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S. HRG. 107–898

AGRICULTURE IN RURAL COMMUNITIES DRAFTING

AND IMPLEMENTATION OF A NEW FARM BILL

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

AUGUST 18, 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

TOM HARKIN, Iowa, Chairman

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

PAUL DAVID WELLSTONE, Minnesota

RICHARD G. LUGAR, Indiana

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

MARK HALVERSON, Staff Director/Chief Counsel

DAVID L. JOHNSON, Chief Counsel for the Minority

ROBERT E. STURM, Chief Clerk

KEITH LUSE, Staff Director for the Minority

(II)

(III)

C O N T E N T S

Page

HEARING(S):

Agriculture in Rural Communities Drafting and Implementation of a New

Farm Bill ............................................................................................................... 01

Saturday, August 18, 2001

STATEMENTS PRESENTED BY SENATORS

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

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

WITNESSES

Bierschenk, Gary, Benton County, Iowa ................................................................ 27

Bremley, Ron, Morley, Iowa .................................................................................... 30

Demmer, Wayne, Livestock and Grain Producer .................................................. 24

Dietrich, John, Policy Analyst, American Corngrower’s Association and

Farmer’s Union of Nebraska ............................................................................... 28

Ginter, Larry, Member, Iowa Citizens for Community Development, Rhodes,

Iowa ....................................................................................................................... 23

Gray, Walter, Delaware County, Manchester, Iowa ............................................. 22

Heithoff, Jerry, Farmer, Nebraska ......................................................................... 19

Helbling, John K., General Manager of Economic Market Development,

Alliant Energy ...................................................................................................... 10

Holdgrafer, Brian ..................................................................................................... 31

Holdgrafer, Carrie, Farmer ..................................................................................... 31

Holecek, Lloyd, Marion, Iowa ................................................................................. 34

Holmes, Mary Swalla, ISU Extension .................................................................... 08

Jennifer ..................................................................................................................... 31

Jepson, Mike, Seattle, Washington ........................................................................ 27

Krier, Jim, Ollie, Iowa ............................................................................................. 04

Lamb, Gary, Farmer, Chairman, Farm Service Agency State Committee ......... 20

McGivern, Ed, Farmer, Keystone, Iowa ................................................................. 29

Paustian, Ross, Farmer, Walcott, Iowa .................................................................. 03

Peters, Bruce ............................................................................................................ 32

Petersen, Chris, Vice President, Iowa Farmer’s Union ........................................ 28

Ryun, Deb, Executive Director of Conservation Districts of Iowa ....................... 06

Sand, Dwayne, Iowa Natural Heritage Foundation, Des Moines, Iowa .............. 33

Serbousek, Tony, Farmer, Johnson County, Iowa ................................................ 35

Smith, Therese, Representative, Farm Service Agency County Office

Employees ............................................................................................................. 35

Specht, John, Student, Mar–Mac ........................................................................... 20

Specht, Phil .............................................................................................................. 34

Stevenson, Rod, Farmer, Davis County, Iowa ....................................................... 25

Thicke, Francis, Jefferson County .......................................................................... 26

Wilson, Brad ............................................................................................................. 19

Page

IV

Zacharakis-Jutz, Jeff, Farmer ................................................................................ 28

APPENDIX

PREPARED STATEMENTS:

Harkin, Hon. Tom ............................................................................................ 38

Bierschenk, Gary .............................................................................................. 67

Demmer, Wayne ............................................................................................... 78

Ginter, Larry ..................................................................................................... 74

Heithoff, Jerry .................................................................................................. 64

Helbling, John K. .............................................................................................. 59

Holmes, Mary Swalla ....................................................................................... 57

Krier, Jim .......................................................................................................... 44

Paustian, Ross .................................................................................................. 39

Ryun, Deb .......................................................................................................... 52

Specht, Phil ....................................................................................................... 80

Stevenson, Rod .................................................................................................. 77

DOCUMENT(S) SUBMITTED FOR THE RECORD:

Schafbuch, Al .................................................................................................... 88

Schiffer, Lois J., Audubon, Senior Vice President, Public Policy ................. 82

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AGRICULTURE IN RURAL COMMUNITIES

DRAFTING AND IMPLEMENTATION OF A

NEW FARM BILL

SATURDAY, AUGUST 18, 2001

U.S. SENATE,

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY,

Washington, DC.

The committee met, pursuant to notice, at 10 a.m., at the Moose

Lodge, 1325 North Cedar Street, Tipton, Iowa, Hon. Tom Harkin,

[Chairman of the Committee], presiding.

Present or submitting a statement: Senator Harkin.

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

IOWA, CHAIRMAN, COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

The CHAIRMAN. The U.S. Senate Committee on Agriculture, Nutrition, and Forestry will come to order.

Today we are having one in a series of field hearings on agriculture in rural communities leading up to the drafting and implementation of a new farm bill.

I am pleased to be holding it this morning here in Tipton. Sorry

I’m a little late. I apologize. We had to fly in and there was some

weather. We did get some good rain today. I am pleased to be having this hearing and the testimony from this panel will be made

a part of the record.

I want to say at the outset that I am going to ask each witness

to talk for 5 to 7 minutes. I’ll have some questions for them, but

I’m going to leave enough time for people in the audience if you’d

like to ask questions, make statements or make comments. I’ll do

as much as I can in the time that’s allotted to us. If you’ve got

something you want to say or something for the record, I think we

have some microphones somewhere. Please state your name so she

can get your name for the court reporter. If it’s an easy name like

Smith, you don’t have to spell it. If it’s a complicated name like

Harkin, then you better spell it out for her.

First, let me recognize a couple of people. Leroy Brown is our

state conservation, natural resources conservationist. I saw Leroy

here. Glad to have you here. Gary Land who is still the Chair of

the state committee of the Farm Services Administration. Gary

Land is back there, our State Committee Chair. Next to him is

Ellen. You may remember Ellen was the state director for rural development for 8 years. The past administration, of course, has

changed hands now and she did such a great job in rural developVerDate 11-MAY-2000 12:41 Apr 10, 2003 Jkt 085325 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 85325.TXT SAG1 PsN: SAG1
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ment that we hired her. She is now a staff member of the Senate.

Sitting right behind me is the staff director for the Senate Agriculture Committee, Mark Halverson, from around Tama. He actually is a hands-on farmer. It is nice to know that we have a handson farmer that is the staff director of our committee. Next to him

is Stephanie Mercer who does all our economics work. She’s a graduate of Iowa State in economics so she’s with us here today also

from the Agriculture Committee.

Farm families and people who live in rural America have not

shared in our nation’s prosperity. We need new directions in Federal agriculture and rural policies. The Freedom to Farm bill may

have had some positive features, flexibility and some conservation,

but it took away some very critical farm income protection. Farmers need a better system instead of these annual kinds of bail-outs

and emergency bills that we pass every year.

The new Farm bill should begin to set a course that all farmers

earn a better return and better share of the consumer dollar in the

market. Right now the farmer’s share of the consumer dollar is at

the lowest point in our nation’s history. We have to ask ourselves

the question: Do we just continue down this road or do we try to

add policies that will somehow get a better return of the consumer’s dollar to the farmer or are we just going to go down the road

and more and more of these government payments go out? That’s

really the essential question that we have to ask ourselves.

It also should focus on building opportunities for families and

people who live in rural communities. One out of fifteen people who

live in rural America farm. The rest live in small towns and communities. They do rely on the farmers, they do rely on the ag economy overall, but in many cases they need off-farm income. We need

jobs in small towns and rural communities. Value-added processing

ventures, biotechnology products, new marketing channels and increased exports, all these can help.

Farmers in Iowa and elsewhere have a tremendous ethic of stewardship of the land. Too often they don’t have the necessary money

to conserve natural resources as they want to do. The new Farm

bill should extend and strengthen the current conservation programs. We need to create a new system of conservation incentives.

I have bipartisan legislation that I have drafted to do that, to provide for more conservation support on working land, provide more

income to farmers on their working lands.

I intend to put a new title in this Farm bill, an energy title. I

don’t know how far it is going to get, but at least I intend to do

it. When we talk about getting more money for farmers from the

market I don’t think we can just think about the food and meat

market. We’ve got to think about the energy market also. That’s

things like ethanol, soy diesel, methane, biomass, even wind energy, things like that. We need a new title to do that.

Again, I mentioned rural economic development for water, telecommunications, equity capital for investments. We have to take a

look at that also and see what can be included in the Farm bill.

Conservation, energy and a better conservation program, farm income protection, stronger support for exports, stronger support for

rural communities and rural economic development, I think all of

these things have to be addressed.

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If I have one complaint about what the House of Representatives

did when they reported out their farm bill from their committee.

It focuses simply on commodities. That’s all. The Farm bill has to

be much broader than that. Again, I’m open to any of your suggestions or comments on that.

With that, I will now welcome our panel. We have Ross Paustian,

a farmer from Walcott in Scott County, Jim Krier, a farmer from

Ollie, Keokuk County, Deb Ryun, Executive Director of Conservation Districts of Iowa, Mary Swalla Holmes, ISU Extension and

John Helbling with Alliant Energy. We appreciate all of you here

because I think this is going to cover the bases of the things I

talked about.

All of your statements will be made a part of the record in their

entirety. I read through them last night and coming over here this

morning. What I’d like to ask you to do is to tell us in your own

words what you think we ought to have in the Farm bill and where

you think we ought to go. If you have any examples you’d like to

talk about, we’d like to hear that. Please try to keep it to maybe

5 or 7 minutes, something like that. I’m not going to bang the

gavel. Is that all right? With that we’ll start with Ross Paustian.

I hope I pronounced that last name right.

[The prepared statement of Sen. Harkin can be found in the appendix on page 38.]

STATEMENT OF ROSS PAUSTIAN, FARMER, WALCOTT, IOWA

Mr. PAUSTIAN. Good morning. My name is Ross Paustian and I’m

a farmer from Walcott, Iowa. Together with my wife and parents

and my brother and his wife we raise corn and soybeans on a 900-

acre farm. We also operate a farrow-to-finish hog operation. I’ve

been farming for 23 years. I appreciate the opportunity to present

my thoughts to the Committee on the Farm bill.

The question that faces us is what type of program is needed to

help farmers weather the down years while giving them opportunity in the up years? I believe Congress made the right decision

to eliminate the old supply management programs and replace it

with Freedom to Farm. At that time the Federal budget was a political issue and many in agriculture didn’t want the same program

with additional cost savings like payments on fewer acres. We

wanted flexibility. We wanted the freedom to make our own decisions.

I would offer my thoughts on the development of the farm policy

in five different areas:

No. 1, the new farm program must stay within the World Trade

Organization amber box commitments. Nearly 50 percent of the

crop producer’s income and 13 percent of livestock producer’s income comes from rural trade. We cannot afford to ignore the impact that international trade has on our bottom line.

No. 2, I support continuation of the AMTA program. Payments

to current contract holders should be continued, but producers

should be allowed a one-time opportunity to adjust their base acres

as provided for in the bill passed by the House Ag Committee. In

addition, soybeans should be added as a program crop but producers must choose whether to shift planted acreage from a current

program crop to soybean payments.

4

Number 3, loan rates must be rebalanced. I support adjusting

loan rates for corn and other program crops so that they are historical with the soybean loan rate. The soybean loan rate should remain at $5.26. The next Farm bill can provide additional marketing flexibility by allowing producers to lock in an LDP rate at any

time during the crop-marketing year.

No. 4, Congress can improve the safety net of the Farm bill by

establishing a counter-cyclical income assistance program. This

program should be revenue-based and must fall within the confines

of the WTO guidelines.

No. 5, conservation programs should be expanded in this Farm

bill. Producers are facing increased pressures from Federal regulatory programs such as EPA’s animal feeding operation rules,

water quality standards and total maximum daily load. The next

Farm bill should eliminate the limits on participation in cost share

and technical assistance by larger livestock producers.

