U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

86–212 PDF 2003

S. HRG. 107–902

DISASTER ASSISTANCE

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

MAY 23, 2002

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):

Disaster Assistance .................................................................................................. 01

Thursday, May 23, 2002

STATEMENTS PRESENTED BY SENATORS

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

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

Lugar, Hon. Richard G., a U.S. Senator from Indiana, Ranking Member,

Committee on Agriculture, Nutrition, and Forestry ......................................... 02

Allard, Hon. Wayne, a U.S. Senator from Colorado ............................................. 06

Conrad, Hon. Kent, a U.S. Senator from North Dakota ...................................... 07

Enzi, Hon. Mike, a U.S. Senator from Wyoming .................................................. 09

Lincoln, Hon. Blanche, a U.S. Senator from Arkansas ........................................ 08

Stabenow, Hon. Debbie, a U.S. Senator from Michigan ....................................... 07

Thomas, Hon. Craig, a U.S. Senator from Wyoming ............................................ 05

WITNESSES

Barbie, Larry, President, Montana Grain Growers, Inverness, Montana .......... 15

Chandler, Brian, National Farmers Union, Midland, Texas ............................... 18

Collins, Keith, Chief Economist, U.S. Department of Agriculture, Washington,

DC .......................................................................................................................... 11

Dierlam, Bryan, National Cattlemen’s Beef Association, Washington, DC ........ 20

Green, Bob, Executive Director, Michigan Bean Commission, St. Johns,

Michigan ............................................................................................................... 22

Hill, Craig, Iowa Farm Bureau Federation, Milo, Iowa ....................................... 13

APPENDIX

PREPARED STATEMENTS:

Harkin, Hon. Tom ............................................................................................ 30

Allard, Hon. Wayne .......................................................................................... 33

Barbie, Larry .................................................................................................... 65

Chandler, Brian ................................................................................................ 69

Cherry Marketing Institute, Inc. ..................................................................... 86

Collins, Keith, ................................................................................................... 42

Dierlam, Bryan ................................................................................................. 75

Enzi, Hon. Mike ................................................................................................ 38

Green, Bob ......................................................................................................... 80

Hill, Craig ......................................................................................................... 61

Michigan Farm Bureau .................................................................................... 84

Roberts, Hon. Pat ............................................................................................. 31

Rehberg, Congressman Denny ........................................................................ 40

Stabenow, Hon. Debbie .................................................................................... 34

DOCUMENT(S) SUBMITTED FOR THE RECORD:

Baucus, Hon. Max ............................................................................................ 92

Cleland, Hon. Max ............................................................................................ 90

Hutchinson, Hon. Tim ...................................................................................... 95

Page

IV

DOCUMENT(S) SUBMITTED FOR THE RECORD—CONTINUED

Letter from Kevin and Nancy Wirth ............................................................... 102

Letter from Zane Reese .................................................................................... 103

The National Grape Cooperative Association, Inc.; Nicholas Pyle ............... 97

Statement of the American Farm Bureau Federation .................................. 100

(1)

DISASTER ASSISTANCE

THURSDAY, MAY 23, 2002

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

The committee met, pursuant to notice, at 3:12 p.m., in room

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

Present or submitting a statement: Senators Harkin, Conrad,

Baucus, Lincoln, Miller, Stabenow, Wellstone, Lugar, Thomas, Allard, and Crapo.

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

IOWA, CHAIRMAN, COMMITTEE ON AGRICULTURE,

NUTRITION AND FORESTRY

The CHAIRMAN. The Senate Committee on Agriculture, Nutrition

and Forestry will come to order on a hearing on agriculture disaster assistance.

Agriculture producers in a number of parts of the United States

have been badly affected by agriculture disaster losses of several

types. Fortunately, our nation has not experienced a general catastrophic agricultural disaster for several years, but there have been

severe and devastating losses to farmers, ranchers and their communities.

Today, the committee will receive testimony on the nature and

extent of those losses and their consequences. We will also examine

the type and the magnitude of the help that is needed. We are here

because the need for assistance is real. Probably most, if not all,

of the members of this committee have heard from producers who

have suffered losses last year or already this year.

Severe losses from drought have occurred throughout the Plains

States and across other regions of the United States. Drought

losses extend to the cattle industry in much of the western part of

our country. Producers in other parts of the country lost crops last

year from excessive moisture that prevented planting, and that was

the case in my State of Iowa. This year, producers in Illinois, Indiana, Kentucky, Missouri and Ohio have been unable to plant

thusfar. In addition, damaging weather has generated serious

needs for emergency conservation assistance, especially through

the Emergency Watershed Protection Program.

On February 12, the Senate voted 69 to 30 to waive the budget

point of order and allow an emergency designation for the Baucus

Amendment to the Farm bill. The amendment provided urgently

needed assistance to producers who suffered crop and livestock

2

losses in 2001. Because of objections from the House Budget Committee and the House leadership, we were unable to include this

in the Farm bill, and the administration similarly opposed the

emergency designation for this assistance in the Farm bill. I am

not certain that they are opposed to it as such; they were just opposed to it being in the Farm bill; that is all.

The committee will examine in this hearing and in further consideration the help provided by existing programs, including the

Federal Crop Insurance Program and other USDA assistance and

the limits of that assistance. We have made significant improvements in the crop insurance program, but producers continue to depend on assistance for losses that are not adequately covered by

crop insurance. Livestock producers lack an effective risk management system for pasture, range and forage crops, and they likewise

lack an effective USDA livestock assistance program.

I look forward to today’s testimony and to appropriate committee

action very soon to respond to the several disaster losses that have

damaged agriculture producers across our nation.

[The prepared statement of Sen. Harkin can be found in the appendix on page 30.]

With that, I would recognize our distinguished ranking member,

Senator Lugar.

STATEMENT OF HON. RICHARD LUGAR, A U.S. SENATOR FROM

INDIANA, RANKING MEMBER, COMMITTEE ON

AGRICULTURE, NUTRITION, AND FORESTRY

Senator LUGAR. Thank you very much, Mr. Chairman.

Let me ask that unanimous consent be given to include a statement by Senator Roberts in the record.

The CHAIRMAN. Without objection.

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

appendix on page 31.]

Senator LUGAR. Thank you very much, sir.

Agriculture is inherently a risky business, subject to hazards of

weather and uncertain markets. In recent years, national crop

yields for major field crops have been above average. The country

has been blessed generally by relatively good weather, at least on

an overall national basis.

However, as farmers and ranchers know, national crop yields can

mask what is going on in individual regions or, for that matter,

even on individual farms. In most years, farmers and ranchers in

one or more regions experience weather-related crop and forage

losses, and most recently, farmers and ranchers in a number of

western states are dealing with a seemingly prolonged drought that

adversely affects crop and forage production last year and is continuing this year.

Last year, producers experienced weather-related problems in

other areas as well. This year’s 2002 crop growing season is just

getting underway for most spring-planted crops. We have several

witnesses with us today who can give us detailed assessments of

what occurred last year as well as the prospects for this season.

Senator Baucus, as the Chairman has pointed out, has introduced emergency disaster assistance legislation that would provide

$1.8 billion in disaster payments to farmers for weather-related

3

2001 crop losses and $500 million in disaster payments to livestock

producers who suffered grazing losses during calendar 2001; thus,

a total of $2.3 billion for the 2001 crop and grazing losses, not including separate provisions for payments to apple growers and

funding for USDA administration.

Senator Baucus’ emergency assistance legislation was included in the Senate-passed farm bill, but the $2.3 billion in emergency crop

and forage loss disaster payments was not retained in the final

Farm bill conference report that the President signed into law last

week.

During the conference, the administration’s position was that

any agriculture disaster spending should be a part of and not an

addition to the $73.5 billion farm bill budget. The administration

was right on this budget issue. We have just enacted a new farm

bill, which the Congressional Budget Office currently estimates will

cost $82.8 billion over baseline, and the baseline has been increased now to $107 billion. This is $9 billion more than the $73.5

billion originally envisioned for the Farm bill in the 2002 budget

resolution.

More importantly, the Congress always intended that the $73.5

billion be available for the Farm bill as long as such spending did

not dip into Social Security trust funds. We know that the Farm

bill spending will dip into the Social Security trust fund this year

and very likely for the next several years, because the overall Federal budget projections changed long before we finished the Farm

bill conference report.

Now, unless offset by cuts in other spending or increases in revenues, enactment of any new agriculture disaster assistance legislation also will dip into the same Social Security trust fund even

more.

Some will no doubt argue that Congress has regularly provided

emergency disaster assistance to farmers in the past and that such

emergency spending is appropriate when our producers are faced

with a natural disaster. This was true in the past, but the crop insurance reform legislation enacted in June 2000, which took effect

with the 2001 crops, was supposed to eliminate the need for any

future ad hoc emergency crop disaster assistance. The crop insurance bill was a $20 billion bill over a 10-year expansion of the Federal crop insurance program, which already was extensive, and the

non-insured crop disaster assistance program for non-insurable

crops.

