Date: 1987-02-26
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Speaker. one of the major issues before this 100th Congress will be the distress in some of our agricultural areas. especially in the heartland of the Nation. This House has a responsibility to deal with the problems of American agriculture. Not just because farmers are good people. but also because agriculture is so important to the overall national economy and to the welfare of American consumers. If we are going to meet that responsibility. we must act on the basis of the facts in agriculture. If we try to make policy on the basis of empty slogans and false images instead of real facts. we will make bad policy. And thats the trouble with some of the talk we have been hearing lately. Mr. Speaker. Too much of it has been based on quick. easy. and false images. Far too many people have been led to believe that our farm programs amount mainly to huge payments for giant corporations. I want to deal with that impression today. Its a story you have heard and seen many times. It goes something like this: Government support programs should be thrown out because almost all of the money we pay out goes to giant corporate farms and very little of the help goes to the people who are really in trouble. the family farmers. If that were really true. I am sure that critics of farm programs would be bombarding us with statistical evidence. But the facts are different. And we have the facts. They do not come from farm organizations or Members of Congress. They come from service experts at the U.S. Department of Agriculture. Early last year. the Department made a survey in which it got specific data on payments to a sample representing 90 percent of all farms with annual sales of more than $10.000. The probability is that if you wanted to look only at fulltime commerical family farms. the sample would represent well over 90 percent of the total. Now. what did this survey find? First. it found that nearly 85 percent of all Government payments and crop loans in 1985 went to farms with sales of under $500.000. What this means. Mr. Speaker. is that the great bulk of Government assistance went to family farms. I realize that $500.000 sounds like a lot of money. But the fact is. and everyone who understands modern agriculture knows this. that there are a great many family farms where annual sales go into the hundreds of thousands of dollars and where the annual profits may be very modest. Heres another fact. The USDA survey found that nearly 60 percent of all payments and loans went to farms which had high debt loads. negative cashflows. or both. What this means. Mr. Speaker. is that it Is simply not true that most- of our farm program dollars are going to fat cats who dont need the help. Some critics and some supporters of farm programs say we should do a better job of concentrating the dollars we provide on the farms that need it most. I agree we should keep this in mind. But I think we also ought to consider that we are already doing a great deal to concentrate help on those who need it most. You dont need to take my word for that. You just have to look at another part of the Agriculture Department survey. The study shows that about 21 percent of the Nations farmers in 1985 had high debt loads. And those farms with high debt loads got 51 percent of the Government farm payment dollars. Now lets look at another point. If 60 percent of the farm program dollars went to farms with high debt loads and negative cashflow. what about the remaining 40 percent? That represents. after all. a good deal of money. Did we pour all those dollars into the bank accounts of rich corporations? The answer is "No." The answer is that a great deal of the money went to farmers who would have been operating in the red if they had not been able to qualify for price support loans and payments. Jim Johnson. an Agriculture Department economist. said in the USDA report that there are two reasons for the fact that about 40 percent of farm payments went to producers who did not have excessive debt loads or negative cashflow. One reasons is the fact that the USDA programs we are talking about do not use a means test. They are designed to control production. Farmers can enroll in these programs if they are willing to comply with regulations including reductions in their acreage. And I remind the House that this eligibility test operates just as much for the benefit of the taxpayer as for the benefit of the farmer. The second reason that we have payments going to farms which do not show up on the red ink list is equally important. Let me quote the explanation given by Mr. Johnson: Preliminary analysis of our data shows that many positive cashflow .farms would likely have been in a negative position without Government payments and CCC loans. Of course. we dont know what would have happened to these farmers if they had chosen not to participate in the programs. but we can assume that participation offered the highest expected net income. Now. Mr. Speaker. we should look at another side of this issue. The fact that big payments have gone to some farms. and the fact that a farmer with. say. 1.000 acres of grain gets bigger average payments than a farmer with 500 acres. We have heard a lot about a few multimilliondollar payments on 1986 crops. Those were the result of a decision in the 