I’m a family farm livestock producer and this farm supports

three families yet we cannot qualify for any cost or technical assistance, yet we must meet increased state and Federal regulations. I

want to commend Senator Harkin for his leadership to establish

the environmental incentives programs. A program like the one

proposed in the Conservation Security Act provides farmers like

myself an opportunity to be rewarded for the practices that I already have in place.

This Farm bill presents an opportunity to implement a long-term

strategy for agriculture while we address the short-term economic

problems facing many producers. I support your vision to expand

the scope of the trade title and provide more opportunities for

value-added agriculture through the rural development title. I also

believe this year presents us with the opportunity to expand agriculture’s role in our national energy strategy. The last Farm bill

was to be part of a three-legged stool. Farmers would assume more

of a risk and be responsible for their own management and marketing decisions. In return, Congress would expand our trading opportunities, reduce the tax burden on family farmers and provide us

with regulatory relief. With the exception of tax relief, this has not

occurred. In fact, regulation of farmers has increased. I urge you

to look at the broad spectrum of policy issues that impact agriculture as you design a recommendation for the next farm program.

In conclusion, farmers look forward to working with you and the

Senate Ag Committee as we develop a new Federal farm program.

Thank you for the opportunity to testify.

[The prepared statement of Mr. Paustian can be found in the appendix on page 39.]

The CHAIRMAN. Ross, thank you very much for your testimony.

Now we turn to Jim Krier.

STATEMENT OF JIM KRIER, FARMER, OLLIE, IOWA

Mr. KRIER. Chairman Harkin, I’m Jim Krier, a farmer who resides between the forks of the North and South Skunk Rivers in

Keokuk County. My wife, Mary, and I raise 900 acres of corn and

soybeans and finish approximately 2300 head of feeder pigs annuVerDate 11-MAY-2000 12:41 Apr 10, 2003 Jkt 085325 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 85325.TXT SAG1 PsN: SAG1
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ally. It’s an honor to appear before you today to discuss the needs

of agricultural producers in terms of the pending farm legislation.

First, I’d like to thank you for your leadership in attempting to

secure an adequate 2001 crop year economic assistance package for

the nation’s farmers. As we all know, not only have commodity

prices remained low, but production costs have risen dramatically

because of the increased petroleum costs.

Mr. Chairman, the current farm policy is not working. Since the

passage of the Freedom to Farm in 1996, crop prices have declined

almost 30 percent and input costs have increased. As a result, a

much larger portion of my income has come from government payments and not the marketplace.

While I like the planting flexibility contained in the current law,

the rest of the program is far from adequate. Farmers want to receive a decent price from the marketplace and not from government

assistance year after year. It’s vital that the new Farm bill put

greater emphasis on creating demand for our products and giving

us the marketing tools to get a better price from the marketplace.

Increasing demand in order to receive a decent price from the

marketplace should be the goal of the new Farm bill. It should also

contain a safety net that is truly a safety net. This new safety net

should be based on what we produce, what our yields are and what

our costs of production are in today’s dollars. The current safety

net is flawed because it is based on what I planted on my farm 5

to 10 years ago and what my average yields were 16 years ago. We

certainly don’t need a complicated safety net that doesn’t reflect

current costs of production and market prices.

I would suggest raising the market loan rates and indexing them

to the cost of production. This is simple. It only helps us when we

actually need the help and it should only go to those who actually

produce the crops.

We also need to place a much greater emphasis on renewable

fuels. It’s no secret that we currently have an energy crisis as well

as a farm crisis. The possible solution to both is the production of

energy from renewable commodities grown right here in the Midwest, thus reducing our reliance on imported oil and keeping those

trade dollars in the U.S. The formation and maintenance of a farmer-owned grain reserve could be used to level out the peaks and

valleys of ethanol production and prices, thus helping to boost farm

prices now and not several years from now.

In addition, the safety net should be targeted to family farmers.

To discourage larger operations and further consolidation, payment

limitations should be strictly enforced.

I would also encourage you to look at adopting a voluntary FlexFallow type of management program to help control excess production capacity. This program is necessary to provide flexibility for

those times when supply continues to exceed demand. No business

can produce all that they want forever. Agriculture is certainly no

different. The Flex-Fallow program would allow farmers to receive

increased loan rates in return for voluntarily idling their land.

The new Farm bill’s foreign trade policy should include countryof-origin labeling to ensure fair competition against imported

produce, meats and grains. There should be tariffs on commodities

6

and produce where differing labor and environmental regulations

represent a substantial difference in the cost of production.

Rural development is another important part of the Farm bill. I

would like to see grants and development money to help farmers

develop, manage, and own value-added enterprises such as ethanol

plants, soy diesel, livestock processing, biomass energy, farm-tomarket fruit and vegetable production to name a few. The farmer

must be helped to do this in order to control his product from farm

to retail market. This is the only way the farmer can capture more

of the retail dollar.

Mr. Chairman, I would urge you to write a farmer-friendly farm

bill, a farm bill that provides balance and meaningful economic

safety nets for those who raise crops, a farm bill that expands markets, a farm bill that reduces the negative impact of surplus production and above all a new farm bill that helps provide profitable

prices for our commodities.

I’d like to thank you for your time, Senator.

[The prepared statement of Mr. Krier can be found in the appendix on page 44.]

The CHAIRMAN. Jim, thank you very much for your statement

and we now turn to Deb Ryun.

STATEMENT OF DEB RYUN, EXECUTIVE DIRECTOR OF

CONSERVATION DISTRICTS OF IOWA

Ms. RYUN. Good morning. I will totally admit to having the

weakest voice on the panel, so if someone can’t hear me, please

raise a hand and I’ll try to speak up.

I do thank you for having this opportunity to comment on the

2002 Farm bill. Conservation Districts of Iowa represents Iowa’s

500 Soil and Water District Commissioners, some of whom are in

the room today. Thank you for coming. Most are farmers or have

a farming background. They have a vested interest, many have a

life-long commitment in promoting wise land use and the conservation of our soil and water.

While I might enjoy commenting on other aspects of the Farm

bill, I do feel compelled to focus on the conservation title.

Soil and water conservation must be a significant component in

both concept and funding in the next Farm bill and receive a minimum of 25 percent of the funding.

The programs must be focused and provide direction to achieve

landscape and watershed objectives for water quality, resource protection and the entire range of conservation benefits.

Flexibility must be built into the conservation programs to allow

them to be tailored within the states. The role of State Technical

Committees needs to be strengthened.

We must meet public expectations for water quality, resource

conservation and environmental enhancement within a framework

that sustains family farms and ranches both economically and socially.

Funding for research and education is critical. It’s a critical component of the Farm bill.

CDI strongly supports the concept of the proposed Conservation

Security Act. We applaud this voluntary and comprehensive approach. Let’s provide financial rewards to agricultural producers

7

who are following sound natural resource conservation practices.

Thank you, Ross.

In the agribusiness world value added is a means to survival and

the CSA may be an example of value added at its best. It would

foster the development and implementation of whole-farm conservation plans. Producers would also receive financial support at

a time when agriculture is struggling to survive. In addition, society as a whole would gain from increased environmental protection.

Currently the USDA offers set-aside programs such as CRP and

WRP designed to help farmers be good land stewards. However,

set-aside programs only directly protect land that is taken out of

production. If we are to have an adequate impact on quality of our

environment, we need to target all working lands and achieve a

better balance between working lands and conservation and setaside land.

It’s important to reward those who are already good land stewards. Many producers have long farmed on the contour on slopes.

They’ve re-established wetlands on hydric soils and pastured their

highly erodible lands. They have set aside timbers and protected

rare prairie remnants. It makes no sense to encourage producers

to undo sound conservation practices in order to be eligible for incentive payments. We should compensate those who are voluntarily

incurring personal cost to establish and to maintain wise land use

practices.

The current system provides financial assistance to a select

group of producers. The Farm bill should provide incentive payments to producers of all types of products. It is important and fair

to provide financial incentives to those farmers who have not traditionally benefited from this type of support.

The next Farm bill should have elements which compliment and

not replace other conservation programs. It should ensure maintenance of aging structures through programs like the small watershed rehabilitation program and fund them at appropriate levels.

CDI supports continuing and expanding the current programs administered through the USDA by NRCS.

General consensus among Iowa’s conservation groups and the

commodity organizations is that participation in USDA programs

should require conservation compliance for direct government payments. Provisions established in the 1985 HEL-Sodbuster and

Swampbuster provisions are important to protect land from erosion. Noncompliance should result in a person being ineligible for

USDA benefits.

Rural Americans who make a comfortable living on working

lands can be considered a threatened, if not endangered, species.

An even more rare breed is those of us who work to achieve more

conservation on agricultural land. The House Agriculture Committee Farm Bill proposal reflects very little, if any, consultation with

3,000 soil and water district commissioners throughout the country.

They’ve been working in this arena for over 60 years and we know

what we’re doing. We ask you to listen to our small but important

voice.

While CDI applauds the house proposal to increase EQIP funding to $1.2 billion annually, we are very much opposed to shifting

the administration of this program to the Farm Service Agency.

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Shifting EQIP or any of the programs which require technical assistance appears to be part of the constant battle of power at the

national level. The biggest roadblocks for EQIP to provide more

conservation assistance are money for contracts, technical assistance funds, and the inter-agency concurrence requirements at the

local level. The house version limits funds available for technical

assistance and does not require the secretary to provide technical

assistance.

Technical assistance is something the producers should expect in

a timely manner. Technical assistance has shrunk from 60 percent

of the conservation budget to about 30 percent since 1985. The

house proposal suggests that none of the funds for programs such

as CRP, WRP & EQIP could be used for technical assistance. It severely limits Commodity Credit Corporation technical assistance

funding to implement Federal programs. It overlooks the effective

partnership delivery system already in place. It does little to address the tremendous workload of conservation assistance.

The focus of the next Farm bill conservation title should be to reduce topsoil loss, improve soil health, improve air and water quality and provide wildlife habitat while at the same time provide assistance to financially struggling farmers. CDI hopes that this objective prevails. Conservation of private lands is important. I do

thank you for this opportunity.

[The prepared statement of Ms. Ryun can be found in the appendix on page 52.]

The CHAIRMAN. Deb Ryun, thank you very much for your testimony. Now we’ll turn to Mary Swalla Holmes, ISU extension.

STATEMENT OF MARY SWALLA HOLMES, ISU EXTENSION

Ms. HOLMES. Yes. I’d also like to thank you for the opportunity

to provide testimony this morning.

Listening to my fellow speakers this morning reminds me again

that Iowans are really smart and we really know what’s happening

out here in the Heartland.

I have traveled the state of Iowa for 5 years as a community consultant working to develop sustainable agricultural opportunities.

I’m here today representing my clients, family farmers who live on

the land and grow fresh, nutritious food for their neighbors and for

the small towns that welcome and support this new agriculture. I

am also a member of Governor Vilsack’s Food Policy Council and

Local Food Systems Task Force and the Iowa Community Food Security Liaison.

I believe that the new Farm bill must address the realities of the

emerging global economy. In the rapidly consolidating and vertically integrating food and fiber chains trans-national companies

will soon own or directly contract for all raw materials. Agricultural raw materials will be produced wherever it is cheapest and

where social and environmental costs can be externalized. Current

farm bill payments which directly subsidize production of commodities ultimately subsidize these mega-corporations. While profits accrue to the corporations, environmental and social costs are billed

to our small communities.

Iowa’s water quality is already among the worst in the nation,

our rivers and streams choked with soil, chemical runoff and fecal

9

contamination. Our rates of rural poverty are high and in a land

awash with corn and soybeans I continually see the battle of hunger and food insecurity. Farmers feel trapped, unable to break the

dependency on farm payments that are based on production of

cheap commodities even though they recognize how dysfunctional

the system has become. They know that the price of competing as

low-cost producers in a global system is to be locked into a downward spiral, forced to make choices that destroy their land, their

community and their health.