The crop insurance bill greatly increased premium subsidies to

make higher so-called buy-up levels of crop insurance more affordable. It also greatly expanded the availability of NAP disaster payments for the non-insurable crops by eliminating the NAP areabased trigger. The dominant theme of the crop insurance bill debate was that these reforms were necessary to avoid the need for

ad hoc crop disaster assistance payments in the future.

The crop assistance bill took effect for the 2001 crops, and farmer

participation in the program has increased to a very high level, including the drought-affected western states such as Montana. According to USDA, 91 percent of Montana’s acres planted wheat

were insured with Federal crop insurance in 2001, and over 80 percent of those acres were insured with the higher level buy-up covVerDate 11-MAY-2000 09:06 Apr 18, 2003 Jkt 086212 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 86212.TXT SAG1 PsN: SAG1
4

erage. Virtually 100 percent of Montana barley acres were insured

last year, with 90 percent protected with buy-out coverage.

Now, I would just say parenthetically, Mr. President, that this

leads to the question that I will have of the witnesses as to the

need to provide disaster payments for crops already insurable

under the Federal Crop Insurance Program or for non-insurable

crops already eligible for disaster payments through NAP. I want

to be helpful to farmers and ranchers who are facing severe weather-related losses, and I would like to explore these budget and policy issues before we proceed with any new legislation.

I would add, Mr. President, in my own case that I add

anecdotally in many of these hearings, we have not been able to

plant at all. We still have all of our soybeans still to be planted;

all of our corn still to be planted. That is true of about 87 percent

of the acres of Indiana as we speak on the 23rd of May, which is

very late in the game, and we are prayerful for a late frost.

In any event, I and most of the farmers who live around me have

purchased crop insurance, and in most cases, it is at the 85 percent

level, which means for the benefit of the hearing that given a 5-

year base that is a part of that crop insurance situation, if, for

some reason, my crop is a total disaster or nearly that by the end

of the day that I am going to receive 85 percent of the normal revenue that I would anticipate.

That is available to every farmer in America. The question, I

suppose, that some of us will have today is why are we here on this

subject? Now, the livestock question is a different one. Clearly, we

do not have insurance there. I would mention, Mr. President, during the Farm bill debate, I offered as an alternative solution an income safety net for livestock producers as well as for those with

crops and vegetables and anything, any agriculture income whatsoever, insurance at an 80 percent level over a 5-year history of time.

Now, that is not 100 percent, not 90 percent, but in terms of a

reasonable payment for everybody in agriculture, across the board,

every state, it appeared to me to be a logical way of trying to solve

the disaster problem as well as some continuity for farmers who

needed to have certain income. That idea received 30 votes, and I

appreciate that that was the extent of support, and another view

has been taken.

At the time, I do not recall the same urgency with regard to livestock that I see now. In due course, perhaps there will be further

consideration of how we provide a safety net in an equitable way

for all of us as opposed to doing it crop-by-crop or livestock as opposed to crops or various states that have a specific problem when,

indeed, this committee has really tried to wrestle with this I think

constructively for several years.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Lugar.

It is the chair’s intent now to recognize Senators in the order in

which they appeared going back and forth, so I would recognize in

this order for opening statements Senator Miller, Senator Thomas,

Senator Wellstone, Senator Crapo, Senator Conrad, Senator Allard

and then Senator Stabenow for any opening statements that you

may have.

Senator Miller.

5

Senator MILLER. I have no opening statement.

The CHAIRMAN. Thank you, Senator Miller.

Senator Thomas.

STATEMENT OF HON. CRAIG THOMAS, A U.S. SENATOR FROM

WYOMING

Senator THOMAS. Thank you, Mr. Chairman.

I do want to comment. I appreciated my friend’s comments from

Indiana, but I come from a livestock State, so I do want to mention

that, and certainly, all of us are aware of the problems we have.

In Wyoming, this is the third year of continuous drought that we

have suffered. It makes it much worse, particularly when you depend on snow pack and so on, and ours is much less.

Our Governor has declared a primary disaster for the whole

state, and obviously, crop insurance is not very useful for livestock

people, as you have suggested. Furthermore, half of our State is

public land, so much of our livestock grazes on public lands. Those

public land managers are going to have to cut back on their capacity this year, so it makes it most difficult. Hay prices have skyrocketed, of course, so the livestock people are unable to find alternative ways to take care of that livestock.

We do need to look for a long-term solution. Now, we are dealing

with the immediate difficulty. I hope that we can look at it over

time. I have a bill that I am interested in that would provide at

least for some capital gains reductions if people have to sell their

livestock because of this, and I hope we can pursue that.

However, assistance is needed now. I hope we can offset it. I

hope we can find a place to offset this, and I understand Senator

Burns has found a way to do this hopefully. We need to treat this

as an emergency situation, and I look forward to hearing the testimony today.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Thomas.

Senator Wellstone.

Senator WELLSTONE. Thank you, Mr. Chairman.

I know we have got votes about 4:45, and then, once we start voting, we are going to vote, vote and vote, so you need to get on with

the hearing.

The CHAIRMAN. We need to move.

Senator WELLSTONE. Why don’t I—I have got a great statement

here.

[Laughter.]

The CHAIRMAN. Thank you for yielding.

Senator WELLSTONE. Well, I did not say yet I was going to yield!

My God! The pressure is unbearable.

[Laughter.]

Senator WELLSTONE. Yes, I will yield. I will yield.

The CHAIRMAN. No, come on, go ahead.

Senator WELLSTONE. No, that is all right.

The CHAIRMAN. Thank you, Senator Wellstone. Thank you.

Senator Crapo? He must have left.

Senator THOMAS. Oh, I meant to mention that he indicated he

had to leave, but he is in favor of doing something here and wanted

you to know that.

6

The CHAIRMAN. Senator Allard.

STATEMENT OF HON. WAYNE ALLARD, A U.S. SENATOR FROM

COLORADO

Senator ALLARD. Mr. Chairman, I want to thank you for holding

this timely hearing.

The situation in Colorado can be just summed up very simply,

and that is that it is bone dry. Of course, being dry is not unusual

in the arid West. What is unusual is the severity of this drought.

Well over half of the State is in extreme drought, and the drought

in the luckier parts of the State is either moderate or severe. Some

areas of Colorado are entering a third year without adequate moisture; other areas are experiencing the driest conditions in 100

years.

Rivers are drying up; the snow pack, measured by the Natural

Resource Conservation Service, is 10 percent of average. It is gone:

acres of farmland that once held the hopes of a prosperous crop

have turned into dust. The impact on the environment is easy to

see: pastures are brown with no new growth. The wheat has shriveled in the ground, and corn, if it made it out of the ground, is wilting in the row.

The impact on the citizens of the United States in the State of

Colorado is also easy to see. In the proud community of La Junta,

a small Southern Colorado town, they are experiencing traffic

jams—yes, a small town with a traffic problem, not because of

highway construction or population but because of the streaming

line of trucks hauling cattle to the sale barn. Cattle volume is not

the only record falling, either. Last week, my staff in Colorado informed me that a sale—just one sale—lasted nearly 24 hours

straight, running from 9 a.m. to 6:30 a.m. the next morning. The

La Junta sale sold nearly 6,000 head from 291 consignees.

Record-breaking volume at livestock sales has flooded the market

with cattle. Their owners are desperate to salvage any remaining

value while they search for hay and pasture. I have even read

where one of the State’s biggest sale barns explained to buyers and

sellers about a lot of 30 healthy young cows. They just flat ran out

of feed. They are just a powerful set of cattle, but ‘‘they don’t have

nothing to eat’’ was the quote.

From Ignacio, Colorado in the southwest corner of the State,

where a rancher sold 85 percent of his herd, to Boulder in the

north, where a third-generation rancher watched his natural

springs run dry, the situation is nothing short of dire.

I am just about finished, Mr. Chairman.

The CHAIRMAN. I understand. I have just been informed that

now, the vote is at 4:20. We really do have to move with the committee. I am sorry, Senator. Please wrap up.

Senator ALLARD. OK; very briefly.

The papers are already proclaiming that this year’s drought is

sure to bankrupt some farmers and ranchers. There is a big part

of Colorado that depends on agriculture, and it is expected to

amount to about a $16 billion impact on the economy.

Mr. Chairman, I would just ask that the remainder of my statement be made a part of the record.

7

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

appendix on page 33.]

The CHAIRMAN. I appreciate that, Senator Allard, and I really do

not want to cut Senators off, but if we have a 4:20 vote, and if we

have witnesses who have come from across the country to be here,

I ask your indulgence unless there—— Senator WELLSTONE. Mr. Chairman, there are going to be a lot

of votes, so you will not even be able to come back.

The CHAIRMAN. That is what I mean.

Senator WELLSTONE. Yes.