1985 farm bill to adopt program provisions aimed at making American commodities more competitive in the world market. Last fall. Congress took a second look at that issue and voted to eliminate the multimilliondollar payments. Under the law as it stands today. no single producer can collect more than $250.000 in direct payments. no matter how much he or she produces. There is also the factand we hear this mentioned frequentlythat average payments and loans to bigger farms are higher than the average for smaller farms. This should not be a surprise when programs are based on the production and acreage on each partiepating farm. But people sometimes use this simple fact as evidence that bigger farms get an improper amount of help in comparison with smaller family farms. Lets look. for a moment. at what USDA say in their recent report. "Our data confirm that the largest average payments are going to the largest farms." said economist Dave Banker. "But you can look at it another way. too. The largest payments are going to the farms with the largest share of production." Mr. Banker points out that if you look for a group of farms that get a high share of Government payments when compared with their share of total production. you will be looking at middlesized producers. Farms with 1985 sales of $100.000 to $250.000. for example. accounted for 27.1 percent of total U.S. agriculture productionbut they got 38.1 percent of total Government farm program outlays. Farms with sales of $40.000 to $100.000 accounted for only about 14 percent of total productionbut they got nearly 20 percent of the payments and commodity loans. The average total of payments and loans for these midsize farms is smaller than the average for farms with sales of over $500.000 a year. But the USDA report makes another point that Members should keep in mind. Heres what the report says: In absolute terms. the average payment is much larger to the bigger farm. but the payment has a smaller relative effect on the larger farms income than the payment going to midsize farms. As a result. these direct commodity payments may help reduce the inequality in total household incomes across the different sales classes. Mr. Speaker. these facts do not mean that our programs are perfect or that we should not deal with whatever problems may rise. The House may remember. for example. that when we adopted the new limitation on total payments last fall. we also directed the administration to recommend any necessary improvements in regulations dealing with the reconstitution of farms. If changes prove to be necessary. I am certain they will be considered. These facts. Mr. Speaker. also confirm that if we design a program to stabilize the incomes of commodity producers with support loans and payments. the farmer who produces 100 bushels will get more payments than the grower with 50 bushels. The farmer who gets an acreage diversion payment for taking 100 acres out of surplus production gets more than the grower who takes 50 acres out of production. But. Mr. Speaker. these facts do not mean that the programs are unfair to small- and mediumsized family farmers. And as the USDA report says directly. they do not mean that our programs. taken as a whole. pour out the bulk of the money to rich corporate giants. The bulk of the benefits. in other words. are going to the purpose Congress intendedto the purpose of stabilizing agriculture and helping family farmers. To emphasize that point. once again. I want the House to note these two excerpts from the article I have referred to. published in the DecemberJanuary issue of the Agriculture Departments Farmline magazine. The article says that USDA economists Johnson and Banker readily concede that commodity programs cannot do everything that all people expect and that they allow payments to some profitable farms. But the article adds this comment: The evidence suggests that. generally speaking. It is not true that payments were going to those who needed them least. The majority of payments and loans received by farmers represented in our survey were going to highdebt farms. and a large proportion of these farms were either suffering a negative cashflow or might have faced a negative cashflow without the payments. That majority widens still further when you add In the farms with low debt but negative cashflows. Finally. Mr. Speaker. I want to talk briefly about another myth that sometimes gets into discussions of farm stabilization programs. That is the suggestion that farm payment dollars go into bank accounts as profits or savings to make a farm family richer. The fact is that these farm payment dollars generally dont stay on the farm. Most of them go right back out to pay feed bills. or equipment or fertilizer bills. or payments to the bank. Those dollars go into rural communities. to the merchants on Main Street. to the real estate taxes that support local governments. If we must call these payments a subsidy. Mr. Speaker. we could very well describe them as a subsidy for rural America. and this is especially important in the heartland States that have been hit hardest by the farm crisis of recent years. Much of rural America is in or is facing the toughest economic crisis since the 1930s. and I fear that if we did not have our farm programs in place. the situation would be far worse than it already is. C] 1230