One ray of hope in Iowa has been a grass-roots movement toward

developing local food systems. This movement is led by the Practical Farmers of Iowa and INCA, the Iowa Network for Community

Agriculture. It connects farmers and consumers through direct

marketing enterprises. The growth of the number and quality of

farmer’s markets and CSA’s, Community Supported Agriculture

Subscription Farms, in Iowa is being driven by consumers who are

looking for a source of food they can trust. These consumers are

willing to pay more for the food that is produced on a healthy, sustainable farm by a farmer they know by name.

Widespread interest in local food systems was recently shown by

over 300 people who signed up and that attended workshops held

in five locations in Iowa. In fact, we turned people away from every

one of those workshops. We were able to hold 60 people in each

workshop and we turned away another 40.

When Practical Farmers of Iowa announced recently that they

would work with groups of producers to develop direct marketing

enterprises, over 30 groups applied. With limited resources, they

will be able to assist eight groups to develop marketing strategies

and business plans.

Working together with Iowa State Extension, the Leopold Center

for Sustainable Agriculture and USDA Rural Development and

NRCS outreach, small amounts of grant funds have been leveraged

to assist the growing number of interested farmers. Additional support is needed to support farmers converting to new enterprises.

Technical assistance in this area is also very needed.

Under the current Farm bill there is little to encourage or support farmers who are converting to high-value, market-oriented enterprises. In a recently completed survey of specialty produce growers in Iowa, 56 percent had less than twelve acres in production.

With limited acres and no corn base, often they are not even considered farmers under USDA designation even though they often

feed 20 to 60 households, supply the local farmer’s markets and

provide social, educational and environmental benefits to their

communities. On the other end of the scale, 25 percent have 75–

1500 acres under production, much of this in 7-year organic field

crop rotation.

As you re-structure the Farm bill, I urge you to consider these

farmers and their communities. Direct payments that focus on rebuilding our natural resource base and reward farmers for conservation practices—uncoupled from commodity production—will

renew the countryside. I fully support the Conservation Security

Act as a beginning. Please consider the amount of technical assistance that will be needed as cultural and economic restructuring

takes place. The ACRE proposal which would support the developVerDate 11-MAY-2000 12:41 Apr 10, 2003 Jkt 085325 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 85325.TXT SAG1 PsN: SAG1
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ment of cooperatives, networks and associations of producers and

technical assistance, addresses this issue.

One important piece of the Farm bill that I’d also like to talk a

bit about is the designation and support of the Community Foods

Security Initiative which builds and strengthens food systems at

the community level. The Community Food Projects Grants Program has provided incomes for farmers while improving nutrition

for citizens all over the country. The Farm to School initiative in

particular seeks to improve access for local farmers to sell into local

schools. In Iowa we are working to create a pool of producers that

would sell ground meat products to Iowa schools. The Community

Food Security Initiative is the centerpiece of a strong, secure America, weaving a tightly woven safety net of food access for all citizens.

Thank you, Senator Harkin, for your work on this most important and far-reaching committee. Please design a farm bill that

marks the turning point for America. We are ready to turn away

from cheap production that destroys our land and our people and

ready to turn toward a real future of abundance and health. Thank

you.

[The prepared statement of Ms. Holmes can be found in the appendix on page 57.]

The CHAIRMAN. Thank you very much, Mary. Now we’ll turn to

John Helbling, General Manager of Economic and Market Development for Alliant Energy.

STATEMENT OF JOHN HELBLING, GENERAL MANAGER OF

ECONOMIC MARKET DEVELOPMENT, ALLIANT ENERGY

Mr. HELBLING. Thank you, Mr. Chairman. I appreciate the opportunity to talk about something that’s extremely important to

our communities as well as Alliant Energy as a whole.

We serve 1.2 million customers in four Midwest states. The minority of those are in urban environments. The majority of them

are rural communities such as this bill hopefully will address.

I want to talk about two issues that impact rural economic development of a whole broad spectrum. One is affordable housing and

the second is biomass energy opportunities. I congratulate the Senator for his initiative on establishing an energy title in the Senate

Agricultural Bill because I feel that this has been a long sector that

the agricultural community has ignored and not taken advantage

of.

First, Mr. Chairman, I want to take the opportunity to thank you

for your leadership in this issue. Your assistance enabled Iowa

farmers to provide set-aside switchgrass to Alliant Energy for the

biomass-to-energy demonstration project at the Ottumwa Generating Station which, as you know, is a part of the Chariton Valley

Biomass Project. Thanks to your assistance that project continues

to grow.

I want to talk first, briefly, about housing. Alliant Energy’s diversified holdings include Heartland Properties, a company that invests in and helps create affordable housing in communities served

by Alliant Energy. Your support for the Eagle Bluff Apartments in

Fort Madison is greatly appreciated. It is an example of the work

Heartland undertakes along with other community developers to

11

meet the rural housing needs of low income seniors. Eagle Bluff

was made possible through the U.S. Department of Agriculture’s

Section 515 Rental Housing loan program which offers some flexibility to finance both new construction and the rehabilitation of

aging rental housing.

While construction costs and the need for quality affordable

housing continues to rise, the program has faced congressional

budget cuts over the past decade. Construction in rural areas costs

nearly as much as the urban ones, but developers cannot charge

anywhere near the same rent. The marketplaces will not bear it.

If rents are too high, seniors and families are left with inadequate

housing conditions or are forced to leave rural communities to look

elsewhere for more affordable housing, either are significant blows

to rural and small town communities. The low interest loans available through USDA are needed to keep rents affordable. Further,

the program combines well with other housing programs, such as

the Federal Low-Income Housing Tax Credit to reach very low income households. We recommend, Mr. Chair, that the decline in

the Department of Agriculture Section 515 Rental Housing loan

program funding levels be halted and that appropriations be maintained at the fiscal year 2001 level of $114.3 million to adequately

address low-income needs in rural areas.

The second issue I want to address is incentives for resolving

what I think is a win-win solution for both ag waste management

and agricultural energy needs. We represent and I represent an energy company. That’s a strength that we need to focus on. Alliant

Energy is committed to finding new and applying new and innovative solutions to energy and other problems today. I mentioned the

Chariton Valley Biomass Project which involves testing whether

switchgrass can be co-fired with coal to power a commercial generator to make electricity. We’re extending this same question to other

forms of biomass, exploring the practicality and profitability of converting animal waste, crop residue and other forms of waste and

combinations of waste ultimately into electricity or other forms of

energy such as steam.

Presently, Alliant is working with the Iowa Department of Natural Resources to install an anaerobic digester fueled cogeneration

facility at the Top Deck dairy farm in Westgate, Iowa. Digesters

like this convert cow and swine waste to methane which is burned

to generate electricity. Capturing the methane prevents it from escaping into the atmosphere and eliminates 90 percent of the odors

from the waste. Runoff is dramatically reduced. The farmer’s electric needs are supported, often entirely, while excess power is sold

back into the grid, another revenue stream for the agricultural

community. The waste from the digester can also be used as a marketable fertilizer product that has 50 percent higher quality than

the unprocessed manure going into the digester.

Biomass energy production is one of the most exciting applications of ag wastes if it works economically because of the numerous

environmental and agricultural problems it can help farmers solve.

Because this is an emerging technology it does need some incentives in order to make it work financially for the farmer. That is

why Alliant Energy is supporting Senate Bill 1219 sponsored by

Senator Grassley expanding the Section 45 tax credit currently

12

available for electricity produced from wind, solar, poultry waste

and certain closed loop biomass to cover electricity produced from

swine and bovine waste. We hope this bill will be added to any

Senate Energy legislation considered later this year and also it

could be considered the basis for the energy title.

In addition, Alliant Energy supports SEC. 3102 of H.R. 4, legislation passed recently by the House relating to further expanding the

eligibility of renewable open-loop biomass eligible for the Section 45

tax credit. Alliant Energy is also working with the Iowa DNR to

set up a fast-track permitting process for biomass-to-energy

projects. In Nevada, Iowa, we are working with the Iowa Energy

Center on biomass conversion and we are beginning to explore how

swine manure in particular might be complemented with other crop

residues and ultimately converted to energy.

It is important to remember that the technology we are looking

at and the waste might work best to produce gas or to run a generator or to be co-fired with other fuels or to produce steam unable

to be fired at a higher temperature. Any Federal support should be

mindful that the technology and fuel sources are still fluid at this

point and language assisting development should not accidentally

cutoff what might end up being fruitful avenues of economic, technological and biomass-to-energy development.

Alliant Energy proposes that the Natural Resource Conservation

Service expand their eligibility for matching loans for collection and

retaining structures to include structures intended to hold manure

for digesters. This would be under the Environmental Quality Incentive Program, EQIP, funded under the Section 4 USDA Waste

Storage Management Code. Alliant Energy also supports any encouragement you can give to the Offices in the Department of Agriculture such as Energy Policy and New Uses and Agricultural Research and Technology Transfer to direct more of their financial

support for innovative technology into early research and demonstration projects involving biomass and biomass-to-energy applications. The economic opportunities for the farm economy suggest

that these are fruitful areas to pursue. Farmers need economic incentives to develop sound environmental practices that have both

societal and economic benefits.

One final word, Mr. Chair, on a program we conduct on the state

level which should be of interest to the committee. Alliant Energy

is offering a Demand Side Management utility program to farmers

directly and specifically. These are incentives to farmers to acquire

and to install energy-efficient technologies at a much broader scale

than had been done in the state of Iowa before. For farmers who

have not sought energy efficiency in the past, the energy savings

can literally be enormous. We are confident that the farm community will see significant savings in the years to come.

In conclusion, Alliant Energy is actively committed to agricultural and rural economic development. In part, this means making

farms and farmers more competitive and more efficient as businesses. In part, this means helping to make and keep our rural

communities a place to live and work and grow in.

Thank you, Mr. Chair, for this opportunity to testify and I look

forward to answering any questions.

13

[The prepared statement of Mr. Helbling can be found in the appendix on page 59.]

The CHAIRMAN. John, thank you very much. I congratulate you

and Alliant Energy for all of your forward thinking and getting involved in the alternative energy projects that you mentioned. I

have some more questions about that. Let me just review, if I

might, to make sure I understand what everyone said.

We heard from Ross who said that basically with the WTO we

have to make sure we’re in the amber box in our farm bill, and

that trade is about 50 percent of our crop income. Ross feels that

we should continue the AMTA payments—correct me if I’m

wrong—and that we should re-adjust loan rates but keep the soy- bean loan rate at $5.26, and re-adjust loan rates for historical averages. He wants a counter-cyclical support program, expansion of

the conservation reserve program, and elimination of the limits on

participation. He pointed out that he could not participate. He has

three families that he supports and because of those limits he can’t

participate in the program. He mentioned an environmental incentives program they supported and an energy title they support. He

supports and wants to expand the scope of trade in farming.

Mr. Krier said that the current policy is not working. We’ve had

30 percent decline in prices. He mentioned the outdated bases that

we have and proposed we raise the market loan rate and index

them to the cost of production. He said we needed more renewable

fuels, emphasis on that. Mr. Krier suggested we have a farmerowned reserve—I think he said basically for ethanol or energy production. Mr. Krier says we should enforce the payment limitations,

also mentioned a voluntary flex-fallow system was needed, mentioned in trade we need country-of-origin labeling plus environmental and labor regulations and said that in rural development

we needed some value added enterprises and financial help for

those.

Deb Ryun mentioned that 25 percent, she believed, of the funding in the Farm bill ought to go for conservation. Flexibility should

be built in to the program and research and education is critical.