The CHAIRMAN. We will not be able to come back. Once we leave

here, we cannot come back.

Unless someone has a very short, short statement, I would recognize them for that, and the next one is Senator Conrad.

STATEMENT OF HON. KENT CONRAD, A U.S. SENATOR FROM

NORTH DAKOTA

Senator CONRAD. Very short.

Let me just say this question of spending is very important, because we have heard in the press over and over what huge increases in spending are coming from this Farm bill. It is just not

the case. If you look at 2002 under this new Farm bill, the total

spending will be $14.2 billion. In 2001, the spending from the Federal Government for farmers was $22 billion. $22 billion is more

than $14 billion in the math I learned back home in North Dakota.

Not current spending under the Farm bill being more, but last

year’s spending is more than under this Farm bill. It is not just

last year, but the year before that, Federal spending by the Federal

Government was $32 billion. That is almost double what it is going

to be under this Farm bill. I have not seen one press report that

has got this right, not one.

All the reporting talks about big increases under this Farm bill.

There are big increases in this Farm bill over what the old Farm

bill provided, but as everyone here knows, there was not just farm

bill spending; there was also economic disaster spending every year

for the last 4 years. The year before 2000, it was $19 billion. That

is more than the spending that will be in this year under the Farm

bill. It would be just nice to see one time somebody get this right,

just once.

There is not more spending; there is less spending. I hope maybe

the word can get out as to what the facts are about this Farm bill,

not these misleading headlines about these massive increases.

They are not massive increases. There is less money going to farmers from the Federal Government than last year and the year before and the year before that.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Conrad.

Again, very briefly, please.

Senator Stabenow.

STATEMENT OF HON. DEBBIE STABENOW, A U.S. SENATOR

FROM MICHIGAN

Senator STABENOW. Well, thank you, Mr. Chairman.

I will ask for the record to have my complete statement.

8

The CHAIRMAN. Absolutely.

Senator STABENOW. This is a very critical issue for the State of

Michigan. I just want to acknowledge that we do have a witness

from Michigan today, whom I was very pleased to invite, Bob

Green, who is the executive director of the Michigan Bean Commission, who will provide an overview of the losses suffered by Michigan bean growers and other producers, and I would just say for the

record that 2001 was the worst year in recorded history, the worst

year in recorded history, for dry bean growers in Michigan, and because beans and our specialty crops and other crops that we grow

in Michigan are not covered by Federal farm programs, in many

cases, they are not eligible for crop insurance, which is a very important piece for us to remember as we consider assistance.

I hope we will, in fact, come forward with a disaster assistance

program, and I also would have to say on behalf of the asparagus

growers in Michigan that addressing market loss would also be another issue that I would like to address.

Thank you.

[The prepared statement of Senator Stabenow can be found in

the appendix on page 34.]

The CHAIRMAN. Thank you, Senator Stabenow.

Senator Lincoln.

STATEMENT OF HON. BLANCHE LINCOLN, A U.S. SENATOR

FROM ARKANSAS

Senator LINCOLN. Mr. Chairman, thank you so much for your

tireless leadership on this and so many other issues. I appreciate

that this hearing is dedicated to the needs of farmers and ranchers

who have been hurt by too little or too much water. In my State,

there are two additional concerns for two very important sectors of

our farm economy. First, the poultry producers are dealing with a

highly contagious low pathogen avian influenza problem that is

being used by our trading partners as an excuse to block our poultry exports.

Arresting the spread of avian influenza means the destruction of

entire flocks, which, in turn, could mean the loss of a producer’s entire revenue. Thus, there could be financial disincentives for poultry producers to admit that an avian influenza exists among its

flocks, even though it is in the better interest of the domestic industry as a whole to do everything possible to contain the disease.

For my state, there are no known occurrences of the avian influenza, but the threat of spread to our state is very frightening. We

would like to take this opportunity to urge the Chairman to hold

more hearings to investigate the dangers of the avian influenza

and to explore whatever options are available to Congress to deal

with that problem.

With that, I would just like to raise the last issue of concern, and

this one is affecting our State’s forestry sector. As the subcommittee chairwoman over Forestry, my subcommittee is preparing to

hold an oversight hearing regarding the severe oak mortality that

is being experienced in Arkansas and the hardwood forests in the

central and eastern U.S. The severe oak decline is not just a disaster waiting to happen; it is already destroying our public and private forests.

9

Over a million acres of red oaks will be impacted just during this

year throughout only Arkansas and Missouri. Mr. Chairman, I appreciate all that you do and would like to ask unanimous consent

to have my entire statement inserted in the record but hope that

these two issues are something that we can deal with in hearings

and hopefully in whatever approach we take in disaster assistance.

Thank you.

The CHAIRMAN. I appreciate that, Senator Lincoln.

Now, we will have to move ahead. Senator Enzi, you have been

very patient. Thank you for being here. For you and everyone else,

your entire statements will be made a part of the record, and

please proceed, Senator Enzi.

STATEMENT OF HON. MIKE ENZI, A U.S. SENATOR FROM

WYOMING

Senator ENZI. Thank you, Mr. Chairman and members of the

committee for hearing my testimony, and I appreciate that the full

statement can be included in the record, so I will condense somewhat. I appreciated your promise to Senator Baucus that you

would hold this hearing and that you are doing it today.

I wanted to testify for a very specific reason, and that is that the

Wyoming livestock producers as well as the other livestock producers are in dire need of assistance, and your bill could provide it.

Wyoming is in the third year of a drought. Producers that sold or

reduced their herds in the first year have been unable to buy replacements, and the tax relief use on forced sales is running out.

Now, even more producers are being forced to sell their livestock

in irrational markets due to prohibitively expensive prices of hay

and the rejections from drought-stricken public grazing lands. I appreciate that you provide the water in bottles here so that we can

conserve on that water. Whenever I leave now, I feel compelled to

drink that water, the drought in the West is so severe.

Though I have been most vocal for livestock producers in my

State, my crop producers have also suffered from the merciless

drought, but I concentrate on livestock, because they have been

completely left out. The Livestock Assistance Program is a program

available to livestock producers in counties that have been declared

disaster areas by the President or Secretary of Agriculture. It provides a minimal financial relief to livestock producers that are experiencing livestock production loss due to drought and other disasters but only if there is money in the fund. Then, there are tremendous delays built in, because everybody has to apply, and the

money is divided up among those people who have it. Of course, if

there is no money, nobody gets anything.

In fiscal year 2000, the Livestock Assistance Program was funded at approximately $430 million. In Wyoming, 933 producers received almost $8 million in assistance from those funds. Now, that

is an average of $8,313 per producer. Nationally, it provided assistance to about 186,000 producers at 88 percent of their grazing loss

for drought and other disasters experienced in 2000. The need was

similar in 2001. Yet again, I repeat, no funds were provided for

livestock producers, but crop producers received their emergency

payment.

10

I thought I could hear relief coming when Senator Baucus and

I successfully added an agriculture disaster assistance package to

the Farm bill with a resounding 69–30 vote. I commend the Senate

Farm bill conferees for their attempts to retain the agricultural disaster spending in the Farm bill conference report, but the final report contained no disaster assistance. What is the use of a farm bill

if my State’s farms and ranches have been sucked dry and are out

of business?

Many of the new and innovative rural development programs

and the Environmental Incentives Program EQUIP will not be of

any value if there are no farmers and ranchers left on the land. I

received a lot of hopeful calls after the conference report passed.

Many of my constituents knew of the disaster assistance amendment, and they were hopeful that relief was on the way with the

Farm bill’s passage. It was difficult to explain why the assistance

was no longer in the bill.

It is now May 2002. I find it astounding that I am still working

to remedy disaster experience in 2001. This spring’s complete lack

of moisture has promised that more of the same is yet to come. We

in Wyoming are trying to be proactive. Governor Geringer has already requested the entire State of Wyoming be declared a disaster

area. I know that USDA is processing that application. The Farm

bill conference report did include an amendment that I offered to

authorize the livestock feeding assistance. With its passage, the

Secretary of Agriculture now has the authority to use that program

to provide assistance to livestock producers.

The program is no longer ad hoc. It is my hope that the appropriators will consider this authority and potential need for assistance

in 2003. I was pleased to hear the announcement yesterday that

USDA, through the Farm Services Agency, has allowed Early Conservation Reserve Program grazing in Wyoming’s Campbell County. In these extreme circumstances, this will allow producers to

graze land that they had agreed to set aside for conservation.

Although it is outside the scope of this committee, I have also

been working to ensure that other Federal agencies offer this same

consideration to strapped producers. I recently sent a letter to the

Bureau of Land Management encouraging their flexibility while

working with permitees on drought-stricken Federal grazing allotments.

I present these nuggets of hope to you today to show that I am

not asking this committee to act when I have not puzzled and considered and acted myself. Wyoming cannot conquer this drought

alone, so I come to you asking you to do something for the livestock

industry.

