situation now that I do not

know what to do about it other than try to have another vote or

have it come up sooner than 2003. That is the only thing I can

think of unless somebody has some ideas on this. Yes.

Audience member. I think when——

Senator HARKIN. You better get a mic so everybody can hear you.

Ms. BOWMAN. We have a couple people waiting for really quick

comments. We are running really short on time.

Senator HARKIN. I will get back to you.

Mr. TAYLOR. I am Steve Taylor from Hartley in O’Brien County.

I guess I am maybe one of the dying breeds of farmers that my sole

family income does come from the farm.

Senator HARKIN. You are a young man.

Mr. TAYLOR. I am hoping to keep it that way, I guess. One of my

things or thoughts is I do not think you have realized that we have

not lost a ton of farmers over the last 20 years with the farm policy, but we have lost a lot of people like me that have solely lived

off the farm. If you would take them numbers, you would find that

you have maybe errored in your ways.

Coming back to the idea of subsidizing production, so it is the

fairness issue. When I first got thinking about farm policy, I always thought we needed the government out. Let us work on our

own. You know, I am ingenuitive enough I can make it work. When

I got to start working and competing with government dollars, it

is almost impossible for me to do. The longer I think about it, the

more I realize and the more I get involved, we are not going to get

the government out. They want their hands in.

The way we do that, we have got to change. If we are paying

anybody over the cost of living, we are unfairly subsidizing production. Neil Harl talked, if we cut payments altogether, we are going

to decrease our values in land and rent. Well, we need to cut them

30 percent to bring them back in line from what we have skewed

with what we have done since 1996 I guess my feeling is that we

need to look at this—you are never going to make a program fair

to everybody. You have to decide which side of the fence do you

want to stand on. Do you want to support the rural communities,

or do you want to support the guy that is going to grow and grow

and grow? I guess that is about as simple and plain as I could put

it. I have got a lot of other details, but I could go on and on and

on.

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Senator HARKIN. You have summed it up pretty accurately, I

think. That is just about the divide right there.

Ms. BOWMAN. We have several—— Senator HARKIN. Right here. We had this man right here wanted

to say something. Claire, right here.

Mr. BRAAKSMA. I am George Braaksma from Sibley, Iowa. I

guess I have been taught in this country that our vote should

count. In the direction of in the general public’s interest that is

what America was built on was a vote. When them votes do not

count, that creates people to think different about our country.

That goes to our election that was last fall, also here in agriculture

the same example with the pork issue. That has got to be brought

up that maybe this changes people’s attitude when it does not

count, that we do not have full faith in our country. That is disappointing.

Also on an issue with the—I am in a situation with a four-lane

road going to go through some of my property. With that in hand,

that is in the general public’s interest for better roads. I am all for

better roads. I am all for issues that is for the general public.

It goes back to Mr. Sand over here with conservation matters. I

feel strongly with conservation matters, that we look at that as if

the water was a road and that we take care of them type of things

that human beings need. That is, to survive we need food, we need

water. We look at energy as one of the things that is something

that is above food and water. We need to exist with food and water.

Conservation practices to me in the Farm bill is one of the highest

priorities because it is what we need to raise that livestock and all

them things. I am going to let that go at this time.

Senator HARKIN. Good. I appreciate that. We are going to make

it, I hope, one of the highest priorities.

Mr. HARTMAN. I am Joel Hartman, a farmer and cattle feeder

here in Clay County, Iowa. I served the Iowa Cattlemen’s Association as the chairman of their environmental policies committee. I

will try to keep my comments very brief here. I have a concern

with your farm bill proposal, Senator. It is Section Prime E dealing

with annual payments not being able to be used for the construction and maintenance of animal waste storage facilities, as several

panelists have mentioned the use of the EQIP program in employing practices to help us protect our water resources. As you know,

the EPA is considering some extremely expensive regulations, regulations which will cost us about a billion dollars to comply with.

Some that by their own estimates will incur $5 of cost for every

dollar of benefit. If the cattle feeding industry is going to be expected to shoulder that kind of a cost, we certainly are going to

need some Federal assistance in doing that.

The EQIP program right now is part of the current Farm bill and

is the only mechanism we have to work with that, but the program

is woefully underappropriated. Only about $200 million has been

appropriated this year in through the program. Here in Iowa it is

about 5.7 million, and yet there was over $15 million in requests

made of that program. We need a lot of money in there.