She liked the Conservation Security Act as a centerpiece of the new

bill, mentioned that incentive payments should go to all types of

farmers and not just a few and that it should compliment and not

replace the existing programs. She also said that we should support the continuation and strengthening of the present programs

and that conservation compliance is needed. Ms. Ryun opposed

shifting the EQIP program to the Farm Service Agency and mentioned that the House bill provides less than 10 percent of the

funds to producers on working lands. Maybe we’ll cover that in a

little bit.

Mary Holmes said that basically the environmental costs and the

social costs are billed to the rural communities and they’re the ones

that pay it, indicating we need that development of local food systems. She mentioned INCA in Iowa and the workshops that they

have around Iowa were well attended, that there’s little or no support in the present farm bill for changing practice if farmers want

to change their practice. She also supported the Conservation Security Act and mentioned that the Community Foods Security Initiative that’s in the present Farm bill needs to be extended.

14

John Helbling mentioned both affordable housing and energy. On

housing he mentioned the 515 rental program that we’ve had for

a long time under Farmer’s Home, now Rural Development. He

mentioned the Eagle Bluff project that I’m familiar with in Fort

Madison. He said that many elderly are being priced out of rental

markets in our small towns and communities and mentioned that

we needed to maintain a $114.3 million for section 515. He also

said we need to extend the biomass to other items like animal

digestives for direction of methane, also support Senate bill 1219

produced by my colleague, Senator Grassley and to expand Section

45 to cover methane. Now, he mentioned both open and closed loop

biomass systems need to be supported, and because technology is

very fluid at this point, we have to be very careful of what we do.

He mentioned expanding the conservation program to build storage

for manure for digesters—I think that’s what you said. That’s what

I wrote down anyway, and mentioned at the end that Alliant Energy is providing incentives to farmers to apply energy saving technologies. I don’t know exactly what all those are, but maybe we’ll

get into that.

Mr. HELBLING. I can provide those to you in detail, sir.

The CHAIRMAN. Thank you all so much for your testimony. I have

some questions for the panel and then we’ll open it up for the audience.

Let me just say at the outset how proud and privileged I feel to

be the Chairman of the Senate Agriculture Committee. I’m the first

Iowan to chair it since 1910. I feel very proud to have this opportunity and responsibility which I take very seriously. I’ve been on

the Senate Agriculture Committee now for 17 years and 10 before

that in the House. I’ve had 27 years. I legislated a lot of farm bills.

I have some real questions about what’s happened over those years

and the directions that we’ve taken. I say to those of you who perhaps think we need to change direction of the Farm bill—which I

do also—that essentially we’ve been going down this road for a long

time. It’s pretty hard to turn everything on a dime. We may have

to think about how long it’s going to take to turn this thing and

get it moving in a different direction. I just want to lay that out

there. I don’t know that everything will be changed all at once, but

certainly some changes do need to be made.

When I first took over chairmanship of the Agriculture Committee I asked this question. I have asked this at every hearing:

Should Federal farm programs continue to support every bushel,

bale and pound that is produced and earned? I just ask that question. If the answer is yes, I would like to have the justification for

it. If no, then I’d like to know what should replace it and where

should we go? That is just an essential question that we have to

ask. The next question is do we take into account all of the consequences of an action that we take? We say, we’re going to do this

and we know how it’s going to effect one element. How does it effect other elements? How do we take those into account? Those are

really the few fundamental questions we have to ask.

First of all, let me thank all of you for the strong expression of

support you made for conservation. That is going to have to be an

essential part of the new Farm bill.

15

Mr. Paustian, you say that you support continuing fixed AMTA

fixed contract payments. I have some question about continuing

those into the future. Since these payments are fixed and then

they’re written into the bill so we know what they are every year,

do they not, then, become reflected in rental rates and land prices

every year? Do we not create some kind of a bubble and it’s reflected into increasing land prices above what the value of the commodity is that can be produced? If you have that same payment

that everyone knows what they’re going to get every year regardless of what the price, does that not get reflected in that price?

Mr. PAUSTIAN. Yes. Possibly it does. It does provide a way for

farmers who plan in that year as far as crop inputs and can plan

a little bit ahead of that. When he has to go to his lender he can

tell them what the projected income is and what his expenses are

going to be.

The CHAIRMAN. That’s a question for everyone here and for you

on the panel. It seems like our farm programs over the last 20

years or 30—I don’t have a definite cutoff here—the last 20 or 30

years basically have had the unintended effect of not only increasing farm size but increasing land prices above really what the

value of that commodity compares. We have what I call a bubble

out there. It’s been built-in. In other words, I ask this question. If

you have a system that pays for every bushel and bale and pound

that’s produced—and since I’m not in the south I can use just bushels here in this audience—does it not mean that the bigger you are

the more you get. That means you can bid up the price of land

more than what your neighbor is farming and get it up and then

next year you’re going to get that too so you keep bidding it up?

I ask that question because it seems like that’s what’s happening.

Mr. PAUSTIAN. Yes. It appears that way. The larger farmer gets

a bigger payment but that’s over more acres too. When you look at

it on a per acre basis I don’t see that much difference.

The CHAIRMAN. Well, that comes back to my question again. Is

that good policy for us to do that? I don’t care if a farmer wants

to get big. If you can get big, God bless you. That’s what the market’s all about. Should the government and the programs sympathize and be making the payments that actually encourage and

promote that? If a farmer can be more efficient and more productive, work harder, save money and increase their capacity, that’s

fine. I have no problems with that. I just ask the question about

whether or not the government should be involved.

Mr. Krier, you mentioned the cost of production and raising the

marketing loan rate and indexing the cost of production. Well, I’ve

wrestled with this a long time, but—It’s very attractive. However,

there’s a wide variation in the cost of production for any given commodity, even for corn. It varies from farm to farm, region to region.

If you’re on the outskirts of Cedar Rapids it might be one thing and

if you’re in southern Iowa it might be quite another. How do you

figure what it is because it various so much?

Mr. KRIER. That’s difficult, I guess, because we’re dealing with

farmers all the way across the nation.

The problem with the Farm bill is you’re going to have a fixed

bill for 10 years and the cost of production is going to be changing

every year.

16

The CHAIRMAN. If we reduce that on an average then to some

farmers you’re giving too much and for some you’re giving them too

little. That’s the tough thing. Now, there does seem to be a difference here. I want to cover the size of livestock operations. Right

now under the CAFO rules, Concentrated Animal Feeding Operation, if you have the equivalency of 1,000 head or more you are

not eligible for the manure management program. There have been

suggestions that that will be raised. There have been suggestions

that we ought to just make it a money cut, up to a maximum

amount of so much money regardless of your size. We have basically three things: Either keep the limits that we have now, raise

the limits above 1,000 to some other level wherever it might be, or

three, the maximum amount of money you could get we don’t care

how big you are. What do you say on that?

Ross, you seem to think that the limit ought to be raised. Jim,

you seem to think that the limit ought to be kept down.

Mr. KRIER. The limit needs to be set and kept there instead of

coming in a year or two later and putting the pressure on and then

upping the payment limits the way we have. We had the limits set,

supposed to receive ample payments, maximum payments and

these payments keep getting bumped. They need to set them.

The CHAIRMAN. I’m just talking about the limits on EQIP for conservation.

Mr. KRIER. It would be the same thing because if you keep rolling the limits higher that allows the larger productions to keep getting money.

The CHAIRMAN. Ross, what do you say?

Mr. PAUSTIAN. The limits should be raised.

The CHAIRMAN. Do you have any idea how high?

Mr. PAUSTIAN. I can’t say that right now. That’s kind of tough.

Definitely above 1,000

The CHAIRMAN. Well, this is something maybe somebody else has

got some views on in the audience. The point is that under the

Clean Water Act the minimum was set and it was assumed that

anyone who had over the equivalency of 1,000 units should be able

to take care of their own manure management. They had to be subject to the regulations. It was over 1,000 subject to the regulations

and therefore they had to pay for it themselves. Under 1,000, not

subject to the regulations. We recognized in the Farm bill that this

also contributed to environmental pollution so we wanted to support and encourage the smaller units to have a good sound manure

management program so we provided EQIP money to them. That’s

where this is. If, in fact, we’re going to open it up to above 1,000

we’re going to have to put a lot more money into it. If we don’t,

then the bigger operations will get more money. They’ll require a

lot of the money and there will not be enough money left for the

smaller operations. That’s the dilemma that we’re on right now on

this thing.

Ross, you mentioned rebalancing loan rates. You said keep soybeans at $5.26. That means we’ve got to raise the others. Do you

have any thoughts on how high do we do it and if we do raise those

loan rates in accordance would that just promote and encourage

more production, more planting and thus more AMTA payments?

17

Do you see what I’m saying? If you have a higher loan rate doesn’t

that just promote more planting?

Mr. PAUSTIAN. Yes. The idea behind announcing that was that

it appears that especially this year we’re getting more soybean

planting because of the imbalances between corn—in this area— corn and soybeans. That’s why it balances out. This year as far as

more acres being planted there’s only a certain number of acres in

the state and if more acres of corn are being planted that’s less

acres of beans. I don’t see that as being a real big problem. The

total number of acre farms is going to be the same.

The CHAIRMAN. Might be some shifting in there?

Mr. PAUSTIAN. Yes. Just shifting.

The CHAIRMAN. OK. Mary Holmes, you mentioned some things

that I’m quite interested in in terms of developing local food systems and things like that. It is ironic that in a rich agricultural

state like Iowa we import almost all of our food. That doesn’t make

sense, but then again how feasible is it, really, to think that we’re

going to change the system that we have in Iowa to get more local

grown produce or whatever? I assume there’s a certain amount of

that we can do, but isn’t that just a small part of our economic

structure?

Ms. HOLMES. It is small, but it’s growing very rapidly. Five years

ago we had about six CSA’s in the state. Today we have 60. I have

communities calling me every week saying how do I reach out to

farmers? How do I develop some of this in my community? I believe

consumers more and more are concerned with the safety and the

health of their food and they also are concerned with having farmers in their area. As we see the incorporation of the larger and

larger farms we don’t have those people in our school systems, we

just have less people to go around in the communities. Communities are looking at it as a way to do both community development

and economic structure.

The CHAIRMAN. One thing you mentioned was that a lot of farmers don’t even benefit from farm programs.

Ms. HOLMES. Absolutely. Right.

The CHAIRMAN. What about farmers that have a long history of

hay and stuff like that? They might not have a good base and so

they don’t—— Ms. HOLMES. Right. They don’t have a corn and soybean base. If

they don’t have that then they don’t qualify.

The CHAIRMAN. We have a lot of people that have questions.

John, again, I want to congratulate you. The biomass project that

you’ve done in Chariton County is a great incentive you’re providing out there. The fact that you’re now looking at how to move into

other areas like methane production, this is the kind of partnership

that we’re going to have to have Federal, state, local, private sector. You mentioned about the digesters and we’re going to look at

this and we’re going to have an energy title, as I said, in the Farm

bill. Do you have to have a huge operation for this to work? Can

you scale this down?

Mr. HELBLING. Right now we’re looking at dairy operations with

500 head of cattle and up. With hog confinement we’re talking

about 1,000, but technology is allowing us to bring it down. It is

a matter of economics right now. Capital costs are quite high for

18

some of these. It may get to the point where some producers—because of their neighbors or whatever—may not be able to get a permit to do the manure management the way they are. We think that

the digester is growing. USDA has indicated it can help us bring

that level of production down and make it accessible to lower and

smaller levels of production. It takes right now about 750 head in

order to make this thing close the cash-flowing out.

The CHAIRMAN. Let me ask you a provocative question. If you

move ahead—Technology is good. If there’s a market out there you

might find new technologies that could be applicable to smaller—— Mr. HELBLING. That is correct.