Thank you very much for your time.

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

The CHAIRMAN. Senator Enzi, thank you very much for your patience. Thank you for your strong support of this, and I know that

you were one of the strong supporters on the Senate floor when we

adopted that provision. As you know, this committee is going to

continue this hearing, and hopefully, we will make some movement

on getting a bill out as soon as possible.

Senator ENZI. Thank you.

11

The CHAIRMAN. Thank you, Senator Enzi.

I also want to note that Congressman Rehberg was here. I do not

know—is Congressman Rehberg still here? Congressman Rehberg

had a statement, and without objection, I will make it a permanent

part of the record right after Senator Enzi’s statement.

[The prepared statement of Congressman Rehberg can be found

in the appendix on page 40.]

The CHAIRMAN. Now, we would like to call to the table Mr. Keith

Collins, chief economist, U.S. Department of Agriculture. I guess

we are going to bring everybody up here: Mr. Craig Hill, Iowa

Farm Bureau Federation; Mr. Larry Barbie, president of the Montana Grain Growers; Mr. Brian Chandler of the National Farmers

Union; Mr. Bryan Dierlam, the National Cattlemen’s Beef Association; and, as Senator Stabenow already introduced, Mr. Bob Green,

executive director of the Michigan Bean Commission.

Senator THOMAS. Mr. Chairman, can I interrupt just long enough

to welcome particularly Mr. Dierlam, who has come to represent

the stock growers? He is also getting married on Saturday.

[Laughter.]

The CHAIRMAN. You can focus on this today?

[Laughter.]

Mr. DIERLAM. It took a little pressure off the wedding.

[Laughter.]

The CHAIRMAN. Someone told me your fiancee is in the audience.

Is that right?

Mr. DIERLAM. About 15 or 16 family members.

[Laughter.]

The CHAIRMAN. Well, why don’t they all stand up? Let us applaud them. Thanks for being here today.

[Applause.]

The CHAIRMAN. Have a great wedding. I hope you have great

weather for it.

Mr. DIERLAM. Thank you, Chairman.

The CHAIRMAN. Thank you.

Now, we will start with Dr. Keith Collins.

Dr. Collins.

STATEMENT OF KEITH COLLINS, CHIEF ECONOMIST, U.S.

DEPARTMENT OF AGRICULTURE, WASHINGTON, DC

Mr. COLLINS. Thank you very much, Mr. Harkin, members of the

committee. Thank you for the opportunity to invite USDA up to

discuss how weather has affected agriculture this year and last

year. I sent you a rather lengthy statement with a lot of tables and

charts attached to the back. I hope that will help the committee

and your capable staff members as they negotiate this difficult

issue.

The major weather events over the last 2 years have been

drought and excess moisture. The charts attached to my statement

start with the drought monitor, a tool which classifies the degree

of drought based on a variety of factors. It shows that the drought

intensified along the Eastern Seaboard states last year; dissipated

last spring and summer with rain; came back last fall and winter

with the dry winter we had; and is now dissipating or diminishing

a little bit with this spring’s rains.

12

In the western states and mountain states, however, the problem

has been much more chronic. The northwest suffered drought in

2000. That spread into the mountain states and the western plains

states during 2001. Drought is now more serious today than it was

a year ago at this time, and it is most intense in the western

plains, the southwest, South Texas and parts of the southeast.

The most recent outlook of the National Weather Service for this

summer forecasts the drought to intensify in the southwest as well

as in Montana, Idaho, South Texas and across the lower MidSouth. Wet conditions are expected to persist in the eastern corn

belt.

The primary effects on agriculture have come on cattle and crop

production. The lack of forage and the increased cost of supplemental feeding has forced cattle producers in the western and

mountain states to move their animals into feed lots rather than

to maintain or expand their herds. Placements into feed lots in the

first quarter were almost 7 percent above the first quarter of 2001.

Coupled with heavier slaughter weights, beef production has been

rising, just the opposite of what we had expected to happen here

in 2002. The combination of increased beef production, a decline in

meat exports across the board, a slowdown in domestic meat demand and rising production of competing meats have all caused

cattle prices to decline. First quarter cattle prices were 10 percent

below the first quarter of a year ago, so you are selling cattle into

a weak market.

Turning to crops, the drought has reduced this year’s winter

wheat production, we estimate by a potential 150 to 200 million

bushels, a drop from 1.5 to 1.3 billion bushels of winter wheat. In

2001, we estimate the weather reduced winter wheat by nearly 100

million bushels, and last year’s spring wheat crop was also reduced

in Montana by about a third.

Drought has also reduced crops in other regions. In 2001, we had

cotton in Texas reduced. We had cane sugar in both Louisiana and

Florida reduced. We had citrus in Florida reduced. We also had

other weather events like cold weather in California and Arizona

which reduced lettuce production this year.

While the western plains and mountain states have been

parched, the problem in the eastern corn belt has been excessive

rain. In 2001, we had generally excellent corn and soybean crops,

but this year’s weather problems could give us serious production

problems. In Missouri, Kentucky, Ohio, Indiana and Illinois, only

25 percent of the corn and soybean acres that farmers intend to

plant had been planted by last Sunday, May 19. That is roughly

23 million acres of corn and soybeans that had not been planted.

The next 2 weeks are going to be critical for corn producers in

the states that are having the wettest problems. We are going to

be conducting a very large survey in the first 2 weeks of June to

measure planted acreage, and we will be able then to determine

what farmers actually planted compared to their intentions.

In the face of these weather-related problems, the Department

has been operating quite a range of programs to help offset the production losses that farmers are facing. The cornerstone of these

programs is Federal crop insurance. As a result of the increased

premiums provided by the Ag Risk Protection Act of 2000, enrollVerDate 11-MAY-2000 09:06 Apr 18, 2003 Jkt 086212 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 86212.TXT SAG1 PsN: SAG1
13

ment in crop insurance rose to 212 million acres in 2001. That was

17 percent above the level in 1998.

Over 80 percent of eligible acreage was enrolled in 2001, and producers are also purchasing insurance at a higher coverage level.

For wheat, participation is above 80 percent in most of the

drought-affected states. Another key program is the Non-Insured

Crop Disaster Assistance Program or NAP, and NAP provides protection for non-insurable crops, including forage for animal consumption. We recently made a number of changes in this program

to make it more helpful to producers, including the coverage of

unseeded forage on public range lands.

In the Emergency Conservation Program—that is another program that can help producers by rehabilitating farm land, carrying

out emergency water conservation and providing water assistance

to livestock and to producers who irrigate orchards and vineyards

should they be short of water. USDA has also authorized emergency haying and grazing of Conservation Reserve Program acres.

Last year, we authorized it in 162 counties in 11 states, and yesterday and this morning, the Secretary notified 85 counties in 7 states

that grazing would be permitted this year.

USDA also provides low-interest emergency loans to help producers recover from natural disasters. There has to be a disaster declaration. Far this calendar year, either the President or the Secretary have designated more than 1,100 counties as disaster areas.

Finally, the 2002 Farm bill provides direct and countercyclical payments for program crops that will not decrease if weather reduces

a producer’s production.

In summary, Mr. Chairman, weather has affected a range of producers the past 2 years, with livestock producers being particularly

hard hit. At the Department, we are monitoring the situation closely and working diligently to ensure the full range of programs

available to mitigate the adverse effects on producers are being employed in a timely and efficient way.

Thank you.

[The prepared statement of Mr. Collins can be found in the appendix on page 42.]

The CHAIRMAN. Thank you very much, Dr. Collins, and we will

hold the questioning until we get through all of the witnesses.

Next, we have Mr. Craig Hill, a neighbor of mine, representing

the Iowa Farm Bureau Federation from Milo, Iowa.

Craig, good to see you.

STATEMENT OF CRAIG HILL, IOWA FARM BUREAU

FEDERATION, MILO, IOWA

Mr. HILL. Good afternoon.

My name is Craig Hill, and I serve as the vice-president of the

Iowa Farm Bureau Federation. I am also a crop and livestock producer from south central Iowa. The Iowa Farm Bureau Federation

represents nearly 155,000 farm families and appreciates the opportunity to provide this testimony before you today.

I am here to ask for your assistance in providing help to those

producers who suffered crop-related losses last year. The severe

weather conditions have had a negative impact on the livelihood of

America’s farmers in the rural communities in which they operate.

14

Senators emergency relief is important at this time. We are

pleased to work with the committee and have been working with

the committee in the drafting of the new Farm bill. We supported

its final passage. This bill will benefit farmers by improving the

safety net features of the 1996 FAIR Act, and certainly, the additional safety net features of this bill and the supplemental payments provided in previous years are important in ensuring that

farmers can meet their financial obligations and remain on the

farm.

However, farmers have suffered crop losses, and those crop losses

continue to have economic concerns, and those producers will not

receive any assistance through the Farm bill for losses last year.

