Farm bill hearing targets Kansas agriculture

By Larry Dreiling

With over 175 people in attendance, the House Subcommittee on General Farm Commodities and Risk Management met June 5 for a field hearing in Salina, Kan.

The hearing was the fulfillment of a promise to the former subcommittee chairman, Rep. Jerry Moran, R-KS, by Rep. Bob Etheridge, D-NC, the current subcommittee chairman.

"I've promised Jerry that no matter what happened that we'd have a hearing here in Kansas," Etheridge said. "Jerry says I'm just temporarily holding his seat."

Etheridge also noted his other host, Rep. Nancy Boyda, D-KS. Boyda, a freshman member of the subcommittee, doubles the number of Kansans on the House Agriculture Committee.

"Nancy has been instrumental in having this hearing here," Etheridge said. It was noted that both offices of the state's delegation participated in the selection of witnesses to the subcommittee.

The hearing, Etheridge said, was the last hearing of the subcommittee before its most important work of the year; the so-called "markup" of the commodity title of the 2007 farm bill.

"While the topic of this hearing is a review of the state of agriculture in Kansas, this hearing will have great importance nationally because the witnesses here have the unique chance to get the last word in before we begin heavy lifting of the commodity title," Etheridge told the crowd.

"Already two other subcommittees have marked up their respective pieces of the farm bill, from energy to conservation, to dairy to research. Our job is to markup the heart and soul of the safety net that farmers depend on."

"Predicting locusts next"

Moran told the gathering that most of his work lately may have seemed strange to the other members of Congress in attendance, considering what's been happening with weather in the state.

"Most of the last few years, I've been advocating for drought assistance. Then the members of the committee flew over the state and saw the ponds were full, fields were green and now we're advocating for flood assistance," said Moran to laughs from the audience.

"We had several years of challenges, including five and six years of drought in all but 12 counties in the 67 county district, followed by a Dec. 31 winter storm consisting of five inches of rain followed by six inches of ice and two feet of snow and 40 mile per hour winds in 44 counties. Then in April we saw wheat losses here in Saline County and four other counties due to three nights in the teens. Now, we've had tornadoes, hail and floods. I'm now predicting locusts are next."

Boyda, for her part, said she has arrived in Congress at a very good time.

"Whether it's been on agriculture or energy or health care, we've been having real-life conversations in Congress--civil, bipartisan, conversations--about real issues and real solutions," Boyda said.

"I've stopped saying I'm trying to completely understand the farm bill. Nobody will believe you. But Jerry has been excellent at helping me understand the more complex issues."

Boyda also made clear what many in the audience already knew: An urban Congress that likely has interests dissimilar to theirs will decide the next farm bill.

"We want to make sure the producer has a strong voice, not the only voice, but we want to make darn sure that your voice is heard," Boyda said.

Two non-subcommittee members also were attendance at the hearing, Republicans Steve King of Iowa and Adrian Smith of Nebraska.

Witnesses, Moran said at a post-hearing news conference, were selected primarily because they represented no particular group but because they had mailed or visited with him, Boyda or their staffs about issues important to them.

Revenue-based payments

Leading off the testimony was Troy Dumler, Kansas State University southwest area Extension agricultural economist. Dumler called for a revenue-based counter cyclical program rather than the current price-based program.

"With two of the three commodity safety net programs tied to price, it is fair to say that producers of commodity program crops should be well covered in low price environments. But does that imply that the safety net is now sufficient," Dumler said.

"Given the fact that an average of $1.3 billion in crop disaster aid has been paid out annually from 1999 to 2006 suggests that the current combination of safety net programs is not sufficient. The primary problem with safety net programs that are tied to price is that they are not very effective in high price/low yield environments."

Most of the grain producers called for continuing a "three-legged stool" of direct payments, counter-cyclical payments and loan deficiency payments. One of those producers was John Pracht, a Westphalia, Kan., producer.

"I know a lot of talk is to do away with the direct payment, but for me it's nice to know that some steady income is coming in," Pracht said.

Moran, whose district is the nation's largest hard winter wheat growing area, attempted to steer his questions to those producers toward his own advocacy of a larger direct payment as something that would be more effective for those producer while creating the least market distortion.

"Know what a difficult task this subcommittee has in forming the farm bill," Moran said. "The Congressional Budget Office indicates we are going to draft a farm bill with 43 percent fewer funds than the 2002 farm bill. Even if we are able to tap additional funds from a so-called reserve fund, it looks like we'll not be able to obtain much more funding.

"The direct payment is in trouble. The chairman of the Senate Agriculture Committee, Tom Harkin, wants to take this direct payment to go to an expanded CSP. The overall chairman of this committee, (Collin) Peterson, wants those funds to go to permanent disaster payments. This will be difficult to show how important the direct payment is to producers in Kansas."