The CHAIRMAN. I’d like to say this to all of you out there. The

House of Representatives 2 weeks ago passed an energy bill. Most

of the press was on the fact that there was a lot of drilling in the

arctic national wildlife area. What they didn’t mention is it provides up to $33 in tax credits, tax benefits for oil, gas and coal over

the next 10 years. I mean, to my way of thinking that’s 19th, 20th

Century technologies. When I look out over a field out here I don’t

just see food, I see a lot of renewable fuel out there too. I just keep

thinking that if we just had one-third of those tax breaks—What

if we had $10 billion that we could put out so that your consortiums and things could get together and build these tax write-offs

and tax credits that they’re going to try to give for drilling off the

coast or something like that? Would that make an impact?

Mr. HELBLING. Not even talking about the closed-loop production,

if you look at the waste recovery which is why we’re focusing on

methane right now which is a waste product, which is an environmental issue. If we harness all the methane that’s being produced

right now as a waste product and converted it to energy we could

substantially meet all of Iowa’s energy requirements. Right now

most of that is not financially or economically feasible. There is

enough methane—there’s enough energy there to provide it, but we

can’t afford that energy right now. We do need assistance and

that’s why we’re asking for the Section 45 tax credits to be extended from closed-loops to open-loops to allow us to take advantage of not only the manure but other residual crop residues that

also are generating methane and use that for renewable fuel.

The CHAIRMAN. There’s an ethanol plant I know of in Kansas

that’s using all of their heat source for the making of ethanol from

methane from I think both landfill and from feeding operations.

Mr. HELBLING. We are currently working with five——

The CHAIRMAN. This is the last one for the panel. Just one question before I open this up. What is a closed-loop and an open-loop?

Mr. HELBLING. The closed-loop under the tax code right now.

Closed-loop is an agricultural product that is grown specifically for

the generation of energy. Switchgrass in this case would be considered a closed-loop biomass source as opposed to open-loop which

is—We look at it as the waste streams of other agriculture production. It was not grown for the specific purpose of generating energy

and that is a tax code issue more than a science or a technology

issue.

The CHAIRMAN. I understand. Thank you all very much. I’m

going to have to ask that you give your name as clear as you can

for the reporter and I am going to have to ask you to limit your

19

comments to a minute to give everyone a chance. I’ll just go back

and forth.

AUDIENCE PARTICIPANTS

Mr. WILSON. My name is Brad Wilson. We’ve had some great discussion here and I’d just like to focus on clarity, that we be clear

about things. It’s so confusing sometimes, this farm policy. First,

keep in mind what are the core issues. I find that as issues that

have the power to destroy family farms and dole out subsidies to

corporate welfare activists or on the other hand to really help farmers. Of course, we have the fringe issues and we have had some

excellent discussion up here with some good definitions. I’m going

to speak for the other side and talk about the other definitions that

are used by politicians coming out of Washington on some of these

things. One general point is a statement that we can’t go back to

the field programs of the past. What that means is we can’t update

successful commodity programs from the past. Instead, we only go

back to corporate welfare and Hooverism. Another term that we

heard—— The CHAIRMAN. I’m going to have to ask you to sum up. If there’s

room at the end you can go around a second time.

Mr. WILSON. There’s still happy days I’d like to add. A hearing

is a place where you call the office of the senator and you’re told

you’ll have 3 minutes. If you actually show up you’d find that after

an hour and a half three-fourths of the time the people back here

will have less and less time to speak.

The CHAIRMAN. Yes, sir.

Mr. HEITHOFF. Good morning. My name is Jerry Heithoff. I’m a

farmer from Nebraska and I raise corn, soybeans, hogs and cattle.

Mr. Chairman, first of all I’d like to congratulate you on your new

position and thank you for letting me voice my opinion. I won’t be

able to read everything I have here, but I’ll try to sum it up quickly.

The CHAIRMAN. If you have statements, I’ll put them in the

record.

Mr. HEITHOFF. The current system of decoupled welfare type

payments is not a substitute for a fair price in a competitive marketplace. If you ask for a show of hands in any room full of farmers

whether they want decoupled welfare type payments or a fair price

in a competitive marketplace, the fair price in a competitive marketplace wins every time, yet many of the politicians and commodity organizations that are supposed to be representing us farmers

continue to tinker with a farm bill that most farmers are fundamentally opposed to.

Senator Harkin, I think you agree with me and most farmers

that ag markets are a long way from either fair or competitive. The

1996 Farm bill makes an already bad situation worse. Thanks to

the 1996 Farm bill the marketplace value of my corn and soybeans

has collapsed.

Some ag producers do not fully understand that until farmgate

prices exceed the marketing loan rates their incomes will not actually go up. As long as the cash market is below the marketing loan

rates, they are either getting more income from the market and

less in LDP’s or less from the market and more in LDP’s. Either

20

way, their total income is about the same and well below their cost

of production. This is why a new farm bill must force the grain

traders to pay us a fair price for what we produce in the first place.

Why should I sell my products for less than my cost of production? In order to get higher prices for what I produce, I want the

marketing loan rates to be set at a minimum of 100 percent of my

full cost of production.

Our current trade policy is a dismal failure. In 1996 our ag bal- ance of trade was $27 billion. Last year it was down to $12 million.

The only Farm bill proposal that I have seen that would maintain

planting flexibility while also forcing the grain trade to pay farmers

a fair price for what they produce and staying within the budget

guidelines is the American Corn Growers Association and the Nebraska Farmers Union farm bill proposal. I hope you give that approach serious consideration. Thank you for your time.

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

The CHAIRMAN. I do have all the proposals from all the farm

groups. My staff has been going through them on a continual basis.

Mr. SPECHT. John Specht, a student at Mar-Mac High School.

Specht, S-p-e-c-h-t.

If, through the opposed free trade agreement of the Americas,

every nation in the western hemisphere besides Cuba will be able

to freely exchange goods including commodities, what’s to stop

countries like Argentina and Brazil from completely dominating

the beef, corn and soybean markets in other countries of North and

South America?

How can this and other free trade agreements be beneficial to

the farmers of Iowa and the rest of America besides those which

are owned by corporations which also control ag production in Argentina and Brazil?

The fact that these free trade agreements are spawned by ag giants as being beneficial to small farmers only proves the fact of

their total dominance of the current system which rewards increased production when as anybody who knows anything about economics knows the greater the supply the lower the demand and

lower prices. Thank you.

Mr. LAMB. Senator, first I’d like to thank and commend you for

coming out to the very heart of the heartland and giving these good

people an opportunity to express their thoughts and concerns on a

public policy that effects every person in this country in some way,

shape or form. My name is Gary Lamb. On October 7th of this year

it will mark 49 years since my father lost his life in a farming accident and I took over the family farm. In that half a century I’ve

seen it all, Senator. I’ve seen every sight you can imagine. I’ve seen

high prices and low prices and good production years and bad production years and floods and droughts, but I can honestly say I’ve

never experienced in a half a century anything like I’ve seen in the

last 3 years when all of our major commodities are at 20, 25-year

record low prices. To give you some measurement, in terms of real

dollars even with inflation the market price of a bushel of grain the

last few years would buy less goods and services than the market

price of a bushel of grain did for my father and grandfather in the

Great Depression of the 1930’s.

21

I also have served in the last 8 years as chairman of the Farm

Service Agency State Committee. As you well know the 1996 Farm

bill was based on the principle that we would have transition payments for 7 years and then we’d phaseout all income protections

and price supports. As you well know we have had appropriation

aid packages in the last 4 years. To give you some measurement

of that in my home county alone, Tama County, we pumped out

$30,528,000 to 1272 farmers. If you average that out that’s an average of $24,000 per farmer in Tama County. Now, if anyone in

this room or this nation thinks if you remove that $24,000 from

each Tama county farmer and you remove that $30 million from

Tama County and you remove nearly $5 million from the Iowa

economy—If you for 1 minute think we wouldn’t be looking at a gigantic economic trainwreck of great proportion out here then you

don’t understand agriculture and what it’s all about.

I would like to remind us all here today of the thoughts and the

words of the last U.S. Secretary of Agriculture from the State of

Iowa, the great visionary and innovative ag leader, Henry Wallace.

When they first implemented Roosevelt’s farm program his response was rather simple: I’ve never met a farmer yet that didn’t

want to get his price from the marketplace.

If we truly understand the inherent weaknesses and

vulnerabilities of production in agriculture and what makes it

uniquely different from any other industry, then we would understand the need to have in place the checks and the balances and

the mechanisms that will encourage or at times force the marketplace to give the farmers a decent price. What other entity other

than government can do that? Those words, Senator, are probably

even more true today than they were 60 years ago because of the

lack of enforcement of antitrust trust laws, with the rapid mergers—[Applause].

As much as we would want it that way, as much as we would

wish it that way, it’s virtually impossible to think about a fair competitive marketplace giving us a decent price.

I may be able to best express my thoughts, Senator, by telling

you about a dream I had recently. I dreamt that the small rural

community of Chelsea was alive and vibrant again much like it

was when I graduated from high school in 1955. I dreamt that the

three grocery stores and the three implement dealers and the three

feed stores and the two elevators and the two drug stores and the

hardware store and the lumbar yard were all open again, vibrant.

We established that understanding that we needed those businesses in that small community to provide our needs on the farm

and those businesses needed us out on the farm to keep them in

business. I dreamt that on a summer night you could go into

Wednesday night band concert night and you’d see literally hundreds of people visiting and buying groceries and listening to the

music. I dreamt that on a cold winter night you could go into the

local high school gym and watch the local high school team play

teams from other communities. I dreamt that if you drove through

the streets of Chelsea on a warm summer evening you’d once again

see retired farmers sitting on the porches in the summer twilight

watching their grandchildren play while their parents shopped and

visited downtown. I dreamt that I saw a couple of kids on the back

22

of a pony on a lane of a farm going nowhere and going everywhere.

They were beginning to learn and understand the wonders and the

values of rural America.

You see, then I woke up and I realized that that was but a

dream because all of those things I speak of gradually disappeared

through the years. The only question that remains unanswered is

can we save those small rural communities that still exist out

there?

If you remember, Senator, you had a hearing much like this in

Ames, Iowa in 1984 or 1985. One of the people who testified was

a reknowned economist. You asked him the question about all the

farmers that were being forced into bankruptcy and foreclosure and

how they were going to effect our communities. His answer was

that these small rural communities contribute no economic value to

our nation whatsoever. That may be, Senator, but to us they’re the

most important place in the world because to us they’re home. This

is where we were born, this is where we were raised, this is where

we put our roots down, this is where our parents and grandparents

are buried and this is where 1 day we too will rest. I want to commend and thank you for your efforts to try to preserve those places

across the rural roads of this country that are still important to all

of us.

The CHAIRMAN. Thank you very much. That’s a little bit long

there because he speaks poetry. He has a wonderful way of expressing himself.

Mr. GRAY. Walter Gray, Delaware County, Manchester, Iowa.

Senator Harkin, I think the state of Iowa is very fortunate to have

you in a powerful position, Chairman of the Senate Ag Committee

and the other committees you are on. I really am impressed today

with this young man that spoke earlier. I guess what we’re here

today about is to make sure that that young man has a place in

agriculture. To do this I think this new farm program has to look

at price supports to a realistic level per producer. Crunch the numbers and see whether that’s 500 acres, 800 acres or 1,000 acres that

will be supported, not only corn and soybeans in this base but also

grass and hay. After you do this, then let’s see what the economists

say. If bigger is more efficient, support bushels up to this acre level

and after that turn them loose on the global market and let the

bigger produce.

We also have to have country of origin labeling. Now, people do

want to know where their products are coming from. As you look

at the trade deficit that we have as a nation—and I believe I’m correct that it will exceed $30 billion a month—how long can a great

country stand this?

We need a competition title in this bill. Earlier you mentioned

that you supported the competition title in this bill. I’d like to see

some hearings on that and that title included.

Earlier this year a free democratic process was taken away from

all swine producers. A free, fair democratic vote was overturned by

compromise. This is not what this great country was built on. This

injustice must be corrected and not repeated.