Producers in southern Iowa are seeking disaster assistance for the

past crop year to help them with their cash-flow problems. Eight

of the past 10 years have been short crop years for producers in

this region.

The cumulative effect of these short crop years has been to whittle down the effectiveness of the safety net provisions provided

through farm programs and through crop insurance. I believe that

crop insurance is a viable tool to help producers manage their own

risks. The new Farm bill improves that by further reducing the

costs to producers of buying adequate crop insurance coverage.

However, for producers in southern Iowa and many regions of the

country, crop insurance falls short of their needed protection.

As I mentioned, 8 of the past 10 years have been poor crop producing years in southern Iowa, and crop insurance coverage has

been—excuse me—the impact of this has been, as you know, to increase rates and reduce yield coverage. Thus, producers pay more

for less coverage.

The continual planting problems in this region have contributed

to a reduced safety net. Despite this, producers in Iowa and in

southern Iowa continue to rely heavily on the crop insurance program to help manage their risk. As you can see from the attached

chart, the amount of acreage covered by crop insurance in these six

counties ranges from a low of 81 percent to a high of 95 percent.

Last year was a particularly hard year for many producers in

southern Iowa. The Secretary of Agriculture has recently declared

many counties in Iowa a Federal disaster area. This opens the door

to some assistance, but this assistance is primarily low-interest

loans. These producers need cash-flow, not more loans.

In addition to the six counties, prevented planting acres for corn

and soybeans totaled 104,000 acres. Total acres planted in 2001 in

Jefferson and Van Buren Counties was reduced by 25 percent. Nationally, losses for producers totaled nearly $2.3 billion. These

losses are not covered by crop insurance, and Iowa crop producers

had losses not covered by crop insurance totaling $30.8 million and

livestock producers by $3.12 million.

Over the last several years, Congress has provided emergency assistance to producers across the country, in part due to unfavorable

weather conditions. Based on the poor weather that many Iowa

producers faced in 2001, I believe we should again provide disaster

assistance to those producers.

15

Thank you for the opportunity to be here today to represent the

interests of the Iowa producers before this committee. I will be

happy to respond to questions.

[The prepared statement of Mr. Hill can be found in the appendix on page 61.]

The CHAIRMAN. Thank you very much, Craig.

Now, we will turn to Mr. Larry Barbie, president of the Montana

Grain Growers.

Senator BAUCUS. Mr. Chairman, if I might just introduce—— The CHAIRMAN. I am sorry.

Senator BAUCUS. No problem.

The CHAIRMAN. I did not see you come in from the floor.

Senator BAUCUS. Larry is, as you mentioned, head of the Montana Grain Growers. He comes from one of the most generally prosperous parts of farm country in Montana, which is probably one of

the greatest hit by the drought, now, in our State of Montana. He

is a terrific farmer, a good friend, and I am just very honored to

have you here, Larry.

The CHAIRMAN. Well, thank you very much, Senator Baucus.

Mr. Barbie.

STATEMENT OF LARRY BARBIE, PRESIDENT, MONTANA GRAIN

GROWERS, INVERNESS, MONTANA

Mr. BARBIE. Mr. Chairman, members of the committee, thank

you for the opportunity to provide testimony on natural crop disaster assistance for my producers. I raise wheat and barley near Inverness, Montana, located in the north central part of the State

about 25 miles from the Canadian border.

I currently serve as Montana Grain Growers’ president, a primary commodity organization representing wheat and barley to our

producers and our State. Wheat and barley are by far the two

major crops grown in the State, accounting for an average of $1 billion of gross sales per year. Agriculture is the largest industry in

the State. In 2000, 36 percent of Montana’s economy derived from

my industry.

I come here today with the heavy responsibility of trying to describe how the horrible ravages of a multi-year drought have evaporated more than soil, moisture and stock water reservoir in my

area of the nation. The financial future and the long life dreams

of success for thousands of Montana farmers have dried up and are

blowing away in the same winds that sift the soil from our fields.

The lack of quick assistance will lead to more rapid consolidation

and larger farms. Without assistance, moderate-sized family farms

will be the first to go.

While wheat and barley production is about half of normal in

2001 for the entire State, my area was much worse. Most farmers

harvested little crop, and many had no crop at all in this area of

Montana. Wheat yields are normally from 35 bushels to 60 bushels

per acre. The previous years of 1998 and 1999 were much below

average as well, and the crop year of 2000 was only slightly better

than 2001.

In the latest drought monitor survey last week, central Montana

was still the most drought-stricken locality in the nation. Our

farmers are desperate, and they need assistance now. The current

16

drought has undercut the present and future financial viability of

not just our farmers but the entire agriculture-related economies of

the region. Unfortunately, without natural disaster assistance,

many of the producers will not be around to participate in the benefits of the new Farm bill.

Some question why crop insurance is not enough to provide aid

during times of crop loss. One year crop loss, there is some merit

to that argument, although the deductible of crop insurance policies

is 30 to 35 percent, an amount that would be inconceivable for

many forms of insurance. A relatively well-managed farm, like

other businesses, cannot stand one year of loss and still remain

viable. Two or three or four continual years of loss would devastate

nearly every business.

With the double whammy of extended drought in area that average yields on which our safety net is based and brings insects and

pests such as grasshoppers, cutworms and wheat mite infestation

that threaten to eat up even more of the crop insurance proceeds.

I wanted to say in final words about the financial impact on the

whole community. During weather disasters of flood, fire, tornado

or hurricane, a disaster is followed by a process of rebuilding. Economic losses trigger the influence of new construction and new employment. Drought has no such economic effect. Farmers cut back

to survive, while businesses they formerly patronized wither. The

last remaining implement dealer in my area closed last year. Farm

supply businesses have reported a 50 percent decline in the

amount of fertilizer and crop protection products they have sold.

Grain elevators sit empty. Employees have been let go, and the

planned construction of a new shuttle train loading facility 60

miles from me has been put on hold. Mental stress on families and

on neighbors creates a dark cloud of gloom, one which has replaced

long-absent ones in the heavens.

While words can never adequately describe the bleakness of the

drought-ravaged field, I hope today that my testimony has helped

the committee realize how uniquely devastating the current situation is. The infusion of capital from the natural disaster aid bill

will not alleviate the drought but would help stem the tide of farm

foreclosures and bankrupt business.

Farmers could return to managing for success rather than finding ways to farm cheaply enough to survive on a meager portion

of their normal income.

Thank you to the committee for giving me an opportunity to appear before you today.

[The prepared statement of Mr. Barbie can be found in the appendix on page 65.]

The CHAIRMAN. Mr. Barbie, thank you, and thank you for coming

this great distance to make your case and to give us this data and

these facts.

Senator Baucus, as you know, is chair of the Finance Committee.

We have a trade bill on the floor. He has to be on the floor to guide

and direct that bill, and I will ask the indulgence of the committee

now for any statement he would like to make or any questions.

Senator BAUCUS. Thank you, Mr. Chairman, and I thank all of

my colleagues, and I will not take advantage of this opportunity,

but thank you, Mr. Chairman.

17

Larry, I wonder if you could just kind of share with everybody

here another dimension of just how bad this is. For example, when

I talk to farmers who have been farming for years, and their families have been farming, and they compare it back to the dust bowl

days. Many people tell me that it is actually worse, because during

the thirties, when there were four successive years of drought, actually, there was one year in the middle when there was a little

bit of rain which tided people over.

Could you comment on that and how this is just worse than the

thirties? When I drive across Inverness and around the south, the

dust is just blowing everywhere, and frankly, were it not for CRP,

we would have a dust bowl thirties situation, I believe anyway, because with CRP there is grass in some of that land. Otherwise, it

would be fallow.

Second, the vicious or spiraling vicious circle and the spiraling

down of payments under crop insurance; that is, each year, there

is less of a yield, and therefore, the crop insurance guarantee is

less and less each cumulative year and how crop insurance really

is not much help now. If you could describe both of those situations

for us and kind of put it in real, personal terms compared to the

thirties and also, really, how crop insurance really does not take

up the slack.

Mr. BARBIE. I have asked my Mom about the drought. She will

be 80 years old this fall, and in the thirties, she said it was dry,

but it was not this bad. Plus, we have got better farming techniques now. I mean, you mentioned CRP, but we strip farm, plus

we chem-fall. When the chem-fall starts blowing, then, it must

really be dry. They say the reservoirs, they have never seen the

water table down or no water in the reservoirs for this long. The

well is growing dry.

To address the crop insurance, I use a good example is like your

grade point average. You get one low score. How long does it take

to bring that grade point average back up? We have had three or

four years of this where our averages are going down, and it just

erodes away from the amount of coverage we can put on our crop

insurance. Plus, the more you use the crop insurance, then, your

premium starts to go up.

Senator BAUCUS. Again, it is a vicious circle.

Mr. BARBIE. Yes.