There are also some restrictions on that program that make it

inoperable for our livestock producers to use, that being in particular, the restriction of the 1,000-animal unit cap. A 1,000-animal

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unit feedlot is a capital investment approximately equal to 140

acres of Iowa crop ground. The EQIP program does not make a restriction on how large a farmer can be in acres to receive a direct

cost share benefit, but they are doing that with the livestock producers and doing it at the very level that EPA is targeting for the

most expensive programs to be put in place. That is one problem

that we need to have addressed. We really cannot wait for the

Farm bill to do it. That is something that could be done right away.

The other problem with the EQIP is the prohibition on the use

of EQIP moneys for engineering. EPA requires that their NPDS

permits be signed off by a licensed engineer. The EQIP program

will not cover that expense. For those smaller AFOs that is a major

part of the expense. We need to have that issue addressed. With

that, I thank you, Senator.

Senator HARKIN. Just a second. I did not know this about the engineering. I was just asking my experts back here on this. Evidently EQIP covers technical assistance and everything like that,

but it does not cover third-party engineering or something like

that. This is new to me.

Mr. HARTMAN. No, sir. The word that I have from NRCS is that

it will not cover the third-party engineering. The projects are basically pre-engineered by NRCS people. The technicians will come

out and help install, but EPA still requires the NPDS permit to be

designed by a licensed engineer. The cost of that engineer is about

the same irregardless of the size of the operation. If you are looking

at 500 head versus 5,000, that 500-head operation will incur a ten

times larger engineering expense. We think that could be addressed by simply removing that requirement, or that restriction,

excuse me, from the EQIP program along with that thousand animal unit restriction. It is very discriminatory and does not make

any sense.

Senator HARKIN. Right. Both are duly noted. Thank you for the

engineering. This is new to me. I did not know about that, obviously about the CAFO limit of a thousand. We are looking at

changing that, maybe expanding that somewhat. We do not know

where and how much. Also the EQIP program, you are right, we

have got three to five times more requests than we have had the

money for. We have got to get the money in there, and hopefully

we will have room in the budget this year for it. Again, we talked

about the budget. It was Phil mentioned something about the budget earlier. I do not know about the House side, but on the Senate

side it looks like our budget was proposing perhaps about a seven

percent cut in some of our discretionary programs. I do not like

that at all.

Mr. HARTMAN. Please be sure that that type of funding will be

available under your proposal, Senator. It is a little contradictory

between part E and I think an earlier part in your program.

Senator HARKIN. We were focused only on land. We thought, we

will leave the EQIP program to do the facilities, see. That was

going to be the dividing point. Maybe there has to be some melding

of the two somehow. Thank you. Duly noted.

I am told we have three people left. I just want you to know if

any of you have any written comments, just please get me written

comments any time or you can e-mail me at my offices. This is

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going to be an ongoing process. I will be having more hearings in

Iowa with the Ag Committee, so do not worry. We will be having

some more in Iowa here in the months coming up. Who else is left?

Here. You have got a young man right behind you.

Mr. MEYER. There are three things I have got to address you

with. First of all, Don Meyer. I live up by Harris. Anyhow, one is

this conservation and CRP ground. I had the very same thing confirmed by a man alongside of me a long distance away. Anyhow,

in our area I can point to you farms that were bought and then

put the whole farm in and then they go on down to Florida or

Texas and were being paid so much for the acre. Actually the Government is buying the farm because they put a down payment in

it, and then after that they got so much an acre. After while the

thing is paid for. That is one.

Then the second is I do not care what direction you go down the

highway. You see the monument, the silo, and the empty feedlot

and the empty—this Iowa has lost—that is what I would call a

monument to a dead industry. Am I right, guys, or not?

Then the estate tax. My father bought 240 acres for me back in

about 1963, 1964. It worked out he paid 80,000. Then I had to wait

for Mother to die in order to inherit that, get it. I had to pay just

the amount what Dad paid for it in 1962 or 1963 for estate tax.

All of a sudden I owned a piece of dirt if I could pay estate tax of

80,000 on that piece of dirt. Then it would be mine. There is one

there, this estate tax.

Senator HARKIN. We are addressing that hopefully in the tax bill,

and we are going to raise some of the levels. Right now it is 675.

What is it now?

Mr. HARL. It is 675,000. If there is a business involved, it is

1,300,000 including the family on business deduction, plus a special

use valuation cuts the value of farmland very, very substantially.

Those are doubled for husband and wife together. I have indicated

my support for raising that to 2 to 2.5 million per decedent.

My concern—and I am opposed to the repeal of Federal estate

tax for reasons that we do not have time to go into. I do not think

it should impact adversely what I call mere mortals. What I worry

about are people up here in the stratosphere in terms of wealth.