Complacency and compromise have lead to the ruination of a lot

of great societies. This Farm bill needs to include parts that brings

23

back our free markets, our competition and breaks up the mergers

that ruined our agriculture. Thank you.

The CHAIRMAN. Thank you very much. We are working on including a competition title into the Farm bill. I just want you to

understand, though, that we have some jurisdictional problems

here. Antitrust and things like that fall under the judiciary committee jurisdiction. Having said that, we’re still looking at how we

might work around that and do some things that fall within our

jurisdiction to be able to address that. When it comes to antitrust

we just don’t have jurisdiction. There may be some other things we

can do. I invite any of you that have some ideas and suggestions

to let us know.

Mr. GINTER. Thank you, Senator Harkin. It’s an honor to be

here. It’s also an honor to followup behind Gary Lamb, one of the

great orators of family farm life production.

My name is Larry Ginter and I’m a member of Iowa Citizens for

Community Improvement. I’m from Rhodes, Iowa and I’ve lived on

the same farm for 62 years except for a 2-year stint in the military.

I’ve been involved in this political and social fight to preserve family farms since 1961. During this timeframe I’ve seen farm policy

go from bad to worse.

Since 1952 trillions of dollars have been robbed from rural America because the New Deal legislation that matched the support

price to the yearly inflation of farm input costs was scuttled. It is

safe to say the farm programs over the past 40 years have driven

farmers off their land and concentrated food production into fewer

and fewer hands.

Since 1952 there’s been a great tug of war between those who

favor raising the support prices each year to match inflation on

farm inputs and a grain cartel that wants to monopolize and control the market. Sadly, each year the monopolizers like Cargill and

ADM buy more political influence and curry more favor from our

elected officials and each year more farmers leave the land and the

marketplace becomes less democratic and competitive.

With that said, Grass-roots groups like Iowa CCI, Missouri Rural

Crisis Center, the Western Organizational Resource Councils and

30 other groups that are part of the National Family Farm Coalition have come together and agreed upon a new farm policy called

the Food From Family Farms Act.

We propose that Congress raise the current loan rate to reflect

true costs of production which would stop the need for farm subsidies and use a non-recourse loan—not a marketing loan—to set

a reasonable floor under grain prices. We need a fair price, plain

and simple.

Congress should establish a farmer-owned grain reserve to ensure food security in times of scarcity and price stability in times

of plenty, maintain flexible planting options and establish conservation measures that help protect the water and land and help

avoid overproduction.

We demand that all branches of the Federal Government enforce

antitrust laws and stop waltzing with the agribusiness giants who

are trying to control food production. Our trade policy is a sham

because it’s designed to enrich the pockets of corporate agriculture

and not family farmers. Trade policies should reflect the needs of

24

farmers, laborers and consumers and every nation must maintain

its right to develop its own domestic food policy and protect its environment. Under the policies of NAFTA and GATT, coupled with

the help of an unelected and undemocratic World Trade Organization, that right has been eroded worldwide.

Finally, with regard to the mandatory pork, we need to end it

now. Last fall, over 30,000 American hog producers voted down the

pork tax by a clear 53 percent to 40 percent margin in a democratic

and legally binding referendum. In Iowa we voted down the pork

tax 60 percent to 40 percent. Despite this, Ag Secretary Veneman

cut a back-room deal with the National Pork Producers Council

and now she’s trying to flush our vote down the drain. Thousands

of people are outraged because Veneman and the Bush administration have declared war on one of the most basic principles that this

country was founded on; the right to vote and the right for our

votes to count.

CCI and other member groups of the Campaign for Family

Farms are fighting Veneman’s decision in the countryside and in

court. We need you, Senator Harkin, to stand with us and demand

that Veneman honor our vote and end the pork tax now. Anything

less is a blow against democracy and fairness in our land.

I worked 6 hours to try to get this thing put together and they

told me I had 3 minutes. That’s exactly 3 minutes. This is a farm

hearing and this is about democracy and justice of family farmers,

Senator, and it’s time that senators in all of the states understand

what this battle is all about. It’s not about complacency and it’s not

about kissing up to the big agriculture giants.

[The prepared statements of Mr. Ginter can be found in the appendix on page 74.]

The CHAIRMAN. You said more in that 30 seconds than you did

in the 3-minutes before that. If you’ve got a written statement I’ll

put it in the record. I’d rather hear from your heart what you got

to say if you have any personal kinds of insights or something like

that.

Mr. DEMMER. My name is Wayne Demmer. I’m a livestock and

grain producer from Dubuque County. I guess I’m here today to

ask you to support the small family farms in this country. The first

place is farm bills should start by capping the amount of money

that goes out. I have several counties here that the Des Moines

Register posted with the top 10 farmers of each county. I’ll present

them to you today. This is why my sons who want to farm can’t

compete against farmers that are getting a half a million dollars,

$1 million from the government. We have to be able to farm the

farm. We’ve got to remember if dad makes a profit his sons will

farm too. What has happened today is we’re going to lose our next

segment of agriculture because our family, our sons can’t farm.

They see dad and everyone else trying to survive. I guess what I’m

trying to say here today is if we keep family farms, the cities and

towns of Iowa will prosper, not be left vacant.

We’ve got to remember the House bill has already summarized

they want to raise the checkoff limits. They say that the big-size

farms are much more efficient than the small ones. We need cap.

We’ve got to get it back. We need government grain reserves so we

25

can put a bottom on the cost of production floor. Let the big grain

purchase our product for at least what it costs us to produce it.

We have a lot of alternatives out here. You talk about conservation and I agree with you 100 percent, but we have one farming

program promoting beans in the hills of Iowa and we have another

program that says we have to have a CRP to stop the erosion.

We’re competing against each other.

You have to remember that I raise hay, I raise oats, I raise grain

and I raise beans. I’m doing a conservation program. I have fields

that are 2, 3, and 4 years seeded out. You should benefit the people

that are already conserving the soil, not the people that are abusing it.

In closing, as the two gentlemen before, I’ve been very active in

the pork checkoff. It’s time—60 percent of the producers in Iowa

voted to end it. We voted it in, we voted it out. It’s time for you

to stand up and support the pork producers of Iowa and support

democracy and our right to vote for it to the court.

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

Mr. STEVENSON. Hello, Senator Harkin. I’m Rod Stevenson and

I farm 820 organic acres in southern Iowa.

The CHAIRMAN. What county are you from?

Mr. STEVENSON. Davis County. First of all, I’d like to say that

this talk of lowering the value of land to make our commodities

more competitive worldwide scares me to death. I don’t make any

money on my farm now and all I’ve gained over my lifetime is tied

up in the value of that land.

What I really came here to talk about is value added agriculture.

I don’t want to take anything away from Mary Swalla-Holmes because, frankly, her agency has given us more support than anyone

else we’ve gone to. Thank you, Mary. To add to what she has to

say we need to focus on value added agriculture that serves our

more conventional Iowa farm in addition to the small market gardeners. We can’t all raise vegetables for each other. I personally am

involved in three different value added agricultural efforts and anything you can do in our farm bills to enhance that and provide us

technical support and the kind of expertise we need to run these

as value added co-ops, that will give a big boost to us as farmers

and serve all of rural America. We don’t have MBA’s here and the

kind of skills that are required to run these sophisticated businesses on a competitive level. I have a statement——

The CHAIRMAN. Let me ask a question. You say you organically

farm?

Mr. STEVENSON. Yes.

The CHAIRMAN. What do you raise?

Mr. STEVENSON. My cash crop is tofu soybeans.

The CHAIRMAN. You raise soybeans of a particular——

Mr. STEVENSON. Several varieties.

The CHAIRMAN. Do you have to clean them and all—— Mr. STEVENSON. Right. They have to be bagged and cleaned.

The CHAIRMAN. Where do you market them?

Mr. STEVENSON. Mine goes to the Heartland Organic Marketing

Co-op and goes to Japan. The domestic market is developing in soy

milk as well.

26

The CHAIRMAN. Do you raise anything else organic or just beans?

Mr. STEVENSON. I haven’t had any success with my rotation.

That’s one of the reasons I’m so dependent on farm programs. For

instance, this year I didn’t get any corn planted because of the wet

spring. I have neighbors who never got any crops planted. My

wheat that I had the corn and wheat both contracted. My wheat

got taken by the weeds because it rained through the harvest period. I’m still hoping to get some of that. My beans were planted

a month later than I normally plant. It’s a tough year for me.

The CHAIRMAN. Do we have anyone here who is a member of the

Practical Farmers of Iowa? When I was in Washington in July we

had Maria Rosen—Ron and Maria Rosen farm out in Shelby County. It was interesting because we had all the witnesses lined up

there, we had the different farm groups and everything and Maria

was the last witness. She pointed out that her and her husband

farm 600 acres, they do not have any off-farm jobs, both of their

sons work in the summertime, they had one full-time hired man

year-round on 600 acres and they’re making it. About 12 or 13

years ago they shipped it to all organic. They raise those beans too

and they raise organic barley, organic hogs, they raise organic

chickens. Her biggest complaint was that in the slow transition period they had practically no help at all from all of the arms of the

Federal Government to the extension service to Iowa State in

terms of research and technical support. She said we need more

emphasis in a new farm bill about this. You just said that. Maybe

this isn’t for everybody, but to the extent that some people want

to do that there at least ought to be the technical assistance, support and research and incentives that enable them to do so.

Mr. STEVENSON. I agree. Thanks.

[The prepared statement of Mr. Stevenson can be found in the

appendix on page 77.]

Mr. THICKE. My name is Francis Thicke, T-h-i-c-k-e, from Jefferson County.

Senator Harkin, I’d like to address three of the questions you

asked. You asked if we should support every bushel. I say we

should not support every bushel. We need to get out of denial.

What we’re doing to the farmers is a transfer mechanism, transferring money from the government to the large corporations. The

more we support every bushel the more we support that. This gentleman had an alternative. There are alternatives to that. Of

course, the Conservation Security Act is I think the ultimate alternative. We need to decouple. Let’s face it. Let’s not be in denial.

Let’s not try to continue in a process that’s going to take us down

to handing over agriculture to the corporations.

You ask, Senator Harkin, do we need to take into account all the

consequences of our actions? I say we do not. We also work with

the WTO. Publicly we do. What we’re doing I think here is handing

over world agriculture to the corporations again. In Iowa we think

by providing the people with corn we’re going to support the hungry in the third-world countries. We are not. The world trade organization is actually going to destroy the agriculture in these countries as well as in our country. We need to wake up and stop that

now.

27

The last thing you asked is if we should limit the payments for

CAFO for the manure treatments. Yes, we need to limit it because

otherwise we’re going to perpetuate this.

The CHAIRMAN. In response to somebody who just spoke a bit

ago, Mark just handed me this note. I’m not saying that you’ve got

to lower land values. That’s not my point. My point is to ask the

question if the system of the farm program payments we have now

simply go through the fingers of the producer in the higher rents,

higher land values, all that stuff, go right through their hands for

equipment purchases and things like that, have we promoted a

bubble where land prices are here and the value down here? You

bring the value of the commodity up to match what the value of

the land is. That’s my point.

Mr. JEPSON. Hello. My name is Mike Jepson, J-e-p-s-o-n, from

Seattle, Washington. I’m here visiting my grandparents. I have a

question. What scares me from what I’ve observed and being very

ignorant on agriculture and just knowing my family and seeing my

grandfather being sharecropped in the 40’s and 50’s, is that the

farmers aren’t getting support. As a consumer working in the

school district where it’s a Federal lunch program I read on the

carton of orange juice that it is from China and Brazil. Another example would be in the grocery stores out there. When I see meat

imported from Canada I put it down. By putting it in the other

packaging I don’t know if it’s domestic or imported meat. The question I would say is I hope that the labelling would be better and

that they’d get out their message. I’m afraid it’s all going to be corporate bail-outs and there’s nobody representing the small farmer.