Oil price floor advocated

Perhaps the biggest buzz in the room came from Gary Parker, a soybean, wheat and Sorghum producer from Moran, Kan., who called for legislation permitting implementation of a price floor on imported oil as a safety net for owners of ethanol and biodiesel plants, many of whom are producers.

"Alternative fuels from agricultural products provide us with an outstanding opportunity to address one of our country's most pressing energy crises," Parker said. "As we continue to make advances in this arena, I have an increasing sense of dread at the number of people--especially farmers--who are making significant and risky investments into biofuels.

"My fear is that most of our ethanol and biodiesel plants are being built using the money of rural farmers and other individual citizens. These investments are being made as Americans face ever-rising prices at the gas pump. A few strategic moves by OPEC to drop crude prices could bring financial ruin on this industry and many of its investors. In a short time, we would see these new plants would shut down.

"Avoiding such a disaster--as biofuels struggle to become more financially viable--would require the implementation of a price floor in oil imports, ensuring that biofuels can remain financially competitive in the short term."

Parker's comments came under tough scrutiny from Smith, a freshman Member who calls himself a strict free market Republican.

"Tell me how a price floor for petroleum would be good for the consumer?" Smith asked. "I'm fearful of governmental interference at a cost to the consumer. I was talking to a retailer the other day, who recalled the price controls of the early 1980s when retailers couldn't make more than 30 cents a gallon when these retailers had really no more than a five-cent margin to begin with so they raised the price of gas up to 30 cents a gallon. The advocacy of a price floor scares me."

Other highlights

Other highlights included a comment from Steve Rome, a Hugoton, Kan., producer who said he and producers like him are using more of the business plan invented by Wal-Mart founder Sam Walton.

"We sell more for less," Rome said. "We've figured that out, but we are unable to figure out to exert the influence on our suppliers or pass on our increased costs to our customers."

From Brian Starck, a Fairbury, Neb., producer, came a reminder that while commodity prices are high during this time when a farm bill is being crafted, they likely will cycle downward eventually.

"We are price takers when we sell our commodities. To develop a farm policy on the notion that crop prices will remain high for a long time would be a mistake," Starck said.

"When it comes to the input side, I am also a price taker when I purchase fertilizer, fuel and other inputs vital to my operation. Some of these costs have almost doubled in the last three to four years which makes my operation even more vulnerable to the production and price risks I face."

Bill Miller, a cattle producer from Princeton, Kan., complained about the high cost of livestock feed brought on by the surge in ethanol production.

"I have a solution to high feed prices in my area. If we can get rid of the ethanol plant at Garnett, that would be great. I probably shouldn't say that," Miller said.

Barry Childs, a Belleville, Kan., producer sought beginning farmer assistance.

"We need to change to tax on the recapture of depreciation on machinery and equipment from the first year to an installment sale provision that is used for land," Childs said. "Older farmers could sell machinery and equipment on contract to younger farmers with the extremely large first year tax. The same amount will be paid, but over several years."

Mark Meisinger, a Marion, Kan., producer, sought additional funding for Farm Service Agency offices.

"The local FSA offices need computer upgrades so farmers won't have to spend so much time there or can do the work from home online," Meisinger said.

Lee Robbins, a cattle producer from Yates Center, Kan., said he was a director for the Kansas Cattlemen's Association, an affiliate of R-CALF USA. Robbins called allowing independent inspection of beef for BSE , mandatory country-of-origin labeling of beef, and a prohibition on cattle ownership by packers two weeks prior to slaughter.

"Consolidation and integration has not been good in general for production agriculture," Robbins said.

Widesprread interest

At the conclusion of the hearing, Moran told the crowd: "I know not every Kansan is a farmer but there is no other bill in Congress this year that will affect the Kansas economy more than this farm bill. I'm glad so many people were here today not only to testify but to show their interest and support."

In a follow-up interview following the hearing Etheridge said the bill will not just affect Kansans by every American who consumes food and fiber but people around the world who are affected by American markets and feeding programs.

"I think this hearing proved for me that this farm bill will be similar in some ways and different in some ways from past farm bills," Etheridge said. "It will similar because it will be bipartisan. It will be different because we will see individual commodities seek their own share of funding rather than, say, grains having their own idea and southern crops their own plan. We're hearing a lot of different approaches and we'll have to go through them all."

Etheridge and his subcommittee won't have much time to wait. The markup for Title I, the commodity title of the farm bill, is expected sometime around June 15.

Larry Dreiling can be reached by phone at 785-628-1117 or by e-mail at ldreiling@aol.com.

6/11/07

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