Senator BAUCUS. It just gets worse and worse and worse every

year. This is not just one year of drought at least that we have had

in Montana. This has been four. This is the fourth year now.

Could you also describe for us the effect that it is having on

towns and on people not buying any fertilizer, not buying any fuel,

and kind of just what is happening to some of the towns in Montana?

Mr. BARBIE. The three towns—there are five towns that are

within a short distance of me. They consolidated in the eighties,

and now, the school is looking to make one school. The kids are

moving out; the people that—there are no jobs anymore. A family

leaves, and then, it snowballs into another family leaving.

Senator BAUCUS. Well, Mr. Chairman as the Congress very graciously wants to help, say, Florida when there are hurricanes and

Oklahoma when there are tornadoes and New York with the Trade

18

Tower disaster, we just ask in Montana that people recognize that

even though we are not in the New York Times—actually, there

was a photograph on the front page of the New York Times about

2 weeks ago of Montana drought conditions. We are part of the

country, and there are other states that maybe do not have quite

as much media markets as some other parts of the country, and

we desperately need help.

I thank you very much for holding this hearing.

The CHAIRMAN. All right; thank you very much, Senator Baucus.

Senator BAUCUS. Thank you, Larry.

The CHAIRMAN. Thank you, Mr. Barbie.

I know you have to leave to return to the floor.

The CHAIRMAN. Next, we will turn to Mr. Brian Chandler, representing the National Farmers Union. He is from Midland, Texas.

Brian.

STATEMENT OF BRIAN CHANDLER, NATIONAL FARMERS

UNION, MIDLAND, TEXAS

Mr. CHANDLER. Thank you, Chairman Harkin, Ranking Member

Lugar, members of the Senate Agriculture Committee. I am Brian

Chandler, an independent grain, cotton, forage and livestock producer from Midland, Texas.

On behalf of the National Farmers Union and family farmers

and ranchers across the country who suffered substantial crop and

livestock production losses in 2001 due to drought and other weather-related causes, I want to thank you for holding this hearing to

discuss emergency disaster assistance for producers.

Much attention has rightfully been focused on the economic

losses suffered by Montana grain and livestock producers as a result of the extended drought that has devastated that State. I am

here, however, to let the committee know that in addition to Montana, the lack of moisture in 2001 had a devastating effect on farmers and ranchers throughout most of the plains state, including my

State of Texas.

Nationally, production losses from drought, flood, disease and

other uncontrollable weather-related causes reduced the economic

viability of farmers and ranchers to the point that over 25 percent

of the 3,141 counties in the U.S. were designated by the Secretary

of Agriculture as disaster areas in 2001. An additional 679 counties

qualified as contiguous counties under the declarations. A copy of

the Secretarial disaster designations for calendar year 2001 is attached.

Unfortunately, low-interest loans, payments under the 1996

Farm bill, supplemental market loss assistance and existing crop

insurance programs fail to adequately address the real needs of

producers, local businesses and rural communities that have suffered as a result of these production losses. On my farm near Midland, our crops were completely decimated by drought to the extent

that dry line crops were totally destroyed, and our soil moisture

deficit precluded us from utilizing our supplemental irrigation.

Winter grazing of small grain crops, a normal practice in my

area, was limited by the poor emergence, stand establishment and

growth of those crops during the fall and winter. In addition, about

80 percent of my hay production was lost or the quality reduced

19

due to the lack of available moisture, which also reduced hay production of other producers in the area from whom I would normally

purchase additional feed supplies.

From a market standpoint, my 2001 cash crops provided me a

fraction of the expected total income. Mr. Chairman, not only did

I have fewer bushels to sell, but also, as you are well aware, crop

prices have been severely depressed since 1998, and production

costs, particularly those related to energy, such as fuel, electricity

and fertilizer, increased substantially last year, further reducing

my income.

In the case of livestock, due to reduced forage production, increased cost of hay and transportation to get it to my farm, I had

little choice but to reduce my herd size. Many of my cattle were

marketed at both lower than optimal weight levels and during a

period when many other livestock producers were forced into the

same situation, resulting in lower market receipts for my cattle as

well.

I utilize crop insurance to help manage the weather risk associated with my farming operation and am appreciative of the improvements that were made in the program a few years ago that

allow me to increase my coverage level at a more realistic premium

cost. However, even with additional coverage for my eligible crops,

insurance remains an inadequate tool to sustain my operation, particularly in the face of a multi-year drought, as we are currently

experiencing.

Although crop insurance allows for a reduced impact of low

yields on a producer’s actual production history, my yield history

is declining to the point that insurance is becoming a less valuable

risk management tool than it should be. For some crops, I can purchase 75 percent coverage, a major improvement over the 65 percent guarantee of the old program. Yet, this means that I must absorb a 25 percent loss before I begin to receive my indemnities.

Given the low and in many cases negative operating margins

farmers receive, I am unable to build the level of financial cushion,

even in relatively good years, necessary to sustain a loss of that

size. In addition, lenders often encourage or require the purchase

of crop insurance in order to qualify for operating credit, recognizing the benefits to protect their investment. However, they are

hesitant to provide credit in a year following a production disaster,

because most farm and ranch operations cannot project an income

level adequate to cover both the uninsured losses of the prior year

and operating costs for the current crop year.

For my livestock operation, insurance is just not a viable operation to mitigate a combination of forged production and forced

market losses.

As you are aware, emergency ad hoc production loss programs

were approved, along with market assistance, in many years prior

to 2001. However, for the 2001 production year, Congress adopted

a more timely supplemental market loss program without addressing production disasters because the level of damage was unknown

and could not be predicted a year ago when action occurred on the

supplemental economic assistance package.

The Senate attempted to address this situation by including $2.4

billion in emergency disaster relief for crops and livestock in its

20

version of the 2002 Farm bill. This action provided hope to producers such as myself that some level of crop and livestock assistance,

in addition to farm program and crop insurance benefits, would be

forthcoming. Unfortunately, the House rejected that provision in

conference.

Farmers and ranchers like me, who suffered losses in 2001 because of adverse weather that is totally beyond their control, truly

need your help. The disaster package developed by Senator Baucus

and adopted by the Senate earlier this year would have provided

the financial resources needed by producers to help offset enough

of their losses to allow them to continue their operations.

Mr. Chairman, I urge the committee to take the action needed

to ensure that the 2001 disaster is appropriately addressed and

would be pleased to respond to any questions you or your colleagues may have. Thank you for the opportunity to appear before

the committee today.

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

Senator LUGAR. [presiding]. Thank you very much, Mr. Chandler.

We always appreciate testimony from the National Farmers Union,

and we are grateful now for testimony from the National Cattlemen’s Beef Association, Mr. Bryan Dierlam.

Mr. Dierlam.

STATEMENT OF BRIAN DIERLAM, NATIONAL CATTLEMEN’S

BEEF ASSOCIATION, WASHINGTON, DC

Mr. DIERLAM. Thank you, Senator Lugar.

Senator Lugar and members of the Senate Agriculture Committee, I am Bryan Dierlam, the director of legislative affairs for the

National Cattlemen’s Beef Association, and thank you for being

able to testify on behalf of beef producers suffering from extensive

drought conditions.

Drought is devastating many parts of the country. When drought

conditions hit, management options quickly become limited. With

decreasing forage on pastures and rangelands, producers purchase

hay and supplemental feed for cattle. This hay and feed typically

comes long distances and from areas not impacted by the drought,

entailing large shipping and transportation costs. Another option is

to find areas of the country where forage is abundant and then to

ship the livestock there.

Often, however, these two options are not warranted, given the

prevailing market conditions, and producers often liquidate parts

or all of their herds, many times into falling markets. This strains

producers and rural communities depending on livestock to fuel the

local economy. The situation is no different for ranchers grazing on

public lands. As the drought intensifies, access to public lands is

diminished, and private ground, which is typically where hay is

grown and cattle are wintered, becomes even more stressed, leaving liquidation as the only option.

We would encourage land managers in the Forest Service to take

the same steps already taken by the Bureau of Land Management

to help states deal with the drought. This includes opening rested

pastures, shifting use to allotments where non-use has occurred,

shifting to upper elevations and other areas of higher precipitation,

21

and expediting the approval process for temporary water troughs

and water haul sites.

For the beef industry, the impact of a drought lasts longer than

the drought itself, because producers are forced to sell their production base. Ranchers cannot simply shut the factory down and let

it sit idle. Cattle must eat. The equivalent would be a manufacturing plant not only shutting down but having to liquidate all of its

plant property and equipment. This hurts the long-term competitiveness of the beef industry.

Recovery time after a drought is further extended, because cattle

that replace those that are liquidated must cycle through an entire

production cycle before the rancher can receive income again. This

drought is severe; it is significant, and it is destructive. Parts of Arizona, Utah and Montana would require nearly 8 inches of rain to

end the drought, and parts of Wyoming would require in excess of

9 inches. Parts of California and Colorado need in excess of 7

inches.