A good example of that would be people who—I keep hearing the

word export but the problem is nobody’s addressing the word import in the domestic market that you already have. We’re going to

get slaughtered because there’s nobody watching us. Thank you.

The CHAIRMAN. Thank you very much.

Mr. BIERSCHENK. Thank you, Mr. Harkin. I want to thank you

for two things. I want to thank you for going after those extra market assistance payments. That was great for farmers here in Iowa.

I’m sorry that you didn’t get what you asked for. At least you

asked.

Second, I’m very proud to have you as my senator because you’re

at least willing to speak at these ag committee hearings where a

lot of times in the past especially in the House you couldn’t even

get up to speak at that time.

My name is Gary Bierschenk. I farm over in Benton County. I’m

also on the board of directors for an organization called Organization for Competitive Markets. We’re a multi-disciplinary group of

farmers, ranchers, academics, attorneys and businessmen dedicated

to reclaiming competitive markets in agriculture for independent

farmers, ranchers and rural communities.

I have a couple suggestions. I’m glad that you think that’s important because I believe there’s only two places to get the money for

the farmer; one is on the marketplace and the second is from the

government. That’s been unbalanced in the past. There’s no reason

that we can’t get our money from the marketplace if things are

managed correctly. As far as USDA is concerned and their regulation enforcement, I believe the Farm bill should create a special

28

council for the competition within USDA that is Presidentially appointed with the advice and consent of the Senate.

[The prepared statement of Mr. Bierschenk can be found in the

appendix on page 67.]

Mr. ZACHARAKIS-JUTZ. My name is Jeff Zacharakis-Jutz—I’ll give

you the spelling later. My wife and I farm about 20 miles west of

here and I’d like to point out there’s a lot of people in this audience

that helped us get started. We didn’t have families to inherit land

from. We didn’t get any of that to start. We got started with

$20,000 that we had saved.

The point I want to make is simply that we need to do more to

promote new farmers. The new farm program is one way. We need

to be looking more at grass-based dairies, ways that we can convert

CRP for opportunity. As it is now most of the CRP in our area is

a retired package for farmers who struggled while they were farming and are doing quite well thanks to CRP. I just think we need

to do more to help new people get into farming. I hope the new

Farm bill does that.

Mr. PETERSEN. I’m Chris Petersen, vice president of the Iowa

Farmer’s Union.

No. 1, I hope, Senator, you can leave a legacy of saving the family farm. You’re on the right track. We need to get away from a policy that eliminates family farmers. The government has been guilty

of this and the farm bureau and commodity groups. I enter a 60-

Minutes tape as evidence of that. We need a new farm bill centered

around family farms, conservation. We need a competition title and

we also need to keep EQIP funding for CAFO down so it helps the

family farmers. Thank you.

Mr. DIETRICH. My name is John Dietrich. I’m a policy analyst for

the American Corngrower’s Association and Farmer’s Union of Nebraska. I also advice a number of other fellow organizations around

the country on agricultural policy.

Thank you for the opportunity to talk in Iowa today, your home

state. I hope people from Iowa recognize that you’re viewed nationally and have been viewed nationally for many, many years as a

leader and a rural advocate for rural communities and farmers for

many, many years. You’re very lucky if you’re in Iowa to have Senator Harkin. Today I’d like to say that all these statements by all

these people today boil down to one thing in the end; Specific legislation must be put together by the agriculture committee that addresses the concerns of all these people’s needs like this around the

country and that’s a very, very difficult job.

Over the past 2 years my organization and other organizations

that we work with have put together a farm bill proposal called the

Family Farm Agriculture Recovery and Maintenance Act. That’s a

proposal that was put together by a number of individuals and organizations based on the things we hear. We listen. It’s the only

farm proposal that does three things; improves market price, improves farm income over current levels and maintains or stays

within the budget. I’d like if I could—I know I’m running over—

address two particular items that you have interest in particularly;

targeting, which everybody has an interest in, and rural development.

29

Our proposal targets farm price supports to buy maximum volume of bushels or pounds produced. The limit would be simply

based on a family farm unit which would consist of the operator,

spouse and minor children. The limit would apply to that unit

whether that unit was—whether those names appeared in a single

operation or in multiple entities. One individual limit would be set

for that unit. It will do a number of things. I need to get into more

specifics with you, but it’s based on volume rather than dollars—

bushels and pounds rather than dollars. There’s enormous value

differences in cotton and rice, for example, compared to soybeans

and wheat and corn. We would bypass those things by basing the

limits on volume.

What I’d like to talk about second is rural development. As you

mentioned, I think you said one out of fifteen in rural communities

are farmers. We believe that if you design a farm program that enhances farm products and saves program expenditures that that

money and those years of cost savings should—some of that money

should be redistributed into the rural communities so that communities can immediately see the positive benefits of higher farm

prices. They need a share of it just like we do. That’s all. Thank

you.

The CHAIRMAN. John, thank you very much. At the end of this

I am going to have a statement to make about the pork checkoff.

Mr. MCGIVERN. Thank you, Senator. I’m Ed McGivern from Keystone in Benton County, Iowa. I have been farming for more than

50 years. I want to congratulate and commend Senator Harkin for

his work he’s done not only lately but throughout his political career with farming.

We all know that there is a crisis. We are already at the accident. There are people bleeding whether we can see it or not. We

need to stop the bleeding and then let’s work on something to revive the patient.

We need to have a new farm bill. I believe very strongly that

that bill should not exceed 5 years. God forbid we would have a 10-

year one like we have now. We also need to make some things simple and we know that that’s not always possible. We need higher

loan rates, we need a conservation program and we certainly need

a conservation reserve—not only for energy security but for national security. Those of us old enough know what happens. When

we have 100 people we have anarchy.

Again, Senator, thank you very much for your time. We appreciate this.

I want to just say one thing. The senator is working hard on our

behalf. He cannot do it alone. He needs our help and if it means

standing up and taking the first stand, let’s do it. Let’s support

him. Thank you.

The CHAIRMAN. I see we’re losing people, but I had a number of

questions that I wanted to ask and get a show of hands. I wonder

if I should do that before too many people leave. Is that OK?

I wanted to get a sense of how people felt here about certain

things. I just want to get a show of hands. They may be generaltype questions. They’re not real specific. I wanted to get a feel of

how you feel about these things. I have about six questions.

30

Should we raise commodity loan rates? How many think we

should?

[Show of hands.]

How many feel that there should not be any raise in the marketing loan rates?

[Show of hands.]

Should we restore the farmer owned reserve? How many people

believe we should have a farmer-owned reserve?

[Show of hands.]

How many people don’t believe we ought to have a farmer-owned

reserve?

Should Federal programs incorporate some kind of type of payment limitations? I’m not saying where or what. Generally, should

they incorporate a payment limitation? How many think they

should?

[Show of hands.]

How many don’t believe there should be an effective farm payment limitation? How many say no to that?

[Show of hands.]

Should we have some kind of a voluntary set-aside program for

a shorter period of time? I don’t know the number of years, but

some shorter period than the CRP. Should we have that? How

many believe we should have a voluntary set-aside program?

[Show of hands.]

How many don’t?

[Show of hands.]

EQIP, should we limit the eligibility for cost-share payments for

livestock operations? Should we limit them under the CAFO limits

of 1000 head or should we go above that? How many think we

should limit eligibility for cost-share payments for livestock under

EQIP?

[Show of hands.]

How many people don’t think we should?

[Show of hands.]

Should the length of the Farm bill be—The house passed 10

years. Should the length of the Farm bill be—Put it this way. How

many people favor a 5-year farm bill or a 10-year farm bill? How

many people think we ought to do a 10-year farm bill?

[Show of hands.]

How many people think we ought to do a 5-year farm bill?

[Show of hands.]

I’m just trying to get some idea whether it ought to be longer or

shorter. I hope that’s fair. All right. Thank you very much.

Mr. BREMLEY. I’m Ron Bremley from Morley, Iowa. We ought to

have a 5-year plan for a farm bill. If it works, continue it. If it

doesn’t work, I don’t want to be suffering what we’ve got now.

There should be an energy title in the next Farm bill because I

think we have a renewable product out here with corn and soybeans for fuel. The farm subsidy should be raised, but I think we

shouldn’t be using the Federal Government to subsidize someone

for getting huger and huger all the time. There should be a cap on

that. I got a lot more to be said, but I want to hear the other people.

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Ms. HOLDGRAFER. My name is Carrie Holdgrafer. My husband,

Brian, and I farm in east central Iowa east of Maquoketa. I guess

the issue that I would like you to clarify is what exactly is a family

farm? My husband and I are part of a family farm. It’s my husband, his brother and his father. Sometimes it is more family than

I can stand. It’s also large and it’s grown significantly in the last

few years, enough so that I left a career with a Fortune 500 company to stay home and work on the farm. It’s grown and it will continue to grow. As I look around and see the average age of the

farmer in America and rural America today, it’s going to have to

grow because somebody our age has to farm those acres someday.

The peers that I went to school with, I went to college with, many

of them chose not to go back into production agriculture. Some of

them didn’t have the opportunity. Some of them chose not to. It’s

hard work and they had other interests and other things they

wanted to do. Our age group is going to have to take responsibility.

Somebody’s got to farm the acres. If we don’t, Brazil will.

I guess another thing I’d like to say is that when I was young

girl my mom and dad said if you sell a lot of Girl Scout cookies,

you’re going to win the contest and I did. When I went to college

they told me, if you build a good resume you’re going to get the

best job offers and I did. They told me when I started farming with

Brian, if you work hard and you work long hours and you’re innovative and you’re aggressive you will grow your acres and you’ll

make it and we have. I hope that we will not be kept from growing—even though we’re a family farm—by limitations if the reason

we’re growing is because we are aggressive. We skip things our

friends go to because we work. We run extra custom businesses.

We do things to make extra money and to make our input costs

low. We’re not growing because of an AMTA payment. We’re growing because we work hard and we work aggressive and we’re going

to keep doing that whether the money comes from the government

or not.

Ms. JENNIFER. My name is Jennifer. I want to ask you something. My aunt and uncle owned a farm up in Dyersville and they

could not make it in farming because everyone was just buying up

everyone else. They have no one to sell their hogs to but IBP in

Waterloo so why can’t they have one in Dubuque that’s closer?

Could you explain that problem?

The CHAIRMAN. What’s the question?

Ms. JENNIFER. They want more marketing to sell their products

to.

The CHAIRMAN. We just don’t have enough packers out there.

That’s what we’re talking about by putting a concentration title in

the Farm bill.

Mr. HOLDGRAFER. My name is Brian Holdgrafer and I can’t believe a group of farmers could sit here for two and a half hours and

talk about a farm bill and never bring up one good thing that’s

come out of the last program and that is government assistance

and CRC Federal profit program. All the money that you guys are

kicking into second payments, if you’d rethink that once and channel that money putting it into CRC—putting it into the premium we pay and taking it from $30 down to $10 or $12 which most of

us like to pay we don’t need all this safety net because the Federal

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crop program will take care of itself just like every other insurance

in the world takes care of itself for automobile accidents and everything.

I guess one other point I just want to say is everybody that voted

to have a set-aside, I hope you remember that every acre we do not

farm Brazil will farm. Somebody will produce the corn and the

beans. If you want to let them do the farming and us do the setaside, that’s fine, but I hope you remember that. It don’t matter

what we do, somebody will grow it.

Mr. PETERS. My name is Bruce Peters and I thank you very

much, Senator Harkin, for coming to the middle of America and listening to all the farmers. It provides me with a great opportunity

to be here, to be able to see. I’m originally from Kansas. I grew up

on a small farm in Kansas. I’m one of the farm casualties of the

1980’s. I went back to farm and because the prices were climbing

at the time I lost my farming business and had to go back and

work in industry. I’m working for a big industrial company on the

Fortune 500 now which is not what I really like to do. I look out

here and I see the average age of farmers here is probably 50’s and

up and I certainly appreciate you trying to help get small farmers

started. That’s one thing that I think the Farm bill should really

help.