We need a Federal estate tax.

What is more important for agriculture is the new basis of death,

a wipeout of the gain at death. That we could lose if we are not

careful here, so it is a very complex issue. If you would like to have

more information, I do have some publications on the arguments

for and against repeal.

Senator HARKIN. I can assure you that we are going to raise the

level of estate tax exemptions for farms and small businesses. That

will be raised. I do not know exactly what the level is going to be.

It will probably be somewhere in the neighborhood of as much as

$3 or $4 million perhaps, somewhere in that neighborhood, which

will just about cover everybody. It will be in that neighborhood. I

can assure you that is going to happen.

Mr. JENSEN. Carl Jensen, a cattle feeder from Everly, Iowa and

chairman of the marketing committee of the Iowa Cattlemen’s Association. I wanted to thank you for holding this hearing. I have

written up the comments, and I will hand them in to you. I am just

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going to summarize real quick what I have got in here. Basically

the livestock mandatory price reporting bill has been stolen by the

bureaucrats, and it is not the bill that we intended to be passed

to put into effect. What has happened to the law because of this

360 Rule, which I am sure you are aware of about the three packers or one packer having more than 60 percent of the business,

those figures cannot be reported. While the new mandatory bill

gives us more historical information that economists can use, like

Dr. Harl and others, to analyze what happened, we are actually

going to have less information for cattle feeders to use to market

their cattle and know what their cattle are worth. We need to see

if there is something that you can do.

An example of what happened, the 360 Rule also applies to the

boxed beef trade which becomes mandatory. They ran a simulation

of Wednesday’s boxed beef report that came out. In that simulation

by applying the 360 Rule, which takes effect April 2, 40 percent of

the items that were reported on Wednesday will no longer be eligible to be reported because of the 360 Rule. This is just ludicrous

that this has occurred. We certainly need your input and Chairman

Lugar and Senator Grassley and the rest of the Iowa delegation to

see what they can do to correct the situation. It is coming up here

very fast. I have submitted written copies for you to see more detail, but I just wanted to summarize it.

Senator HARKIN. Again, I can assure you, Carl, this is something

that has not gone unnoticed. I know about it. My staff knows about

it. You are right. We have got to get to the department and get

that rule changed quickly.

Mr. TIGNER. My name is Ron Tigner. I am from Fort Dodge,

Iowa. I used to milk cows with my dad until milk prices hit about

$11 a hundred weight. Now they are about 850. I am sure there

is going to be lots of farmers going out of business here soon. In

fact, some of the big corporates are hurting bad too.

My comments are—I was not going to talk about this at first, but

I will now, about the pork checkoff, because you talked about it. A

5-year period between referendums is much too long a period. The

corporate integrators are going to put people into contracts, and

they are going to put the independents out of business till they get

it to a point where they will have the checkoff referendum in their

favor, what the vote is. They are going to limit the number of people who are going to be eligible to a small timeframe, which they

did in the pork checkoff. It has got to happen within a few years

between timeframes. A 3-year timeframe for the pork checkoff is

going to be too long. 2003 is going to be way too long. They are

going to work their tails off to make sure independents cannot vote

in it.

Now, my overall comments that I had thinking of coming in here

were in asking the question of what new directions we need in Federal farm policies. It seems to me we need to go to the beginning.

By this I mean in 1908 a national commission decided that resources, people, money and so on need to be moved from rural

areas to urban areas. Prior to those years we had always seen in

the United States an increase in the number of farmers. Since then

for every year there has been a steady decline. In the 1950’s our

own government studies said those trends should continue. Even

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the best known farm organization in the United States’s national

president said that should continue. We all know that our philosophy is we need the lowest cost of production for food and the fewest

farmers farming as possible. That is our national policy, and it continues today.

I do not feel we will improve farm communities and bring back

more farmers until we have a new national philosophy, a new national policy that says we need more people farming and fair market prices. We need an affordable food policy and a sustainable agriculture and rural community policy. We need to ditch the old philosophy.

We also need a moratorium on mergers and acquisitions in the

food sector and vigorous enforcement of the packers and stockyards

act with improvement in antitrust legislation to reflect its impact

on farmers, not just consumers and not just—— Mr. TIGNER [continuing.] Not just when it reaches some high

threshold of monopolization, rather when the effect in the marketplace by a combination of factors is the same as a monopoly. Thank

you, Senator Harkin.

Senator HARKIN. Thank you. I appreciate it. One more.