For comparison purposes, I have attached a map at the back of

my testimony which show the drought conditions in May of 2000,

2001 and 2002. The current conditions are worse than the same

date in the two previous years. The timing of this request for

drought assistance does come on the heels of the Farm bill, and

many observers wonder why this aid should be provided, given that

the Farm bill just passed. This is perhaps a fair question, and I

would like to provide some context from the beef industry’s perspective.

The Livestock Feed Assistance Program was eliminated in the

1996 Farm bill. After that occurred, severe droughts impacted

many parts of the country. Since there was no longer an authorized

program, Congress responded with ad hoc funding for the Livestock

Assistance Program in 1998, 1999 and 2000. To help end ad hoc

disaster programs, NCBA worked for and supported the inclusion

of the Livestock Assistance Program, which is part of the Farm bill

recently signed by the President.

For future years, budget riders will be able to plan for the program, and it will no longer have to be funded on an ad hoc basis

but rather through the normal appropriations process. Even though

this program is in place for future disasters, the remaining question is what do we do for 2001? NCBA supports providing $500 million for the Livestock Assistance Program to cover drought losses

for 2001. This funding will bridge the gap between previous ad hoc

measures and the implementation of the measures contained within the Farm bill.

The Livestock Assistance Program is not the only drought management program that we have worked on. The National Cattlemen’s Beef Association supported provisions contained in the Agricultural Risk Protection Act of 2000 that called for the development

of pasture, range and forage insurance. These programs are currently in development. The Risk Management Agency at USDA has

contracted with a firm named Agrilogic to complete a feasibility

study on insurance policies that could cover drought and fire damage.

The feasibility study will form the basis of pasture, range and

forage policies, and Agrilogic is scheduled to submit this feasibility

22

study to RMA in July. After review and approval by RMA, development work on the insurance products can begin. That development

work will entail actuarial tables, underwriting, ratings and other

documentation. After that work is done, we could soon see on the

market risk management and insurance type programs to work for

pasture, range and forage products.

This program appears promising and will be an additional tool

for producers to use. We have worked aggressively with Agrilogic

throughout their feasibility study. They have attended our meetings and held listening sessions across the country, and we have

provided input to hopefully make this program very usable.

It does take time to implement our laws and to implement the

work models and products that need to be developed, especially out

of something like the Agricultural Risk Protection Act. Often, the

administrative processes turn much more slowly than the calving

cycle, the weather cycle or the Federal budgeting process.

NCBA has worked with Congress to develop programs and tools

that can help us get away from ad hoc disaster programs, but until

these programs are up and running, beef producers need help and

assistance for the years not covered by the Farm bill and not covered by the drought development tools that are currently in development.

The National Cattlemen’s Beef Association, our leadership and

our members will continue working with Congress and the administration to find ways to help producers deal with this drought and

to bridge the gap between the old programs and the programs to

be implemented in the new Farm bill and also the new drought

management tools.

I will be happy to answer any questions and thank you for being

able to testify today.

[The prepared statement of Mr. Dierlam can be found in the appendix on page 75.]

Senator LUGAR. Thank you very much for your testimony.

Mr. DIERLAM. Thank you.

Senator LUGAR. I would like to call now upon Mr. Bob Green, executive director of the Michigan Bean Commission, St. John’s,

Michigan, and I would note for the record that your faithful Senator from Michigan is still here to hear that testimony.

Mr. GREEN. I certainly appreciate that, Mr. Chairman.

Senator LUGAR. Mr. Green.

STATEMENT OF BOB GREEN, EXECUTIVE DIRECTOR,

MICHIGAN BEAN COMMISSION, ST. JOHN’S, MICHIGAN

Mr. GREEN. I represent the growers of dry beans in Michigan.

There are about 3,000 strong of them. The grower organization is

100 percent funded by those growers, and we are charged with promotion, market development and research.

During the 2001 growing season, the Michigan bean industry

was the unwelcome recipient of the most devastating bean crop in

recorded history. The National Agricultural Statistics Service,

NASS, reports that only 130,000 acres were harvested out of the

215,000 acres that were planted. Yield for the 2001 crop, according

to NASS, was only 600 pounds per acre harvested, compared to a

normal average yield of around 1,800 pounds. This is the lowest

23

yield since 1936 for dry beans. Total production amounted to only

780,000 bags, which is the lowest total harvested since numbers

were kept starting in 1909. By comparison, the 2000 crop of dry

beans in Michigan was over 4.4 million bags.

In one of the handouts, you have a graph, and on that graph, it

compares the 2000 crop in the red versus the 2001 crop in the yellow for some specific classes of beans, and you can see the dramatic

difference that happened last year.

Additional Michigan crops suffered from the weather disaster of

2001 as well. Eighty-two of the 83 counties in Michigan were declared a disaster last year by the USDA. Soybeans, corn, pickles

and grapes and other specialty crops were all affected. All of these

crops did have their respective problems. All of these crops certainly had much lower yields in the affected drought areas. However, none of these other crops suffered the total statewide devastation that dry beans did, and none of them will have the total negative impact on their producers that this year’s dry bean crop had.

An additional factor, and Senator Stabenow mentioned this in

her opening remarks, is that dry beans are not covered under any

Government farm program. There are no subsidies and/or LDPs for

dry beans.

The Lansing State Journal front page article on November 21,

2001, stated it best: Michigan’s dry bean crop nearly wiped out. A

number of growers could also be wiped out.

On another poster that I handed out, you will see the revenue from the 2001 crop actual, which was $12 million, versus the 2000

crop, which was $100 million—$88 million difference between the

2000 crop and the 2001. Michigan bean growers are not alone.

Many regions of the country were faced with significant crop and

livestock losses, as we’ve already heard. In many cases, producers

did not have a crop to harvest, and livestock producers were faced

with higher feed costs because they had to purchase hay that they

would normally grow on their own farms and ranches.

The severe weather and disease conditions have had a negative

impact on the livelihood of American farmers and ranchers in the

rural communities in which they operate. Emergency relief is critical at this time in order to prevent further economic loss.

The agriculture emergency assistance package would provide

$2.3 billion in immediate assistance to producers, $1.8 billion for

producers with crop losses and $500 million for producers with livestock losses. Without this assistance, the economic conditions in

rural America will only worsen. The Michigan Bean Commission

and the 3,000 dry bean growers it represents appreciates the opportunity to testify and report to the Senate Committee on Agriculture, Nutrition and Forestry on the dry bean disaster of 2001.

These dry bean growers ask for your consideration as you debate

and decide the future of disaster relief for the 2001 crop year.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Green can be found in the appendix on page 80.]

The CHAIRMAN. [presiding]. Thank you very much, Bob, Mr.

Green, for being here and for providing this testimony. I am told

the vote just started. Can someone verify that for me?

Senator LUGAR. Yes.

24

The CHAIRMAN. It did?

Senator STABENOW. Mr. Chairman, if I might just ask unanimous consent—— The CHAIRMAN. Yes.

Senator STABENOW [continuing]. I have two letters, one from the

Michigan Farm Bureau and also the Cherry Marketing Institute in

Michigan expressing as well what has happened in Michigan, and

I would appreciate that being a part of the record.

The CHAIRMAN. Thank you. They will be made a part of the

record.

[The information referred to can be found in the appendix on

page 84 & 86.]

The CHAIRMAN. I just have one thing, Dr. Collins, that I would

like to ask for the record. We have heard from producers who lost

crops to drought. Although the Agriculture Risk Protection Act of

2000 did improve the insurable yields for those who had suffered

crop losses, we have heard from several people here today who explained that repeated crop losses can devastate a producer’s crop

insurance yield.

For most producers, the lower yields also mean higher premium

rates. Producers who lose crops for two or more consecutive years

are simply unable to regain financial stability. Does the Department have any suggestions or any advice on how we might improve

crop insurance for these producers? I mean, we have heard that

from a couple or three people here today.

Mr. COLLINS. Yes, Mr. Chairman, we have heard that.

I would say first of all that despite the heavy subsidies of the

program, we do try and run the program and are required by law

to run it in an actuarially sound way. That means that when we

are establishing the policy parameters for an individual insured,

we are trying to establish a yield that is their expected yield in a

statistical sense, their most likely yield.

What we do is we use a long-term average of their historical

yields, up to 10 years. Then, if they have a bad year, it is true that

this average could get pulled down, and if they have a couple of

bad years, this average could get pulled down.

That was dealt with in the Agriculture Risk Protection Act. Now,

maybe some people felt it was not dealt with adequately enough,

but the Agriculture Risk Protection Act put a so-called cup into the

formula. If a producer has a bad year, a very low yield, they can

throw it out, and they can use 60 percent of the so-called T-yield

for that year. The T-yield is the county average yield.