The other thing is that every time I drive through—We have

corn in Kansas too and every time I drive by a farm field I see an

oil well. I applaud you for your opportunity to look at vision because when you compare the cost of farming in Brazil and the cost

of farming here, they can grow soybeans and they can grow corn

a lot cheaper than we can. On a global basis it’s hard for us to compete. We do need some safety nets to help us in low prices because

for the last two or 3 years farm prices have been pressed to the

point where we’re selling our products for less than we produce it.

Prices will go up in the future, but we need more markets is what

we really need. We need the opportunity of the Federal Government to help us get into ethanol markets and get into soy diesel.

Right now the gasoline that we sell in America, only 1 percent of

it has ethanol in it. If you compare that to Brazil, 22 percent of the

gasoline in Brazil is ethanol and it’s going up to I think 28 percent.

I would like a new-based agriculture and not the old agriculture

where you have all these safety nets and everybody depends on the

government. We need more vision. We need to look forward to providing value-based agriculture and getting the farmer to be able to

compete with farming. That’s the real problem that we have. We

just can’t compete.

The CHAIRMAN. I’d just like to respond to the last couple of people. If all we’re going to do is to continue to try to compete on the

global market on a who-to-defeat basis, we’re going to have our

lunch handed to us. First of all, recognize we are in a global market. We are there. The doors are open. We may wish we could turn

the clock back, but it isn’t going to happen. If all we’re going to do

is compete on a food and feed basis Brazil is going to beat us. They

can grow soybeans so much easier—and corn.

I was in China last summer. I remember when the Freedom to

Farm bill was passed in 1996 thinking China is going to be buying

corn, they’re going to be improving their diets, they’re going to

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have this growing economy. Last year China not only fed one billion people, it exported corn and they have hybrids. They’ve got

corn just as good as anything you’ll see out here and they’ve got

more land to put in production. I visited those farms and mile after

mile is some of the best corn you’ll see anywhere. Guess what, none

of the farmers own that land. They don’t have that cost. The government owns it all. I don’t like that system. I don’t think it’s a

good system, but you have to recognize the reality. I believe just

what you’ve said and others have said. We’ve got to look for new

markets. It’s not just taking land out of production. That could be

a dead-end street. Obviously we have to have conservation. I’m big

on CRP. We’ll expand it. I have my Conservation Security Act.

We’ve got to look at energy. Now, our energy needs are not going

to go down and we know that we can compete on that basis. It may

take some up-front money.

Second, value added other processes, building materials and

other things that we can make out of the crops and residue that

we have. We can look at pharmaceuticals and biotech. Some of you

may be opposed to biotech, but it’s here. We can’t turn back the

clock. Through biotech we can raise different types of things out

there. Farmers might be able to market their beans, their oil seeds,

their rice, their corn, their soybeans for other things in terms of

pharmaceuticals, other things that we might want to get from that

for different purposes. I see all that out there and I think I understand the thrust of it and that is that we can do more than just

grow food and feed.

I have a picture in my office taken in the year I was born, 1939.

It’s a picture of Henry Ford, the old guy, the first one. He’s got a

baseball bat in his hand and he’s hitting the trunk of a 1939 Ford

with a baseball bat. He’s hitting the trunk of the car. He was demonstrating that this trunk wouldn’t dent and wouldn’t break when

he hit it with a baseball bat and it was made out of soybeans. That

was 1939. Henry Ford predicted that the car of the future would

be built from soybeans. With all the things that they had—plastic—it would be built out of soybeans. What happened to that?

World War II. We needed oil and we needed petrochemical products. We built that whole industry up and we’ve lived on it ever

since. Even the visionaries of the past recognize what else we can

do with this great productive capacity we have out there on our

countrysides. In the 21st century that we have to think about it too

and what we can do with that great productive capacity out there

may not just be food. It may be a lot of other things. Before you

race out of here and say, oh, Harkin doesn’t want to produce food

anymore, I’m not saying that. I’m just saying we need to build new

markets. There are other things we can do with that productive capacity. I didn’t mean to take so long, but I just wanted to respond

to some of the things.

Mr. SAND. I’m Dwayne Sand with Iowa Natural Heritage Foundation in Des Moines. We want you to know how much we’re depending on you to provide leadership in the Senate and to get a

good farm bill. You’ve got your work cut out for you. I’ll just mention four of the really bad ideas that are coming your way from the

House side.

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First of all, the intent is to duck Swampbuster. The effect on

that—while some farmers would like it—is that the economic research service shows that Swampbuster keeps 13.2 million acres

out of production that could otherwise be farmed. The impact of

that if it were to happen would be a reduction from $1.6 to $3.2

billion less net farm income every year in the long-run. We want

you to save Swampbuster.

Second, we’re concerned about rewarding farmers who bowed out

and created more crop land. The most recent USDA inventory

showed 12.7 billion additional acres plowed out from grasslands to

wetlands in the 5-year period of 1992 to 1997. We’re concerned that

the provisions in the house bill will just accelerate that trend, especially the way it rewards soybean production.

My third point is what they’ve done to EQIP as far as ducking

the watershed program. Their intent is to spread the money over

far more areas. However, in Iowa we’ve got 157 water bodies. We

really depend on that watershed money if we’re going to have any

hope to clean up farm requirements under the Federal Clean Water

Act.

The fourth comment I wanted to make to you relates to your funding of CAFO. The House would allow $200,000 per feed lot

with no limit on size. I would suggest to you that we ought to be

looking at a fourth option beyond what you mentioned as the three.

The fourth one is the use of the clean water state—funded by

EPA in every state. These things could be used for and in many

states are used for livestock manure management, for businesses

that are regulated and their competitors have already complied

with regulations. If we really have an economic hardship we really

ought to be talking about loans rather than grant moneys, especially for these large operations. We’ve certainly worked with your

staff to explore that and we’ve worked with farm groups to explore

that. Thank you.

Mr. HOLECEK. My name is Lloyd Holecek from Marion, Iowa. The

answer to your question about every bushel is an unequivocal no.

There’s no reason that every bushel should count. The farmers that

are best at farming the farm programs are the ones that are able

to buy out their neighbors. Those people that take the half a million dollars, of course their values are up so they can buy out their

neighbors that don’t have that same thing. Their values are down.

What we need to do is you need to support the conservation type

programs and I think there would be enough money there to keep

up farmland prices.

The CHAIRMAN. Thank you very much.

Mr. SPECHT. My son spoke earlier, but I wanted to address something that hasn’t been addressed, the dairy. I milk 130 cows near

McGregor. The current farm legislation has been tilted against pay

and forge crops tremendously. They’re giving hundreds and thousands of dollars to guys that have corn and beans. If you grew and

cared for the land over decades you have lost the ability to compete

in a neighborhood against subsidized cash grain operations in our

counties that are driving family farmed dairymen out of business

and planting soybean on hills where they do not belong. I’ve got a

couple points. My neighbor’s got a quarry. He called Jim Jeffords

the man who saved the country. Please allow dairy compacts, the

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ability of dairymen to set a minimum price for milk like would be

a minimum wage to extend to the rest of the country. Give dairymen a chance to set a minimum price for milk. Thank you.

[The prepared statement of Mr. Specht can be found in the appendix on page 80.]

Mr. SERBOUSEK. My name is Tony Serbousek. I live in Johnson

County and I’ve farmed basically all my life. One of the issues that

hasn’t been touched on here today is the high value of the dollar.

When you take the high value of the dollar against all the other

currency of the world we are the Nation of last resort to sell our

products. Now, the rest of the world is turning around and producing these products. A lot of this problem would go away on all

these issues if the government would address the value of the dollar against all the other currencies of the world.

Now, the import to export ratio is going way out of sight. We’re

importing way more than we’re exporting and one of these days it

will catch up to us. In fact, I ain’t so sure it hasn’t already started.

One of the other issues that I want to touch base on is—When

you’re talking about this new Farm bill, in 1995 Congress passed

a farm bill that gave the most discretionary power ever to USDA

to interpret. This is what has happened. We have a lot of things

going on in the 1995 Farm bill that was not the intention of the

Congress that passed the law. I feel for one thing that Congress

has to take back control of our elected officials and make the decision, not USDA. Thank you.

Ms. SMITH. My name is Therese Smith and I’m a representative

of the Farm Service Agency County Office Employees. I represent

the eight states in the Midwest area. I wonder why we can’t work

doing the farm program together with NRCS and FSA—delivering

the farm program together. To me it seems the most efficient and

the most effective way of delivering. One of the things that the

farmers in this room—They don’t care who delivers the program as

long as it’s delivered. If we would combine the two administrative

portions of those agencies together and work this program together

we can do it. Thanks.

The CHAIRMAN. First of all, thank you all very much. That was

a good exchange. I said that I would comment on the pork checkoff

and I will. Immediately after the USDA announced the results

under Secretary Glickman there was a meeting in a court case file

that was tied up in court. It was not clear at all whether the Court

would have allowed them to end the checkoff or not because there

were questions about it in the court. Then the administration

changed and Secretary Veneman had to deal with it. Again, earlier

this year it was not clear whether or not the Court would allow

them to end the checkoff. In fact, the Court issued a temporary restraining order to continue the checkoff. Veneman, faced with this,

agreed to a compromise. Under that compromise the checkoff would

continue, but the Pork Board would be separated from the National

Pork Producer’s Council. The two of them would be separated. Also

there would be a survey taken to see whether or not pork producers wanted to hold a new vote in 2003.

Now, here are the points I want to make. The case is still being

argued in the Michigan court. It has not come to a closure. There

has been a Supreme Court case recently decided dealing with

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mushrooms from Tennessee in which the Supreme Court held that

because certain mushroom producers did not agree with the type

of advertising they could not be compelled to pay into a checkoff.

Big decision. Now it looks as though maybe the Court just may influence what the Court’s going to decide in Michigan on whether

or not people can be compelled to make that stance.

The checkoff should be decided fairly on the law. The case in

Michigan has yet to be decided. I’m sure that there will be briefs

filed by the lawyers on both sides arguing that the mushroom case

should apply or should not apply on that and then we’ll see what

happens after the Court makes its decision. Now, having said all

that, it is my opinion that all of these checkoffs, every single checkoff we have, ought to come up periodically for an automatic vote.

This ought to be put in the Farm bill. Every so many years, every

5 years or so, there should be an automatic vote. There won’t be

a vote to see if you have a vote. There will just be an automatic

vote by producers to see whether or not that particular checkoff

ought to continue.

With regard to pork checkoff I think basically we’re in a situation

where we—basically I think Secretary Veneman did what was reasonable and responsible. With the pending case in Michigan—— Audience member. You’ve only told one side of the story.

The CHAIRMAN. If you want to go with the temporary restraining

order, that’s going to continue the checkoff without separating the

boards. At least Veneman separated the boards out.

Audience member. Let someone tell the other side of the story.

The CHAIRMAN. That’s where we are right now with the pork

checkoff right now. As I said, I’m going to put this in the Farm bill

and we’re going to have a vote every 5 years on all the checkoffs.

Audience member. I voted a legal and binding vote. The ones

that voted for it did the same thing. Independent farm producers

voted to end the mandatory pork checkoff. We won that vote in a

legal and binding vote. You’re supposed to stand up there for democracy and tell Secretary Veneman that she did not do what was

right. Now, there’s a court case involved in Michigan, but that

judge did not hear all sides before that ruling was made and before

Secretary Veneman acted. She acted out of line. You should stand

up and say that she acted out of line.

The CHAIRMAN. That’s why it’s in Federal court. I don’t know

which way they’re going to decide. I don’t care. I mean, I do care,

but we’re going to put it in the Farm bill.

With that the hearing is adjourned.

[Whereupon, at 12:55 p.m., the hearing was adjourned.]

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