Mr. BIERMAN. Thank you, Senator Harkin. I am Tim Bierman

from Larrabee, Iowa, farmer, pork producer, also on the board for

the Iowa Pork Producers Association. I wanted to talk to you about

two things. One of them is last year you appropriated nine million

for the funding of the National Disease Center and National Veterinary Services. We need to continue in that so that Iowa State and

the USDA facilities can move forward. In lieu of that, as we all

know, the European union over there has foot and mouth disease.

We need to be more concerned about the foreign animal disease

coming into this country, so we need to increase our surveillance.

We know there is an increased regulation of producers using

human waste products in this country because we know they are

coming in on ships and planes and other things. It can come in on

those—foot-and-mouth disease can come in on those ships and

whatever. This year if it comes into the United States, it will not

matter if we have a checkoff because we will not have any hogs to

be raising in this country. We will be slaughtering them like the

European union. It moves on to the cattle. Then it will affect the

grain farmers because how much grain do we eat up? This ought

to be No. 1 and then to make sure we survive. We can live if we

can keep that out of this country. Thank you.

Senator HARKIN. Tim, thank you. I am glad you brought that up.

I did not mention this earlier, but I went to the National Animal

Disease Lab yesterday. I watched the disposal of some of the sheep

that was there. It is being done in a very safe manner, humanely.

They are now examining the brain tissues of the sheep. It just

points up again, I think, what is happening in Europe, the need to

rebuild for the next century the National Animal Disease Center

at Ames. Now, again, the price tag is high. We are looking at about

somewhere in the neighborhood of about $400 million to rebuild it.

Keep in mind Europe is losing over $100,000,000 a day in their

losses. It has already cost Great Britain $5.3 billion. We need a National Animal Disease Lab that is a actually a world center more

than just a national center. We have the basis for it in Ames, but

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it is 40 to 50 years old. They need new equipment. They need new

labs. They need new research components. They need new disposal

facilities. Not only for that, but to fight bioterrorism and for food

safety. We have to be prepared for this in the future. I am going

to do everything I can to ensure that we rebuild and refurnish that

laboratory at Ames. I am hopeful that—I mean, no one would wish

this. With what is happening now, maybe some of my colleagues

now in the Congress who did not think it was a very high priority

item now will see that this is a high priority item for our country.

We need to rebuild it, so I am glad you brought that up, Tim. It

is something that we cannot continue to put off year after year.

With that unless there is something else from the panel, you

have been very patient and kind to sit there. If there are any last

things that any of you wanted to say before we adjourn, I would

sure—— Mr. HARL. Could I just add one note? Mr. Nolin made a point

about germ plasm in the public domain.

Senator HARKIN [continuing.] Yes. You talked about it.

Mr. HARL. I testified before the Senate Agriculture Committee in

October 1999 on that and said we need to fund at least a half

dozen plant science centers at state-of-the-art levels, and we need

to be sure that the results go into the public domain, not into the

hands of the big transgenic hybrid producers. We are down to five

of those on a global basis. We will be down to three in about 3

years in my view. That is awesome concentration. We have got to

do what Mr. Nolin says.

Senator HARKIN. Again, that ought to be part of the research

component of our Farm bill.

Mr. HARL. Exactly.

Senator HARKIN. Any help, Neil, you can give us on how to write

that and what to do with it, I need your help on that. Anybody

else? Joan.

Ms. BLUNDALL. If I look at one issue that comes up in therapy

which is rather surprising from rural populations—it happens over

and over again, and I think there is a danger in it. When a populus

believes that they have no shot for stability, we are at risk. It is

not atypical to hear people talking about concentration in the food

industry, about not having access because we do not have the technology or the resources. Somehow we have got to build some

bridges for opportunity, and we have got to do something about

concentration.

Senator HARKIN. That is just about the proper note to end on.

You are absolutely right. We do have to do something about concentration, and we are going to focus on that. The hour is getting

late. You have all been very patient to be here. This has been a

great hearing. I have gotten a lot of good information. I can assure

you that the suggestions and advice, consultation that I got here

today will be part of the record. We will continue to have hearings

here in Iowa as we go through this year to develop the next Farm

bill. I take to heart everything that I have heard here today. This

is just vital to our survival. I take to heart what Phil said from the

Iowa Farm Bureau, that this has got to be more than just commodities. You got to look at credit, and you got to look at everything.

You got to look at rural development, all these things. You have

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got to look at all this stuff. We are going to keep that together in

the Farm bill I can assure you.

Thank you all very much. The hearing will be adjourned.

[Whereupon, at 3:50 p.m., the committee was adjourned.]

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MARCH 24, 2001

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Æ