Now, if they do not want to do that, if they do not want to use

the plug yield for that year, then, the most their yield can drop in

a year is 10 percent. We have two kinds of cups in there to protect

their yield from falling too far. Now, this makes a lot of sense when

yield is varied, when it goes up and down from year to year, because you really do not want to penalize somebody who happens to

have a bad year or two bad years.

The problem becomes when somebody has five or six or seven

bad years in a row. Then, it is true, their yield falls. Then, you

have to ask a fundamental question: what is their expected yield?

Should it really be a lot higher than that, or should it be lower?

Do 5 or 6 years really better reflect their expected yield?

25

This is not an easy question to answer when you are trying to

run an actuarially sound program.

The CHAIRMAN. I still want to examine this even further, especially as it relates to prevented planting and what the effectiveness

of prevented planting coverage is in crop insurance.

Do any of you want to speak to that? Craig, I do not know if you

want to talk about it. We have had some problems in Iowa in prevented planting.

Mr. HILL. Yes.

The CHAIRMAN. How is that—— Mr. HILL. Well, I have had a number of producers tell me that,

of course, cash rent, the fixed cost of cash rent must be paid, and

that prevented planning payment goes toward cash rent. Sometimes, there is $20 or $30 left over after that fixed cost is paid. The

maintenance cost of those acres, the spraying, the mowing, the upkeep, sometimes can range as high as $20 or $30. There are no

funds available to pay for those machinery expenses that go on or

living expenses; all those other expenses that continue on above

and beyond that.

The CHAIRMAN. Thank you.

Senator Lugar.

Senator LUGAR. Just a quick question of Dr. Collins: what is the

administration’s view of the $2.3 billion expenditure?

Mr. COLLINS. Senator Lugar, you expressed pretty well in your

opening comments the administration’s view. The administration

felt that those funds, which would be applied to 2001 losses, should

have been dealt with in the Farm bill conference. They should have

come out of the $73.5 billion. The administration has not opposed

disaster assistance. They have felt up to this point that it should

be paid for and that the appropriate place to pay for that should

have been in the Farm bill.

Senator LUGAR. Does OMB or anyone else have offsets, any pragmatic way in which this failure on our part to include it can be

paid for?

Mr. COLLINS. No, but I can say that I have spoken with OMB

and other administration officials, and they are certainly willing to

try and find offsets in the Farm bill to accommodate disaster assistance. Now, the actual dimensions of the disaster assistance are

another point of issue. You have seen the President’s comments

when he signed the Farm bill. What he was doing was pointing us

all, the Congress and the administration, toward taking a very

good inventory of what is available under the portfolio of programs

that I mentioned, many of which have been changed over the last

couple of years, combined with the Farm bill, which is new legislation, and then see what falls through the cracks after that.

Senator LUGAR. Could, then, therefore, the administration be

helpful to the committee in this quick study? It is a large bill, we

have all struggled with the provisions, but what in the bill either

might be delayed or offset, or what in the bill provides something

that might diminish the need for $2.3 billion more? In other words,

pragmatically, this is an invitation, perhaps, the Chairman would

share to work together. Fairly rapidly, in the next few days—we

are going to be in recess but to have some recommendation before

we go to markup or action that the Chairman might want to do?

26

Mr. COLLINS. There would be willingness to discuss that, and I

will carry that message back to my friends at USDA and my colleagues at OMB.

Senator LUGAR. Thank you.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Senator Lugar. I feel constrained to say here that we had the $73.5 billion. I understand that. That just does not cover emergencies and contingencies like this. I will say that if this fall, God forbid, a huge hurricane hits Florida and Georgia and South Carolina and wipes out

towns and wipes out things, I mean, we are not going to say sorry,

cannot do anything about it; it has got to come out of whatever

budget we have.

We always respond to emergencies in this country, whether it’s

a tornado that hits Oklahoma or someplace or a flood or hurricane

or anything like that; natural disasters, we always respond to these

as emergency situations. We cannot anticipate those.

Now, to the extent that we tried in the revised crop insurance

bill, which we passed, we made some great strides toward that. I

have indicated in my question to you and have been enunciated by

some of the people sitting here today and by many others, that you

can get into a spiraling situation; OK, for one year, but you get two

or three or four years, you are in real trouble, even with the generous provisions that we have in the crop insurance program.

We cannot provide for every contingency, and we have to address

these as they come up if they are true emergencies. I hope that we

can work this out with the administration to find the wherewithal

to take care of a very severe drought.

We have only about 5 minutes left in the vote. I have a lot of

questions, but once we get in this vote, we are not going to be able

to come back. There are going to be a lot of votes on this trade bill.

I just invite anyone here, if you have any further comments or

points that you want to make that maybe you want covered—— Senator STABENOW. Mr. Chairman?

The CHAIRMAN. Oh, I am sorry; Senator Stabenow?

Senator STABENOW. Thank you. I would appreciate, if I might

just ask a question as well—— The CHAIRMAN. Absolutely.

Senator STABENOW [continuing]. I wanted to just followup and

support your statements as well regarding the question of emergency assistance and also indicate that while we have appreciated

in Michigan that we have qualified for low-interest loans through

disaster assistance, our farmers have enough loans. What they

need is some direct assistance in an emergency just as we would

for any other kind of disaster.

I would strongly urge that we do what we tried to do, what we

did do in the Senate originally when we passed the Farm bill and

added additional assistance, that we treat agriculture as we would

other emergencies.

I do have one additional question, Dr. Collins, that I would appreciate an answer on. I have been hearing reports in Michigan

about some problems with the NAP program, the non-insurable

crop insurance, and in particular, we have a lot of growers like

cherries, for example, that did not realize that they were eligible

27

for assistance and the deadline. I am wondering if the administration is aware of this and if you would be willing to extend the deadline.

Mr. COLLINS. I am not sure I could answer that right here today.

I am not aware of the extent to which producers missed the deadline. I am sure there are some. The NAP program was reformed

in the Agriculture Risk Protection Act of 2000. Unfortunately, it

took us until March 19, 2002, to promulgate the rules of that reform, and producers who suffered losses during 2001 then had to

come in and pay their $100 plus to participate in that program.

The rules require that they enroll and pay 30 days prior to the coverage period.

We were tardy in promulgating the rule, and people came after

the coverage period and were able to pay and enroll. We are also

accepting payments for the coverage period in 2002 now. There is

no doubt in my mind that there are probably some producers who

have fallen through the cracks on this. I will go back and look at

this question. I cannot answer the question at the moment of

whether we would extend that deadline of having to pay your percrop, per-county fee prior to the coverage period.

Senator STABENOW. Well, I would urge you, and I would appreciate a followup with my office——

Mr. COLLINS. OK.

Senator STABENOW [continuing]. Regarding this.

Mr. COLLINS. Sure.

Senator STABENOW. Because, obviously, of the lengthy time in

promulgating the rules, this is very serious. Again, cherries as an

example in Michigan are now facing another very difficult disaster

situation with unseasonably warm weather in April; with a return

to very cold weather; and now, some real concerns about yield.

They are very concerned, and I would like very much to make sure

that what we had intended, in fact, will be available to people and

that we would not hold artificial deadlines out that would get in

the way of actually meeting the needs that we I know together

wish to meet.

Mr. COLLINS. Well, the deadline itself is fashioned around the

deadlines we have for crop insurance. You know, we have a socalled sales closing date for crop insurance. It is a parallel concept

that we are using for NAP. I will go back and see how flexible we

are in that.

Senator STABENOW. I would appreciate it.

Mr. COLLINS. OK.

The CHAIRMAN. Thank you.

We have about 2 minutes left.

Mr. Green, do bean producers up your way, do they use Federal

crop insurance?

Mr. GREEN. Yes, they do.

The CHAIRMAN. OK; I just did not know.

Mr. GREEN. We probably had about 75 percent of them last year

that used the Federal crop insurance, but of course, a number of

them used the catastrophic. Then, of course, there are always

issues all the way down with that, Mr. Chairman, from the issue

of what the price is. It was—in the catastrophic, it was like $7.50,

28

roughly, plus half the yield. As I stated in my testimony, the price

is usually pegged around $16 just for the cost of production.

Of course, I have another grower who always says, well, he says

what person in their right mind only insures the last 65 percent

of their car? He has a point there as well.

The CHAIRMAN. Thank you all.

I apologize. I had no idea—I thought we were going to start voting at 6, but we are now on our first vote on the trade bill. Again,

I thank you all for being here, some of you coming a great distance.

Thank you for your testimony. This committee will meet sometime

shortly after we get back from the Memorial Day break to see if

we can mark up a bill that would respond to the needs that we

have out there on this disaster assistance program.

Again, I thank you very much, and the committee will stand adjourned until the call of the chair.

[Whereupon, at 4:33 p.m., the committee adjourned.]

(29)

A P P E N D I X

MAY 23, 2002

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

(89)

DOCUMENTS SUBMITTED FOR THE RECORD

MAY 23, 2002

90

91

92

93

94

95

96

97

98

99

100

101

102

103

104

Æ